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Action Ukraine Report

"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"

THEIR COUNTRIES' EUROPEAN DESTINY
The inspiring moments were.....
The defining moments of this year's World Economic Forum were, for me,
neither the hopes of peace in the Middle East nor the pledges of additional
assistance for Africa. I have heard both too often before. The inspiring
moments were, instead, the statements by Recep Tayyip Erdogan, Turkey's
prime minister and, still more, by Viktor Yushchenko, the newly elected
president of Ukraine. Both leaders declaimed their countries' European
destiny. [article one]

"THE ACTION UKRAINE REPORT" - Number 422
morganw@patriot.net, ArtUkraine.com@starpower.net
Washington, D.C. and Kyiv, Ukraine, WEDNESDAY, February 2, 2005

NOTE: Do not miss out on all of the exciting news about Ukraine
during the first year of the Yushchenko presidency. Please tell your
friends about The Action Ukraine Report and let them know they
can subscribe now to this free public service publication distributed
solely for the personal use of its readers. EDITOR

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

1. "THE PULL OF A FREE AND PROSPEROUS EUROPE"
COMMENTARY: By Martin Wolf
Financial Times, London, UK, Wed, February 2, 2005

2. UKRAINIAN PRIME MINISTER DESIGNATE SAYS CANDIDATES
FOR CABINET AND GOVERNOR'S SELECTED
Interview with Yuliya Tymoshenko by Viktor Chyvokunya
Ukrayinska Pravda web site, Kiev, in Ukrainian 1 Feb 05
BBC Monitoring Service, UK, in English, February 1, 2005

3. UKRAINIAN SPEAKER URGES PARLIAMENT TO BACK PRESIDENT
UT1 State TV, Kiev, in Ukrainian 0800 gmt 1 Feb 05
BBC Monitoring Service, UK, in English, February 1, 2005

4. OUR UKRAINE MEMBER WILL TAKE VICE SPEAKER'S SEAT
Ukrainian News Agency, Kyiv, Ukraine, Tue, February 1, 2005

5. "UKRAINE'S PRESIDENT TAKES THE STAGE"
By Lynn Berry, Staff Writer Moscow Times
Moscow, Russia, Monday, January 31, 2005

6. MCDONALD'S UKRAINE TO INVEST USD 4 MILLION IN
DEVELOPMENT OF IT'S RESTAURANTS NETWORK IN 2005
Now has USD 83 million invested in Ukraine
Ukrainian News Agency, Kyiv, Ukraine, Mon, January 31, 2005

7. A NEW GOVERNMENT AT LAST IN UKRAINE
International Outlook, Business Week magazine
New York, NY, February 7, 2005 Edition

8. "UKRAINIANS ON THE GO"
By Andriy Duda, EMU Political Analyst
Ukraine - Post Presidential Election February 1 Report
European Movement Ukraine Information Service (EMU)
Ukraine Today: www.ukrainetoday.net, Kyiv, Ukraine, Tue, Feb 1, 2005

9. YOU SAY YOU WANT A REVOLUTION? UKRAINE GROUP
READY TO CHANGE EX-SOVIET WORLD
Agence France Presse (AFP), Kiev, Ukraine, Mon, January 31, 2005

10. "TO THIS VIKTOR BELONGS THE SPOILS"
Can Ukraine's new President turn his country away from cronyism
and corruption? Or will reform be elusive?
By Brett Forrest, Fortune magazine Europe
Europe, Monday, February 7, 2005 Edition

11. SENATORS MCCAIN AND CLINTON NOMINATE PRESIDENTS
OF GEORGIA AND UKRAINE FOR NOBEL PEACE PRIZE
United States Senate, Washington, D.C., Wednesday, Jan 26, 2005

12. HOW BUSH COULD FIGHT TYRANNY
[That strategy has a proven record: It just worked in Ukraine]
By Jackson Diehl, Columnist, The Washington Post
Washington, D.C., Monday, January 31, 2005; Page A21

13. UKRAINE INTELLECTUALS STAND OUT IN PROTECTION
OF RUSSIAN LANGUAGE
ITAR-TASS, Moscow, Russia, Mon, January 31, 2005

14. "UKRAINE'S LESSON FOR PUTIN"
Does Russia's president face the same kind of upheaval?
By Jim Hoagland, Columnist, The Washington Post
Washington, D.C., Thursday, January 27, 2005; Page A19

15. "EAST UKRAINE ADAPTS AFTER ELECTIONS"
By Helen Fawkes, BBC News, Donetsk
BBC NEWS, UK, Monday, January 31, 2005
=========================================================
1. "THE PULL OF A FREE AND PROSPEROUS EUROPE"

COMMENTARY: By Martin Wolf
Financial Times, London, UK, Tue, February 1, 2005

The defining moments of this year's World Economic Forum were, for me,
neither the hopes of peace in the Middle East nor the pledges of additional
assistance for Africa. I have heard both too often before. The inspiring
moments were, instead, the statements by Recep Tayyip Erdogan, Turkey's
prime minister and, still more, by Viktor Yushchenko, the newly elected
president of Ukraine. Both leaders declaimed their countries' European
destiny.

By virtue of their size and location, Turkey and Ukraine are much the most
important countries now requesting entry. Many in the European Union hope
to wake up from these twin nightmares. If they had been in that hall, they
would have realised the magnitude of their delusion.

Mr Erdogan remarked that joining the EU would lead to a "reconciliation of
civilisations". Mr Yushchenko was able to state that "the people of Ukraine
declared that they chose to be part of Europe during the Orange Revolution".
On the wintry streets, millions declared that they wished to be free. What
better definition can there be of what the EU stands for?

The tabular content relating to this article is not available to view.
Apologies in advance for the inconvenience caused.In Davos, these two
impressive leaders stated the desire of their peoples to share in the
liberty and prosperity of contemporary Europe. That is what Harvard
University's Joseph Nye means by soft power. It alters a people's
aspirations and so what they demand of their leaders. Some question whether
this is power at all. Yet the name does not matter. Call it "attraction" if
you prefer. What matters is its palpable reality.

In a contemporary democracy, power depends on consent. In Ukraine, we have
seen a demonstration of what happens when that is withdrawn. Non-violent
protest destroyed the legitimacy of a corrupt elite. As even the loyalty of
the police and the army dissolved, force became impossible to exercise. Soft
power won inside Ukraine.

Yet Europe's attraction created that power in the first place. Turkey and
Ukraine prefer freedom to serfdom, democracy to dictatorship, prosperity to
poverty and peace to war. They aspire to join a club of states built on
these values. Such fervour deserves its obvious reward. Both these countries
must gain membership.

In the immediate aftermath of the 60th anniversary of the liberation of
Auschwitz, we recognise the truth that many Europeans quite recently
embraced the opposite of these values. It must never be forgotten that the
US then played a decisive role in rescuing Europe from itself. Human beings
are capable of almost unimaginable wickedness. But we must believe in their
ability to learn. Europe, it seems, has learnt from its follies and crimes.

The post-second world war successes of western Europe undermined the
communist dictatorships of the east, as they had earlier induced
transformations in Portugal and Spain. In the aftermath of their collapse,
the aspiration to join the EU then drove political and economic reform in
much (though not, alas, all) of central and eastern Europe.

This then is the Europe that Turkey and Ukraine wish to join. Who could
blame them? Quite a few people, seems to be the answer. For, irony of
ironies, as Turkey and Ukraine seek to join, the UK may be on its way out.
If the UK turns out to be the only country to reject the new constitution
that might well be the outcome.

What then motivates this deep-seated hostility? Part of the reason, no
doubt, is the pardonable British view of themselves as rescuers of Europe.
Another part is the sense of security of a country that has remained
unconquered for almost a millennium. Yet another is the sense of themselves
as an island-people with ties to the English-speaking countries across the
oceans, especially the US.

Nevertheless, there is another more contemporary reason: the belief that the
EU's economy is a calamity. If true, the desire of Turkey and Ukraine to
join would be quite foolish. It is not, however. The EU is not the
collapsing behemoth of fevered imaginings.

