"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"
WORLD TRADE ORGANIZATION (WTO) ACCESSION A TOP PRIORITY
FOR UKRAINE IN THE YEAR 2005
WTO accession is the key to Ukraine's trade policy.
"The main tenet of Ukraine's trade policy must be to gain early accession
to the World Trade Organization (WTO). A realistic but ambitious target
is 2004. That requires the Ukrainian government to concentrate single-
mindedly on resolving all the outstanding issues. The primary focus
should be to accelerate the composition and adoption of a final report on
Ukraine's trade regime and adopt all the requisite legislation for entry
into the WTO." [Economist Anders Aslund writing in March of 2003]
[article ten below]
Ukraine's non-participation in this global economic organization
(WTO) has no reasonable explanation. Joining the WTO is a prerequisite
for Ukraine's real, not simply declarative, integration with the European
Union. [{Volodymyr Sidenko, Olexandr Baranovskyi, Zerkalo Nedeli,
Kyiv, Ukraine, 13 July 2002][article elevenbelow]
"THE ACTION UKRAINE REPORT - AUR" - Number 519
Mr. E. Morgan Williams, Publisher and Editor
morganw@patriot.net, ArtUkraine.com@starpower.net
Washington, D.C. and Kyiv, Ukraine, FRIDAY, July 8, 2005
------INDEX OF ARTICLES------
"Major International News Headlines and Articles"
1. UKRAINE'S CABINET OF MINISTERS HOPES THAT RADA APPROVES
ALL DRAFT LAWS ON WTO BY FRIDAY, JULY 8
Minister of Economy: We hope the red clowns stop their clownery.
Ukrainian News Agency, Kyiv, Ukraine, July 7, 2005
2. YUSHCHENKO: POLITICAL AMBITIONS AND PERSONAL INTERESTS
OF CERTAIN POWERS BLOCK ADOPTION OF REQUIRED WTO BILLS
Ukraine has lost USD 8 billion not being in the WTO
Ukrainian News Agency, Kyiv, Ukraine, Thu, July 7, 2005
3. FIGHTING BREAKS OUT IN UKRAINIAN PARLIAMENT FOR SECOND DAY
Communists and Socialists launch aggressive attacks against WTO
Associated Press (AP), Kiev, Ukraine, Thu, July 7, 2005 .
4. PARLIAMENT ADOPTS TWO LAWS NECESSARY FOR UKRAINE'S
WTO ACCESSION THEN SESSION DESCENDS INTO CHAOS
Communists occupy speaker's bench, rip out microphones
Interfax-Ukraine news agency, Kiev, in Russian 7 Jul 05
BBC Monitoring Service, UK, in English, Thu, Jul 07, 2005
5. LYTVYN DOUBTS UKRAINIAN PARLIAMENT WILL APPROVE ALL
LAWS ON WTO BEFORE SESSION ENDS ON FRIDAY, JULY 8
Ukrainian News Agency, Kyiv, Ukraine, Thu, July 7, 2005
6. BREAKING SPEED LIMITS ON THE ROAD TO THE WTO
Rada treats draft WTO laws with indignation
Kyiv Weekly, Kyiv, Ukraine, Thu, July 7, 2005
7. UKRAINIAN PARLIAMENT SPEAKER LYTVYN CRITICAL OF
CABINET'S WORK ON WTO BILLS
UT1, Kiev, in Ukrainian 1610 gmt 7 Jul 05
BBC Monitoring Service, UK, in English, Thu, July 7, 2005
8. GOIN' THROUGH THE WTO MOTIONS
Yushchenko watched the Communists grab the microphones
Kyiv Weekly, Kyiv, Ukraine, Thu, July 7, 2005
9. CD PIRATES LOST AND BURIED AT SEA!
Ukraine was first punished by the US for CD piracy in 2001
Kyiv Weekly, Kyiv, Ukraine, Thu, July 7, 2005
10. A FOREIGN TRADE POLICY FOR UKRAINE - YEAR 2003
The main tenet of Ukraine's trade policy in year 2003 must be
to gain early accession to the World Trade Organization (WTO)
By Anders Aslund, Professor;
Consultant UNDP; Senior Associate,
Carnegie Endowment for International Peace (CIPE)
Ukraine UNDP Trip Report - March 31, 2003
Washington, D.C., March 31, 2003
11. UKRAINE AND WTO: HOW TO MAKE THE PLUSES LARGER
AND THE MINUSES SMALLER [YEAR 2002]
Its non-participation in this global economic organization has no
reasonable explanation. Joining the WTO is a prerequisite for Ukraine's
real, not simply declarative, integration with the European Union.
By Volodymyr Sidenko, Olexandr Baranovskyi
Zerkalo Nedeli, Kyiv, Ukraine, 13 July 2002
Published on the website of The Ukrainian Centre for Economics
and Political Studies named after Olexander Razumkov
Kyiv, Ukraine
12. UKRAINE PRESIDENT YUSHCHENKO PROMISES TO SET UP
AN AGENCY ON INVESTMENTS BY JULY 11
Ukrainian News Agency, Kyiv, Ukraine, Thu, July 7, 2005
13. COMING SOON: COCONUT HUSK-FUELED POWER PLANT TO BE
BUILT IN THE PHILIPPINES BY A UKRAINIAN ENERGY COMPANY
AN IDEA whose time has come in a land of "nuts.''
