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Action Ukraine Report

"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"

UKRAINE ECONOMY: REPRIVATISATION STUCK IN THE MUD
Process mired in political and legal controversies which are
damaging the economy and deterring investment

"The easiest solution at this point would be to shelve the idea, but it has
become such a high-profile issue that this is politically impossible. As a
result, deprivatisation is likely to dog the government's work for most if
not all of the rest of the year and to serve as a reminder that Mr
Yushchenko is unable to get all of his team working together."
[The Economist Intelligence Unit: article two]

"THE ACTION UKRAINE REPORT - AUR" - Number 506
Mr. E. Morgan Williams, Publisher and Editor
morganw@patriot.net, ArtUkraine.com@starpower.net
Washington, D.C. and Kyiv, Ukraine, TUESDAY, June 21, 2005

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

1. IRAQ: A BLACK HOLE FOR UKRAINE?
Ukrainian Authorities Need A New Strategy for Iraq
ANALYSIS: By Serhiy Zhurets and Serhiy Khanenko
Ukrainian Centre for Army, Conversion and Disarmament Studies
Defense-Express Web Site, Kiev, in Russian, June 15, 2005
BBC Monitoring Service, UK, in English, Mon, Jun 20, 2005

2. UKRAINE ECONOMY: REPRIVATISATION STUCK IN THE MUD
Process mired in political and legal controversies which are
damaging the economy and deterring investment
EIU Economy - News Analysis
The Economist Intelligence Unit Limited
London, United Kingdom, Monday, June 20, 2005

3. REALISM AFTER ORANGE REVOLUTION
Investors more sombre but analysts remain confident on future
ANALYSIS: New Europe, Athens, Greece, June 20, 2005

4. BUREAUCRACY IS THE "MAIN" PROBLEM IN UKRAINE
This is where most of Ukraine's leadership problems are centered.
LETTER TO THE EDITOR
From: Walter Prochorenko, Paramus, New Jersey
Saturday, June 18, 2005
Subject: Economic Forum Ten Point Action Plan for Ukraine
Published by THE ACTION UKRAINE REPORT (AUR)
Washington, D.C., Tuesday, June 21, 2005

5. VILLAGE TESTS YUSHCHENKO'S VOW
Kozyn, a sleepy village of 4,000 inhabitants 30 minutes from Kiev
By Natalia A. Feduschak, The Washington Times
Washington, D.C., Sunday, June 19, 2005

6. UKRAINE'S LEADERS VOW TO SPEED UP REFORM
By Andrew Hurst, Reuters, Kiev, Ukraine, Friday Jun 17, 2005

7. MEXICAN PRESIDENT FOX TALKS UP BUSINESS OPPORTUNITIES
ON HIS FIRST VISIT TO UKRAINE
Mara D. Bellaby, AP Worldstream
Associated Press, Kiev, Ukraine, Monday, Jun 20, 2005

8. UKRAINE AND TURKMENISTAN MAY SOON SIGN GAS CONTRACT,
DEVELOP NEW PIPELINE
AP Worldstream, Achkhavbad, Turkmenistan, Mon, Jun 20, 2005

9. "A CIVILIAN IN MILITARY UNIFORM,
OR ANATOLIY HRYTSENKO"S 100 DAYS"
ANALYSIS: by Oksana Kozak, Political Analyst
Glavred, Kiev, in Russian 0000 gmt 15 Jun 05
BBC Monitoring Service, UK, in English, Mon, Jun 20, 2005

10. UKRAINIAN PROSECUTOR-GENERAL WANTS TO RESIGN
Account of the phone-in with Piskun
Fakty i Kommentarii, Kiev, in Russian 18 Jun 05; p 5-6
BBC Monitoring Service, UK, in English, Mon, Jun 20, 2005

11. U.S.-UKRAINE SECURITY DIALOGUE INAUGURAL EVENT ON THE HILL
Mykola Hryckowian, Center for US-Ukrainian Relations
New York, New York, Monday, June 20, 2005

12. DOCTORING THE DOCTORS
De-recognition for Crimea State Medical University
EDITORIAL: New Straits Times
Malaysia, Monday, Jun 20, 2005

13. 'UNFAIR TO PUNISH ALL'
Thousand students at the Crimea State Medical University
Shamini Darshni; Ranjeetha Pakiam
New Straits Times, Malaysia, Mon, Jun 20, 2005

14. THEY'VE GOT USED TO FREEDOM, SO WHY DO RUSSIANS
STILL HUNGER FOR THE USSR?
By Niall Ferguson, Sunday Telegraph
London, United Kingdom, Sunday, June 19, 2005
===============================================================
1. IRAQ: A BLACK HOLE FOR UKRAINE?
Ukrainian Authorities Need A New Strategy for Iraq

ANALYSIS: By Serhiy Zhurets and Serhiy Khanenko
Ukrainian Centre for Army, Conversion and Disarmament Studies
Defense-Express Web Site, Kiev, in Russian, June 15, 2005
BBC Monitoring Service, UK, in English, Mon, Jun 20, 2005

The new authorities have followed the "beaten track" inherited from their
predecessors in their Iraqi policy and have failed to see results in the
form of reconstruction contracts, a defence web site has written. In
particular, Ukraine is unable to ensure timely supplies of the necessary
equipment and has failed to establish cooperation with the emigre Iraqi
clans in neighbouring countries, Serhiy Zhurets and Serhiy Khanenko from
the Ukrainian Centre for Army, Conversion and Disarmament Studies write.

They also suggest following the example of countries like Slovakia that have
donated equipment to the Iraqi army in expectation of maintenance contracts
in the future. The following is the text of the article entitled "Iraq: A
Black Hole for Ukraine?" published in Russian on Defense-Express web site
on 15 June; original subheadings have been retained:

National Security and Defence Council [NSDC] Secretary Petro Poroshenko
and Dominic Asquith, an adviser to the British prime minister and director
of the Foreign Office's Iraq Policy Department, agreed on 14 June to carry
out a study of Ukrainian companies' capabilities for participation in
rebuilding Iraq's energy sector. They also discussed coordinating Ukraine's
work in military and technical cooperation with Iraq.

This was not the first time we heard about such agreements and about
Ukraine's prospects in Iraq. But there have been no results. It is not just
because Iraq is still unstable and dangerous. The reason is different: the
new authorities in Kiev are trying to follow the beaten track inherited from
the old authorities. Ukrainian officials are trying to play on the Iraqi
market according to rules which can be of interest only to them. But getting
established in Iraq requires a brand-new strategy.

FIRST LESSON --------
It is companies from the countries which initially allocated funds for
rebuilding Iraq that get contracts in this country. Thus, it is necessary to
allocate money and make investments in Iraq first, and then reap the fruit.
But it should be kept in mind that, given the instability in Iraq, it may
turn out that there is no fruit.

Everybody remembers the 2003 Madrid conference and its results. The USA
allocated 18bn dollars to Iraq in the form of loans; Japan allocated 5bn
dollars, of which 2bn dollars was in the form of grants were gratuitous and
3bn dollars in the form of loans; Saudi Arabia and Kuwait both allocated 1bn
dollars in grants.

As for our companies, they approached this issue in a different way: "Give
us a contract, we shall fulfil it, and then we shall thank you."
The previous and incumbent Ukrainian authorities regarded the international
coalition as a kind of a joint-stock company where soldiers were seen as a
contribution to the statutory capital and a share package, which was
automatically supposed to be a guarantee of dividends in the form of
contracts.

SECOND LESSON --------
Ukrainian companies now have minimal, if not to say zero, chances of getting
general contracts. These are received by US corporations, while Iraqi
companies, mainly representing private business, act as sub-contractors.
Attracting local contractors ensures the loyalty of the local population,
minimizing labour costs and reducing security costs. In this situation,
there is no reason for US companies to attract Ukrainian labour instead of
Iraqis.

THIRD LESSON --------
Ukrainian proposals are still perceived in Iraq like an offer from a
stranger to buy a pig in a poke. Ukrainian companies are unable to present
themselves in the most favourable light and colour. But even if our goods or
services are recognized and either US logistics managers or Iraqis
themselves are ready to buy them, we are unable to supply goods quickly
and without prepayment.

"It would be possible for us to order all goods from America. They will be
delivered in a month. But transportation from the USA costs 2,000 dollars
per ton of cargo. The Poles make supplies to Iraq in not more than a month,
though they have to transport cargo across half-Europe.

So why do Ukrainian companies need at least two months for making
deliveries, if you have direct railway links with your own Black Sea ports?
Given such delivery terms and against the background of local companies
supplying Korean of Japanese equipment to us within two or three weeks, you
are not competitive by definition." That is what US representatives in Iraq
say. They would be happy to buy cheap goods "made in Ukraine", but they are
afraid to do it... [ellipsis as published]

FOURTH LESSON --------
If we want to be in Iraq tomorrow, we should be in the [United Arab]
Emirates, Jordan, Kuwait and Syria today. These are the places to which the
largest Iraqi clans moved during the period of Saddam's persecutions. Now
they constitute the major commercial gate to Iraq. This continues to be true
even now due to the ongoing instability in the "peacekeeping" zone. Almost
all large foreign companies expanding their presence on the Iraqi market
have opened offices in Jordan and the UAE.

Iraqi medium-level traders also spend some of their time abroad in this
secure "business incubator". It is necessary to establish our own "rear
bases", open representations, establish dealers' networks and provide
services, and then Ukrainian goods will flow to Iraq by themselves. It does
not matter how: organization of deliveries and security will be the problem
of Iraqi business.

FIFTH LESSON --------
We also wanted to sell military equipment and services to Iraq. The new
Iraqi army needs everything: from tanks to armoured vests. There were
discussions in Kiev on Ukrainian-Polish cooperation on modernization of
Iraqi T-72 [tanks] worth almost 100m dollars, on providing a servicing
plant, armoured personnel carriers and helicopters. But our barriers are the
same: slowness and lack of an overall state approach.

For example, Jordan donated 150 APCs, the majority of them ex-Soviet
production, to the Iraqi army for free. Slovakia recently donated 50 T-55
tanks to Iraq - also for free, but it will be necessary to repair this
machinery later on. It already means money. But ours is a single-step
approach: "No profit - no goods". -30-
===============================================================
2. UKRAINE ECONOMY: REPRIVATISATION STUCK IN THE MUD
Process mired in political and legal controversies which are
damaging the economy and deterring investment

EIU Economy - News Analysis
The Economist Intelligence Unit Limited
London, United Kingdom, Monday, June 20, 2005

Ukraine's government has taken control of Kryvorizhstal, the country's
leading steel mill, and ordered its reprivatisation. Simultaneously, it has
promised to push ahead with other asset sales.