A compelling indication of this truth comes from the 2005 Index of Economic
Freedom, compiled by impeccably conservative Americans.* No fewer than
10 of its top 20 countries are EU members (see chart). Luxembourg, Estonia,
Ireland, the UK and Denmark are all ranked above the US. True, Italy is 26th
and France 44th. But this variation proves that the EU does not compel
countries to follow bad policies; it merely allows them, within limits, to
do so. The UK's recent success similarly shows that membership is far from
a hindrance to good performance.

Equally, the EU's recent economic performance is less dismal than many
suppose. Output per hour worked is quite similar in the US and the
pre-enlargement EU of 15 members. Employment is rising in the EU, though
the proportion of the population of working age at work is still far lower
than in the US. True, according to the Conference Board, the business
research group, productivity grew a percentage point a year more slowly
in the EU of 15 than in the US between 1995 and 2004 (see charts).
Yet several members managed faster growth than the US or were not
far behind.

None of this is to suggest that the EU's economy is functioning perfectly.
Aggregate demand has been far too weak in recent year, while the economies
of the three big eurozone economies remain over-regulated. But the EU
continues to provide the opportunities for rapid catch-up exploited, in the
recent past, by Ireland, Portugal and Spain. More important, it has forced
political reforms across the continent. The EU has been far more successful
in generating economic and political reform in its "near abroad" than the US
has been in Central and South America. The EU offers the reward of a voice
in the continent's affairs. The US, at best, offers economic opportunities.

The EU is an achievement for which many, including the US itself, can take
great credit. Its attraction to its neighbours is overwhelming. It is now
easy to imagine an EU with an aggregate population of well over 600m. Yes,
such an EU would be unwieldy. No, it would not be the great power dreamt of
by many Europeans. But it would also be more than a free trade area. Such an
EU would be a zone of prosperity, peace, freedom and democracy, stetched
across Europe. Turkey and Ukraine believe in it. Why should the rest of us
not do so, too? -30- [The Action Ukraine Report Monitoring Service]
----------------------------------------------------------------------
* The Heritage Foundation and The Wall Street Journal
E-mail: martin.wolf@ft.com
======================================================
2. UKRAINIAN PRIME MINISTER DESIGNATE SAYS CANDIDATES
FOR CABINET AND GOVERNORS' SELECTED

Interview with Yuliya Tymoshenko by Viktor Chyvokunya
Ukrayinska Pravda web site, Kiev, in Ukrainian 1 Feb 05
BBC Monitoring Service, UK, in English, February 1, 2005

KIEV - Ukrainian Prime Minister-designate Yuliya Tymoshenko has said that
she has already selected all the candidates for ministerial and governors'
posts, and that none of the current ministers or governors would keep their
jobs. She said that when the parliament votes to confirm her nomination on 3
February it would also vote on the government programme, which will give the
new cabinet a guaranteed one year in office.

Tymoshenko also said that her Fatherland party will run as one bloc with
President Viktor Yushchenko's Our Ukraine in the 2006 parliamentary
election. Tymoshenko said she still opposed constitutional amendments but
would follow all the instructions given by Yushchenko.

The following is the text of Tymoshenko's interview with Viktor Chyvokunya
published on the Ukrainian Ukrayinska Pravda web site on 1 February;
subheadings inserted editorially:

[Chyvokunya] Will the government action programme be put to vote together
with approval of your appointment as prime minister?
[Tymoshenko] Yes. This will be a programme fully corresponding with the
president's programme. The president ran in the election with a certain
programme, and the people supported it. Now the president is hiring a prime
minister and a cabinet to implement this programme. We have simply expanded
it without losing its logic and main content. We are going to implement the
president's programme.
[Chyvokunya] Is this the programme which gives a one-year immunity [from
dismissal] to the prime minister?
[Tymoshenko] This is a five-year programme.
[Chyvokunya] Just to clear out any confusion: are we talking about the same
government action programme which is written in the constitution and which
is supposed to be approved by parliament?
[Tymoshenko] Yes! Yes!
[Chyvokunya] Who drafted this programme?
[Tymoshenko] This programme was drafted by all the candidates to the
ministerial posts.
CABINET MAKE-UP FINALIZED
[Chyvokunya] Does this mean that the cabinet's make-up has been finalized?
[Tymoshenko] The cabinet has been finalized 100 per cent. And 100 per cent
of governors have been selected. I mean as a proposal to the president.
[Chyvokunya] Who will be your first deputy?
[Tymoshenko] I think this will be known on Thursday [3 February].
[Chyvokunya] What will be your main steps as prime minister?
[Tymoshenko] I will say everything in my speech in parliament. I do not want
to speak too soon, I will say everything clearly in parliament. And I will
hold a news conference afterwards.
[Chyvokunya] The Socialist Party said it would support you if you don't
touch the constitutional amendments passed in December. But you want to
cancel them through the Constitutional Court.
[Tymoshenko] You know that I have been consistent in opposing amendments to
the constitution. But I can say that I cannot fail to take into account the
fact that the amendments have already been passed. Now I will follow what
President Viktor Yushchenko says. I can say that Yushchenko and [Socialists
Party leader] Oleksandr Moroz have a written agreement. I will strictly
follow the president's instructions.
PLANS FOR 2006 PARLIMENTARY ELECTION
[Chyvokunya] It is known that Yushchenko does not want his prime minister to
head a political party. What way out have you found as the leader of the
Fatherland party?
[Tymoshenko] We agreed that we would join forces for the 2006 [parliamentary
election].
[Chyvokunya] You mean you will form a joint party with Our Ukraine?
[Tymoshenko] No, we will join our forces in a bloc. Fatherland will not
merge with the joint party.
[Chyvokunya] Who will head your faction, the Yuliya Tymoshenko Bloc, after
you leave parliament?
[Tymoshenko] We shall see, we need to hold a meeting of the faction.
[Chyvokunya] Is it true that Oleksandr Turchynov will be a deputy to the
head of the presidential secretariat, Oleksandr Zinchenko?
[Tymoshenko] No, he has no plans to go into the secretariat. His new job
will be known on 3 February.
[Chyvokunya] Okay, but he is said to be considered for the post of interior
minister.
[Tymoshenko] Yes, it is true.
[Chyvokunya] Why do you think the Our Ukraine faction does not fully support
your nomination? What do you know about this?
[Tymoshenko] I do not know anything. I think we have worked as one team, and
the vote will be consolidated.
[Chyvokunya] How would you comment on the statements by MPs Bezsmertnyy,
Morozov and Stetskiv [who sharply criticized Tymoshenko and said they would
not vote for her]?
[Tymoshenko] First of all, Stetskiv has not said anything like that... I
read carefully - the news headlines seemed to be incorrect. As for
Bezsmertnyy and Morozov - I do not even want to react to that. This is human
weakness, and I don't comment on weakness.
[Chyvokunya] In general, what is your prediction as to the number of MPs who
will vote for you?
[Tymoshenko] It is difficult to predict how good it will be (laughing).
[Chyvokunya] Will you get 300 votes?
[Tymoshenko] I don't know, we shall see.
[Chyvokunya] What do you think of the fact some people who have very
recently worked for [Yushchenko's rival presidential candidate Viktor]
Yanukovych - Havrysh, Hubskyy - have very quickly announced their support
for you?
[Tymoshenko] I don't know, you should ask them. My task is to unite the
people and politicians. But I will follow strict principles.
ALL NEW FACES IN GOVERNMENT
[Chyvokunya] Will any of the old ministers or governors appear in the new
government?
[Tymoshenko] No, they will not.
[Chyvokunya] Are you occupying the same office where Yushchenko worked
in 2000-01?
[Tymoshenko] Yes.
[Chyvokunya] Are you going to renovate it?
[Tymoshenko] No, I will inherit it without renovations (laughing). I am not
interested in the interior. I do not have time for this.
[Chyvokunya] How would you comment on the decision of Prosecutor-General
[Svyatoslav] Piskun to close all the criminal cases against you?
[Tymoshenko] This should have been done long ago, because there were no
cases. I heard from many lawyers that the cases did not exist. Piskun simply
stated de jure what have long been known de facto.
[Chyvokunya] Do you support him on the post of prosecutor-general?
[Tymoshenko] I am sorry, I have to go.
[Chyvokunya] Is it true that your husband has returned to Ukraine?
[Tymoshenko] I will answer all the questions at the news conference.
=======================================================
3. UKRAINIAN SPEAKER URGES PARLIAMENT TO BACK PRESIDENT

UT1 State TV, Kiev, in Ukrainian 0800 gmt 1 Feb 05
BBC Monitoring Service, UK, in English, February 1, 2005

KIEV - Ukrainian parliamentary speaker Volodymyr Lytvyn has called on
members of parliament to support President Viktor Yushchenko's moves to
form a government of the people's trust, indirectly urging them to approve
the candidacy of Prime Minister-designate Yuliya Tymoshenko. Lytvyn
made the call in a speech at the opening of the new session of parliament,
which is to consider Tymoshenko's nomination on Thursday 3 February.
The parliamentary meeting is being broadcast live by Ukrainian television.

