"THE ACTION UKRAINE REPORT- AUR"
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"
"THE ACTION UKRAINE REPORT- AUR" Number 467
E. Morgan Williams, Publisher and Editor
morganw@patriot.net, ArtUkraine.com@starpower.net
Washington, D.C. and Kyiv, Ukraine, FRIDAY, April 22, 2005
NOTE: Do not miss the latest news about Ukraine and the new
Yushchenko led government. Please assist us in expanding the
distribution list for The Action Ukraine Report. Please send us
the names and e-mail addresses of those you think would like to
receive this free publication. [EDITOR]
------INDEX OF ARTICLES------
"Major International News Headlines and Articles"
1. UKRAINE'S NATIONAL BANK STRENGTHENS CURRENCY
By Mara D. Bellaby, Associated Press (AP)
Kiev, Ukraine, Thursday, April 21, 2005
2. GOVERNMENT VS NATIONAL BANK AS INFLATION ACCELERATES
Andrey Voltornist, Ukraine Analyst
IntelliNews - Ukraine This Week
Kyiv, Ukraine, Monday, April 18, 2005
3. ECONOMIC ANALYSTS COMMENT ON THE FUTURE IN UKRAINE
By Aleksandra Nenadovic, FirsTnews Staff Writer
FirsTnews, Kyiv, Ukraine, Wed, April 20, 2005
4. FOREIGN INVESTORS LEAVE UKRAINE
ForUM, Ukraine's Internet Newspaper
Kyiv, Ukraine, Thursday, April 21, 2005
5. WORLD BANK TO ALLOCATE USD 300 MILLION TO UKRAINE
Ukrainian News Agency, Kyiv, Ukraine, Thu, April 21, 2005
6. UKRAINE: TNK-BP AGREES TO CUT GASOLINE PRICES
Associated Press, Kiev, Ukraine, April 21, 2005
7. UKRAINE'S RICHEST MAN SKIPS TOWN
Ukrainian Journal, Kyiv, Ukraine, Wed, April 20, 2005
8. UKRAINIAN STEEL MAGNATE SAID TRYING TO SELL ASSETS
Glavred, Kiev, Ukraine, in Russian 0000 gmt 20 Apr
BBC Monitoring Service, UK, in English, Thu, Apr 21, 2005
9. UKRAINE: PRESIDENT'S OIL AND GAS SCHEMES. PART TWO. GAS"
By Oleh Havrysh, Ukrayinska Pravda web site, Kiev, in Ukrainian 19 Apr 05
BBC Monitoring Service, UK, in English, Thur, Apr 21, 2005
10. PRESIDENT YUSHCHENKO RESTORES NATO MEMBERSHIP INTO
PROVISIONS OF UKRAINIAN MILITARY DOCTRINE
Ukrainian News Agency, Kyiv, Ukraine, Wed, April 20, 2005
11. NATO ACTS TO OPEN DOOR FOR UKRAINE
By Steven R. Weisman, The New York Times
New York, New York, Friday, April 22, 2005
12. ENHANCING NATO-UKRAINE COOPERATION: SHORT-TERM ACTIONS
NATO Headquarters, Brussels, Belgium, Thu, April 21, 2005
13. ROMANIA, UKRAINE PLEDGE TO RESOLVE TERRITORIAL DISPUTES
Associated Press (AP), Bucharest, Romania, Thu, April 21, 2005
14. UKRAINE'S INTERNATIONAL RELATIONS NOT ANTI-RUSSIAN
Associated Press (AP), Moscow, Russia, Thu, April 21, 2005
15. RUSSIA SOFTENS TOWARD NEIGHBORS
Secretary of State Rice met with Putin Wednesday while
NATO may invite Ukraine into the Western alliance.
By Fred Weir, Correspondent of The Christian Science Monitor
Christian Science Monitor, Boston, MA, Thu, April 21, 2005
16. GONGADZE'S WIDOW SPEAKS ABOUT INFORMATION FROM
MINISTER OF INTERIOR ON COMPLICITY OF 40 PEOPLE
IN KILLING HER HUSBAND
Ukrainian News Agency, Kyiv, Ukraine, Thursday, April 21, 2005
17. MINISTER ZVARYCH, COULD BE ANOTHER FAKE PROFESSOR?
By Luba Shara, Ukrayinska Pravda, Washington, D.C., Mon, Apr 18, 2005
18. ZVARYCH'S EDUCATION
EDITORIAL: Kyiv Post, Kyiv, Ukraine, Wed, Apr 20 2005
19. UKRAINE JOINS THE WORLD IN CELEBRATING EARTH DAY 2005
By Oksana Bondarchuk, FirsTnews Staff Writer
FirsTnews, Kyiv, Ukraine, Thu, April 21, 2005
=============================================================
1. UKRAINE'S NATIONAL BANK STRENGTHENS CURRENCY
By Mara D. Bellaby, Associated Press (AP)
Kiev, Ukraine, Thursday, April 21, 2005
KIEV - The central bank raised the value the national currency against the
U.S. dollar in hopes of curbing inflation Thursday, a move that Ukrainians
say will wipe out chunks of their savings.
The 2.7 percent revaluation of the hryvna set the exchange rate against the
dollar at 5.05 hryvna, as compared to 5.25 hryvna on Wednesday. Ukrainians,
who mostly keep their money in dollar savings, called the move outright
theft. "Our money is being stolen," complained secretary Lena Levina, 29.
President Viktor Yushchenko's government had warned that it planned to
strengthen the hryvna in an effort to fight double-digit inflation.
The process of revaluation was to continue, with the National Bank
announcing the rate would drop further Friday to 5.02 hryvna to the dollar.
Prime Minister Yulia Tymoshenko, who lobbied for strengthening the hryvna,
insisted Thursday that Ukraine's economy would benefit in the long run.
"Artificially maintaining a low course for the hryvna is absolutely
illogical because its value must be set by the market," she said, adding
that imports would become cheaper and inflation would drop as less
money is printed.
But the National Bank's move, bringing the exchange rate to its lowest
level since 1999, caused grumbling among Ukrainians, who have already
had to cope with rising meat and gasoline prices since the new govern-
ment came to power.
Ukrainian lawmakers sharply denounced the bank's move in parliament,
summoning the head of the National Bank to Friday's session to explain.
Signs of dissent also emerged in the Cabinet.
Economic Minister Serhiy Teryokhin warned that the move could lead to
panic, adding "it seems to me that the National Bank doesn't understand
itself what it is doing," according to the Interfax-Ukraine news agency.
Paul Bermingham, the World Bank's director for Ukraine, Belarus and
Moldova, insisted "the hryvna is strong and stable." "It's not very wise to
look at the currency exchange rate on one-day basis. You'll have to look
at it from bigger prospective," he told reporters in Kiev. "It is desirable
for Ukrainian economy to have a more flexible exchange rate."
But Mykola Rudkovsky, a lawmaker from the Socialist Party which joined
the coalition that helped usher Yushchenko into power, warned that
strengthening the hryvna would result in losses for exporters. That could
cripple the country, which counts on exports for more than 60 percent of
its gross domestic product.
Tymoshenko insisted Ukraine's exporters could still compete on the
international market. Ukraine exports include ferrous and nonferrous
metals, fuel and petroleum products, chemicals, machinery and
transport equipment. -30- [Action Ukraine Report Monitoring]
=============================================================
2. GOVERNMENT VS NATIONAL BANK AS INFLATION ACCELERATES
Andrey Voltornist, Ukraine Analyst
IntelliNews - Ukraine This Week
Kyiv, Ukraine, Monday, April 18, 2005
KYIV - State Statistics Committee reports about striking CPI inflation in
Q1Recently, State Statistics Committee published data on CPI inflation,
which accelerated 0.6pps m/m to 1.6% in March. The ytd inflation made up
4.4%, which is 2-fold higher than a year ago. This is the 3rd highest rate
observed in Ukraine since national currency hryvnya was introduced and the
maximum level for the last 5 years. Worth noting, inflation in H1/04 was
equal to 4.4% ytd as well.
The highest price growth in Q1/05 was observed in food products, whose
weight in CPI makes up 60%. Thus, in March food prices increased 2.2%
m/m, non-food prices rose 0.2%, while services - 0.5%. Worth noting,
EconMin expected that consumer prices will grow only 1% in March.
Since the beginning of the year food prices increased 5.9%, non-food
prices - 0.6%, and services - 2% as of Apr 1.
Bloated government spending ahead of 2004 vote plays up in Q1According to
Valerii Lyvytskyi, head of advisor group of NBU Council, one of the reasons
of high inflation in Q1 was inertia of price hikes in 2004. As it is known,
significant price increase was observed in Q4/04 (whopping 6.2%). Social
policy was very biased before the presidential elections: wage arrears were
paid, pension benefits were increased. Thus, as we predicted, the long and
tense elections negatively impacted the economic situation in Q1/05. We also
expect the effect to remain in Q2/05. The price growth in oil products and
higher government spending on social programs affect CPI in Jan-Mar.