Yet the whole process remains mired in political and legal controversies
which are damaging the economy and deterring investment. Nor, to the
detriment of Ukraine's prospects, is there any end in sight to the
reprivatisation controversy.

Yulia Tymoshenko, Ukraine's prime minister, was reported on June 20th
as saying that the government had agreed to hold a new auction for
Kryvorizhstal, the steel mill sold for US$800m in mid-2004 to politically
well connected businessmen. The move followed a court decision to seize
the share certificates of the company, following a ruling that the
privatisation breached Ukrainian law.

Added to government promises, made to the World Economic Forum
meeting in Ukraine, of a renewed push on privatisation, this appears to
signal that the government of Viktor Yushchenko, the pro-reform president,
is poised to move ahead after an unexpectedly long post-election delay.

GOING NOWHERE --------

In practice, however, neither the government's reported Kryvorizhstal
decision nor Mr Yushchenko's pledges are likely to break the deadlock that
has surrounded reprivatisation in Ukraine. The issue came to the fore during
and immediately after the presidential election campaign in late 2004,
tapping into disgust at perceived cronyism in the disposal of state assets.

For the government, moreover, it offered a useful way to boost state revenue
and to attract foreign investors who have missed out on the glittering
prizes in Ukrainian privatisation to date.

In the months since the new team has come to power, however, squabbles
between various leading lights in the government have created a
destabilising deadlock. Initially a question of social and economic justice,
some government advisors have recently portrayed deprivatisation as a way
to reimpose state control in strategic sectors.

The mishandling of reprivatisation has alienated existing and potential
investors by failing to clarify a number of significant questions-including
how many, let alone which, enterprises are likely to be affected.

The government's statements on the issue have frequently been contradictory,
with various cabinet officials confirming, and then denying, the existence
of definitive lists outlining which companies are to be affected.

Initial talk was of a list of several thousand enterprises, although this
quickly fell to 30 or 40. In early May Anatoly Kinakh, the first vice
premier who was made responsible for the issue, confirmed that he had
drawn up a list of 29 enterprises that had either been sold cheaply, in an
opaque sale or with investment conditions that had not been met.

While statements by Mr Yushchenko and Petro Poroshenko, secretary of the
National Security and Defence Council, appeared to confirm Mr Kinakh's
statements, Ms Tymoshenko contradicted them, stating that she knew of no
such list. The State Property Fund, for its part, has prepared a blacklist
of 191 enterprises whose privatisation is to be contested in court.

Ms Tymoshenko, meanwhile, said on June 17th that "eighty percent of
Ukrainians believe that ten strategically important companies were sold
extremely brutally", and that those transactions would be challenged in the
courts.

MULTIPLE PROBLEMS --------

The government's reprivatisation problem has at least four aspects.

FIRST, it has struggled to provide clear terms for reviewing past
privatisations. It is fine, in theory, to stand against cut-price, opaque or
otherwise rigged sales but defining precise criteria for identifying
illegitimate asset sales is difficult. Moreover, it would be impossible
within the next year to produce a comprehensive list-as justice demands-of
enterprises sold illegitimately.

As a result the government is minded to focus on the largest firms and the
most "blatant" cases-but this almost immediately makes the process a
subjective one that is difficult to codify and still more difficult to
defend against charges of political score-settling against the old regime.

SECOND, the absence of a law on reprivatisation and the nature of the
Ukrainian court system promises lengthy delay in every allegedly wrongful
privatisation that the government attempts to prosecute. Here the case of
Kryvorizhstal is instructive, as it underlines the legal uncertainty. On
February 17th the Pechersky District Court in Kiev declared the sale to have
been illegal, but then reversed itself on April 21st.

Shortly thereafter, the Kiev Economic Court declared the Kryvorizhstal
privatisation to have been illegal-a decision upheld by the Kiev Economic
Court of Appeal in early June. This prompted the government to move to
recover control of the plant.

However, the verdict by the Kiev Economic Court of Appeal may still be
contested in higher courts, such as the High Economic Court and, as a last
resort, the Economic Chamber of the Supreme Court of Ukraine. The
Kryvorizhstal is therefore likely to drag on for far longer that the
government would like.

THIRD, the government lacks a mechanism for determining a "fair" or "market"
price for the assets-and this is important because, in an effort to minimise
the economic disruption, the authorities are prepared to offer most owners
the chance to retain their assets by making up the difference between this
reference price and the price they paid.

No legislation on asset re-evaluation currently exists. It is, moreover, a
complicated challenge. Many assets were acquired several years ago,
when economic conditions in the country and in the enterprise itself were
very different.

FOURTH, the reprivatisation issue is damaging the Ukrainian economy.
Domestic and foreign companies have delayed investment decisions
pending a resolution of the question, and foreign investors have made clear
to the government the damage done to the country's attractiveness arising
from such uncertainty over property rights.

Confidence has been badly shaken, and the negative impression is
compounded by the government's inability to sort out its internal
differences.

Moreover, reprivatisation sets a bad precedent-if Mr Yushchenko or Ms
Tymoshenko is able to reverse privatisations, what is to stop their
successors from doing the same?

A GOOD IDEA AT THE TIME -----

Deprivatisation remains theoretically attractive. As part of a new start
under Mr Yuschenko, it offered a way for Ukraine to avoid the problems that
still besets Russia-the absence of societal acceptance for the post-Soviet
distribution of capital-and which underpins the Yukos saga.

Righting the wrongs of the past, either through fresh sales or top-up
payments by current owners, could help to create a solid basis for the
country's domestic and foreign businesses by increasing confidence in
property rights.

In practice, however, deprivatisation has damaged the Ukrainian economy.
Investment has stalled and the privatisation of state assets has been frozen
too. Instead of conferring greater legitimacy on capital, it has put all
businesses on edge. For a government facing all-important parliamentary
elections in less than a year, this is becoming a major liability.

The easiest solution at this point would be to shelve the idea, but it has
become such a high-profile issue that this is politically impossible. As a
result, deprivatisation is likely to dog the government's work for most if
not all of the rest of the year and to serve as a reminder that Mr
Yushchenko is unable to get all of his team working together. -30-
===============================================================
3. REALISM AFTER ORANGE REVOLUTION
Investors more sombre but analysts remain confident on future

ANALYSIS: New Europe, Athens, Greece, June 20, 2005

Six months after Ukraine's Orange Revolution paved the way for the
reform-minded Viktor Yushchenko to emerge as president, the international
investment community's euphoria about the nation's prospects for an
economic and political overhaul has been replaced a more sober
assessment of the country's outlook.

But despite signs of tensions in Ukraine's new government about Kiev's
economic course, in particular in the run-up to next year's parliamentary
elections, analysts remain confident that the country will be able to press
on with reforms and to continue to draw closer to the European Union.

"I think overall there is still substantial optimism - both medium-term and
long-term - about Ukraine's prospects," Deutsche Presse-Agentur (dpa)
quoted Rory Macfarquhar, analyst with Goldman Sachs in Moscow, as saying.
"This is both in terms of market reforms and clean government issues as well
as closer relations with Europe," he said.

Indeed, despite the crisis that has engulfed the EU's ambitions for
enlargement that followed French and Dutch referendums, the EU's new
member states, such as Poland and Lithuania, continue to push for deepening
Europe's economic ties with Ukraine and shoring up Kiev's credentials as a
candidate for joining the 25-nation bloc.

"People are very interested in seeing how the story will develop with regard
to the EU," said Jon Harrison, emerging markets strategist with Dresdner
Kleinwort Wasserstein in London with international investor interest in
Ukraine helping to bolster the national currency, the hryvnia.

Meanwhile, a dramatic reduction in tariffs announced by Kiev in March and a
three-year action plan with Brussels is helping to underpin economic links
with the EU.

With a population of about 49 million, Ukraine represents a potentially new
large market in Central and Eastern European region's fast-paced economy.
In addition the nation is expected to turn in a growth rate of this year of
about seven percent (after 12 percent in 2004) with foreign investment in
the nation expected to double this year from what has been a low base
compared to neighbouring countries.

In the meantime, support in both the White House and the US Congress for
Yushchenko's political and economic agenda could mean said Lars
Christensen from Danske Bank in Copenhagen that Ukraine joins the World
Trade Organisation before Russia.

But as economic uncertainties surrounding the nation have emerged in recent
years, income growth in Ukraine has slowed, increasing by about five percent
in the first four months of this year. But that was down from the 12 percent
recorded in the same period last year.

Apart from the No votes in the French and Dutch referendums which has cast
doubts on the EU expansion drive, the more measured approach taking by
investors to Ukraine follows conflicting signals out of Kiev over its plans
for renationalising and relaunching privatisations of companies that were
sold off by the former Moscow-backed government.

"There has been a dose of realism for investors," said Macfarquhar. "It is
'old Europe' which is definitely more hesitant about feeding Ukraine's
hopes," he said.

Further underscoring the role played by Warsaw in sponsoring Kiev's EU
aspirations some international companies are considering using neighbouring
Poland as a springboard into Ukraine. Poland and Lithuania were two of eight
Central and Eastern nations that formally signed up for EU membership in May
last year.

However, even before the fall-out from the resounding No votes in France and
the Netherlands plunged the EU into a period of soul-searching about its
future, analysts believed that investing in Ukraine involved considerable
risks. "They have a long way to go in terms of opening up markets," said
Harrison.

Analysts say Kiev also faces pressure to maintain the social payments system
of the previous government as well as they are concerned about how
Yushchenko will seek to rebuild political ties with supporters of the former
regime, who tend to look more towards Russia than those backing the
president and his campaign to join the EU. Despite the push by Yushchenko
to refocus his country on western Europe, more than 35 percent of Ukraine's
trade is with Russia.

Nevertheless, Julia Tsepliaeva, economist with ING Bank in Moscow, remains
upbeat that Kiev will be able to overcome its current problems and to forge
ahead with economic change. "There are substantial short-term risks because
of the privatisation process," she said. "But after 2006, Ukraine should
enjoy a much improved situation." -30-
===============================================================
4. BUREAUCRACY IS THE "MAIN" PROBLEM IN UKRAINE
This is where most of Ukraine's leadership problems are centered.