Lytvyn said: "As never before, the head of state [President Yushchenko]
needs the broadest public trust, support and understanding. As never before,
a responsible government, a true government of the people's trust needs to
be formed. Bargaining for government portfolios should be abandoned, giving
the president an opportunity to reinforce the implementation of his policy
with the personnel he needs."

The speaker said this session could yield the best-ever results of
cooperation between the executive and legislative branches: "This seventh
session can and should become the most productive in this convocation.
There are plenty of opportunities and incentives for such work. It is the
newly-elected president, the newly-appointed government - I think we will
settle this issue shortly - that will contribute to the energy of growth, so
to speak," he said.

"This session can be compared to a honeymoon in relations between the
president, parliament and the government - naturally on condition that all
the parties involved adhere to the unwritten yet vital code of honour - in
order to prevent anyone from being tempted to form a so-call controlled
majority and to use it to impose their will on the whole of the Supreme
Council [parliament]."

He warned against attempts to upset the post-election balance or to review
the package of laws on elections and political reform approved in December
2004.

"I deem it necessary to state in clear terms that attempts to call into
question the December decision of the Supreme Council on amendments to
the constitution, up to contesting it in the Constitutional Court, represent
a dangerous game which may have unpredictable consequences. This includes
casting doubt on the law on the specifics of the 26 December election, and
consequently, the legitimacy of the elections, an outburst of new
confrontation and the resumption of centrifugal trends in the regions. This
forecast is very logical because the principle of a package vote would be
violated. It was that principle, and that principle alone, that helped calm
down passions in society and helped all participants save face in that very
difficult situation."

Everyone is tired of political battles, and "there is no time left for a new
round of score-settling", Lytvyn said. He praised the role of parliament in
defusing the election crisis: "We were one step away from a large-scale
civil conflict, which could have led to this country being torn apart. It
was the Supreme Council's sensibility and responsibility that saved society
and the state from this by its decisions and actions." Lytvyn added that
parliament's function of political supervision should be stepped up.

Talking about the session's agenda, Lytvyn stressed that parliament needed
to pass "laws on the president of Ukraine, on the Cabinet of Ministers, new
versions of the laws on the National Security and Defence Council, elections
to the Supreme Council and local government bodies."

Speaking of other priorities, Lytvyn said that Ukraine needed to bridge the
gap with Europe in economic and living standards in order to pursue a
Europe-oriented foreign policy. "Foreign policy should be strictly guided by
economic feasibility," he said.

Lytvyn ended his 15-minute speech with a call for MPs to work constructively
and to cooperate with the new executive branch: "The results of the vote on
the candidacy for prime minister and on the government's action programme
will indicate the level of parliamentary support for the head of state and
the new composition of the government. This will be a temporary yet real
coalition, and that's the reality to proceed from. All the rest will be
dealt with after the 2006 [parliamentary] elections."

After the speech, parliament voted for the session's agenda, the highlight
of which will be a 3 February vote to approve Yuliya Tymoshenko as prime
minister. -30- [The Action Ukraine Report Monitoring Service]
======================================================
4. OUR UKRAINE MEMBER WILL TAKE VICE SPEAKER'S SEAT

Ukrainian News Agency, Kyiv, Ukraine, Tue, February 1, 2005

KYIV - State Secretary, deputy chairman of the Verkhovna Rada Oleksandr
Zinchenko predicts that a representative of the Our Ukraine coalition will
take the vice speaker's seat from him. He said this in interview with the
Ukraina Moloda newspaper, whose text Ukrainian News has.

"Our Ukraine will be absolutely right to claim the post of deputy head of
the Verkhovna Rada," Zinchenko said. This post, thanks to political
developments in this country, has long exceeded the limits of any quotas, he
said.

In Zinchenko's opinion, the victory of Our Ukraine coalition leader Viktor
Yuschenko in the presidential elections makes it possible to speak about the
creation of a power of new quality, when professionalism will prevail over
party interests. At the same time, Zinchenko stressed that the competition
for this post with representatives of other political forces is a subject
for open debate.

The State Secretary also said that in the near future he would give up his
duties as the Rada's deputy chair and people's deputy. As Ukrainian News
reported, Yuschenko appointed Zinchenko the State Secretary on January 24.
Zinchenko was elected to the Rada in 2002 on the ticket of the Social-
Democratic Party of Ukraine (united), and was appointed vice speaker
in May 2002 under the SDPU(u) quota. -30-
======================================================
5. "UKRAINE'S PRESIDENT TAKES THE STAGE"

By Lynn Berry, Staff Writer Moscow Times
Moscow, Russia, Monday, January 31, 2005

DAVOS, Switzerland -- The comparisons are inevitable. A year ago, it was
the newly elected Mikheil Saakashvili who came to Davos to announce
ambitious plans for transforming his country. Bursting with boyish energy,
he seemed almost giddy from suddenly finding himself among world leaders
curious to meet the young Georgian president.

This year it was Viktor Yushchenko in Davos holding out the promise of a
new democratic country on former Soviet soil where corruption would no
longer be tolerated.

When the new Ukrainian president rose to speak Friday before about 1,000 of
the political and business elite gathered at the World Economic Forum, the
well-heeled audience honored his bravery with a standing ovation.

His bruised and bumpy face enlarged on a giant video screen behind him,
Yushchenko said Ukrainians had shown that they belong in Europe, and he
laid out his plans for a future Ukraine worthy of membership in the
continent's ultimate club, the European Union. He asked for the foreign
investment necessary to help make these hopes a reality.

Some Davos participants said they found him too soft, lacking in charisma.
Others saw, instead, a gentleness, perhaps a wiseness, which touched a
chord. All saw a once-handsome face disfigured by dioxin poisoning that
nearly took his life.

At a lunch with journalists Saturday, Yushchenko said it would soon be
clear who had poisoned him during last fall's presidential election
campaign. "I don't think it's a complicated case," he told a half-dozen
journalists sitting at his table. "The circumstances are very specific,
very obvious. The prosecutor general said yesterday that they are narrowing
the scope of the investigation."

He refused to identify the suspects. "This will have to be answered by the
prosecutors," he said. He also refused to respond to a question on whether
the trail will lead back to Moscow. "Can I refrain from answering this?" he
said.

If the evidence points to Russian involvement, it could complicate
Yushchenko's efforts to patch things up with President Vladimir Putin, who
backed his opponent in the disputed election. Both leaders, who met in
Moscow on Jan. 24, have given assurances that they are ready to turn the
page and will work together.

Yushchenko said he would seek treatment for his disfigured face, though he
would not say where. "I still cannot get used to the face of Yushchenko
that you see today," he said at a news conference earlier Saturday.

In addition to his own poisoning, he promised progress in another painful
case, the 2000 murder of journalist Heorhiy Gongadze. "I hope that by May
we can submit the case to court," Yushchenko said at the lunch. He said he
planned to meet this week with Gongadze's mother and will honor her wishes
for her son's burial.

Gongadze was abducted in central Kiev in September 2000, and his
decapitated body was later found buried in a forest outside the capital.
His murder triggered months of violent protests against then-President
Leonid Kuchma, whom the opposition accused of being involved in the
killing. Recordings later surfaced of alleged conversations between Kuchma
and his subordinates in which he vented his anger at Gongadze's writings.
Kuchma has denied any involvement in the murder.

During Kuchma's presidency, he was also accused of approving the sale of
radar systems to Saddam Hussein's Iraq and of steering wealth to relatives,
supporters and east Ukrainian clans during privatizations.

The new Ukrainian leadership will have to address the question of Kuchma's
fate, specifically whether to hold him accountable for any crimes he may
have committed. Yushchenko said Saturday that he had not cut any deal with
Kuchma that would protect him from prosecution.