Another thing is that the growth rate of nominal income (almost 40%) exceeds
3-fold the relevant index in the last year, while productivity of labor
stays almost unchanged. One of the most competent Ukrainian economists,
former presidential adviser Anatolyi Galchynskyi believes this is the
susceptibilities of economy policy of both the old and new governments.
According to him, optimal income growth rate to GDP growth rate ratio is
1.2-1.5. The current situation is not like this. GDP growth was just 5.2%
y/y in Q1.
Inflation forecasts for 2005 vary from 8.1% to 11.4% y/yIn 2004 inflation
in Ukraine reached a significant 12.3%. In March, PM Yulia Tymoshenko
announced that government's target is 9% eop for full-2005. But after the
amendments to the state budget were approved by Rada, government
revised its y/y target to 9.8%. EconMin Sergei Teriokhin said the ministry
expects inflation at 11.2-11.4%. He also noted that inflation may be
decreased if government and NBU agree on monetary policy and UAH
exchange rate becomes is allowed freer float. Meanwhile, IMF worsened
its inflation forecast from 8.1% to 9.5% for the year.
Monetary aggregates' growth accelerates further in MarchIn one of his
interviews, FinMin Viktor Pynzenyk mentioned that the reason of rising
prices is not wage increase but hryvnya emissions. Money supply surged
notably in Q1/05. According to NBU, in March money supply, which includes
the amount of cash in circulation and the amount of cash held in current
accounts and time deposits with commercial banks, skyrocketed UAH 9.181
bn or 7% m/m, making up UAH 140.123bn (USD 26.5bn) as of Apr 1.
Monetary base, which includes the amount of cash held in commercial
banks' accounts with NBU and the amount of cash in circulation, rose by
UAH 5.356bn or 9.7% m/m from UAH 54.938bn to UAH 60.294bn. Since
year-start, money supply already rose 12.1% ytd (UAH 6.531bn). The
amount of cash in circulation rose by UAH 1.284bn or 3.1% m/m in March,
amounting to UAH 43.063bn. Since the beginning of the year, cash in
circulation rose by 1.7% ytd or UAH 0.72bn. Worth reminding, money
supply rose by 32.4% y/y to UAH 125.8bn in 2004, and monetary base
rose by 34.1% to UAH 53.762bn.
So, as it can be observed, robust money aggregates' growth continues
this year. As a special note, the reason why ytd cash in circulation growth
significantly lags money supply is that there is not enough investment
activity. Acute political risks (including looming re-privatization) reduce
investment, while rising inflation undermines consumer demand.
Trying to contain the consequences of foreign currency buy-out NBU
stepped up hryvnya appreciation. Thus, since the beginning of the year
UAH strengthened almost 5 kopyek in nominal terms from 5.3054
UAH/USD to 5.256 UAH/USD as of Apr 15. Lytvytskyi noted that NBU
will continue strengthening national currency, however, this will be done
moderately.
Liberalization of the exchange rate will be conservative; there will never
be artificial and rapid revaluation, which is a danger for the local
financial system, he underlined.
NBU: inflation can be kept within 9% in 2005 On Apr 15, Lyvytskyi
announced that NBU considers inflation can be kept within 9% this year.
According to him, it is low goods supply, and not increase of social
payments, that drives up inflation. He proposed to raise goods supply
and minimize excess liquidity. Among factors influencing inflation,
Lyvytskyi named the rise of railroad transportation tariffs, inflationary
expectations, and claims of some politicians about a possible inflation
spurt. He stressed that government's administrative actions in economic
regulation are acceptable only in short-term.
Negative inflation expectations and government statements create price
pressure. Inflation expectations are very negative today, which, in our
view, affects the situation. We must outline that such a mood has both
consumers and producers. It is empirical evidence that when expectations
become widespread, that feared can become reality. Another thing we are
negative about is long process of forming new state institutions. This
already resulted in introducing amendments to the state budget for 2005
not in February, but in April.
Besides, minding different forecasts of inflations for 2005, it seems
government does not have a united program of economic development of
the country. That is why, by the way, EconMin addresses NBU to negotiate
monetary policy (which would be suitable for government?). Authorities
should not forget that they heat up inflation expectations by their careless
claims. Besides, NBU is an independent financial institute responsible for
monetary policy. It must not do just what government wants it to do, but to
act according to economic rationale.
Indicative were head of NBU Volodymyr Stelmakh's words that Teriokhin
provokes inflation himself and wants to blame NBU for probable double-digit
price growth by year-end. We mostly support NBU. Boosting goods supply
is more important, while driving up money supply spurs inflation. But with
government reluctant to go back on previous government's promises (for
image-keeping reasons), money supply growth would indeed keep fuelling
inflation. -30- [The Action Ukraine Report Monitoring Service]
=============================================================
3. ECONOMIC ANALYSTS COMMENT ON THE FUTURE IN UKRAINE
Comments by investors, economic analysts and government advisors
suggest that the coming year might be a very trying time for Ukraine, and
the success of the Yushchenko presidency depends upon strong leadership,
good decision making, increased foreign economic support - and a fair
amount of just plain good luck.
By Aleksandra Nenadovic, FirsTnews Staff Writer
FirsTnews, Kyiv, Ukraine, Wed, April 20, 2005
KYIV - Ukraine displayed a combination of economic achievements
over the last few years and prospects for the future that were only improved
by last year's wave of protests that brought Viktor Yushchenko to power.
However, many believe that these improvements take time and that many
might fail because of the government's restrictive economic and tax policies
imposed by the Yulia Tymoshenko government.
Analysts and many businessmen argue over whether the prospects for
improvements and better ties with the West can be improved or the
government's policies could scare away investors.
Michael Bleyzer, who heads the SigmaBleyzer Company that manages private
equity investment funds in former Soviet Union and Eastern Europe, believes
that high average rate of economic growth of about 9 percent, low averages
of inflation and fiscal deficit speak in favor of Ukraine's prospects.
At a recent presentation of the Ukraine-US Business Networking Series in
New York, Bleyzer said that Ukraine's high account surplus of more that 8
percent of its gross national product, "stable foreign exchange rate and
high international reserves of some US$9.5 billion," can be traced back to
Yushchenko's reforms implemented during his term as prime minister that
started in 1999.
Yushchenko then tightened financial discipline, restricted barter or
non-monetary transactions in the energy sector, accelerated privatization
and liberalized monetary and exchange rate policy. He was also credited
with progressing with land privatization, initiating administrative reform
and improving the banking system.
However, Bleyzer warned that the new government under Tymoshenko will
have to fight several problems that emerged or might appear this year
including "inflationary pressure triggered by 2004's fiscal loosening due to
increase in pensions and salaries" pushed by former Viktor Yanukovych's
government weeks ahead of the hotly disputed presidential vote.
"Ukraine also faces problems related with lack of exchange rate flexibility
and tremors on foreign markets since country's economy is to a large
degree dependent on exports," Bleyzer's presentation said.
Bleyzer said however, that should Yushchenko and his allies fail to
implement tight fiscal and monetary policies, Ukraine might face "double
digit inflation which, in return, would discourage investments." The future
stability of the financial sector and its ability to support to further
economic growth will depend on substantial improvements in Ukraine's
financial infrastructure, he said.
Last month, Ukraine's parliament approved the amended budget for 2005
that envisions an end to most tax privileges and exemptions. It also i
introduced a moratorium on the creation of new free economic zones, and
increased excise taxes.
Andriy Dmytrenko, an analyst with the Kyiv-based Dragon capital investment
group believes that this is a political move taken in the light of upcoming
parliamentary elections. "There are many large companies that were
registered as small and medium businesses, so they were paying a low
fixed rate."
Tymoshenko's government has also virtually eliminated intimidation of the
private sector by government institutions and launched a number of
measures that targeted corruption and nepotism that characterized former
President Leonid Kuchma's administration.
Yushchenko and his allies have also pledged to introduce a friendlier
approach by government to small and medium-sized businesses, reduce
the size of the shadow economy and promised a "fair government and
legal system."
Many local businesspeople claim that the initially good measures only
triggered problems with bureaucrats who stalled virtually all business
transactions by implementing the government's orders to the letter and even
introducing their own rules. "Now we have to bribe them twice as much," said
a businesswoman from Kyiv, speaking on condition of anonymity. She said
that hastily introduced new rules almost stalled all export-import
operations.
Meanwhile in a statement viewed as a reconciliatory move aimed at attracting
backing of small and medium businesses, Finance Minister Viktor Pynzenyk
said he expects that Ukrainian banks will increase loans to domestic
producers.
Soon after he took over from Kuchma in January, Yushchenko sought to boost
Ukraine's ties with the west and visited NATO summit in Brussels and the
United States where he met President George W. Bush and key American
businesspeople.
In his speech in Congress, Yushchenko asked the United States to back his
country's entrance into the European Union, the World Trade Organization and
NATO, which he said would spur democratic progress and economic reforms.
Yushchenko, who is also working to loosen Kyiv's historic links with the
Russia, Ukraine's major trade partner and energy supplier, also pressed
American lawmakers to exempt his country from the Jackson-Vanick amend-
ment, a restriction that ties most favored nation status and U.S. trade with
relaxation of emigration restrictions that existed in former Soviet states.