LETTER TO THE EDITOR
From: Walter Prochorenko, Paramus, New Jersey
Saturday, June 18, 2005
Subject: Economic Forum Ten Point Action Plan for Ukraine
Published by THE ACTION UKRAINE REPORT (AUR)
Washington, D.C., Tuesday, June 21, 2005

Hello Morgan,

The ten point proposal submitted at the conclusion of the Economic Forum
in Kyiv would be laudable were it not for the fact that we have heard it all
before. Not only have similar proposals been submitted to Ukraine's
government agencies in the past, been published in various publications, but
if one also worked in Ukraine during the past 14 years then one also lived
with them.

I don't mean to be too skeptical since I still have a lot at stake in
Ukraine and if anyone would like to see Ukraine's economic climate improve,
it certainly would be myself, but let's be realistic: are these really the
problems that need to be addressed or is it just window washing while the
main issues remain unaddressed?

As you so well analyzed just a few days ago, the chance of Ukraine's present
Parliament enacting the necessary laws needed for WTO entry this year (let
alone before summer break) are very slim. But even if by some miracle they
did, they still would need the support of the US which is not ready to bend
over backwards when the new administration has still not shown a cohesive
economic strategy and has already back-tracked on some of its promises.

The creation of specialists to support foreign investors is an excellent
idea, but if these specialists will be from Ukraine, then there is a real
likelihood that they will look only after their own interests rather than
those of the country as a whole. This has been an historic problem and until
a sense of national identity and societal well-being is established, it is
likely to remain just a proposal.

The second problem with this proposal is: will Ukraine's leaders listen to
such specialists? They have never done so in the past so what is likely to
change now?

If Ukraine would be serious about creating a team of specialists that
could help guide Ukraine to a true market economy, then such specialist must
come from the West (as was done in Poland) and they should be paid well
enough to be taken seriously. They should also be mandated to be consulted
by Ukraine's various agencies during the new transition process.

This issue also relates to proposed step 9 which the forum suggested would
require the transfer of skills and business knowledge from abroad. But
let's be realistic! Would any of the really skilled professionals from the
West be willing to work in Ukraine for free or for some type of low wages?

Or would the so-called skilled personnel that Yushchenko invited to work in
and help Ukraine consist of "fresh out of college" young people that are
looking for adventure, exotic experiences, and generally a "good time"? The
other question is: would anyone take inexperienced young graduates seriously
in the various Ukrainian administrations?

How many times in the past have we seen these inexperienced World Bank,
IMF, and other agency "recent graduates" come to Ukraine and ineffectively
"lecture" the old communist bosses on how to run the country? Was this not
one of the reasons why these very bosses decided that rather than listen to
these "young experts" that they would rather conduct business their own way
and reverted back to "apparatchik" rule, clan politics and Soviet style
corruption?

Steps 3 through 7 as proposed by the forum leaders, again would require
Parliamentary and Ukrainian government inter-departmental action and
cooperation, which given the present state of affairs and lack of a cohesive
and comprehensive administrative policy, is very unlikely to happen in the
very near future. When the President, his ministers, and various appointed
departmental and regional heads do not seem to be able to agree on major
issues and when one faction within the same party fights another for power
and control, then what chance is there for them to achieve a unified policy?

Tax reform has been on the drawing board for quite a long time, well before
Yushchenko took over the reigns of government. However, with additional
spending, budget shortfalls, and an economic slowdown, meaningful tax
reform that can stimulate the economy will be a hard sell.

The one area that certainly requires attention is the management and
business skills of its economic leaders. If one speaks about the younger
Ukrainians, then their skills are certainly on par with any other country in
Europe if properly directed. It is the vestiges of the old Soviet system
leadership that needs special attention since these are the leaders that
still possess the power and control a large portion of the ineffective and
pervasive bureaucracy in Ukraine and much of Ukraine's business
enterprises.

In my humble but well experienced opinion bureaucracy is the "main" problem
in Ukraine. Unfortunately this was not addressed by the Economic Forum
leaders and yet this is where most of Ukraine's leadership problems are
centered.

When mid-level bureaucrats can state that courts and laws have no bearing
on their (the bureaucrats') decisions, then there is something fundamentally
wrong with the country. Incidentally - this is something that I experienced
first-hand in Kyiv not very long ago. In another instance, a different
mid-level bureaucrat was thrown out of office by the "prokuratura" for
exceeding the position's authority, taking over public properties for
self-interests, and for physically beating up several village council
members. She (yes - she) then barricaded her office and prevented the duly
appointed replacement head to take his duties. She was then reinstated at
the request of the President (with whom she has distant family ties) and now
still remains in that position.

The last example shows that there should definitely be a serious move
against corruption, but how can this happen when the President's own people
are now being accused of the very corruption that they claim to be against?

I know that I will be vehemently attacked for some of the comments made
above particularly regarding young volunteers and criticism of the
Yushchenko administration, but if Ukraine is indeed serious about becoming a
true market economy, joining the EU, NATO, and WTO, then it needs to take
some hard self-analysis, and to make some serious fundamental changes in its
governance. These changes need to be directed at its pariah bureaucracy,
which I firmly believe is the root and cause of its corruption and its
various other problems. As the bureaucratic system now functions, it
literally promotes corruption and inefficiency.

When I heard at a recent conference that one Ukrainian "think tank" expert
actually proposed an increase in the level of bureaucracy in order to fight
corruption, it made my hairs stand on end. I was flabbergasted that such an
idea could even be considered. In my mind, and from my years of experience
with various agencies in Ukraine, I directly correlate bureaucracy with
corruption. Both are interdependent and self-serving. In Ukraine - as in
many other places - one cannot exist without the other, but while other
countries have been able to bring corruption under control while utilizing a
"functioning" bureaucratic system, in Ukraine this has not yet happened.

I look forward to Ukraine's transformation to a true market society but how
soon it does so will depend on how it is able to deal with its own
bureaucratic problems and its ensuing corruption issues. While I fully
support President Yushchenko and all of his administration, I feel that
changing the top level of the government only is insufficient to take the
country into the direction it needs to go.

Best Regards, Walter Prochorenko
E-Mail: prowalt@yahoo.com
-----------------------------------------------------------------------------------------------------------
Walter Prochorenko is a businessman who spent over 8 year in Ukraine
in private enterprise which included consulting, real estate development,
business appraisals for banking interests, and construction. He has just
finished a doctorate in International Business with his main area of
research: business in Ukraine.
===============================================================
5. VILLAGE TESTS YUSHCHENKO'S VOW
Kozyn, a sleepy village of 4,000 inhabitants 30 minutes from Kiev

By Natalia A. Feduschak, The Washington Times
Washington, D.C., Sunday, June 19, 2005

KOZYN, Ukraine -- The front line in President Viktor Yushchenko's promise
to establish the rule of law in this county runs through Kozyn, a sleepy
village of 4,000 inhabitants a 30-minute drive from downtown Kiev, the
capital.

For months now, the country has been gripped by reports of corruption
and a land grab by the rich and powerful.

"For Mr. Yushchenko and his government, this is a huge chance to make an
example of Kozyn that the law works," said Irina Sahach, who registers the
town's land holdings.

The dispute is over some real estate that was acquired for next to
nothing and is now being developed into multimillion-dollar housing estates
and upscale hotels.

On one side, Mayor Valentyna Horobets, who was elected in 2003 after her
predecessor died, has demanded a moratorium on land transfers to sort out
who owns what. On the other side, a group of deputies, many elected before
2003, accuse the mayor of corruption and secretly transferring land
ownership while in office.

"She said there needed to be an inventory of land," said Mykola
Tymchenko, a deputy. "There has been lots of disorganization. We believed
her."

The dispute has become so bitter and complicated that Mr. Yushchenko has
appointed a special representative to help resolve the situation.

Mr. Yushchenko was swept to power five months ago, riding on a promise
to clean up corruption. Since then, several scandals have surfaced in
newspapers and on television: a government minister who lied on his resume,
suspicion surrounding a wealthy official who claims to have put his assets
into a blind trust, and another minister who has just returned from a junket
to Monte Carlo on a plane provided by Russian businessmen.

The situation in Kozyn, however, has become the biggest headache so far
for the Yushchenko administration.

Many officials from the previous government of Leonid Kuchma, who was
ousted following huge protests that began late last year, and a number of
Mr. Yushchenko's political allies own land in Kozyn that they bought at
cut-rate prices, said Mrs. Sahach, the land registrar.

"The problems began under the past government," she said. Under
Ukrainian law, each citizen is allocated a small parcel of land, usually in
the region where he or she lives.

In Kozyn, however, large parcels of land essentially were given away to
government officials, but registered in the names of their relatives or
businesses, making the actual ownership nearly impossible to trace, Mrs.
Sahach said.

The village comprises about 16,300 acres. Pristine land sells for about
$10,000 for 120 square yards.

New houses -- an odd architectural assortment of oversize villas,
unsightly miniature castles and some tasteful homes -- are rapidly being
built within sight of old, shabby buildings. Mercedes SUVs and Toyota
Land Cruisers ply the village's potholed roads.

Despite the glaring opulence, the village collects a mere $1,306 per
year in land taxes, said Olya Mineyeva, the chief accountant.

Like others, Mrs. Sahach said she doesn't know whether Mr. Yushchenko's
special representative will be able to help resolve the situation. Too many
people have a vested interest in making sure that Kozyn's true state of
affairs remains hidden, she said.

On a warm recent Saturday afternoon, a handful of deputies from the
village council said they had been unable to carry out their duties during
the past year because Mrs. Horobets, the mayor, prevented them from
entering the village government center.

They accuse her of giving away land, including nature preserves, without
their permission.

The deputies say they have no idea who owns what in Kozyn because they
don't have access to the registry books, and have taken their case straight
to Mr. Yushchenko.

They blocked the entrance to the president's residence, which is near
Kozyn, on a recent night until he heard them out. He said he would let the
courts decide," said Aleksiy Tokar, a local deputy. -30-
===============================================================
6. UKRAINE'S LEADERS VOW TO SPEED UP REFORM

By Andrew Hurst, Reuters, Kiev, Ukraine, Friday Jun 17, 2005

KIEV - Ukraine's President Viktor Yushchenko vowed on Friday to quicken the
pace of reform after international investors expressed concern that the new
government was losing momentum. Yushchenko and his radical prime minister
Yulia Tymoshenko addressed a World Economic Forum meeting of business
leaders worried by mixed messages on reform, particularly over a review of
completed privatisations.

"The Ukrainian government is 4-1/2 months old. You are pioneers who came to
this market. You will witness the organisation of the most modern market in
Europe. It will be the Ukrainian market," Yushchenko said to a standing
ovation. The second half of 2005, he said, would be devoted to introducing
promised reforms and fighting corruption.