Immediately after meeting Putin in Moscow, a trip he made the day after his
inauguration, Yushchenko set out to push his main agenda, eventual EU
membership for Ukraine. His first stop was the Council of Europe in
Strasbourg, France. At Davos, it became clear how serious and personal an
issue this is for him.

"I don't feel comfortable striving to join Europe," he told journalists at
the lunch. "I feel like I am a European. I live in a European country and
possess European values."

He said he has no illusions about Ukraine entering the EU any time soon,
but said the steps Ukraine needs to take to reform its government and
economy are necessary regardless of EU membership.

"We will make Ukraine a European country in terms of values and standards,
and then we will see Europe knocking on our door," he said.

Yushchenko met with European Commission President Jose Manuel Barroso on
the sidelines of Davos on Saturday, and Barroso said afterward that Ukraine
should concentrate for now on building closer ties with the EU through
political and economic reform, Reuters reported. Yushchenko expressed
satisfaction with the meeting and said he will visit Brussels in late
February to discuss Ukraine's quest for market-based economy trade status.

Those who spoke with Yushchenko and his advisers here said they were
impressed with how aggressively he has moved to formulate a program. On
Thursday, he plans to submit his strategy for European integration to the
EU. At the top of his list is fighting corruption, specifically within
government and law enforcement.

"What my friend Mikheil Saakashvili has done to this end is very
illustrative," Yushchenko said at the news conference.

Saakashvili, who was at Davos again this year, claims to now have the
smallest civil service and lowest corruption in the CIS. He completely
abolished the traffic police and fired 80 percent of the police force. "The
only thing that happened was that they stopped extorting money on the
roads," Saakashvili said at a private lunch that was also attended by some
of his ministers.

With help from the United Nations, philanthropist George Soros and others,
Saakashvili has significantly increased salaries for the police, judges and
government officials. The increases were introduced first in the tax
service, and it brought an immediate jump in tax collection, he said.
Georgia also introduced a tax amnesty for previous years, Saakashvili said.

Annual tax revenues increased 48 percent in 2004, and revenue from customs
duties increased five times, said his minister for economic development,
Aleksi Aleksishvili. Gross domestic product was up 8.5 percent, with
inflation at 7.4 percent. Aleksishvili pointed to estimates from the
Economist Intelligence Unit of 12 percent GDP growth in 2005.

Kakha Bendukidze, a former Russian industrialist who is now Georgia's
minister for coordinating reform, said the government is working on further
privatizations. "Not having state property means not having corruption," he
said.

Bendukidze said Georgia also is working on "how to prevent the
Yukos-ization of the economy" as governments change.

Yushchenko spoke passionately about the need to bring the shadow economy
into the light, reduce taxes but enforce tax collection, form an honest and
professional civil service, establish an independent judiciary, and
guarantee a free press. He said his plans will be spelled out in more
detail in the strategy he will present to the EU later this week.

He said his key objective in coming to Davos was "to stretch out his hand
to business." "It was important that this hand does not hang in the air
unshaken. This is why we spoke on every possible occasion about what
we want to change," he said. "We want to convince business that we have
a new government, one that will not steal and will not accept bribes."

In his speech to the forum, he ended with a simple plea. "Please help
Ukraine and quite shortly you'll see a beautiful, European country."

- Yushchenko, still in the process of putting together a government,
defended his choice of Yulia Tymoshenko as prime minister, though he did so
in an unusual and indirect fashion. "Tymoshenko has been my partner. I have
certain political obligations to her, and I want to meet them," he said at
the news conference. He added that polls show more than 34 percent of
Ukrainians want her to be his prime minister.

-One of the more pleasant problems facing the new Ukrainian leadership is
what to do with unspent funds donated to support the Orange Revolution.

Yushchenko said his team had opened a bank account to support those camping
out near Independence Square. In one day, 16,000 transfers were made into
the account, which eventually grew to 25 million hryvnas ($4.9 million.) Of
that amount, only 5 million hryvnas was spent, because so many people
brought food, warm clothes and other supplies to the square. Now the
government is trying to decide how to spend the remaining 20 million, he
said. -30- [The Action Ukraine Report Monitoring Service]
==========================================================
6. MCDONALD'S UKRAINE TO INVEST USD 4 MILLION IN
DEVELOPMENT OF IT'S RESTAURANTS NETWORK IN 2005
Now has USD 83 million invested in Ukraine

Ukrainian News Agency, Kyiv, Ukraine, Mon, January 31, 2005

KYIV - McDonald's Ukraine plans to invest USD 4 million in development
of a network of restaurants in 2005. The company's PR manager Mykhailo
Shuranov informed journalists about this.

He told that investments would be directed at construction of another two
restaurants in Kyiv and reconstruction of those already existing all over
Ukraine. According to the data as of January 1, 2005, the company invested
over USD 83 million in development of the Ukrainian network.

According to Shuranov, McDonald's network takes about 20% of the
Ukrainian public catering market in mid-price segment. Average attendance
of McDonald's restaurants in Ukraine is 170 visitors daily.

McDonald's Ukraine opened one restaurant in Ukraine in 2003. As Ukrainian
News earlier reported, McDonald's Ukraine opened a total of 53 restaurants
in Ukraine, including 20 in Kyiv.

McDonald's has been operating in Ukraine since 1997, and is a world leader
in fast food industry (over 30,000 institutions in over 100 countries of the
world). -30- [The Action Ukraine Report Monitoring Service]
==========================================================
7. A NEW GOVERNMENT AT LAST IN UKRAINE

International Outlook, Business Week magazine
New York, NY, February 7, 2005 Edition

New Ukrainian President Viktor Yushchenko is moving to put his country on
a reformist footing. In the two days following his Jan. 24 inauguration
after a two-month power struggle, Yushchenko nominated his radical ally,
businesswoman-turned-pol Yulia Tymoshenko, 44, as Prime Minister. And he
asked the European Union to agree by 2007 to talks on Ukraine's desire for
membership. EU officials favor improved ties but aren't putting membership
talks on a fast track. Yushchenko has a three-year plan to get Ukraine in
shape.

Tymoshenko will be charged with implementing that plan if Parliament, as
expected, approves her. An early measure will be pay hikes for the police, a
bid to curb corruption. Tymoshenko aims to simplify the tax code to cut down
on bribery and the black market, estimated at 50% of the economy. She
wants to create a level playing field for investors by ending privileges
that aided an elite close to outgoing President Leonid Kuchma.

Tymoshenko has a controversial past. In the 1990s, she made a fortune
trading gas and was once briefly jailed on fraud charges, which she denied.
She faces a challenge to ease tensions in divided Ukraine. Even so, Tomas
Fiala, managing director of Kiev investment bank Dragon Capital predicts
that, thanks to reforms, foreign direct investment will double to $3 billion
this year. (By Roman Olearchyk in Kiev, Edited by Rose Brady) -30-
==========================================================
8. "UKRAINIANS ON THE GO"

By Andriy Duda, EMU Political Analyst
Ukraine - Post Presidential Election February 1 Report
European Movement Ukraine Information Service (EMU)
Ukraine Today: www.ukrainetoday.net, Kyiv, Ukraine, Tue, Feb 1, 2005

It is very difficult for a Ukrainian to comment on President Yushchenko's
first week of presidency. Euphoria is in the way. Indeed, over a period of a
few days President Yushchenko broke through Ukraine's window to the world,
and proved that not only did Ukraine need Europe, but that Europe needed
Ukraine as well. Simply until now Europe had no one to talk to in Ukraine -
Kuchma and his criminal cronies? - hardly.

During the first week Viktor Yushchenko managed to outline the principal
points of Ukraine's foreign policy. Thus, Yushchenko contrary to
Saakashvili, positioned himself not as a pro-American but as a pro-European
politician, regardless of his close cooperation with the pro-American
Poland, regardless of the support of the new American President shown still
during the Orange Revolution.

Yushchenko's pro-European direction is substantiated by his foreign policy
travel route at the beginning of his presidency and the fact that Yushchenko
openly supports the anti-American theme of withdrawing troops from Iraq,
thereby proving that his word is solid, even when it was expressed during
his election campaign. But this did not prevent the American Senators
Hillary Clinton and John McCain from recommending Viktor Yushchenko
for the Nobel Prize. Europe did not lag behind.