He also asked the United States to cancel restrictions on Ukrainian goods in
the U.S. market and to classify his country as having a market-based
economy, a move that could ease Ukrainian entrance into the WTO and would
make it harder for U.S. companies to win antidumping cases against Ukrainian
companies.
But as political and economic prospects improved abroad, internal economic
problems remained. Gross domestic product rose by only 5.4 percent between
January and March, compared with a 10.8 percent rise at the same time in
2004, official figures showed. GDP growth in the first quarter fell due to a
slowdown in the construction industry, the State Statistics Committee said
last week.
Construction output fell by almost 6 percent in January to March, compared
with the same period last year, the committee said. The government announced
its expectations Ukraine's economy to expand by about 8.2 percent in 2005,
compared with GDP growth of 12.1 percent last year. The construction
industry, previously one of Ukraine's fastest growing sectors, was badly hit
during the weeks of political turmoil which swept across the country,
analysts said.
"At this point any forecast will not be accurate. The government needs to
monitor food prices and inflation," Dmytrenko said.
The analysts in Kiev believe however, that tough measures of Tymoshenko's
government might be fruitful if the government persists long enough in
implementing them. Many also believe that the ultimate condition for
Ukraine's further economic development lies in firm alliance between
Yushchenko's Our Ukraine and Tymoshenko's bloc in the next parliamentary
elections.
A government official speaking on condition of anonymity said that "if we
win the next elections we might just steer this country to the EU. If we
fail, and there are many among us who are trying to make us fail for their
own selfish purposes, then God help Ukraine." -30-
-----------------------------------------------------------------------------------------------------------------
LINK: http://www.firstnews.com.ua/en/article.html?id=38857
=============================================================
4. FOREIGN INVESTORS LEAVE UKRAINE
ForUM, Ukraine's Internet Newspaper
Kyiv, Ukraine, Thursday, April 21, 2005
KYIV - "Eurocar" enterprise had a successful activity on the territory of
special economical zone "Transcarpathian" during the last years. Now it
is forced to suspend the construction of second line of car factory. The
reason is the cancellation of such zones and, as a result, of all the
earlier declared privileges, "DVC" [Donbass Voters Committee,
http://zadonbass.org/en/index.html] reported.
The construction of the second line of the factory for assembling of Skoda,
Volkswagen and Audi cars was started three months ago. Its estimated
output makes 145 thousand cars per year. It was expected that 2 thousand
residents of Transcarpathian region would get fixed up in a new job on
October and 4 thousand more would get fixed up in a job related to the
production of spare parts in future. But all the operations are suspended
due to the cancellation of customs and tax privileges. Nobody can predict
whether operations will be renewed.
Vladimir Panov, the Deputy General Director of "Eurocar" explains that all
the technical and economical calculations were carried out during favorable
tax climate that was guaranteed by the State till the year 2030. Now the
guarantees are cancelled, even without a period of transition.
About 30 investors, who had their business on the territory of
"Transcarpathian", met the problem. They invested hundreds millions
USD into their projects and 20 thousand residents of Transcarpathian
region were granted with a job. -30- [Action Ukraine Monitoring]
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LINK: http://en.for-ua.com/news/?id=552
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5. WORLD BANK TO ALLOCATE USD 300 MILLION TO UKRAINE
Ukrainian News Agency, Kyiv, Ukraine, Thu, April 21, 2005
KYIV - The World Bank plans to allocate USD 300 million for support and
development of energy, education and financial sector of Ukraine in 2005.
The World Bank country director for Ukraine, Belarus and Moldova Paul
Bermingham informed about this at the press conference.
He told that during several months the WB plans to present a number of
projects for approval of the board of directors on development and support
of energy, education and financial sector of Ukraine for the total amount of
USD 300 million.
For instance, the bank plans to allocate USD 80 million for the project for
improvement of conditions for education and training, especially in the
village schools, and USD 110 million for the project on reconstruction and
development of hydroelectric power plants; the WB also initiates the project
that would permit to simplify access to credit resources for small business,
especially in the rural areas.
Besides that, according to Bermingham, the WB plans to complete
preparation for issuing USD 175 million to Ukraine in the second tranche
of the second programmatic adjustment loan within several weeks.
As Ukrainian News earlier reported, WB may allocated up to USD 3 billion
loans in Ukraine in 2005-2007. The World Bank is ready to allocate to
Ukraine USD 175 million of the second tranche of the second Programmatic
Adjustment Loan and USD 500 million of the third Programmatic Adjustment
Loan by July of this year. -30- [Action Ukraine Monitoring Service]
=============================================================
6. UKRAINE: TNK-BP AGREES TO CUT GASOLINE PRICES
Associated Press, Kiev, Ukraine, April 21, 2005
KIEV - Ukrainian Prime Minister Yulia Tymoshenko said Thursday that
Russia's TNK-BP (TNKB.YY) had agreed to lower the price of gasoline at
its stations throughout Ukraine to the level of government-set price caps,
the Interfax news agency reported. The agreement came amid growing
accusations by Ukrainian officials against TNK-BP and another big Russian
oil company, Lukoil (LKOH.RS), of conspiring to raise the price of gasoline.
Ukraine 's Anti-Monopoly Committee opened a criminal investigation into
the two oil giants, as well as other companies, into alleged price-fixing.
"We agreed that tomorrow from 8 a.m. the chain of TNK gas stations, which
number 1,000, will use the prices set out in the Ministry of Economy's
order," Tymoshenko was quoted as saying.
The government's press office said they would comment later, and TNK-
BP's Ukraine office said no one was immediately available to comment. The
Moscow-based oil company is half-owned by U.K. oil major BP PLC (BP).
Prices at the gas pump have risen 13% this month, a sharp increase that
underscored Ukraine 's energy dependence on Russia and threatened to
fuel popular discontent against the new government. Under the agreement,
the gasoline price will fall back to 2.99 hryvna, or $0.59, a liter from the
current 3.30 hryvna, or $0.65/liter.
Oil traders have said the increase is due to Russia's boosting of export
tariffs, rising costs for rail shipments in Ukraine and high world prices,
which are seeing pump prices rise around the world. Tymoshenko was
scheduled to meet with representatives of Lukoil's Ukraine office on Friday.
=============================================================
7. UKRAINE'S RICHEST MAN SKIPS TOWN
Ukrainian Journal, Kyiv, Ukraine, Wed, April 20, 2005
KYIV - Rinat Akhmetov, the country's richest man, has left Ukraine
and is managing his huge business empire from overseas by a telephone,
Shakhtar, a soccer club that Akhmetov owns, said Wednesday.
Shakhtar did not specify the country where Akhmetov went to "for a business
trip," but sources in the Donetsk administration suggested the businessman
may be as far as in Spain.
The relocation of Akhmetov, until recently the most powerful business and
political figure in Ukraine, fuels rumors that he had fled the country in
fears of prosecution from law enforcement.
The development comes less than two weeks after Boris Kolesnikov,
Akhmetov's right hand man and the head of the Donetsk region council,
was taken in custody for alleged racketeering.
Akhmetov's brother, Ihor, is wanted by the law enforcement in connection
with the same racketeering case as Kolesnikov, but was reported to have
fled the country.
On Tuesday, two of Akhmetov's Ukrainian iron ore producers decided to pay
out most of their 2004 profits as dividends with Akhmetov apparently taking
some $154 million in cash in the process, released figures suggested.
"Rinat Leonidovych with the help of a phone is contacting soccer club
managers and coaches," Shakhtar said in the statement.
Shakhtar's other key officials, such as Serhiy Kiy and Zhigan Taktashev,
were also reported to have fled Ukraine due to their alleged link with the
racketeering case.
Meanwhile, the Regions Party, led by former Prime Minister Viktor
Yanukovych, who lost the presidential election to Viktor Yushchenko in
December, issued a statement accusing the authorities of persecution
of opposition.
"We demand that the authorities stop persecuting opponents, stop
ordering criminal investigations and putting pressure on citizens that
support the opposition," the party said. (jp/ez) -30-
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LINK: http://www.ukrainianjournal.com/index.php?w=article&id=664
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8. UKRAINIAN STEEL MAGNATE SAID TRYING TO SELL ASSESTS
Glavred, Kiev, Ukraine, in Russian 0000 gmt 20 Apr
BBC Monitoring Service, UK, in English, Thu, Apr 21, 2005
KYIV - The son-in-law of former Ukrainian President Leonid Kuchma and
one of Ukraine's richest businessmen, Viktor Pinchuk, is trying to sell his
steel empire to Russian businessmen, a Ukrainian web site has quoted
the Russian newspaper Vedomosti as reporting.
Russian companies are said to be interested in Pinchuk's assets, but
say the risk of buying them is too high in the context of looming
reprivatization in Ukraine. Ukrainian courts have been looking into
controversial privatization deals involving some of Pinchuk's factories.