Tymoshenko offered investors a voice in policy-making. She also vowed to
proceed quickly with the resale of Ukraine's most hotly contested
privatisation, the Kryvorizhstal steel plant, saying details would be
finalised on Saturday.

Yushchenko told the event's closing session that his government had made
Ukrainians more prosperous and set down democratic foundations since the
"Orange Revolution" protests that helped sweep him to power late last year.

He appealed to investors to beware of corruption. "I ask you as president --
when you come to Ukraine do not pay bribes to anyone," he said. "I do not
take bribes and recommend you not take bribes."

He pledged to secure passage of necessary legislation to join the World
Trade Organisation in October, to cut payroll taxes and clear a big backlog
of tax rebates.

Investor interest soared after mass protests against a rigged election
ushered in leaders committed to overturning 10 years of administration often
harshly criticised in the West.

INVESTOR CONCERNS -------

However, many investors are worried about an economic slowdown from last
year's record growth of 12.1 percent, conflicting policy statements, which
some analysts link to parliamentary elections next year, and uncertainty
over the sale of state assets.

Tymoshenko promised to accommodate foreigners willing take the risk of
investing. "Ukraine is ready today to open its doors, its windows, to roll
out the red carpet," said Tymoshenko. "Our only request to you is to pay
your taxes honestly. The Ukrainian government imposes no further
conditions."

The premier proposed setting up an investment advisory board, to include
foreigners. "I want to know about the activities of investors and what it is
that is not allowing them to do their work," she said.

Her government, she said, had passed a revised budget eliminating a deficit
of about $6 billion (3.3 billion pounds), brought monthly inflation down to
0.6 percent and eliminated thousands of regulations hindering business
activity.

However, many investors were still to be convinced. Kamran Huseyinov of the
Turkish-based Zorlu company, said its efforts to build a power plant were
being hindered by the government's imposition of value added tax on key
components. "This problem has to be sorted out within a year," he said. "If
not, then it is not worth it."

Russian ambassador Viktor Chernomyrdin, a former prime minister in Moscow,
offered a blunt assessment of dissonance in the cabinet.
"I get the impression you have too many Bolsheviks in your government," he
told a discussion group. "Every Bolshevik makes a statement that has nothing
to do with his position. And it does a lot of damage to the economy." -30-
==============================================================
7. MEXICAN PRESIDENT FOX TALKS UP BUSINESS OPPORTUNITIES
ON HIS FIRST VISIT TO UKRAINE

Mara D. Bellaby, AP Worldstream
Associated Press, Kiev, Ukraine, Monday, Jun 20, 2005

KIEV - Mexican President Vicente Fox officially opened his country's embassy
in Kiev on Monday during the first visit of a Mexican leader to independent
Ukraine - part of a tour meant to build commercial ties in the former Soviet
Union.

Fox won Ukrainian support for preliminary plans to assemble An-140 planes at
a plant in Mexico, with Ukraine supplying the components. Ukraine also said
it would consider helping Mexico construct a Mexican-based repair center for
Ukrainian-made helicopters.

Ukrainian President Viktor Yushchenko said Ukraine was also interested in a
joint project to produce chemical fertilizers in Mexico. "Today's talks are
a definite sign that Ukrainian-Mexican relations are developing," Yushchenko
told journalists in Kiev's ornate Mariynskiy Palace.

Prime Minister Yulia Tymoshenko, meanwhile, won agreement from Fox to
consider removing limits on the import of Ukrainian metals and chemical
products, Ukrainian news agencies reported.

From Ukraine, Fox was to go to Russia where he was slated to hold talks
with President Vladimir Putin on Tuesday.

Fox told Ukrainian officials that he had welcomed last year's Orange
Revolution protests - which helped usher the pro-Western Yushchenko into
power - saying he saw similarities with his own rise to power in Mexico's
2000 elections.

Fox's victory ended more than seven decades of rule by the Institutional
Revolutionary Party, or PRI, and was widely hailed as a breakthrough for
democracy. Yushchenko's win brought an end to a decade of former
President Leonid Kuchma's scandal-tainted rule.

"It isn't accidental what happened in Ukraine, which is a little similar to
what happened in Mexico about five years ago," Fox said. "We have found
many similarities in our people's strivings to develop democracy." Fox told
Yushchenko: "The most important thing is not to lose the momentum on this
path."

Fox was accompanied on his visit by a delegation of business leaders, who
attended a Ukrainian-Mexican business forum Monday. Mexican investors
expressed interest in Ukraine's metals sector, Ukraine's Channel 5 TV
reported.

Fox also held talks with parliament speaker Volodymyr Lytvyn, who suggested
the two countries boost cooperation in the sciences and education spheres.
Fox's visit to Russia is also the first by a Mexican leader since the 1991
collapse of the Soviet Union. Putin visited Mexico last year.
===============================================================
8. UKRAINE AND TURKMENISTAN MAY SOON SIGN GAS CONTRACT,
DEVELOP NEW PIPELINE

AP Worldstream, Achkhavbad, Turkmenistan, Mon, Jun 20, 2005

Ukraine and Turkmenistan are planning to sign a long-term contract on
selling Turkmen gas and develop a new gas pipeline, a top Ukrainian energy
official said Monday after meeting Turkmen President Saparmurat Niyazov.

Oleksiy Ivchenko, the chairman of Ukraine's state Naftogaz-Ukraine oil and
gas company, said Niyazov could possibly visit his Ukrainian counterpart
Viktor Yushchenko in September to sign the agreements.

Turkmenistan, a largely desert ex-Soviet nation in Central Asia ruled with
an iron fist by Niyazov, is a top supplier of natural gas to Ukraine.
The energy-rich former Soviet republic briefly turned off supplies to
Ukraine in early 2005 when the Ukrainian government balked at higher rates.

Ukraine later agreed to pay US$58 (Euro 48) per 1,000 cubic meters (35,310
cubic feet) of the 36 billion cubic meters (1.26 trillion cubic feet) of gas
it intends to buy from Turkmenistan this year. The two countries have been
negotiating a 25-year contract on selling Turkmen gas to Ukraine beginning
in 2007.

However, the Turkmen Foreign Ministry complained after the talks that
Ukraine owed more than US$560 million ( Euro 461 million) in goods due
for shipments of gas made in 2004 and so far in 2005. Under the current
contract, half of the price is paid in cash, half in kind.

"During the negotiations, we especially stressed the fact that bilateral
relations need to be built on a mutually-beneficial, civilized basis," the
foreign ministry said in a statement. "If Ukraine fulfills its obligations,
Turkmenistan is ready to supply Ukraine with the amount of natural gas it
requires," it added.

A pipeline passing through Uzbekistan, Kazakhstan and Russia carries the
gas to Ukraine. The Ukrainian energy official did not give details about
where an alternative gas pipeline could lie.

Ivchenko and Niyazov also discussed the possibility of Ukrainian companies
taking part in developing oil and gas fields in Turkmenistan. Ivchenko said
the Turkmen leader welcomed the project and urged specialists to speed up
work in that field.

Turkmenistan is the second-largest natural gas producer in the former Soviet
Union after Russia. By 2007, its annual exports are expected to reach 100
billion cubic meters (3.53 trillion cubic feet). -30-
===============================================================
9. "A CIVILIAN IN MILITARY UNIFORM,
OR ANATOLIY HRYTSENKO"S 100 DAYS"

ANALYSIS: by Oksana Kozak, Political Analyst
Glavred, Kiev, in Russian 0000 gmt 15 Jun 05
BBC Monitoring Service, UK, in English, Mon, Jun 20, 2005

Ukrainian Defence Minister Anatoliy Hrytsenko inherited a difficult task
when he was appointed some hundred days ago, a political analyst writes
on a Ukrainian web site. Among the problems he has had to encounter are
corruption, particularly in the management and use of the ministry's
resources, the misuse of land plots on Defence Ministry property and the
unfair allocation of service accommodation.

He also plans to improve the quality of life and professional training in
the army and to increase soldiers' pay, the writer goes on. Hrytsenko had
talks with his Russian counterpart Sergey Ivanov regarding "violations" by
the Russian side in the use of the Sevastopol port and about the future
stationing of Russian troops in Crimea. On the subject of NATO, he said
Ukraine could be ready to join the alliance "in two-three years' time".

The following are excerpts from the article by Oksana Kozak entitled "A
civilian in military uniform, or Anatoliy Hrytsenko's 100 days" carried on
the Glavred web site on 15 June; subheadings have been inserted editorially:

CIVILIANS IN UNIFORMED MINISTRIES --------

Ukrainian President Viktor Yushchenko is very keen on the power-wielding
structures of his government being headed by civilians. Leaving aside the
details of agreements reached with his political allies regarding this or
that post, it seems the allies heeded the president's wishes.

For example, Yuriy Lutsenko became Interior Minister and Anatoliy Hrytsenko
became Defence Minister. But whereas Mr Lutsenko's arrival at the Interior
Ministry as chief of those he had more than once threatened through the
megaphone at protest rallies, caused first a shock and then a lingering
stupor, the arrival at the Defence Ministry of the "civilian" Hrytsenko -
the analyst of Viktor Yushchenko's election headquarters and president of
the Razumkov centre - caused little surprise, at least among the experts.

It also geared everyone up towards reform and raising the army's prestige.
"This can be seen as a crushing burden or as an interesting task. So long as
you kindle the people's interest," Hrytsenko said in an interview for the
Zerkalo Nedeli newspaper.

In any event there was some hope of reducing the entropy in this state
structure as set out in "Murphy's Military Law".
"No matter which way you have to march, it's always uphill" (Murphy).

"If the Ukrainian president has decided that the defence minister should be
a civilian, then Hrytsenko's appointment, in my view, is the best option. I
know him from his work at the National Security and Defence Council [NSDC],
and also in the Ukrainian Centre for Political and Economic Research. I have
to say that he has always stood out for his profound grasp of issues
connected with the military," was how former NSDC Secretary Volodymyr
Horbulin praised the new minister. [Passage omitted: outline of Hrytsenko's
professional and academic career]

At the Razumkov centre Hrytsenko, among other things, was responsible for
questions of the army and defence capability and Ukraine's entry into NATO.

Hrytsenko was the expert most widely quoted in the west on matters of
civilian control over the armed forces and military-political reform, and
his book, devoted to these matters, is required reading for all military
attaches coming to Ukraine. So, the Ukrainian army has been headed by
"brains". [Passage omitted: Hrytsenko did away with time-wasting practices
such as painting grass green and snow white]

MINISTER INHERITS PROBLEMS --------
"The quartermaster has only two sizes - too large and too small" (Murphy's
Law).