Yushchenko received an ovation at the European Council Parliamentary
assembly. The Economic Forum in Davos greeted him standing up. But
appearances are not all. The European Union Commissioner on EU enlargement
Olli Rehn declared that Ukraine's associated membership in EU by 2007 was a
reality. A lively discussion as to prospects of expanding the EU to Ukraine
is being carried on among EU members.

At the European Council meeting President Yushchenko revealed his plan of
Euro integration in stages. While discussing the priorities of Euro
integration and the accession to EU, President of Ukraine sees the
following steps as principal: 1)obtaining the status of a country with
market economy; 2) joining the WTO and coming to an agreement with
EU about creating a Free Trading Zone; 3) simplifying the visa regime
between Ukraine and the EU countries.

At the World Economic Forum in Davos, President Yushchenko declared that
today Ukraine is becoming one of the most attractive countries because of
its investment climate. Among the interior political changes which will
affect that investment attractiveness Mr. Yushchenko pointed out: l)
bringing the economy out of the shadow, lowering of taxes; 2) transparency
of the budget formulation; 3) fight with corruption and legal reform.

Evidently even Belarus President Lukashenko could talk about such steps,
but it is doubtful if it would have any effect on foreign investment in the
Belarus economy. The trust in the new President of Ukraine is the guaranty
of the foreign economic response to the interior policy. Already today
President of the European Bank of Reconstruction and Development Jean
Lemierre promised Ukraine a credit of 1 billion Euro per year.

In addition, the rhetoric of the new President of Ukraine shows that he is
not entering the European world begging. In Davos he proclaimed that he
represented “one of the largest countries in Europe, wherein the geographic
center of Europe is located, and the citizens of which are among the most
educated in the world.” The problem of Euro integration is not the only
foreign politicy problem of Ukraine. There is one more - Russia. In the area
of Russian cooperation Viktor Yushchenko proceeded in a blitzkrieg fashion.

As promised, his first trip abroad was to Russia. This was the country which
took unprecedented steps to meddle in the interior matters of our country,
the Head of State actively campaigning for one of the presidential
candidates and whose special services are suspected of poisoning President
Yushchenko. As a human, in Moscow Viktor Yushchenko appeared to have
forgiven all, as Head of State he demonstrated to Russia the new language of
the Ukrainian state. This was the language of force, and he demonstrated it
“elegantly”.

It all began with Yushchenko's appointment of Yulia Tymoshenko acting Prime
Minister, according to a previous agreement. From a Ukrainian point of
view - this appointment was unquestionable. But for Russia this is a blow.
Yulia Tymoshenko's “love” for Russia is well known. There is more. In
Moscow Viktor Yushchenko did not express a very optimistic view of the
United Economic Space, a child of the present post imperial Russia. We are
not against a free flow of goods, we are not against UES as long as this
does not interfere with Ukraine's entering other markets. We should remember
that according to the Concept of UES creation, regulations such as “forming
of a joint customs tariff, means of non-tariff regulation, application of
regulatory instruments in trading with third countries” are all applicable.

In other words, this means creation of a customs alliance. Once in the
customs alliance, Ukraine would lose its right to independently make
decisions while realizing its Euro integration projects, since the subject
of decision-making would be in this instance not Ukraine, but UES as a
regulatory organ where the Ukrainian voice would not count for more than
10 - 12%. President Yushchenko's declaration in this instance was more
than characteristic.

Yushchenko's other message concerned the gas transport consortium, which
is being pushed by Russia, where he insists on a third party - a European
party, which is not what Russia had in mind. The language of force is the
only language which is correctly understood in Moscow. And Russians did
understand it well. A sociological poll shows that the attitude of 74% of
Russians is “good or very good” towards Ukraine. Russian anti government
demonstrators are now appearing with Viktor Yushchenko flags. Russian
policy is in panic - they are talking about the creation of the “Axis of
Evil” of Ukraine, Georgia and Moldova. They are talking about the orange
threat. As a Russian journalist said - Yushchenko has made the first steps
which cause many officials wanting to shoot themselves. -30-
==========================================================
9. YOU SAY YOU WANT A REVOLUTION? UKRAINE GROUP
READY TO CHANGE EX-SOVIET WORLD

Agence France Presse (AFP), Kiev, Ukraine, Mon, January 31, 2005

KIEV -- Flush with victory of the "orange revolution," the leaders of
a Ukraine youth group have decided to export their know-how to other
former Soviet republics in a move that an ever-hardline Russia has noted
with concern.

"Think of it as a democratic spetsnaz," Vladislav Kaskiv, smiling
sheepishly, told AFP, using a Russian and Ukrainian term for an elite
special forces unit.

Kaskiv is one of the leaders of the Pora (It is time) youth group, one of
the key players in last November's "orange" protests that swept aside a
Moscow-friendly regime in favor of a pro-Western leader after a disputed
election.

It was the second year in a row, after Georgia's rose revolution, that such
a scenario occurred on former Soviet territory -- a fact that Moscow, which
has been trying to rebuild its influence there, has duly noted.

"The repeat of such scenarios is possible both inside the countries of the
CIS and beyond," Vladimir Rushailo, Russia's former national security
chief, warned last week.

Having received coaching from fellow youth activists from Serbia, Slovakia
and Georgia ahead of their revolution, Kaskiv and cohorts have decided to
set up a center to help support similar movements in the former Soviet
territory.

"We've talked with practically all leaders of democratic movements in the
region, who have agreed with the idea 120 percent," he said, adding that
the group has also received pledges of financing and was hoping to have the
center up and running by the end of the month.

Unlike Belgrade's Center for Non-violent Resistance set up by members of
the Otpor youth movement, the Kiev one would unite all of the countries
that have "been successful in democratic makeovers: Slovakia, Poland, the
Czech Republic, Serbia, Georgia and Ukraine... to provide support for
democratic movements in the region."

"Russia should be put first and foremost, then Belarus, Moldova,
Azerbaijan, Kazakhstan," Kaskiv said. The list of targets reads like the
Kremlin's worst nightmare and it has made a lot of leaders in former
Soviet republics nervous.

"There will be no rose, orange or banana revolutions," declared in early
January Belarus President Aleksander Lukashenko, a hardliner who is
among the top targets for democracy warriors in the former Soviet Union.

Leaders of Uzbekistan and Kyrgyzstan have likewise rejected the possibility
of "the Georgian or Ukrainian scenario" taking place on their territory.
But others aren't so sure.

"The events in Ukraine have inspired a level of politicization among the
Russian youth I haven't seen in years," Yegor Gaidar, a leading Russian
liberal and author of Moscow's market reforms, told the Financial Times
in December. "This is the first stone thrown at the edifice of Russia's
managed democracy," he said.

Youth groups like Ukraine's Pora have played a key role in the peaceful
protests that have swept aside hardline regimes in former Communist
satellite states, by rallying the most fearless and idealistic part of the
population.

During the protests in Kiev, the tent city set up in part by Pora in the
center of the capital was filled with democracy activists from Azerbaijan,
Armenia, Belarus, and others.

"Ukraine will triumph, and then we will," one Belarussian told AFP in the
heat of the protests. Ukraine's "victory will inspire us." That's just what
Kaskiv and company are hoping for.

"The main thing that these people need... is a psychological base, an
example that gives you a point of support and the confidence that change
is possible," Kaskiv said.

"For me personally the situation in Georgia had a huge psychological
impact. Because it confirmed that everything is possible." Kaskiv
dismissed suggestions that Ukraine's example would lead Russia
and others to clamp down on the groups and take them out.

"We had the same thing here. But as soon as they began to tighten the
screws, we attracted support from business, the intelligentsia,
bureaucrats... The situation just detonated the process." -30-
==========================================================
10. "TO THIS VIKTOR BELONGS THE SPOILS"
Can Ukraine's new President turn his country away from cronyism
and corruption? Or will reform be elusive?

By Brett Forrest, Fortune magazine Europe
Europe, Monday, February 7, 2005 Edition

The chocolate king of Ukraine has never had it so sweet. Petro Poroshenko
made the bulk of his $ 200 million fortune on candy--first importing cocoa
to Kiev in the mid-1990s, then starting Roshen, the country's largest
confectionery. Today the beefy 39-year-old businessman also owns a TV
station, has interests in a number of auto dealerships, and sits in the
Rada (the parliament) where he chairs the powerful budget committee.