The following is the text of the article entitled "Who Pinchuk is going to
sell his assets to" and posted on the Ukrainian web site Glavred on 20
April 2005:
The Ukrainian steel magnate, Viktor Pinchuk, is trying to sell his assets to
Russian businessmen. A co-owner of a Russian steel company told
Vedomosti that he had received an offer to buy Pinchuk's Interpipe holding
company for 1bn dollars.
Sources close to the Ukrainian magnate say that Pinchuk has offered parts of
his steel business to the owners of [Russia's] TMK [Steel Pipe Company] and
OMK [United Steel Company], Severstal, Yevrazholding, Mechel [Steel Group]
and Magnitogorsk Steelworks. All these companies offered no comment, but
employees of some of them confirmed that the companies did receive the
offer. "We are interested," Russian businessmen say, "but the risks
connected with the assets are high, and we are not sure that the assets are
registered impeccably from a legal point of view."
According to Metropol's analyst, Denis Nushtayev, and the executive director
of AG Capital Management, Aleksandr Agibalov, both OMK and TMK could
be interested in acquiring Interpipe, Mechel - in acquiring the assets of
Pinchuk's another company, Dniprospetstal, not to mention his coal and iron
ore assets, which are of interest to all Russian steel companies.
According to the Forbes magazine, Viktor Pinchuk, 44, who happens to be
the son-in-law of former Ukrainian President Leonid Kuchma, is worth 1.3bn
dollars. He is one of three Ukrainian billionaires [the other two are
Donetsk-based tycoons Rinat Akhmetov and Serhiy Taruta]. Russian business
believes Pinchuk and his partners own several banks, TV channels and the
steel-pipe manufacturer, Interpipe holding company.
The holding company makes 1.3m tonnes of steel pipes a year and comprises
the Nizhnyodniprovskyy [seamless] pipe-making and the Novomoskovskyy
pipe-making plants, the Nikopol Pipe Company, the Nikotube, the Mogilevskiy
[as published] steelworks, the Nikopol ferroalloys plant and the
Dniprospetstal.
In 2004, companies belonging to Pinchuk and Rinat Akhmetov acquired a
93-per-cent stake in Kryvorizhstal, [Ukraine's] largest steelworks
[supposedly for a fraction of its real value].
Since the Orange Revolution, the steel magnate has been having hard times.
Courts that previously refused to probe the Kryvorizhstal privatization deal
have begun to reverse their decisions. The [Kryvorizhstal] assets have been
frozen, and only few doubt that they will be renationalized, Vedomosti say.
Ukrainian MP Oleksandr Holub believes, however, that the authority will not
impede the sale of Pinchuk's assets.
The director of the [Ukrainian] national institute for strategic research,
Kostyantyn Bondarenko, believes that after getting rid of the assets, the
magnate will flee the country, [Russian web site] Lenta.ru says. "The
authorities want him to follow [Russian tycoons] Gusinskiy and Berezovskiy's
suit," Bondarenko said. -30- [Action Ukraine Report Monitoring Service]
=============================================================
9. UKRAINE: PRESIDENT'S OIL AND GAS SCHEMES. PART TWO. GAS"
By Oleh Havrysh, Ukrayinska Pravda web site, Kiev, in Ukrainian 19 Apr 05
BBC Monitoring Service, UK, in English, Thur, Apr 21, 2005
Ukraine's national fuel company, Naftohaz Ukrayiny, enriched many in former
President Leonid Kuchma's entourage by dubious deals when it was run by
Ihor Bakay in 1998-2000, the Ukrayinska Pravda web site has said. Bakay
later headed the Directorate of State Affairs under Kuchma and is now wanted
for questioning by the Ukrainian police on several cases of abuse of office.
Bakay is now said to be in Russia, working for an oil company there.
Expert Oleh Havrysh details the gas trade and re-export schemes that
allegedly helped Bakay pour millions into his pockets. He says Bakay was
sacked because he tried to launch money-making schemes on his own
account without getting Kuchma's consent.
The following is the text of an article by Oleh Havrysh entitled
"President's oil and gas schemes. Part two. Gas" and published on the
Ukrayinska Pravda web site on 19 April; subheadings inserted editorially:
Since the time Naftohaz Ukrayiny was set up in spring 1998, until he left
the company in March 2000, Ihor Bakay was able to earn over 1bn dollars in
gas trading. According to experts, at least half of that money belonged to
former Ukrainian President Leonid Kuchma. What is more, a good third of
Ukrainian politicians were drawn into schemes on the gas market. They
include a whole range of state officials who today occupy key posts in the
country.
Experts claim that more or less serious capital was earned in Ukraine from
the trade in natural gas. In fact, that phrase could more accurately have
been put differently: many Ukrainian oligarchs earned their wealth from
percentages on incomes received by Leonid Kuchma from the sale and
re-export of natural gas.
WHY PRECISELY NATURAL GAS?
The point is that Ukraine at the end of the 1990s was using a record amount
of gas - 75bn cubic metres a year. That was the fourth biggest indicator in
the world, which is strange, to say the least, for a state that is not even
in the top twenty in terms of GDP volume.
The national joint-stock company Naftohaz Ukrayiny extracted 18bn cubic
metres within the country along with joint enterprises, the biggest of which
are the Poltava Gas and Oil Company, Plast and Ukrnaftohaztekhnolohiya.
All the gas extracted by the company and some that it received for transit
was compulsorily sold to the population and budget (state) organizations.
Nobody in Ukraine apart from Naftohaz Ukrayiny had the right to sell natural
gas to the population.
Ukraine received the remainder of its natural gas from Russia as payment
for transit, or bought it from Turkmenistan. This gas was sold to industrial
enterprises and re-exported.
From the very outset the idea of creating Naftohaz Ukrayiny was that of Ihor
Bakay and a number of functionaries from his Interhaz company. Ihor Bakay,
who lobbied for the creation of the gas monster, proceeded from the fact
that the former head of Ukrhazprom, Bohdan Klyuk, was in no condition to
ensure a sufficient inflow of money for the president and his family.
Indeed, Klyuk like every red director, tried to redeem himself with valuable
gifts. On the other hand, the question still remains open about the
disappearance of 7bn cubic metres of natural gas in the last months of the
"management" of the Ukrhazprom general director.
Bakay proved to be a more talented executor than the "red directorate".
First of all, he approached the question of gathering all the energy money
under one roof in great style. This is not surprising, since Bakay already
had sufficient experience of work on the market. Thus, in 1994 the Cabinet
of Ministers instructed the Respublika corporation, founded by Bakay, to
pay for Turkmen gas to the value of 663.9m dollars in money and goods.
From 1996 Mr Bakay, together with [tycoon MP Ihor Sharov] created the
Interhaz company that traded in gas, and then took under its wing another
range of structures for the marketing of gas (for example, Kontintental).
But the main thing in this situation was that Ihor Bakay was a friend of the
president of Ukraine. As a member of the parliamentary committee for the
fuel and energy complex, Oleksandr Hudyma, said, "in those times 65-70
per cent of the gas market in Ukraine was in the shadow".
RE-EXPORT SCHEMES A BIG EARNER
"In the times of Ihor Bakay, the purchase of Russian and Turkmen gas was
conducted with serious breaches, and considerable volumes of fuel were
re-exported out of the country. The biggest abuses happened with Turkmen
natural gas that was bought according to personal accords between Leonid
Kuchma and [Turkmen President] Saparmyrat Nyyazow. I am sure that the
greater part of the money from that activity was received by Leonid Kuchma
personally, who allowed part of the illegal profit of the company to be left
for their needs first to Bakay and then to [former First Deputy Prime
Minister Mykola] Azarov," Hudyma said.
How specifically could Messrs Bakay and Kuchma have made money, and
what sort of sums of money are we talking about? Russia supplied the country
with 30bn cubic metres of natural gas as payment for transit at a price of
80 dollars per 1,000 cubic metres. Naftohaz resold that gas to middlemen,
who in turn supplied it to industrial enterprises.
Using barter-promissory note schemes and suchlike craftiness, the middle-
men made at least five dollars per 1,000 cubic metres. In this way, the
total amount creamed off in such operations exceeded 150m dollars a year.
It must be said that 40 per cent of all sales of natural gas in 1998-2000
were controlled by Bakay's commercial firms - Interhaz and its affiliates.
This is confirmed by a summary of the main debtors for natural gas in 1999.
At that time Interhaz owed Naftohaz 197.26m dollars out of the total amount
of debts of 274.54m dollars.
The "president's friend" sold at least 12bn cubic metres of gas through a
whole series of traders and affiliate companies, making five dollars for
every cubic metre. The annual profit from such deals exceeded 60m dollars.
"There was a real bacchanalia ruling the market - a multiplicity of traders
buying gas from Naftohaz at higher prices than they were selling it,
understanding that they would not be paying for it," Oleksandr Hudyma said.
But it was not this type of activity that was the tastiest. Best of all was
making money out of reselling the gas to Poland, Slovakia, the Czech
Republic, Hungary, Romania and Bulgaria. The volume of such re-exports
traditionally varied between 7bn-8bn cubic metres a year.
However, some time in the middle of Bakay's reign at the company,
Turkmenistan refused to supply natural gas to the country because of
chronic non-payment on the part of Ukrainian consumers.