The path to a new life for the army inevitably lies through reform, which
meant finding one's feet and sorting out its economy. After taking stock of
what he had been left with, the new minister's optimism began to wane. In
general, it was just like Kennedy said: "we said everything was bad, but we
didn't think it was that bad". "In some aspects, particularly of an economic
nature, realities exceeded expectations", Hrytsenko admitted. "What we are
talking about here, above all, is corruption and betraying the interests of
the Defence Ministry and the state when economic deals were being
concluded."

In particular, this concerns the management and use of the potential of the
Defence Ministry's resources - leasing land, premises, enterprises, and so
on. The total sum of the "kickbacks" in the Defence Ministry's economic
activity, according to Hrytsenko, was about 30 per cent. You can add to that
bribes, without which nothing is ever accomplished.

After everything he had seen, Hrytsenko came to the conclusion that the
wisest thing to do would be to relieve the Defence Ministry of the economic
and commercial burden and to create transparent schemes of marketing the
surplus property of the armed forces. First and foremost he "discharged" all
the middle-men in the conclusion of deals and put a stop to all tenders
carried out by previous Defence Ministry's representatives.

As regards deals already concluded, then after audits by the Defence
Ministry and the Prosecutor-General's office, and sometimes through the
courts, many of them will be reviewed and thrown out. This concerns both
contracts of lease and housing construction on Defence Ministry's land and
supplies to the armed forces.

For example, the charge for renting out one square metre on Defence Ministry
facilities on paper is less than two hryvnyas on average throughout the
country, and less than 15 hryvnyas [3 dollars] for Kiev (in central parts of
the capital the commercial renting charge is 20-25 dollars a square metre).

HOUSING AND LAND PROBLEMS --------

Over the past two months before the elections finished the Defence Ministry
handed over large plots of land, hundreds of hectares, in Kiev for housing -
this is about half a billion dollars in market prices. In return the
investors promised to provide the Defence Ministry with 15-20 per cent of
the apartment blocks they built within three to four years.

Hrytsenko decided to do away with not only the wanton practice of promises
which were binding on nobody, but also to fight the age-old "apartment
question" which has been such a pain for military servicemen.

"Our principle concerning such contracts will be simple and clear: we will
value the plot of land and assess the cost of housing which will be built
there, followed by a tender and the percentage going to the Defence
Ministry. This would be followed by an assessment of the market value of the
housing (not the cost price!). And then on this figure we will receive
apartments for servicemen from the investors.

Today, not in three or five years' time, and in those areas where the
ministry needs them. If an investor does not want to put credit in the bank,
then he is not our investor," was how the minister set out in army-style the
strategy and tactics for cutting the "knot" of the apartment saga.

As regards the housing queue, in which 45,500 servicemen are standing today
(3,000 have obtained apartments in the past year), then the minister also
has a plan: service accommodation plus an inventarization of the queue. "I
have signed a decree to make an inventory of the queue in each garrison,"
Hrytsenko told "Fakty" during the phone in.

"I know that the garrison housing commission very often visits the autonomy.
But the people who are serving in the units at this garrison have a very
distant contact with it. If they have one at all. I want these queues to be
checked again. I have serious suspicions and even definite knowledge that
there are people there who have been given four-five apartments each. What
is more, there are people in the queue who have long since left the armed
forces.

Some people have been entering their mother-in-law, father-in-law and
grandchildren - in order to obtain, say, a five-room instead of a two-room
apartment. I want to flush out this practice and only then provide
apartments to the more needy! I have set a task to radically push forward
the housing queue this year so that everyone can see that the state is
concerned about the military."

IMPROVING QUALITY OF SERVICE LIFE --------
"Density of fire increases proportionally to the curiousness of the target"
(Murphy's Law).

According to the government's "Meeting people's wishes" programme, one of
the most important and indispensable conditions for reducing the number of
Ukrainian military servicemen must be to improve the "quality" of those
remaining, the professional training and the mobilization potential of the
armed forces. If we want the Ukrainian military to be healthy and happy with
their life, their lives must be improved - we must provide apartments, a
normal wage and other vital benefits. [President] Viktor Yushchenko has set
the transition to the contract principle of forming the army to be carried
out until 2010, that is five years earlier than [former President] Leonid
Kuchma and his Defence ministers planned.

Anatoliy Hrytsenko, Yushchenko's Defence Minister, believes that the key
issues for contract servicemen are: (i) the low level of pay (at the moment
contract servicemen receive approximately 400-500 hryvnyas [a month, 80-100
dollars], which can attract servicemen from only the most deprived social
areas, where the level of unemployment is very high); (ii) the undeveloped
system of allocating service housing, which either does not exist or is, in
essence, a barrack room; (iii) the inability for financial reasons to
organize combat training at the required level and, accordingly, to arouse
interest in military service.

"If the questions of service accommodation are not resolved, wages are not
increased and interesting combat training is not provided for, then the
people who are now working on contract, will, most probably, leave the
service," Hrytsenko believes. "Therefore, instead of increasing the
proportion of contract servicemen, we suggest we focus our efforts on
creating the right conditions. And at the same time launch pilot schemes,
i.e. in every form of the armed services make up one brigade entirely of
contract servicemen.

This proposal has already been given provisional backing by the president.
We intend to select brigades which have the best conditions for combat
training and housing and to provide them with resources as a priority."

"If you grab them by the balls, their hearts and minds will be yours" (The
unofficial motto of the American "Green Berets")

BLACK SEA FLEET PROBLEMS --------

It so happened that the end of April - beginning of May - the end of the new
government's first 100 days - was very, very troublesome for Defence
Minister Hrytsenko. Among other things, he had to travel to Moscow to clear
up relations with his Russian counterpart Sergey Ivanov on the destiny of
the Russian Black Sea Fleet in Crimea - and this after a statement by
Ukrainian Foreign Minister Borys Tarasyuk, who tried to send the Russians
"home".

On the subject of the Russian Black Sea Fleet, the Ukrainian foreign
minister said that the violations by the Russian side of the accords on the
Black Sea Fleet "were of a systematic nature", and therefore it is either
necessary to immediately start talks on these issues, on the problem of the
delimitation of the marine space in the Azov and Black Seas and the Kerch
Strait, or.

"One side wants from these talks further concessions, which are not based on
joint documents and, consequently, on obligations. But the other side wants
both sides to stick to the agreements they have concluded and their own
obligations. Surely we are not demanding the impossible? We want order to be
imposed in the implementation of these agreements," Tarasyuk told Zerkalo
Nedeli.

What Tarasyuk had in mind was not just the violations of land use on the
territory of Sevastopol by the Russian side and not just the situation
regarding the sub-lease of premises, issued by the Black Sea Fleet for
temporary use, but also of Russian patrols on the streets of the town, the
Russian courts and the prosecutor of the neighbouring state which are
operating in Sevastopol, the use of radio frequencies by the Russian Black
Sea Fleet without permits or licences, and much else besides.

In short, a decent fleet does not behave like that in another sovereign
state. "The previous administration needs to look at how they allowed all
this to happen. After all, if we had worked together with the Russian
Federation exclusively on a legal basis, then we would have no complications
today. But now, when we are beginning to draw attention to these violations,
they are trying to tell us that this is an unfriendly act in relation to
Russia,"

Tarasyuk said, reminding (the Russians in particular) in his statements that
the fleet should be asked to leave Ukrainian territory altogether. "As far
as I am aware, the Russian side has a vested interest not only in the full
use of the period of the temporary stationing of the Black Sea Fleet in
Sevastopol, i.e. until 2017, but also in extending it. Therefore I want to
remind them: the Ukrainian side has taken commitments only up to 2017, and
afterwards the provisions of the Constitution, which do not permit the
stationing of foreign troops on Ukrainian territory, start to come into
effect.

But since, as Tarasyuk himself said, in international law there is a rule
"pacta sunda servanda" (agreements must be fulfilled) and the eviction of
the Black Sea Fleet from Sevastopol ahead of schedule could have
far-reaching consequences, Defence Minister Anatoliy Hrytsenko set off for
Moscow to see his counterpart Sergey Ivanov (he had to visit the "field",
i.e . Sevastopol) in order to chat about all this as officer to officer.

"Ukraine will honestly fulfil all its obligations, and the Russian fleet
will be based on its territory until 2017," Hrytsenko promised Russian
Defence Minister Sergey Ivanov on 26 April. "I want to absolutely rule out
all speculation regarding the violation of the question of the early
withdrawal of the Black Sea Fleet. We have a vested interest in this being
an honest commitment by both sides to those accords which we have reached."

Hrytsenko also said that attention is now being focused on drawing up new
documents which will enable all the gaps in the question of the stationing
of the Russian seamen in Crimea to be closed.

"We are well aware that we were not the ones who created these problems. But
it is our responsibility today to overcome them," Hrytsenko admitted. "We
will be actively seeking ways to solve these differences and we have already
agreed that we will not be planning a large number of joint measures and
projects which will not be effectively and practically implemented. We will
be determining those areas where it will be useful, interesting and fruitful
for us to work together to obtain a positive result."

In passing Hrytsenko managed to interest his counterpart Ivanov in the joint
project of a missile attack early warning system and the strengthening of
security in the Black and Mediterranean Seas, as well as the An-70 aircraft.
Say what you like, the years spent by Mr Hrytsenko on strategic operations
work were not in vain.

UKRAINE AND NATO ------
"Combat will always occur on the ground between two adjoining maps"
(Murphy's Law).

Well, it goes without saying, we need to enter NATO, whether some people
like it or not. Even if Defence Minister Hrytsenko says that whereas before
he had said a great deal in support of Ukraine's joining NATO straightaway,
after 100 days he has come to the conclusion that he is least of all
interested in the date for joining the alliance. The main thing now is to
raise the army to NATO standards.

To achieve this, again, one must closely read "Meeting people's wishes": the
word NATO is not mentioned there, but there is quite a bit about an army
with the best world standards. In fact this is a condition for joining the
North Atlantic alliance, as was already mentioned earlier.

One of NATO's main requirements is he allocation of no less than two per
cent of GDP for the country's defence requirements. But although a figure of
three per cent is there in black-and-white in Ukraine's budget laws, in fact
the volume of funding has never exceeded 1.6 per cent.