As wealthy as Poroshenko is, he's even better off in the wake of December's
re-do election, in which reformer Viktor Yushchenko was elected President,
toppling the candidate of the ruling elite, Viktor Yanukovich. Poroshenko
threw his support--and that of his TV station, Channel 5--behind
Yushchenko, whom he has backed since 1999, when the latter was Prime
Minister. Now Poroshenko is on the shortlist to become Prime Minister
himself. And some 40 corruption-related charges filed against him during
the regime of former President Leonid Kuchma, he says, have either been
dropped or decided in his favor.

"I think people should notice the changes in Ukraine in a short period of
time, say half a year," Poroshenko says, spreading his plump hands across a
desk in his modest office in Kiev. "We should demonstrate that there is
strong responsibility for every single corruption case. I am not so
romantic as to believe the situation will change in one day. But I am 100%
sure that the situation was generated from the top."

By all indications, Ukraine is ready for change. Its economy has grown
steadily over the past four years. It has a substantial trade surplus,
based primarily on heavy industries such as steel and chemicals, which
account for 60% of exports. And last year GDP growth hit a record 12%,
the best rate in Europe. If the markets are any indication of support for
Yushchenko's platform, there's reason to be optimistic: Ukraine's stock
index rose 30% in the weeks after the December election.

But upending an entrenched system won't be easy. The country has subsisted
on corruption and the wink-wink for as long as anyone can remember. Roughly
half the economy is in the shadows. Having survived an apparent poisoning
during the campaign last fall, Yushchenko can only wonder what kind of
longevity he'll have if he carries out his program to turn the country away
from cronyism toward an open-market economy.

"There will obviously be significant changes in the political landscape, a
move away from the Kuchma way of doing things," says Hartmut Jacob, who
runs the Ukraine operations of Renaissance Capital, Russia's largest
independent investment bank. "The question is, How will it be different,
and how big will the change be?"

As Prime Minister and, earlier, chief of Ukraine's Central Bank,Yushchenko
had a strong record of reform. This, along with his campaign platform of
transparency and corruption-busting, provides the strongest clues as to
what he will do when he takes office. Although the diehards of the Orange
Revolution have left Kiev's Independence Square--now cold and stark, its
gilded monuments to independence the only uplifting sight--Yushchenko's top
lieutenants are busy outlining a broad plan of reform that includes
conducting open privatizations, revamping the tax code, encouraging a free
press, and purging the judicial system and security services of compromised
judges and officials.

But in the interests of assuaging Western fears over the sanctity of
private property (think Yukos), there has been tempered speech about
turning back the clock on previous privatizations. Only the most egregious
cases are likely to be overturned. The company currently in the bull's-eye
is Kryvorizhstal, Ukraine's biggest steel mill, which received offers of
nearly $ 1.2 billion in an auction last summer, but was sold to Kuchma's
son-in-law, Viktor Pinchuk, and Ukraine's wealthiest oligarch, Rynat
Akhmetov, for only $ 800 million.

There is well-founded apprehension in Kiev that real reform may prove
elusive. Isn't this election a simple swap of one oligarch (Akhmetov, at $
1 billion) for another, less wealthy one (Poroshenko, at $ 200 million)?
some are asking. The temptations of power remain constant, so why should
reform carry the day? But there are three wild cards: the newly discovered
political will of a historically fatalistic populace, which cannot easily
be brushed aside; the European Union, which Yushchenko is making plans for
Ukraine to join; and Western money, which has just now begun flowing in and
could easily flow back out, should the dirty dealing endure.

Amid the speculation, Yushchenko's coalition is experiencing its first
potential fracture. Yulia Tymoshenko, 45, energy magnate and former deputy
prime minister under Yushchenko, was one of Yushchenko's most vocal
supporters during the campaign. Along with her money and her claws, which
are out, Tymoshenko's most prominent characteristic is her hair, which is
gathered into braids that ring the back of her head. The plaits call to
mind the Ukrainian farmbelt, perhaps a ploy to distract voters from her
past as an inhabitant of the gray area.

Tymoshenko made a fortune in gas trading in the 1990s during the
administration of Prime Minister Pavlo Lazarenko, who now sits in a federal
prison in San Francisco, convicted last June of money laundering and
extortion. During Yushchenko's premiership, Tymoshenko deftly managed to
transform herself into a tool of the outraged public, leading an assault on
the energy sector and its overnight billionaires. Kuchma's government
accused her of providing kickbacks to Lazarenko and threw her in jail for a
month in 2001 in hopes of taming her. The charges were later dropped.

Incarceration had the opposite effect, turning Tymoshenko into a hardliner.
During the Orange Revolution, she climbed atop a bus and exhorted crowds
with demands for the government's resignation. She called Kuchma a
"red-haired cockroach" and provided glamorous contrast to Yushchenko's
scarred face, standing alongside the candidate on the stage in Independence
Square.

She claims to have a letter in which Yushchenko pledged to name her Prime
Minister. But the new President may have ample reason to shy away from
her--his decision is expected in early February, soon after he takes
office--in favor of someone more moderate, such as Poroshenko. Tymoshenko
was a terrier when Yushchenko needed her to be, but there is a feeling in
Kiev that with the country still dangerously divided, the time for growling
has passed.

Tymoshenko has hardly cooled. Sitting in an office in Kiev after the
election, she talks about the need to "divide business and power" and the
importance of nurturing a new opposition. "One cannot always believe in
clear and honest government," she says. "That's not the way it works. We
need to introduce a new system under the constitution that would ensure
adequate control over the executive power."

That may not be a message Yushchenko wants to hear right now. And it
may prove increasingly difficult to appease the factions that brought him to
the presidency while still managing to keep Ukraine in one piece. The hunt
for stability is on--how to build it, how to keep it--in a country shot
through with venality.

"People, at least after this election, will now think twice about doing
something stupid," says Dmytro Tarabakin, director of Dragon Capital,
Ukraine's biggest brokerage by volume. "I just hope that people don't put
on orange scarves and use them as cover and kiss up to the new authorities
while being ready to stab them in the back." ?

"I am not so romantic as to believe the situation will change in one day."
==========================================================
11. SENATORS MCCAIN AND CLINTON NOMINATE PRESIDENTS
OF GEORGIA AND UKRAINE FOR NOBEL PEACE PRIZE

United States Senate, Washington, D.C., Wednesday, Jan 26, 2005

WASHINGTON, DC - Yesterday Senators John McCain (AZ) and
Hillary Rodham Clinton (NY) sent a letter of nomination to the
Norwegian Nobel Institute regarding Georgian President Mikhail
Saakashvili and Ukrainian President Viktor Yushchenko. They
nominated the two Presidents for their historic roles in the freedom
movements in Georgia and Ukraine.

In their letter Senators Clinton and McCain said, "In leading freedom
movements in their respective countries, [these two presidents] have
won popular support for the universal values of democracy, individual
liberty, and civil rights." They added, "We believe that the actions
of Presidents Saakashvili and Yushchenko testify to the power of
peace and human rights in their battle against oppression.
Recognizing these men with the Peace Prize would honor not only their
historic roles in Georgia and Ukraine, but would also offer hope and
inspiration to those seeking freedom in lands still denied it."

Please see attached copy of the letter sent to the Norwegian Nobel
Institute: January 24, 2005, Norwegian Nobel Institute
Drammensveien 19, NO-0255, Oslo, Norway

Dear Nominating Committee:

We are writing to nominate for the Nobel Peace Prize two men who have
exhibited an extraordinary commitment to peace: Georgian President
Mikhail Saakashvili and Ukrainian President Viktor Yushchenko. In
leading freedom movements in their respective countries, they have
won popular support for the universal values of democracy, individual
liberty, and civil rights. Because of their efforts, the people of
Georgia and Ukraine are now constructing new societies based on the
rule of law. At the same time, Ukrainians and Georgians are resolving
peacefully the complex ethnic and social issues that have in the past
threatened to divide their nations.