Another problem arose. In order to get gas for re-export, since 1999 Ihor
Bakay had taken the decision to start unauthorized extraction of Russian
fuel from the pipelines. In this way gas was obtained worth over 1.43bn
dollars (about 18bn cubic metres, i.e. the volume of the country's annual
extraction). The greater part of that amount went for export to countries of
Eastern Europe. Poland, Hungary and Slovakia recorded the volumes
received. But Ukraine did not.
As we already said, the amount of profit from re-exports of natural gas
amounted to 20 dollars per 1,000 cubic metres, or 360m dollars over the
whole period. That is how much the state lost. That was acquired by the
middlemen who resold the gas to the West under the direct control of Bakay.
NAFTOHAZ UKRAYINY SADDLES WITH HUGE DEBTS
"The whole volume of debt for the stolen natural gas lay with Naftohaz
Ukrayiny, and the company only last year paid back that huge debt. The
profit from those sales went into the pocket of the president of Ukraine.
Bakay was meant to receive only a percentage. However, as the Melnychenko
tapes show [recordings made in Kuchma's office by former security guard Maj
Mykola Melnychenko apparently implicating him and other senior officials in
serious crimes], he did not always return the entire sum, which allowed
Azarov to put his own man in place," Hudyma said in explanation of the
situation.
In actual fact, the Melnychenko tapes record not the moment of non-return
of money from trading operations, but the fact that Ihor Bakay was trying
without Kuchma's consent to make extra money out of Naftohaz via a firm
founded by him and [parliament speaker] Volodymyr Lytvyn. The present
speaker's firm sold intellectual property worth tens of millions of dollars
to Naftohaz.
In effect Bakay was dismissed not because he failed to pay enough for resale
of natural gas going abroad. Those amounts were always under the control of
the former president. It was for deciding without Kuchma's consent to shake
Naftohaz a little more.
STRICT CONTROL NEEDED
However, the temptation to steer the huge volumes of gas money remains
even today. "Imagine what a serious temptation it is for the chairman of the
board of Naftohaz Ukrayiny. He officially earns 5,000 hryvnyas, but is
sitting on a turnover of billions of dollars. Now, for example, the amount
of German credit alone amounts to 2bn dollars," Oleksandr Hudyma says.
Indeed, Naftohaz still remains a reserve controlled officially by the prime
minister [Yuliya Tymoshenko], according to informal understandings by
[presidential chief of staff] Oleksandr Zinchenko, but in fact - by nobody
knows whom at all.
The monster's legal net profit last year exceeded 1.26bn hryvnyas. But
according to information from the company's former top managers, taking
account of re-exports and all the operations hidden from the public, it
reaches 1bn dollars.
"How can breaches be avoided in this situation? There are two basic ways.
One must either strengthen control of the work of Naftohaz on the part of
the Cabinet of Ministers and the Fuel and Energy Ministry, or privatize the
affiliate companies of Naftohaz. The latter idea will make it possible to
attract investors, who are specially needed by such companies as
Ukrtranshaz and Ukrtransnafta," Hudyma claims.
"In this way we should decide as a matter of principle what Ukraine's energy
policy in the future will be," says Oleksandr Hudyma.
And while the idea of privatization of Ukrtranshaz and Ukrtransnafta today
requires painstaking preparation, it is also essential to step up control of
the management of Naftohaz Ukrayiny. Only in that case will it be possible
to create full transparency of the work of Naftohaz in a matter of days.
Otherwise, it may be too late. -30- [Action Ukraine Report Monitoring]
=============================================================
10. PRESIDENT YUSHCHENKO RESTORES NATO MEMBERSHIP INTO
PROVISIONS OF UKRAINIAN MILITARY DOCTRINE
Ukrainian News Agency, Kyiv, Ukraine, Wed, April 20, 2005
KYIV - President Viktor Yuschenko has restored the provisions of the
Ukrainian military doctrine that state that the final goal of Ukraine's
policy of Euro-Atlantic and European integration is membership of NATO
and the European Union. Foreign Affairs Minister Borys Tarasiuk
announced this in Vilnius (Lithuania) during a joint press conference with
NATO's Secretary-General Jaap de Hoop Scheffer.
"Yuschenko has again introduced the goal of Ukrainian membership of
the European Union and NATO in Ukraine's military doctrine," Tarasiuk
said. Tarasiuk said he informed the foreign affairs ministers of NATO
member-countries about this.
Tarasiuk recalled that former president Leonid Kuchma removed the
provisions of the Ukrainian military doctrine that stated that the final
goal of Ukraine's policy of Euro-Atlantic and European integration was
membership of NATO and the European Union in summer 2004.
Tarasiuk said that this step by Yuschenko was one of the confirmations
of the fact that Ukraine intends to move away from declarations in its
relations with NATO and the European Union.
Tarasiuk also stated other steps aimed at concretizing relations and said
that he announced these steps at the commission's meeting. The first step
is Ukraine's completion of all the procedures involving approval of the
Ukraine-NATO Target Plan for 2005. The second is Ukraine's participation
in NATO's antiterrorist operations in the Mediterranean Sea called Active
Endeavor. Moreover, according to Tarasiuk, Yuschenko has ordered
completion of the structuring of Ukraine's interactions with NATO.
As Ukrainian News earlier reported, former president Leonid Kuchma
removed the provisions of the Ukrainian military doctrine that stated that
the final goal of Ukraine's policy of Euro-Atlantic and European integration
was membership of NATO and the European Union in late July 2004.
Kuchma said that he removed the provisions because NATO and the
European Union were in crisis. Kuchma approved the military doctrine
in mid-June 2004. -30- [The Action Ukraine Report Monitoring Service]
=============================================================
11. NATO ACTS TO OPEN DOOR FOR UKRAINE
By Steven R. Weisman, The New York Times
New York, New York, Friday, April 22, 2005
VILNIUS, Lithuania - NATO acted officially on Thursday to open
discussions with Ukraine, a former partner of Russia, to become a
member of the Atlantic military alliance, while Secretary of State
Condoleezza Rice met with opposition leaders favoring the ouster of
the Russian-backed regime in Belarus.
.
Rice, who previously had declared that Belarus was the last dictatorship in
Europe, warned bluntly that it should not conduct a "sham election" next
year because its conduct would be "watched by the international community,"
much as the election in Ukraine last year had been watched and deemed
fraudulent, helping to lead to its revolution.
.
The opposition leaders with whom Rice met said later that they would use
"mass pressure for change" on the regime of President Alexander
Lukashenko. But Rice cautioned that she was not suggesting any particular
way for them to oust him.
.
In Moscow earlier in the week, Rice heard complaints from officials and
call-in listeners on a radio show that Russians fear the United States is
trying to surround Russia with allies and in some cases military forces. She
told reporters that Russians seemed mired in a "19th-century" view of the
world.
.
Nevertheless, to counter Russian concerns, NATO also moved Thursday
to sign a "status of forces" agreement with Russia that would enable it to
expand joint military exercises on Russian soil, possibly for future peace-
keeping operations in various trouble spots.
.
There have been a few such joint exercises focusing on dealing with
emergencies or humanitarian crises, but American and NATO officials said
the new accord would expand the possibilities, making it easier to transport
foreign troops across Russian soil to interdict narcotics and arms smuggling
from Afghanistan and other places.
.
Sergey Lavrov, the Russian foreign minister, met with NATO foreign
ministers here in the capital of Lithuania, itself a onetime state in the
Soviet Union but now a NATO member, and he said he was pleased with
the Russia-NATO accord.
.
"The issues were dealt with without extraneous ideology," Lavrov said,
though he added a note of displeasure with Rice's meeting with Belarus
opposition leaders, saying that Russia did not support "regime change"
there.
.
Rice flew back to Washington on Thursday night, ending her first visit to
Russia as secretary of state. Part of her task was to pave the way for
President George W. Bush's visit to Moscow next month to mark the 60th
anniversary of the end of World War II, but that event is also stirring
controversy.
.
Many world leaders are scheduled to join Bush in Russia, but Lithuania, for
example, is boycotting on the grounds that the celebration is effectively
marking the beginning of Russia's grip on Eastern Europe and the cold war
tensions that followed.
.
The NATO decision on Ukraine was set in motion after the victory of Viktor
Yushchenko in the "Orange Revolution" last year. His rise to power came
after an uprising that installed a new pro-Western regime in Georgia, and it
was followed this year by an uprising in Kyrgyzstan, another former Soviet
state.
.
Yushchenko pressed the case for joining NATO in Washington earlier this
month when he visited the White House and addressed Congress. Bush
backed the request, but this week American officials said that entry would
not be easy or rapid. Ukraine used to have one of the largest armies in
Europe, but its armed forces have shrunk recently.
.
"NATO is not just a club," a senior State Department official said. "You've
got to be able to contribute." The official said that before Ukraine could
join NATO, it would need to demonstrate that civilian control of the
military, and its democracy in general, will last, and that an effective
military is not "top heavy" with generals.
.