[Former Prime Minister Viktor] Yanukovych's government, in developing its
budget proposals, proceeded from the army's minimum requirements, setting
a trend of degradation. The [Yuliya] Tymoshenko government has tried to
correct the situation at least to some extent, having tripled servicemen's
wages, including soldiers and officer cadets.

This would at least smooth over the impression of the neglect of the army,
but will scarcely help to influence the long-term prospect of its
development. For this to occur the defence minister intends to complete all
the above concerning both management and personnel and maintaining its
priorities, having tried to correct the situation by his own efforts.

After his trip to Brussels for the session of the Ukraine-NATO commission at
the beginning of June the Ukrainian defence minister said that Ukraine could
be ready to join the alliance in two-three years. "The final date of Ukraine
's membership of NATO must be decided by a political decision of both sides.

If one takes into account the military aspect of cooperation, theoretically
Ukraine could be ready to join in two-three years' time," he said, noting
that "temporary institutional difficulties which have arisen in the EU"
cannot interfere with Ukraine's progress along the direction of the EU and
NATO. In other words, the collapse of the referendum on the European
Constitution and the opposition of the "old Europeans" to the entry into the
EU of the "youth", in the Ukrainian defence minister's opinion, will not
affect Ukraine's geo-strategic designs. We will join NATO!
Peacekeeping operations

"In Ukraine about 40 per cent of people still perceive NATO as an aggressive
military bloc. Some people may like NATO and some may not, but to call it an
aggressive military bloc is a bit tough, since it is already becoming more
of a military-political organization than a humanitarian-orientated,
peacekeeping-orientated organization," Hrytsenko believes. To back this up
Hrytsenko held talks on drawing units of the Ukrainian armed forces into
peacekeeping operations under the aegis of NATO.

In particular, a Ukrainian peacekeeping contingent is remaining in Kosovo.
In addition, Ukraine is ready to support NATO peacekeeping operations in
Afghanistan and Iraq and to provide military transport aircraft within the
framework of NATO operations, support the efforts of the African Union to
stabilize the situation in the Sudanese province of Darfur, and many others.

There in Brussels, Hrytsenko signed a treaty of intentions to create a joint
peacekeeping battalion, "UkrPolLitbat" [Ukrainian-Polish-Lithuanian
battalion], based on the existing Ukrainian-Polish formation with the
addition of Lithuanians. That is the "Little European" battalion, headed by
Ukraine.

"There is no such place as a convenient foxhole" (Murphy's Law).

Be that as it may, Hrytsenko is still a political analyst who was extremely
successful in Viktor Yushchenko's election headquarters and is managing
quite well in party construction work in the electoral processes. Is he
interested in what is now happening as regards building up the president'
party, and does he plan to enter the electoral lists of this party? "We have
been discussing this question with the president, because I heard about
such proposals," Hrytsenko told Zerkalo Nedeli.

"We decided that this did not need to be done because the defence minister
heads a security body in which nearly 300,000 men are serving on the
principle of undivided authority. One cannot permit any genuine or
fabricated accusations of using this position as an administrative
resource."

But if a law on the Cabinet of Ministers is adopted which includes a
paragraph switching the minister to the category of politicians, Hrytsenko
has made the following proviso: "if at the start of parliamentary elections
I am still in the post of defence minister and ensuring the professional
results on which the president was counting when he appointed me to this
post, and if my presence in the party list, in the opinion of its compilers,
will strengthen this list, then I will put my name to it and stand in the
elections." -30- [The Action Ukraine Report Monitoring Service]
===============================================================
10. UKRAINIAN PROSECUTOR-GENERAL WANTS TO RESIGN
Account of the phone-in with Piskun

Fakty i Kommentarii, Kiev, in Russian 18 Jun 05; p 5-6
BBC Monitoring Service, UK, in English, Mon, Jun 20, 2005

Ukrainian Prosecutor-General Svyatoslav Piskun has said that he is ready
to resign. Speaking during a phone-in at the office of the Ukrainian Fakty i
Kommentarii daily, Piskun said he was "fed up" with his job, but added that
parliament would not let him go. Piskun praised highly his record as
prosecutor-general and dismissed the latest allegations of lacking in
integrity. They emerged following the publication of what is said to be
Piskun's wiretapped conversations on the Internet.

The following is an excerpt from the account of the phone-in with Piskun
published in Fakty i Kommentarii on 18 June; subheadings have been
inserted editorially:

[Newspaper introduction] Ukrainian Prosecutor-General Svyatoslav Piskun
came to the Fakty direct line in an excellent mood on his own admission. He
explained it by the fact that for the first time in European history Ukraine
and Croatia signed a treaty on direct cooperation in the fight against
intercontinental and transcontinental crime and money laundering. Now, at
least in Croatia, we have everything "tied up", and prosecutors will go
about their prosecution tasks without any lengthy talks with foreign
ministries or justice ministries.

Speaking figuratively, Mr Piskun explained: previously, the corpse would
have already started rotting before you got through all the departments. But
now, evidently those corpses will be sent to us almost by fax. The
prosecutor-general just as easily addressed all the questions, sometimes
very complex and even tragic, that readers of our paper put to him. He
promised everyone that he would take up, consider and sort out their
questions, and in a short period of time.

Getting hot, Mr Piskun even took off his jacket. He also answered some
questions from Fakty journalists. Unfortunately, not all the questions that
we wanted to ask - his duty called. Obviously the country was waiting for
new high-profile cases.

PISKUN "FED UP" WITH JOB --------

[Caller] Hello Mr Piskun. This is Anatoliy from Kiev. The head of the
parliamentary committee for combating corruption and organized crime,
Volodymyr Stretovych, called on you to tender your resignation. Will you go?
[Piskun] I will! I'm fed up with it.

[Caller] What, all of it?
[Piskun] Well, not all of it. There is still a tiny bit left. Parliament
will not let me go.

[Caller] Who won't?
[Piskun] They all won't. Don't you know? Don't you read the papers? Don't
you know who didn't let me go yesterday? It was a strange business: three
committees completely brushed aside a proposal to dismiss the
prosecutor-general! What's more, two of them were not directly linked to
prosecution.

[Caller] Why?
[Piskun] They are OK. They understand that Piskun does the right things.
That Piskun does not bow down to presidents or politicians. Piskun lives
according to the laws! And he makes others live according to the laws. It's
all the same to me. I've already brought cases against new governors. And
I'll be bringing still more cases!

[Caller] Against whom?
[Piskun] It's a secret for the time being. A friend of mine told me today,
"You'll come to a bad end." I answered, "Oh well, I started out badly, and
that's how I'll end up." For other prosecutors everything works out fine
somehow. They are given titles, they are respected, all sorts of honours.
But for me, there is nothing: no titles, no respect. Journalists torment me.

SYSTEM TO FIGHT FABRICATED CASES --------

[Caller] This is Yevhen from Kiev. Mr Piskun, I would like to ask how do you
combat fabricated cases?
[Piskun] We have now established a system whereby all cases that are
instituted by the police or the security service are checked by the
prosecutor's office in accordance with the law. This means that in Ukraine
today not a single case is instituted without the approval of a prosecutor
who supervises its investigation. That prosecutor, on my instruction, is
answerable for the legality of bringing the case, filing charges and
compiling final charges.
Therefore, if anyone wants to file a fabricated case, for this he will have
to use the powers of the prosecutor, over whom there is also a
higher-ranking regional prosecutor and the Prosecutor-General's Office of
Ukraine. All criminal cases - both open and closed! - are monitored by the
Prosecutor-General's Office. And all criminal cases without exception that
are closed on rehabilitation grounds are sent to the Prosecutor-General's
Office for study and reaction.

[Caller] So now not a single fabricated case will go through without the
approval of a prosecutor?
[Piskun] Or the non-approval.

[Caller] Good day. This is Yevpatoriya, Crimea, here. My name is Pavlo.
Tell me, is the accountability of a bribe-giver identical to that of a
bribe-taker?
[Piskun] Well, basically they are both put on trial! But the accountability
may differ slightly.

[Caller] But I don't understand. The papers wrote that [Interior Minister
Yuriy] Lutsenko gave a bribe of 20 hryvnyas to a traffic policeman. What's
that about?
[Piskun] You know, it's what is known as soliciting a bribe.

[Caller] Is it actionable?
[Piskun] Yes, there is a criminal article. But where did this happen? It's
news to me. I will be talking with the minister today. What was he thinking
of? It's indeed not the business of a minister to hand out bribes on the
road (On Thursday [16 June] Yuriy Lutsenko told journalists that, it turns
out, the bribe was given to the traffic policeman not by him, but by his
driver - editor)

[Caller] Hello. Have you got Piskun there answering questions?
[Piskun] Hm, Mr Piskun, actually.

JUSTICE MINISTER'S EDUCATION "MORAL ISSUE" -----

[Caller] I'm sorry. My name is Kolesnykov and I'm phoning from Donetsk. As
someone steeped in jurisprudence through and through, you know that in no
country - the same here, by the way - should there be a minister without
higher education. But working with you side by side is [Justice Minister
Roman] Zvarych, who does not even have secondary education. And for some
reason the Prosecutor-General's Office turns a blind eye to that. Can order
really not be installed there? Or are you scared of him?
[Piskun] No, what have I got to be scared of? What have I got to be scared
of?

[Caller] All sorts of small fry are caught, and rightly so. But such big
fish are passed by. The man doesn't have higher education! In what country
can that be possible?
[Piskun] The question of the appointment of a minister is decided by the
president of Ukraine on the recommendation of the prime minister. There is
a provision on state service. And that provision also does not say that he
needs to have the appropriate ranks and education or not. This is, so to
speak, taken for granted. And so, there is no reason for the
prosecutor-general to step in.
I tell you frankly that we have not checked on the situation. If someone
instructed me to check - the president, for example! - I might have done so.
But I don't intend to. Because it is more a moral question than a juridical
one. And I deal with moral questions after work. In my free time.

[Caller] Well, OK. I want to wish you success, and I'm sincerely glad that
our court, I mean the Ukrainian, Pecherskyy court, reinstated you [after
dismissal by then President Leonid Kuchma], because I was on your side.
[Piskun] Thank you very much.

[Caller] I am speaking quite seriously. We in Donetsk are able to
distinguish good from bad. I believe that you are in the right job, and I
look at you as prosecutor with great hope. Our journalists hear everything
they can, but they don't hear what they should. Or maybe their ears are
plugged by very big and fat banknotes.

[Caller] Good day! This is Volodymyr from Mariupol. We have a sort of
collective guarantee here. Nobody can remove Yehorov.
[Piskun] And who is Yehorov?