As a key leader in the "Rose Revolution," President Saakashvili
guided Georgia to a peaceful change of power that ended a decade of
endemic, government-supported corruption. His rejection of violence
was critical to the success of Georgia's movement. In early 2004,
President Saakashvili negotiated a peaceful resolution to the ethnic
conflict in Ajaria, and his push for wider political freedoms has
positioned Georgia as a stabilizing force in the Caucasus region.

During the presidential campaign in Ukraine, Mr. Yushchenko's calls
for full democracy and an end to corruption met obstacles from the
government, including the denial of media access, official
discrimination, and an alleged poisoning attempt. When Ukraine's
Central Electoral Commission declared Prime Minister Victor
Yanukovich the winner in the November run-off election -- after
massive and coordinated vote fraud -- Mr. Yushchenko urged peaceful
resistance. By channeling the people's aspirations for freedom and
democracy into non-violent protest, Viktor Yuschenko sparked
the "Orange Revolution," and now stands as his country's president.

Both presidents have displayed a commitment to peace and the rule of
law in removing authoritarian governments. Their leadership has
allowed millions in Georgia and Ukraine to reclaim their democratic
system and to build a society based on law and individual rights.

We believe that the actions of Presidents Saakashvili and Yushchenko
testify to the power of peace and human rights in their battle
against oppression. Recognizing these men with the Peace Prize would
honor not only their historic roles in Georgia and Ukraine, but would
also offer hope and inspiration to those seeking freedom in lands
still denied it.

Sincerely, John McCain, Hillary Rodman Clinton
----------------------------------------------------------------------------
LINK: http://clinton.senate.gov/~clinton/news/2005/2005126715.html
==========================================================
12. "HOW BUSH COULD FIGHT TYRANNY"
[That strategy has a proven record: It just worked in Ukraine]

By Jackson Diehl, Columnist, The Washington Post
Washington, D.C., Monday, January 31, 2005; Page A21

President Bush now says his inaugural address outline of a global U.S.
campaign against tyranny was merely an ideal, not a plan for policy. Fair
enough; no one really believes an overnight reversal in American relations
with Russia or China makes sense. But last week's backtracking raised a
depressing possibility: that Bush will make no significant alterations in
foreign relations after promising, in an address fastidiously styled for
history books, "the greatest achievements in the history of freedom." If so,
his second term will simply compound the damage of his first to U.S. global
prestige and influence; both dictators and dissidents will conclude that
America's proclamations can be dismissed as hollow and hypocritical. Bush
himself will be remembered as one of the greatest blowhards in U.S. history.

In fact the president has the means to make good on his rhetoric without
launching new wars or rupturing relations with key allies. But he can't do
it merely by bashing the weak pariah states recently ticked off by Secretary
of State Condoleezza Rice, such as Belarus and Burma. To leave a real mark,
Bush has to tackle the crucial conflict he avoided in his first term,
between the goal of democracy on the one hand, and U.S. security and
economic interests. He should do it in the places where the choices are
hardest: Pakistan, Egypt and, yes, Russia. In each case, he has the
opportunity to demonstrably tip the balance of U.S. influence toward
promoting his ideal.

Start with Pakistan. Administration officials describe the military regime
of Pervez Musharraf as if it were a precious piece of china: If not coddled,
they warn, it may shatter, opening the way for Taliban-style Islamic
extremists to seize control over a nuclear arsenal. That's exactly what the
general wants Washington to believe, and it's why he has spent his five
years in office promoting Pakistan's Taliban while repressing the secular
and pro-Western democratic political parties displaced by his coup.

Bush need not rupture relations with Musharraf, or choke off the billions in
U.S. aid he has been promised. He needs only to order his administration and
allied non-government groups to develop a program to help the Pakistan
People's Party and Muslim League, along with other secular civil society
groups, rebuild and reform themselves, much as U.S. agencies are promoting
the reform and modernization of Palestinian institutions. Musharraf,
meanwhile, can be pressed to conduct a political dialogue with those
parties, rather than the Muslim extremists he has dealt with until now, and
to commit himself to allowing them full and fair participation in the next
parliamentary elections, in two years. The general might resist a little,
but for $600 million a year and a U.S. security blanket, it's not too much
to ask.

Next comes Egypt, where the administration continues to prop up 76-year-old
president Hosni Mubarak with $1.8 billion in annual aid but has made no
visible effort to dissuade him from rigging another referendum to grant
himself five more years in power. Like Musharraf, Mubarak frightens
Washington with nightmare scenarios: A free election, he whispers, would
only lead to a fundamentalist Muslim regime in Cairo. More credible
Egyptians, like the dissident (and would-be presidential candidate) Saad
Eddin Ibrahim, hotly dispute that theory.

But never mind: Bush need not explicitly aim at forcing democratic elections
in Egypt this year. He need only inform Mubarak that he no longer will be
granted a veto over the tens of millions of dollars in U.S. aid earmarked
for democracy promotion. The money can then be used to train and support the
opposition parties and independent human rights groups that have recently
sprung up in Egypt. If Mubarak tries to stop funding for the democrats,
there should be none for him and his army. As in Pakistan, the United States
would present its favored tyrant with a new formula: We will continue to
support you only if we can also help build the democratic movements that
will one day succeed you.

That strategy has a proven record: It just worked in Ukraine, where a paltry
$58 million in U.S. spending on democratic political parties and allied
groups, married to a cordial but arms-length relationship with a thuggish
president, helped bring about the peaceful transformation of his regime into
a genuine democracy. It also offers an excellent way to adjust American
relations with Ukraine's neighbor, Russia, and Bush's favorite autocrat,
Vladimir Putin. Bush suggested at his news conference last week that he
might reason with Putin in private about the virtues of democracy. But the
private wheedling of thugs rarely gets results. Bush should instead save his
breath and do his necessary business with Putin -- and then order up more
U.S. aid and training for Russia's beleaguered democrats. U.S. aid for
democracy in Russia this year is $43 million, an increase over last year but
still too little to make a real difference.

Of course, Putin might be irritated, but he can no more afford a rupture
with the United States than Mubarak or Musharraf. The greater risk is that
Bush will pass the next year without causing some discomfort for the tyrants
of Moscow, Cairo and Islamabad -- and that the rhetoric he meant to be
inspirational will instead be turned against him. -30-
==========================================================
13. UKRAINE INTELLECTUALS STAND OUT IN PROTECTION
OF RUSSIAN LANGUAGE

ITAR-TASS, Moscow, Russia, Mon, January 31, 2005

DONETSK - Representatives of Ukrainian intellectuals stood out in
“protection of honour and dignity of the Russian language”, says an open
letter, signed by over 70 scholars of universities in Donetsk, Kiev, Odessa,
Simferopol and Kharkov as well as actors, political scientists and
reporters.

In the opinion of the document’s authors, “discrimination of the Russian
language” during all the years of Ukraine’s independence puts a serious
barrier for professional and spiritual self-realization of the considerable
part of population, for which this language is native”.

The letter says that the anxiety of intellectuals is caused by the position
of the new president’s milieu who strove for repealing, back in 2000, the
ratification by the legislature of the European Charter of regional
languages and languages of minorities, which guaranteed state protection to
the Russian and another 12 languages wide-spread in Ukraine.

Instead, members of the Yushchenko cabinet compiled a draft decision of the
government, providing for “de-Russification of various spheres of
activities”, including “a transfer of higher educational schools of all
forms of ownership to the Ukrainian language, complete Ukrainisation of TV
and radio broadcasting, tough regulation of guest performances of foreign
(above all Russian) entertainers and high taxes on trade in foreign (above
all – Russian) books”.

The letter stresses that “the dramatic presidential election campaign is
over and ‘the orange revolution’ has subsided. Viktor Yushchenko was elected
Ukrainian president, but the problem, agitating us had not disappeared. We
have no confidence, as before, in readiness of the new president and his
team to resolve constructively this question.”

“The problem of the Russian language in Ukraine oversteps substantially the
limits of protection of the rights of national minorities,» the letter’s
authors claimed. “We regard equality of possibilities of users of the
Russian and Ukrainian languages in Ukraine as one of necessary conditions
for establishment of Ukraine as a civilized democratic and European state.

“We see our duty in defending consistently and firmly honour and dignity of
the Russian language in Ukraine as well as in defending this language by
law, without infringing upon the rights of Ukrainian-language population,
but disregarding some or other political situation”. -30-
==========================================================
14. "UKRAINE'S LESSON FOR PUTIN"
Does Russia's president face the same kind of upheaval?