The NATO discussions encompassed other issues, including a decision by
the alliance to be ready, if asked by the African Union, to transfer forces
to Darfur, Sudan, where thousands have died in a civil war and many more
have been driven from their homes. But Jaap de Hoop Scheffer, NATO
secretary general, said any troop support would involve "planning and
logistical support," and not "boots on the ground."
.
The United States has tried and failed to broker a Darfur peace agreement
and to get adequate relief to the victims of what it has called genocide,
but it remains committed to getting more outside forces there. "We all
have a responsibility to do what we can to alleviate suffering in Darfur
and to create conditions in which humanitarian aid can get in," Rice said.
.
In addition, de Hoop Scheffer said there was a discussion - purely
hypothetical, he said - about the possibility of eventually sending NATO
forces as peacekeepers in other situations, such as the Israeli-Palestinian
conflict.
.
Rice pressed for a broader NATO role, or at least a discussion of such a
role. "We intend to use NATO more and more effectively as a trans-Atlantic
security forum," she said. But Foreign Minister Michel Barnier of France
warned against turning NATO into "the world's policeman" and taking on
too many tasks outside Europe. -30- [Action Ukraine Monitoring Service]
=============================================================
12. ENHANCING NATO-UKRAINE COOPERATION: SHORT-TERM ACTIONS
NATO Headquarters, Brussels, Belgium, Thu, April 21, 2005
NATO Allies and Ukraine have agreed to launch the initiatives
outlined below to enhance their cooperation in support of Ukraine's
reform priorities. We are undertaking these measures in the framework
of the NATO-Ukraine Action Plan, taking into account our decision to
begin an Intensified Dialogue on Ukraine’s aspirations to membership
and relevant reforms, without prejudice to any eventual Alliance decision.
Strengthening democratic institutions ----
- Using available resources from NATO, Allies, and other
interested institutional partners like the Geneva Centre for Democratic
Control of Armed Forces (DCAF), expand Joint Working Group on
Defence Reform (JWGDR) efforts to help the new leadership strengthen
executive, legislative, and public oversight of defence and security sector
institutions with which NATO is engaged in co-operative activities.
- Receive and evaluate information and exchange views on efforts
to enhance media freedom and electoral and judicial reform, including by
inviting relevant Ukrainian ministries and agencies to provide regular
briefings.
- Use this year's annual assessment of Ukraine's Action Plan
implementation to provide a comprehensive review of achievements
since its adoption in 2002, offering specific guidance on outstanding
reform needs.
- Fully utilise Action Plan (AP)/Annual Target Plan (ATP)
mechanisms (using existing NATO-Ukraine channels at all levels) to
provide positive feedback on successes in this area, as well as
constructive criticism and recommendations as necessary.
Renewing political dialogue ----
- Broaden the scope of issues to be discussed in NATO-Ukraine
meetings in all levels in the NATO-Ukraine Commission (NUC) format,
to include all areas outlined in the Charter and AP.
- Undertake to hold discussions of specific common political and
security concerns, particularly regarding frozen conflicts (e.g.,
Transdniestria).
- Offer a more regular frequency of substantive exchanges with
Ukraine (e.g., through a regular calendar of issue-driven NUC meetings
at all levels) to inform and focus targeted practical co-operation. This
would include work toward enhanced operational co-operation in key areas
(including in the framework of Operation Active Endeavour, ISAF, KFOR
and the NATO Training Mission-Iraq), as well as intensifying
consultations on arms control, export controls and non-proliferation
(including exploration of a possible Ukrainian contribution to Weapons
of Mass Destruction (WMD) defence).
- Improve the preparation of high-level meetings by using the
Political Committee in NUC format for that purpose, and to develop
substantive issues.
- Increase public awareness of enhanced political dialogue between
Ukraine and NATO, using the full range of public diplomacy instruments
available.
Reinvigorating co-operation in defence and security sector reform ---
- In the context of the JWGDR Work Plan for 2005, develop
activities to assist Ukraine in conducting a comprehensive national
security review of the missions, tasks and functions of all security
institutions with which NATO is engaged in cooperative activities.
- Assist in the reform of the intelligence sector according to
Euro-Atlantic standards, through enhanced exchanges of experience
and expertise between Ukraine and NATO member states; support
enhancement of the capabilities of the Ukrainian intelligence services
in the struggle against terrorism.
- At the working level, enhance the provision of Allied expertise
(both International Staff (IS)/International Military Staff (IMS) and
national experts) to support the urgent work of implementing Ukraine's
reform plans, including the demilitarisation of internal security
structures, while initiating a fundamental review of co-operation in
light of how the new Ukrainian administration defines Ukraine's
longer-term needs.
- Assist Ukraine in developing civilian personnel to be employed
in both key and expert positions in Ukrainian security institutions,
including the National Security and Defence Council (NSDC).
- Follow up on specific requests for information and specific
possibilities identified for expert twinning, while developing a wider
programme under the JWGDR.
- Consult with all relevant structures of the Ukrainian Ministry
of Defence (MoD) and NSDC to encourage broad co-ordination of
reform plans, and to determine specific needs for defence planning
expertise in developing mid-term programmes.
- Hold conferences, workshops and seminars on defence
policy/strategy and defence economics issues with the involvement of
experts from Allied capitals to assist Ukraine in strengthening policy
formulation capacities and increasing civil society expertise and
oversight capacity.
- Leverage the NATO Defence College’s (NDC) relationship with
Ukraine’s National Defence Academy to enhance the capability of the
latter to generate innovative thinking on issues of importance for
defence reform. This could include, inter alia, increasing the number
of Ukrainian officers participating in NDC programmes.
Enhancing and targeting public diplomacy efforts ----
- In cooperation with the Ukrainian authorities, seek to address
negative public perceptions of NATO in all regions of Ukraine, including
by making available Russianlanguage versions of NATO-Ukraine
publications.
- Increase awareness of positive developments in NATO-Ukraine
cooperation, including in the defence sector, as well as of NATO-Russia
cooperative activities in the framework of the NATO-Russia Council (NRC).
- Develop, together with the Ukrainian authorities, a concrete
public diplomacy strategy involving Ukrainian civilian and military
officials, parliamentarians and Non-Governmental Organisations (NGOs)
on one side, and NATO officials, high-level Allied representatives and
experts on the other.
- Undertake a series of seminars for interested personnel of
relevant Ukrainian ministries and for media representatives, academics
and public opinion-makers, aimed at developing greater public
understanding of NATO issues.
- Using the NATO Information and Documentation Centre, the NATO
Liaison Office and the NATO Contact Point Embassy, increase the
frequency and visibility of highlevel visits to Ukraine by both Allied
representatives and the IS/IMS, to assist in disseminating NATO
information and key messages.
Enhancing support to address the socio-economic impact of defence
reform ----
- At the working level, enhance the provision of Allied expertise
to support the urgent work of developing and implementing Ukrainian
military and security forces’ release, retirement and resettlement
programmes, to include in particular:
- expert support for an assessment of needs and the development
of a comprehensive retraining/resettlement plan;
- increased practical support to concrete retraining programmes in
2005 and 2006; and
- explore means of addressing Ukraine’s retraining needs in the
longer term.
- Provide expert advice to Ukraine’s defence industrial complex to
help it adapt to new market realities, convert to civilian production,
and integrate into the Euro-Atlantic market environment, including
through the application of Euro-Atlantic standards in arms export controls.
- Work to ensure that additional resources are found for the PfP
Trust Fund for the destruction of surplus small arms/light weapons
(SALW) and munitions, so that the first phase of destruction can be
undertaken as soon as possible. Explore additional co-operation in the
area of munitions safety and security. -30-
-----------------------------------------------------------------------------------------------------------
LINK: natodoc@HQ.NATO.INT
=============================================================
13. ROMANIA, UKRAINE PLEDGE TO RESOLVE TERRITORIAL DISPUTES
Associated Press (AP), Bucharest, Romania, Thu, April 21, 2005
BUCHAREST -The presidents of Romania and Ukraine pledged Thursday
to resolve outstanding territorial disputes between their two countries by
the end of the year. Romania and Ukraine disagree over their shared maritime
boundary in the Black Sea, where major oil and natural gas deposits have
been discovered. They are also at odds over Ukraine 's widening of a canal
through the Danube's Bystre Estuary, one of Europe's most important
wetland sites.
"We set a date of the end of 2005 to solve all our litigious problems,"
Romania's President Traian Basescu said after meeting with Ukraine 's
President Viktor Yushchenko, who was on a one-day visit to Bucharest. Both
leaders said committees would be set up to work out the details of resolving
the issues. "I want this generation of politicians to assume responsibility
of resolving these problems," Yushchenko said, adding that "It is important
that we want to sit round the negotiation table."
The two countries signed a treaty in 1997 agreeing to negotiate a settlement
of their Black Sea border and an agreement on the delineation of the
continental shelf. But no agreement has been reached, and in September,
Romania filed a suit against Ukraine at the International Court of Justice,
asking the United Nations' highest judicial authority to demarcate the
border in the area. Basescu did not specify whether Romania would
withdraw the suit.