[Caller] The Mariupol prosecutor.
[Piskun] Mariupol? And how long has he been working there?

[Caller] Probably for three years now.
[Piskun] No, no. He should have retired long ago. Yes, I know what it's
about. There will be an appraisal commission with this prosecutor at the
beginning of the month. The commission will sort it out.

[Caller] Mr Piskun? This is farmer Kukushkin from Kherson Region, Beryslav
District. Last year I was robbed of 1,400 tonnes. How long will the
prosecutor's office in Kherson Region go on protecting gangsters?
[Piskun] I say, is there a collective farm that produced wine at one time
called Beryslav winery?

[Caller] There were three wineries in Beryslav District: Krasnyy Mayak,
Lenin and Kamyanskyy.
[Piskun] Kamyanskyy, that's it. I was in London once, and I was treated to
wine from Kamyanskyy, which is bought by Her Majesty the Queen.

[Caller] Quite right. Perlyna Stepu [Pearl of the Steppe].
[Piskun] Perlyna Stepu! Quite right! I was proud that in London I was
treated to wine from Ukraine that is supplied to the court of Her Majesty
the Queen! It's wine from the Vidrada Kamyanska state farm. But tell me, how
did you come to be robbed?

[Caller] Well, very simply. With a statement from the police and the
authorization of the prosecutor's office. They worked on trust. The director
of the state farm had 400 t of wheat left and 300 ha of sunflower. He reaped
it and said that he had not taken anything. And that's how it is to this
day.
[Piskun] I have a request to you. Tomorrow or on Monday [20 June] phone the
prosecutor's office of Kherson Region. The prosecutor of the region
personally! They will put you through. I promise.

[Caller] Mr Piskun, this is the third week that I have been picketing the
Supreme Council [parliament].
[Piskun] Then you had better come to me! Why bother with the Supreme
Council? What will the Supreme Council solve for you?
[Newspaper's insertion] Having answered readers' question, Svyatoslav Piskun
also answered questions from Fakty journalists. [Passage omitted: Piskun on
his good relationship with his wife]

PISKUN HAS NO POLITICAL PROTECTORS -----

[Interviewer] What about your relations with journalists - no, we
understand. And with a "roof" [protection]? How do you put up with all these
attacks? Who provides you with a "roof"?
[Piskun] Absolutely nobody. I live by myself! It's complicated. But I try to
survive. If there were normal, civilized journalism in Ukraine, it would
never have allowed itself to print conversations of dubious origin
[apparently, reference to transcripts of what supposedly is Piskun's
wiretapped conversations, published on the Internet].
Why hype up something that did not exist? Do they need a cheap sensation
that the prosecutor-general is not what he should be? And who knows what he
should be like, the prosecutor-general? What should the president and the
prime minister be like? I should be evaluated according to my work rather
than by my personality qualities.
I promised to clear up the [murdered journalist Ihor] Oleksandrov case, and
I did. The murderers are on trial. I promised the people of Ukraine that I
would solve the [murdered journalist Heorhiy] Gongadze case, and I did. The
murderers will be on trial in a month.
I will walk around puffing my cheeks. I wanted to spit on everyone! Why do I
act like this? I know why. Years will go by, and in the history of Ukraine
they will write: there was Prosecutor-General Piskun who did this. Nobody
did it but he! That's it.
Just think: generals kill journalists. What is this? Could this be solved?
Is this normal at all?

PISKUN DENIES BEGGING FOR REINSTATEMENT IN
"WIRETAPPED CONVERSATIONS" -----

[Interviewer] You said that before the appearance on the Internet of
transcriptions of your conversations with the US ambassador [John Herbst]
and [tycoon MP] Viktor Pinchuk, you were offered to buy them. That's
blackmail. Can you name that person? Why has he not been arrested?
[Piskun] Why? A friend of mine came and said, "Svyatoslav Mykhaylovych,
people have come to me and said that there is a print version and in a month
there will be a voice version. The people who can do this are proposing to
be paid 100,000."
I said, "What? What for? And don't even think about it. Am I crazy, or
something to spend that money?" He proposed, "I can pay it from my money."
I said, "No."
I also told the president [Viktor Yushchenko] about it two months ago. I
said, "Just imagine, Mr Yushchenko, a person comes to me with a printout and
says that those recordings will be released in a voice version in a month.
There are my conversations with Pinchuk alleging that I was begging him on
my knees [to be reinstated as prosecutor-general]." Me - on my knees?
The only people before whom I would get down on my knees are my daughter
or son, and that is if I would do something for which my children, my
family,
would hate me. And that is unlikely! What is more, judging by those
recordings, Pinchuk phoned me, not I him. What the hell? Further: we hear
"Piskun's reception room". But I didn't have a reception room in the
National Security and Defence Council where I was working at the time that
the conversation allegedly took place. Nobody investigates thoroughly! What
is more, who would wiretap the council? All the telephones there are
specially checked for bugs.

DETAILS OF CONVERSATION WITH US AMBASSADOR -----

But the second conversation, with Herbst, did take place. But why did they
stick in the second conversation? In order for people to believe in the
first one. Well, we have had 119 episodes of bugging - Yushchenko, [Prime
Minister Yuliya] Tymoshenko and others - and now there will be 120! A
criminal case has been instituted. What rights did they have to wiretap the
prosecutor-general?

[Interviewer] Was there authorization for your bugging?
[Piskun] There was no authorization at all. The second conversation (with
the US ambassador - editor) was on a mobile phone. But before that I had
been brought a letter from the ambassador, and there is a witness to it.
Serhiy Vynokurov, who brought the letter to me, said, "Mr Piskun, a priest
has been accused of stealing church property and taking it to another
church.
And this second, Russian church abroad, for some reason approached the
ambassador. They said, "Mr Ambassador, we did not steal, we just took a
cross and two towels from this building to that one." I asked, "And whose
property is it?" "The community's." "And did the community also move?" "It
did." What sort of theft is that? It was an invented criminal case.

When the ambassador phoned me, I told him, "A decision has already been
taken, we will not put him in prison." That's all. There were another three
of four conversations. At his initiative. He is an ambassador and defends
the interests of his people! And who should he phone? [Passage omitted:
about criminal cases concerning election fraud] -30-
===============================================================
11. U.S.-UKRAINE SECURITY DIALOGUE INAUGURAL EVENT ON THE HILL

Mykola Hryckowian, Center for US-Ukrainian Relations
New York, New York, Monday, June 20, 2005

NEW YORK - The American Foreign Policy Council (AFPC), the Center for
US-Ukrainian Relations (CUSUR) and the Ukrainian Congress Committee of
America (UCCA) will sponsor the inaugural event of the U.S.-Ukraine Security
Dialogue Series on Thursday, June 23, 2005 on Capital Hill in the Longworth
House Office Building, room 1539, Washington, D.C.

The U.S.-Ukraine Security Dialogue Series provides a venue for senior-level
representatives from each nation's respective ministries to exchange views
on a wide range of security and defense related issues. The event will
review U.S.-Ukraine joint operations from the Balkans to Iraq as well as
other areas of bilateral security interests. A security dialogue between the
United States and Ukraine is of particular significance following the
success of Ukraine's Orange revolution.

Representative Curt Weldon (R-PA) is scheduled to open the proceedings
with an overview of U.S.-Ukraine security cooperation. The morning session
will feature presentations by Dr. Paul Carter from the State Department,
U.S. Maj. Gen. Nicholas Krawciw (Ret.), President of Dupuy Institute, and
Maj. Gen. Oleh Sivushchenko, representing Ukraine's Ministry of Defense.

The afternoon session begins with an overview of security cooperation
between the U.S., Ukraine and Poland by Maciej Pisarski, First Secretary of
the Embassy of the Republic of Poland to the United States.

The conference forges a link between energy issues and the US-UA security
dialogue with a discussion about the Odesa-Brody-Gdansk pipeline by Ilan
Berman, Vice-President for Policy at the AFPC.

The event will conclude with a discussion about the relationship between the
United States, Ukraine and NATO by Dr. F. Stephen Larrabee, the European
Security Chair.

Closing remarks will be offered by Col. Leonid Kadenyuk, who orbited the
Earth as the primary payload specialist aboard Space Shuttle Columbia in
1997. Currently, he is a member of the National Security and Defense
Committee of the Ukrainian parliament. -30-
--------------------------------------------------------------------------------------------------
Mykola Hryckowian, 212-473-0839, 212-982-1170
mhrychowian@earthlink.net; http://www.cusur.org
===============================================================
12. DOCTORING THE DOCTORS
De-recognition for Crimea State Medical University

EDITORIAL: New Straits Times
Malaysia, Monday, Jun 20, 2005

THE first thing to do to make peace in the "Crimean War" over last week's
"de-recognition" of a Ukrainian medical college is to state the obvious.
Because we trust doctors with our lives, it is in everyone's interest that
they apply the highest standards on those entering their profession.

No one wants to fall under the knife of a Jayant Patel, the fugitive surgeon
suspected of causing the deaths of 87 patients in a hospital in Queensland,
Australia. Similarly, if the Malaysian Medical Council decides that a
particular medical school is crowding its classes with dodgy students, no
one should argue.

Certainly not Datuk Seri S. Samy Vellu, the MIC president and Works
Minister, a non-doctor whose eye is focused on the students already in the
college or working to get there, rather than the risks posed by incomplete
training. The Patel case shows how easily even professionals can be
hoodwinked by one of their own. So the MMC must be respected for moving
to pre-empt malpractice the moment it suspects that something like it may be
afoot.

Nevertheless, a decision to remove any member from the MMC's exclusive list
of approved medical schools can be hugely problematic. Some 1,100 are
already enrolled at the Crimea State Medical University (CSMU) and hundreds
are swotting up for pre-medical courses, eager to get in. Others have paid
thousands of ringgit in booking fees, certain that, with a "no-objection
letter" from the Higher Education Ministry and a growing student body of
fellow Malaysians already in the Ukraine, they were making a worthy
investment.

Yet, in spite of the numbers left in the lurch, the MMC is right to make
periodic reviews of its list of 334 colleges worldwide. To reduce the
moaning and groaning over contingencies such as the CSMU, the MMC should
declare its decisions as early as possible - and still be prepared to take
the flak. The council is thrown into this contentious position because its
determination of the status of colleges not only concerns the welfare of
patients (on which it cannot be criticised), but the futures of would-be
doctors (on which it can).