By Jim Hoagland, Columnist, The Washington Post
Washington, D.C., Thursday, January 27, 2005; Page A19

A revolt of "the millionaires against the billionaires" helped fracture
Ukraine's corrupt power structure and lift Viktor Yushchenko to the
presidency there. A similar upheaval may be bubbling next door against
Russian President Vladimir Putin.

That is the well-buttressed argument put forth by Anders Aslund, a Swedish
economist and former diplomat whose past readings of failure in the Kremlin
and its political consequences have earned my attention and respect.

I first ran across Aslund in Moscow in the 1980s at the height of
Gorbymania, as the West cheered Mikhail Gorbachev for pushing perestroika
as a means of reforming and saving the Soviet Union. Aslund's predictions
that Gorbachev would be unable to manage the forces he unleashed and
would be destroyed by them were seen at first as provocative, then profound
-- and ultimately prophetic.

Being right once is no sign of being right always, or even often. There is a
human tendency to analogize from the past and to miss what has changed. The
rough-and-tumble years of Russia's robber-baron politics and capitalism
under Boris Yeltsin's government, which Aslund initially advised, must have
changed something.

But in conversation the other day and in several recent articles he has
written, Aslund persuasively illuminated domestic conflicts that he sees
leading toward "an unraveling of the Putin regime." Parallels exist both
with Gorbachev's failure and with the political success of the reformer
Yushchenko, with whom Aslund worked at Ukraine's Central Bank.

Corruption and mismanagement have begun to sap the strong public support
that Putin commanded in his first term, Aslund reports. And the campaign to
line the pockets of Putin's former KGB associates by jailing, intimidating
and/or dispossessing the "oligarchs" who assembled fortunes under Yeltsin
has turned much of the business community against the Russian president --
as corruption did for Ukraine's former rulers.

Ukraine's "millionaires" -- the big, but not the biggest, businesspeople --
helped create and finance a political opposition that they hope will
implement the rule of law and let them keep most of what they have already
made, suggests Aslund, who directs the Carnegie Endowment's Russian and
Central Asian projects from Washington.

"Putin could have won a democratic election last year, but he chose not to,"
says Aslund. "He used the power of the state to crush his opponents. He
named a prime minister, Mikhail Fradkov, whose only virtue is that he will
make no decision on his own. From a base of support that rested on public
opinion, the business community and the security services, Putin is
isolating himself to rely only on the security service."

Russia's finances still benefit from high world energy prices. But Putin's
cronies "sit on the cash flow and take a slice for themselves. They do not
do what the oligarchs did, which was to reinvest in retail and other
sectors," says Aslund, who estimates that Russia lost $8 billion in capital
flight in 2004 after several years of net inflows.

"The problem for Putin is that there is nothing there to hold him if he
falls. That happened with Gorbachev, too," the Swede continues. But
Aslund demurs when I ask him what will follow:

"I am better at decline than rise. What strikes me, though, is that former
prime minister Mikhail Kasyanov is putting forward real alternatives in
public. He is someone to watch."

So is George W. Bush, who will meet with Putin in Slovakia on Feb. 24. That
will be the moment to shift gears in the U.S.-Russia relationship, which has
been dominated since Sept. 11, 2001, by Putin's adroit response to American
needs in the war against al Qaeda and other Salafi extremists.

President Bush is now in the stronger position of the two leaders. In
Bratislava, he can ask for greater Russian cooperation in
counterproliferation, particularly on Iran. Missile defense is another
promising area of coordination in what could become a broad security zone
linking Russia, Europe and the United States. And Bush cannot afford to
neglect Putin's assault on democracy at home.

Bush will not need or want to flaunt demands in public. But in private, he
will need and want to take into account Putin's failures of the past year
and the Russian's still-falling stock. Bush needs in short to be more
skeptical about a leader to whom he has given the benefit of the doubt for
too long.

He could even offer Putin a useful Chinese adage: It is time to eat your
bitterness rather than justify, nurse and pursue it. Consume it, before it
consumes you. -30- [The Action Ukraine Report Monitoring Service]
----------------------------------------------------------------------------
E-mail: jimhoagland@washpost.com
http://www.washingtonpost.com/wp-dyn/articles/A40072-2005Jan26.html
==========================================================
15. "EAST UKRAINE ADAPTS AFTER ELECTIONS"

By Helen Fawkes, BBC News, Donetsk
BBC NEWS, UK, Monday, January 31, 2005

DONETSK - Eastern Ukraine was a stronghold of support for defeated
presidential candidate Viktor Yanukovych. Helen Fawkes visited Donetsk to
see how people were coping. Smoke billows from the huge factory chimneys
which overshadow the outskirts of Donetsk. The air is so thick with
pollution that you can feel it in your throat.

More than 12,000 people are employed at the metal plant alone. This is the
industrial heart of Ukraine. Metal workers Alexander Kirilshin and Mikhail
Borodin proudly voted for Viktor Yanukovych. "The mood isn't very happy,"
Alexander admits. "Nothing good will happen over the next few years as the
new government won't be able to achieve anything," said Mikhail.

During the political crisis that followed Ukraine's disputed presidential
election in November there were fears that the country might split. Mr
Yanukovych, who was prime minister at the time, was initially declared the
winner. Hundreds of thousands of opposition supporters took to the streets
of Kiev and western Ukraine claiming the ballot was rigged. In the
Russian-speaking east of the country, there were calls for separatism and
industrial strikes. The result was annulled due to election fraud.
POLITICAL LULL
Viktor Yushchenko won the re-run poll in December. Mr Yanukovych got
40% of the vote. In Donetsk, he polled 93%. Ukraine's new president was
inauguration last weekend. But many of the workers here told me that they
won't be calling for any action. "We'll wait and see what he does as
president. One person can hardly change anything in our country," said
Mikhail.

Yanukovych supporters set up a small tent city in Donetsk although it only
lasted a few days before being taken down last week. "For the moment there
probably will not be any more protests in Donetsk. When we had our own
demonstrations during the elections they always started after 6pm when
people had finished their work," says analyst Olga Parfinenko. "But if
people lose what they've got now - their high wages and pensions - then they
will start to protest."

The city's main square is still named after Lenin almost 14 years on from
independence. On the day of the inauguration this is where few hundred
people burnt an effigy of President Yushchenko. As I start to do interviews
on Lenin Square I'm surrounded by 20 or 30 people shouting and arguing.
They're angry about the outcome of the repeat election.

Sergey Buntovsky from a pro-Russian political party explains why.
"Yushchenko got his power illegally," Sergey finally manages to tell me.
"He's not the legitimate leader of the country. His approach will lead to
the separatism. It's already caused tension between Ukrainians."
FEAR OF REPRISALS
In the newsroom of Ukraina TV, campaign materials promoting Mr
Yanukovych can still be seen. This station which is based in Donetsk
backed the pro-Russian candidate during the election. But there's concern
that there could be reprisals.

Ukraina TV has now stopped broadcasting its main news in Russian. Fearful it
may be taken off the air, it now uses Ukrainian instead. "We've already been
threatened with a criminal investigation. We've been told our activities are
anti-Ukrainian," says Genadiy Kandaurov, the President of Ukraina TV.

Here in the east of Ukraine, people are not happy with the new president.
They are worried that he will follow a nationalist agenda and ignore their
pro-Russian interests. But for the time being. it is unlikely that the
country will break up or that there will be any mass protests. -30-
----------------------------------------------------------------------------
LINK: http://news.bbc.co.uk/2/hi/europe/4222033.stm
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SIGMABLEYZER MONTHLY MACROECONOMIC REPORTS
http://www.sigmableyzer.com/index.php?pid=532

1. UKRAINE -- Macroeconomic Situation - December 2004
http://www.sigmableyzer.com/files/Ukraine_Ec_Situation_12_04fin.pdf

2. ROMANIA-- Macroeconomic Situation - December 2004
http://www.sigmableyzer.com/files/ROM_Ec_Situation_12_04.pdf

3. BULGARIA-- Macroeconomic Situation - December 2004
http://www.sigmableyzer.com/files/BLG_Ec_Situation_12_04.pdf
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