Kiev claimed in 1995 that Romania was trying to lay claim to Ukrainian
territory in the Black Sea near Serpents Island, and Ukraine went on to
build structures on the rocky island to strengthen its territorial claim on
the area.
In their other dispute, Romania is concerned that Ukraine 's widening of a
shipping canal through the Danube estuary could harm the environment. The
European Union in October urged Kiev to postpone the completion of the
canal, citing environmental concerns.
Despite the differences, relations have warmed between Romania and Ukraine
after reformist Yushchenko came to power late last year. Romania's President
Traian Basescu, also a reformist, had a surprise win in December elections,
defeating the country's former communists. Yushchenko's one-day visit was
the first by a head of state since Basescu took office. Basescu already
visited Ukraine and wants to strengthen ties with Romania's neighbors.
Basescu said Thursday's talks also centered on consolidating democracy in
Black Sea states. The two leaders also discussed ongoing tensions in the
breakaway separatist region of Trans-Dniester in eastern Moldova. Moldova,
wedged between Ukraine and Romania, has a large ethnic Romanian minority
and a smaller Ukrainian minority. -30- [Action Ukraine Report Monitoring]
=============================================================
14. UKRAINE'S INTERNATIONAL RELATIONS NOT ANTI-RUSSIAN
Associated Press, Moscow, Russia, Thu, April 21, 2005
MOSCOW (AP)--Ukraine 's top security official Thursday sought to reassure
Russia that his country's new pro-Western course would not interfere with
relations between the two nations. With distrust lingering some four months
after Viktor Yushchenko's west-leaning administration took power in Kiev,
Petro Poroshenko also reiterated that a group of five former Soviet
republics formed to counterbalance Russia's influence was not a threat to
Moscow. The group, which includes Georgia, Ukraine , Uzbekistan, Azerbaijan
and Moldova, holds a summit Friday.
"Ukraine 's Euro-Atlantic integration can in no way carry an anti-Russian
component," said Poroshenko, head of Ukraine 's Security and Defense
Council, during a visit to Moscow.
Relations between Moscow and Kiev have soured over the bitterly contested
presidential election in Ukraine , in which Yushchenko beat a Kremlin-backed
candidate. The countries have agreed to set up an intergovernmental
commission headed by the two presidents, a move Poroshenko said was
aimed at increasing bilateral cooperation and solving problems more
efficiently.
Speaking after meeting with Russian President Vladimir Putin, Security
Council Secretary Igor Ivanov and others, Poroshenko also stressed that
Ukraine will honor its agreement to allow Russia's navy fleet to use the
Ukrainian port of Sevastopol as its headquarters until 2017.
Russia and Ukraine divided up the former Soviet fleet of ships after several
years of tense arguments following the 1991 Soviet collapse, and Russia
was allowed to base its fleet at Sevastopol. Ukraine , however, indicated
last
week that the lease would not be extended when it runs out in 2017.
Poroshenko also discussed an ongoing dispute in Ukraine over gas prices.
The government says that two of Russia's most prominent oil companies -
TNK-BP (TNKB.YY) and Lukoil (LKOH.RS) - are conspiring to raise retail
prices.
Ukrainian Prime Minister Yulia Tymoshenko on Thursday won TNK-BP's agree-
ment to lower gasoline prices throughout the country to government-set price
caps. Poroshenko expressed hope that a similar deal would be reached with
Lukoil.
Poroshenko also said Ukraine will use the Friday summit to put forward its
plan of solving Moldova's breakaway province of the Trans-Dniester region,
which borders the Ukraine . Trans-Dniester broke away from Moldova in the
early 1990s over fears the country wanted to reunite with Romania. Moldova
was part of Romania until 1940, but Trans-Dniester was not. -30-
=============================================================
15. RUSSIA SOFTENS TOWARD NEIGHBORS
Secretary of State Rice met with Putin Wednesday while
NATO may invite Ukraine into the Western alliance.
By Fred Weir, Correspondent of The Christian Science Monitor
Christian Science Monitor, Boston, MA, Thu, April 21, 2005
MOSCOW - Stung by democratic revolts around Russia's periphery and
the Western drift of former subject nations, the Kremlin is mulling a switch
from the use of "hard" political manipulation to "soft" methods of
persuasion in its dealings with the increasingly troubled post-Soviet
neighborhood.
A new Kremlin department to oversee "cultural relations" with former Soviet
countries was created last month, which experts say will spearhead Moscow's
new charm offensive in its own rapidly changing back yard. Many experts say
the prodemocracy wave that broke over Georgia, Ukraine, and Kyrgyzstan in
the past 18 months has left the Kremlin stunned and determined to prevent
fresh uprisings in its dwindling sphere of influence.
Another worry is that Western authority is rapidly marching in as Moscow's
recedes. Secretary of State Condoleezza Rice, who met with a seemingly
disinterested President Vladimir Putin Wednesday, apparently upset by Ms.
Rice's criticisms of Russia's authoritarian drift, will be in Lithuania
Thursday for a NATO meeting, the first time the alliance has convened in a
former Soviet republic. Ukraine, a key Russian partner until its democratic
revolt late last year, could be invited to join the Western military
alliance as early as this week.
"The possibility of Ukraine eventually joining NATO is of great concern to
Russia," says Viktor Kremeniuk of the Institute of USA-Canada Studies in
Moscow. "That would spell the end of Russian dominance in the post-
Soviet sphere. Russia faces isolation."
In an interview with Russian radio Wednesday, Rice said that the US isn't
competing in former Soviet republics, nor is it trying to "export
democracy," but is merely supporting people "in their right to express
their opinions."
Critics say the Kremlin's heavyhanded intervention in neighboring countries
has been the chief cause of Russia's declining regional fortunes. Mr. Putin
twice visited Ukraine during its presidential elections last year to throw
Russia's support behind pro-Moscow candidate Viktor Yanukovich. Ukrainian
experts accuse Moscow of channeling as much as $300 million and
dispatching top Kremlin "spin doctors" to aid Mr. Yanukovich's campaign.
Russia's support for Moldova's breakaway Transdnestr Republic, where it
maintains an army, was a key reason Moldova's Communist Party government
has distanced itself from Moscow and appealed to Europe for help. Russia
also maintains two Soviet-era military bases in Georgia and continues to
aid the rebel republics of Abkhazia and South Ossetia against the central
authorities.
"Everyone understands we need a new policy," says Sergei Markov, an
analyst who is connected to the Kremlin and who was one of the consultants
sent to help Yanukovich last year. "The failure in Ukraine has made it
impossible to follow the old approaches."
The chief of the Kremlin's new advisory department on relations with
former-Soviet countries, Modest Kolerov, is the former head of a
nationalist-leaning news agency that has published articles blaming the
West for sponsoring rebel- lions on Russia's doorstep. Mr. Kolerov has
denied any "counter revolutionary" purposes but has said: "Russia should
defend its interests in the post-Soviet sphere." Kolerov will work directly
under Dmitri Medvedev, Putin's chief of staff, who warned earlier this
month that growing revolutionary moods in the former USSR threatens
crisis. "The breakup of the Soviet Union will look like child's play
compared to a government collapse in modern Russia," Medvedev said.
Sociologist Olga Kyrshtanovskaya, who studies Russian elites, says the
Kremlin's main concern is to stifle the spread of rebellious moods to
Russia's own far-flung, multiethnic population. "All these revolutionary
waves around Russia have an impact," she says. "The authorities may try
to displace popular discontent by inventing enemies who are besieging
Russia. This is the likeliest approach."
Mr. Markov says the Kremlin will actively attempt to identify and assist
pro-Russian political forces around the region. For example, he says, polls
show that many Ukrainians oppose joining NATO despite President Viktor
Yushchenko's championing of the idea as a means of anchoring Ukraine in
the Western camp. "For Ukraine, joining NATO would mean undermining
Russian-Ukrainian cooperation in key economic spheres, such as military and
high-tech industries," says Markov. "Many Ukrainians don't feel this would
be in their interests. Russia must do what it can to help those Ukrainians,
who don't want to join NATO. This issue could bring Yushchenko down."
Russia's long-dormant policy of seeking reunification with Belarus, the
only post-Soviet state that has shown interest in merging with Russia,
could be revived as the Kremlin surveys its options. "Russia's sphere of
influence is dramatically shrinking, and so a country like Belarus that
wants to join our club takes on new importance," says Sergei Strokan, a
foreign affairs expert with Kommersant, a liberal newspaper.
Wednesday's meeting with Rice isn't the last Putin will hear from the US.
President Bush will visit next month to commemorate the 60th anniversary
of the Allied victory in World War II. -30-
=============================================================
16. GONGADZE'S WIDOW SPEAKS ABOUT INFORMATION FROM
MINISTER OF INTERIOR ON COMPLICITY OF 40 PEOPLE
IN KILLING HER HUSBAND
Ukrainian News Agency, Kyiv, Ukraine, Thursday, April 21, 2005
KYIV - Myroslava Gongadze, widow of killed journalist Georgy Gongadze,
informed that nearly 40 people were complicit to murder of her husband,
according to the words of the minister of Interior Affairs Yurii Lutsenko.