To be fair to the MMC, many of the doctors who have graduated from some of
the unrecognised institutions are already given a fighting chance. The
Medical Qualifying Examination is a substantial concession to those who have
ill-advisedly taken courses that have not met the council's minimum
requirements. But even such back-bending good intentions can be challenged,
especially when there are enough malcontents to mount a class action suit or
make representations to political parties.

As expert as he undoubtedly is in all matters medical, it may no longer be
enough for the Director-General of Health to assert that his only worry is
in the "quality of doctors". With the country so short of them, and so many
pinning their hopes on filling that shortage, he may have to open his
decisions to greater scrutiny. -30-
===============================================================
13. 'UNFAIR TO PUNISH ALL'
Thousand students at the Crimea State Medical University

Shamini Darshni; Ranjeetha Pakiam
New Straits Times, Malaysia, Mon, Jun 20, 2005

SUBANG JAYA - Show proof, and don't make blanket statements that
will worry more than a thousand students at the Crimea State Medical
University (CSMU) and their families.

"I challenge the Government to provide statistics on the number of
unqualified Malaysian students versus those who are (qualified)," said K.
Balasingam, who has a son in his third year at CSMU.

"It's not fair to punish everyone because of one or two or three students."
He said if it was true that the university had lowered its entry standards
by accepting arts stream dropouts and academically poor science stream
students, the Government should prove it.

"If the students are not qualified, the Government should take action on the
students themselves, their agents or the officials at the Higher Education
Ministry or the relevant department who approved the students' application
to Crimea," he said.

On Friday, the Government decided to de-recognise the university from Jan 1
next year. The Malaysian Medical Council (MMC) said it would not recognise
students registered and admitted to medical and pre-medical courses at the
university.

One of Balasingam's main worries is that his son, Dinesh Francis, who
obtained 8As in the Sijil Pelajaran Malaysia examination, would return after
completing his studies to find a stigma attached to his CSMU qualification.

"Most European universities recognise CSMU, as my son found out when
he was surfing the Internet for an affordable university," he said. Students
face a relatively strict admission process to the university, Balasingam
said.

He said an agent in Malaysia sent registration forms to students, who filled
and returned them to the agent for forwarding to the university.
On approval, the university sends a letter of invitation, without which the
Ukraine embassy will not issue a visa.

"So the question is, how did the arts students or poor science students get
accepted in the first place?" Last year, Balasingam, a former hockey player,
visited his son at the university and was pleased with what he saw.

"I saw three of four classes at the university in which there were only 15
students to a lecturer. Furthermore, the learning environment is good.
There are no pubs or clubs there and it is a nice town for students." He was
there for five days with his wife and they spent time with his son's
classmates, mostly Malaysians, met with the university lecturers and visited
the library.

"My son is going to be a good doctor one day. Malaysia is going to lose a
good doctor because I will ask him to work in the UK although I want him to
come back and serve his country." Management consultant Shan Thuraisingham,
who called the New Straits Times to comment on the issue, said the MMC had
been peremptory in deciding on qualifications for students studying.

"If it had any qualms on de-registering the students from the university in
Ukraine, it should have referred to the Public Service Department as it is
the authority on such matters," he said.

"The MMC has gone beyond its jurisdiction by registering and de-registering
universities." He added that there was no reason why students from the arts
stream could not be given the chance to take up medicine.

Shan said this was not the first time that such a situation had occurred, as
the Government had had problems in the past recognising medical
qualifications from Manipal in India, but that had been resolved at the
Cabinet level. -30-
===============================================================
14. THEY'VE GOT USED TO FREEDOM, SO WHY DO RUSSIANS
STILL HUNGER FOR THE USSR?

Last week Vladimir Putin made it clear that he intends to reassert his
country's dominance over its immediate neighbours. Niall Ferguson in
Moscow sees a worrying resurgence of Russia's desire to be a
superpower

By Niall Ferguson, Sunday Telegraph
London, United Kingdom, Sunday, June 19, 2005

After a week in St Petersburg, I can't seem to get that old Beatles number
out of my head: I'm back in the USSR/ You don't know how lucky you are.
Russia's pre-revolutionary capital has certainly changed since I was last
here in 1990. It has, needless to say, acquired all the garish trimmings of
post-perestroika capitalism: billboards for US-style sports utility
vehicles and a rash of neon lights along the Nevsky Prospekt, the city's
Champs Elyses. And not just the trimmings. Fifteen years ago, the state-run
shops lacked even the most basic essentials; people appeared to subsist
on air and pickled gherkins. Today there are supermarkets offering a
cornucopia of cheeses and chardonnays.

Yet look behind this patina of economic progress and you soon spot
disquieting vestiges of the old Soviet Union. Every public building still
seems to be guarded by its gimlet-eyed babushka, hell-bent on denying you
admission if you do not have five copies of your permit stamped by five
different government offices. The Russian bureaucracy may have lost its old
air of menace. But it still lurks in its dingy, stale-smelling offices,
just waiting for the signal to spring back into inaction.

The Russian President, Vladimir Putin, also paid a visit to St Petersburg
this week. This, too, brought back memories of the old days. Whole streets
were cordoned off. Motorcades roared around the city, bringing traffic to a
standstill. Close to where I was working, a stretch of potholed sidewalk
was hastily repaved so that Mr Putin could unveil a plaque there (to the
Soviet-era president of Azerbaijan) without stubbing his toe.

Since coming to power as Boris Yeltsin's anointed successor, Mr Putin has
worked hard to concentrate power in his own hands. His party, United
Russia, dominates the Russian parliament. In the aftermath of the
disastrous Beslan school siege last September, he took over the appointment
of regional governors, who had been directly elected in the 1990s. He has
also tightened the Kremlin's grip on the country's main television networks.

But Mr Putin's most dramatic power-play has been his decision to break the
political power of the business "oligarchs" who were the main beneficiaries
of the Yeltsin era. Mikhail Khodorkovsky, the former head of the Yukos oil
company, has just been sentenced to nine years in jail for alleged tax
evasion and fraud. Everyone here knows, however, that his real crime was to
pose a political threat to Mr Putin.

Nobody can deny that all kinds of mischief went on in the Yeltsin years.
The privatisation of the energy sector was one of the scams of the century,
but the vehemence with which Mr Putin heaps opprobrium on the oligarchs
awakens unpleasant memories of the old Soviet regime, which specialised
in the vilification and destruction of internal enemies. Even more troubling
is Mr Putin's unapologetic nostalgia for the days when Russia ran the
affairs of nearly all its immediate neighbours. "We should acknowledge," he
declared in an astonishing speech two months ago, "that the collapse of the
Soviet Union was a major geopolitical disaster of the century."

Mr Putin clearly intends to restore Russia's influence over the
Commonwealth of Independent States, the vestigial association of former
Soviet republics. "We need not turn this CIS space into a battlefield," he
said last Monday. "Rather we should turn it into a space of co-operation."
The idea that these are the two options being considered by Mr Putin is not
reassuring.

Is Putin's long-run aim to restore the Soviet Union? Russians always insist
that it would be impossible to turn back the clock now that people have
grown accustomed to the whole range of Western freedoms - not least the
freedom of information symbolised by the crowded internet cafes along the
Nevsky Prospekt. Yet there is a discernible nostalgia for the terrible
simplifications of the old days. In a poll conducted in 2003, the Russian
Centre for Public Opinion found that 53 per cent of Russians still regard
Stalin as a "great" leader. The explanation is not far to seek. The
collapse of Communism has meant not just greater freedom but also widening
inequality and a dramatic decline in average living standards.

Since 1989, the Russian mortality rate has risen from below 11 per 1,000 to
more than 15 per 1,000 - nearly double the American rate. For adult males,
the mortality rate is three times higher. Average male life expectancy at
birth is below 60, roughly the same as in Bangladesh. A 20-year-old Russian
man has a less than 50/50 chance of reaching the age of 65.

This has much to do with the round-the-clock consumption of fags and booze
- the typical St Petersburg man walks around with a bottle of beer and a
cigarette in one hand the way a Londoner carries his mobile phone - not to
mention an attitude to road safety apparently inspired by the Mad Max
films. It also reflects the long-term effects of the planned economy on the
Russian environment and the near-collapse of the healthcare system.

Exacerbating the demographic effects of increased mortality has been a
steep decline in the fertility rate, from 2.19 births per woman in the
mid-1980s to a nadir of 1.17 in 1999. Because of these trends, the United
Nations projects that Russia's population will decline from 146million in
2000 to 101million in 2050. By that time the population of Egypt will be
larger.

All this helps explain why so many Russians might welcome a return to the
USSR. Or perhaps it might be more accurate to say that they would willingly
trade their own recent history for a version of China's, which would give
them the benefits of the market economy without the costs they associate
with the collapse of the Soviet state.

Whether Mr Putin can deliver that is a moot point; it is probably too late
now for Russia to exercise the Chinese option. But what he can undoubtedly
give Russians is a sense of geopolitical revival after the humiliations of
1989-91, which saw perhaps the swiftest decline and fall ever experienced
by a great empire. For in military, diplomatic and economic terms, Russia
still remains a serious power.

Just consider Mr Putin's diary over the past week. On Monday he welcomed
Tony Blair to Moscow. On Tuesday he had a phone call from President Bush.
And on Wednesday his guest in St Petersburg was Sonia Gandhi. Needless to
say, all this gets blanket coverage on the television news. Still, there is
substance behind the show.

Other world leaders have good reasons to hobnob with Putin. Mr Blair came
here to get his backing for African debt cancellation and the Kyoto
Protocol, which Russia recently signed. Russia, is after all, a member of
the G8, which will shortly convene in Gleneagles. Mr Bush wanted to hear
Putin's thoughts on reforming the United Nations. Russia is, after all, one
of the five permanent members of the Security Council. And no doubt Sonia
Gandhi wanted to talk economics. Russia is, after all, Asia's number one
source of oil, gas and other vital commodities.

Any British visitor to Russia instantly recognises the symptoms of
post-imperial trauma. The place has the feel of the 1970s, right down to
the terrible clothes, teeth and hairdos. Yet those who wrote off Britain in
the 1970s overstated our decline. The same mistake was made by a British
journalist last week who compared Russia with Africa. This is not, despite
the old Cold War joke, "Upper Volta with missiles". There may be no going
back to the USSR. But it is much too early to consign Putin's Russia to
what Soviet propaganda used to call the dustbin of history. -30-
-------------------------------------------------------------------------------------------------------------
Niall Ferguson is Laurence H Tisch Professor of History at Harvard
University. His latest book Colossus: The Rise and Fall of the American
Empire, has just been published in paperback by Penguin. Niall Ferguson
2005
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