She made this statement in her interview to the newspaper Komsomolska
Pravda in Ukraine. "According to Yurii Lutsenko, on the whole, about 40
people participated in the operation for killing my husband," she said.
Myroslava Gongadze said that after the meetings with Lutsenko and
Prosecutor General Sviatoslav Piskun she surmises that investigation on
solution of her husband's murder is on the right track. "Things they told
me and a number of identifications that I participated in, give me a right
to surmise that the investigation is coming to its logical end," Myroslava
said.
She also said that Piskun assured her that her husband's murder would
be solved despite death of ex-Minister of Interior Yurii Kravchenko.
Moreover, Myroslava Gongadze said that she does not believe in the
version about Kravchenko's suicide.
In her opinion, recordings of ex-major of presidential guard Mykola
Melnychenko should be ruled authentic and added to investigation of the
case on her husband's murder. Besides that, in the opinion of the
journalist's widow, Georgy's killing was not provoked by his publications.
"I think Georgy's publications were not the reason of what happened. He
knew a lot, talked a lot about this, and thus drew attention to himself,"
Myroslava Gongadze believes.
As Ukrainian News earlier reported, President Viktor Yuschenko has
promised Myroslava Gongadze, the widow of journalist Georgy Gongadze,
that the journalist's murder will be solved. Yuschenko stated on March 1
that law enforcement agencies had established and arrested the killers
of Gongadze.
A local court sanctioned the arrest on March 3 of two people suspected of
involvement in the killing of Gongadze, One more suspects gave a written
obligation not to leave the place, and another one - General Oleksii Pukach,
who is the former head of the Department for Criminal Investigation - is on
the wanted list. The Prosecutor's General Office established that Gongadze
was not killed incidentally, the suspects carried out a criminal order and
during the time murder they worked in the department that was headed by
Pukach.
Gongadze disappeared in September 2000. His decapitated body was found
in the woods outside Kyiv two months later. Gongadze's disappearance
triggered a political scandal in Ukraine, which centered on the possible
involvement of former president Leonid Kuchma, the Ukrainian Presidential
Administration's former head Volodymyr Lytvyn (currently the speaker of the
parliament), the Security Service of Ukraine's former head Leonid Derkach
(currently a member of the parliament), and former Interior Affairs Minister
Yurii Kravchenko (who died in March) in the murder. -30-
=============================================================
17. MINISTER ZVARYCH, COULD BE ANOTHER FAKE PROFESSOR?
By Luba Shara, Ukrayinska Pravda, Washington, D.C., Mon, Apr 18, 2005
First we thought it was an April Fool’s hoax. An anonymous letter to expose
Justice Minister Roman Zvarych’s alleged lies arrived to the Ukrayinska
Pravda office on April 1, right after he had taken part in the US-Ukraine
Business Networking Forum.
This quite successful and useful conference took place at the Ukrainian
Institute of America in New York, on March 30-31. Incidentally, New York
City is hometown of Minister Zvarych. And on the 1st of April Minister
Zvarych had a speech at his alma mater, Columbia University.
Look up any Who-is-Who directory, browse the Ukrainian Parliament or
Cabinet of Ministers web-sites and you will see that Roman M. Zvarych
was born on November 20, 1953 in New York, USA. Higher education.
In 1981 he graduated from Columbia University (New York), Department
of Philosophy. Ph.D. thesis “Ontological bases of Plato ethics” (1981).
1981-1983 – Assistant Professor of Philosophy at Columbia University.
1983 to 1991 – Professor in New York University.
The gist of the anonymous letter was that its author(s) took advantage of
the Minister’s visit to the campus and decided to arrange an interview with
him and the Columbia alumni magazine.
However, the alumni magazine staff replied that they were unaware of
any Columbia graduate named Roman Zvarych.
Oops! Could be yet another fake “proFFessor”?
Allegations in the anonymous April Fool’s Day letter were so serious and
blunt, that the Ukrayinska Pravda decided to conduct an independent
journalistic investigation.
"-----------------------------------------------------------------"
NOTE: To read the rest of this article and to see the photographic
images of documents with the article please click on the following link:
http://www2.pravda.com.ua/en/archive/2005/april/14/2.shtml
=============================================================
18. ZVARYCH'S EDUCATION
EDITORIAL: Kyiv Post
Kyiv, Ukraine, Wed, Apr 20 2005
What a strange controversy is tarnishing the career of Justice Minister
Roman Zvarych. Last week, the Web site Ukrainska Pravda ran an article
alleging that not everything on Zvarych’s resume might be as it seems. At
issue are the U.S.-born official’s studies at Columbia University in New
York City, and his subsequent teaching career at New York University.
Zvarych, who became a Ukrainian citizen in 1995, has intimated in various
venues that he holds at least one degree from Columbia. His resume on the
official Ukrainian government site says he graduated in 1891 (sic) from the
prestigious Ivy League school. Zvarych has also claimed that he taught law
at New York University. The Ukrainian version of his resume says he worked
as a professor at NYU from 1983 to 1991.
The Ukrainska Pravda report, however, suggests that Zvarych holds no
degrees from Columbia, even though he seems to have matriculated there.
The Pravda report replicated what it purports is a statement from the
Columbia registrar’s office confirming that he received no diplomas.
Zvarych’s comments about his academic career are confusing. In a March
25 interview with the newspaper Fakty, Zvarych said he received a full
scholarship to attend Columbia. “I received a master’s degree in
philosophy,” he told Fakty. He also said, “I never practiced law in the
United States, only in Ukraine. By the way, I never finished the university
because I applied for a doctoral program. I didn’t finish that either, but
began teaching at Columbia as a teacher’s assistant.”
"----------------------------------------------------------------------"
NOTE: To read the entire Kyiv Post editorial click on this link:
http://www.kyivpost.com/opinion/editorial/22616/
=============================================================
19. UKRAINE JOINS THE WORLD IN CELEBRATING EARTH DAY 2005
Earth Day has been a regular feature of spring all over the world
in recent years - including ten years in Ukraine. Preparations for this
year's event include the usual marshalling of rock bands and other
to draw the crowds - and a bit of effort to be sure that those
celebrating do not forget that the parlous condition of the earth is
an important matter, indeed
By Oksana Bondarchuk, FirsTnews Staff Writer
FirsTnews, Kyiv, Ukraine, Thu, April 21, 2005
KYIV - In Kyiv, icy sidewalks and piles of dirty snow have given
way to a sudden emergence of leaves and flowers, reinvigorating our
relationship to nature and the environment - and reminding us that the
annual observance of Earth Day is upon us.
Most of the world will celebrate Earth Day 2005 on Friday, April 22.
However, the observance in Kyiv will be held April 23, thereby allowing
many who could not participate on Friday to be a part of the community
event.
A coalition of Ukrainian public organizations, including the Earth Day
Network, the international organization that promotes environmental
awareness worldwide, and the Ukrainian ecological organization, Mother-
86, are planning this year's events in such a way as to remind all of our
responsibilities for stewardship of our natural environment.
Earth Day has its roots back in the mid 19th century in the United States.
It achieved official recognition in 1970, and it is now observed in more
than 170 countries. The event has been celebrated in Ukraine for more than
10 years with programs aimed at reminding people of the delicacy of nature
and the importance of avoiding repetition of such environmentally damaging
events as the Chornobyl disaster.
"During more than 10-years existence of Earth Day in Ukraine, ecological
organizations have always emphasized that this day is not a festival. It is
a day when one should pay attention to the Earth's problems. The ecological
organizations use different approaches to call attention [to these issues],"
Tamara Malkova, a representative of the information center, Zelene Docie
(Green Dossier), said.
Events in Kyiv on this Saturday will indeed make Earth Day look exactly like
a festival. Beginning at 11 a.m., Khreshchatyk, Kyiv's main street, and
Maidan Nezalezhnosti [Independence Square] will host a number of activities
including interactive games and workshops for children, street performances,
an auction of children's drawings, and concerts with Katia Chilly,
Gaidamaky, VV, Okean Elzy and others. A disco will cap off the festivities
during the evening. All these events will feature ecological themes.
"This year, Earth Day in Ukraine will be devoted to mobilization of
partnerships for solving ecological problems. With all means and with
famous rock singers, we hope to call public, political state and business
attention to the management of problems related to environmental
protection," said Hanna Golubovska-Onisimova, the president of
Mother-86.
President Viktor Yushchenko, Prime Minister Yulia Tymoshenko and Kyiv
Mayor Oleksandr Omelchenko have been invited to take part in the day's
events.
One participant who questions the wisdom of a rock concert and disco is
Oleg Skrypka, a leader of the Ukrainian rock band VV. "I will be very glad
to sing on this holiday, but I don't understand it. If we want to make the
city green, let's go to plant trees, instead of making a concert or a disco.
We will see how much rubbish remains after the disco!"
Earth Day will be marked on a substantial scale only in the capital.
Educational arrangements like conferences, ecological classes and
exhibitions by the local branches of ecological organizations highlight
celebrations in the rest of the country. -30-
--------------------------------------------------------------------------------------------------------
LINK: http://firstnews.com.ua/en/article.html?id=39622
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