Volt Contreras, Philippine Daily Inquirer
Manila, Philippines, Thursday, Jul 07, 2005
14. UNITED STATES 3M CORPORATION OPENS UKRAINIAN
AFFILIATE CALLED 3M UKRAINE
Ukrainian News Agency, Kyiv, Ukraine, Thu, July 7, 2005
15. ISRAELI COMPANY PLANS TO INVEST ONE BILLION DOLLARS IN
CONSTRUCTION OF TWO CONTAINER TERMINALS IN ODESSA SEAPORT
Prime-TASS news agency, Moscow, in English 1246 gmt 7 Jul 05
BBC Monitoring Service, UK, in English, Thu, July 7, 2005 (12:46)
16. THE ORANGE REVOLUTION IN REVERSE"
Parliamentary elections may come to be an Orange Revolution in reverse
COMMENTARY AND ANALYSIS: By Olesya Yakhno, Journalist
Glavred, Kiev, Ukraine, in Russian 0000 gmt 1 Jul 05
BBC Monitoring Service, UK, in English, Thu, Jul 07, 2005
17. "GREAT BARGAINING"
Major Mykola Melnychenko and his compensation talks
A former bodyguard of Ex-Ukrainian President Kuchma
Article by Semen Shevchuk
Ukrayinska Pravda web site, Kiev, in Ukrainian 5 Jul 05
BBC Monitoring Service.UK, in English, Thu, Jul 07, 2005
===============================================================
1. UKRAINE'S CABINET OF MINISTERS HOPES THAT RADA APPROVES
ALL DRAFT LAWS ON WTO BY FRIDAY, JULY 8
Minister of Economy: We hope the red clowns stop their clownery.
Ukrainian News Agency, Kyiv, Ukraine, July 7, 2005
KYIV - Cabinet of Ministers hopes that the Verkhovna Rada approves the
whole package of 14 draft laws required for Ukraine's accession to the World
Trade Organization before the end of this session on July 8. The Minister of
Economy Serhii Teriokhin informed journalists about this while commenting
on voting of draft laws on WTO on July 6 in the Rada.
Teriokhin said that the situation in the Rada during consideration of the
draft laws on the WTO, which was accompanied by blockage of the rostrum by
MPs from the Communist Party faction and sirens that muffled the speeches,
was a pathetic harrowing view.
While summarizing results of the vote on July 6, Teriokhin said that the
government plans to continue the debate with heads of the Rada's factions in
order to reach an agreement about approval on July 8 of draft laws on WTO
that still remain unapproved.
He said that the only law that the Verkhovna Rada approved on July 6 that
brought Ukraine closer to understanding of international public was the law
"On Protection of Intellectual Property."
The minister also expressed hope that MPs from the Communist Party faction
would stop blocking the Rada's work. "We hope that the red clowns stop their
clownery, and we can complete discussion of WTO package on this session,"
he said.
Teriokhin mentioned that if Ukraine joins the WTO before the end of this
year, this will give growth of next year's GDP by about UAH 9 billion and
increase of positive trade balance by USD 1.5 billion. Besides that, this
will facilitate stabilization of the national currency and increase of
revenues of the national budget.
As Ukrainian News earlier reported, on July 6, the Verkhovna Rada was
considering package of 14 draft laws that Ukraine needs for the WTO
accession. The Rada approved a total of five draft laws on July 6 (on
intellectual property, export duty for sunflower seeds, auditing, import of
vehicles and development of automobile industry.)
Besides that, the Rada supported two draft laws in the first reading (on
export duty, scrap of non-ferrous metals and opening of affiliates of
foreign banks in Ukraine). The Rada refused to put other draft laws from
the WTO package on agenda, or rejected them, or postponed their
consideration. -30- [The Action Ukraine Report Monitoring Service]
===============================================================
2. YUSHCHENKO: POLITICAL AMBITIONS AND PERSONAL INTERESTS
OF CERTAIN POWERS BLOCK ADOPTION OF REQUIRED WTO BILLS
Ukraine has lost USD 8 billion not being in the WTO
Ukrainian News Agency, Kyiv, Ukraine, Thu, July 7, 2005
KYIV - President Viktor Yuschenko believes that the grounds behind blocking
the Verkhovna Rada adoption of bills required for Ukraine's accession to the
World Trade Organization (WTO) are political ambitions and interests of
certain political powers. The presidential press service made the statement,
quoting Yuschenko as saying at the Revival of Village - Business of the
Young forum in Sumy.
Yuschenko stressed that at the parliament meeting he saw no debate on the
bills' content. "I had impression that the matter is about political
maneuvering, the way to use the bills in somebody's interests," the press
service quotes Yuschenko.
The President drew attention to existence of a variety of opinions of
experts, members of unions of small and medium business, processing
industry experts, car industry experts on importance for Ukraine to join the
WTO.
"It ails me that each day of such behavior of politicians begets years of
Ukraine's losses on the foreign market to a sum of USD 8 billion," the press
service quotes Yuschenko.
As Ukrainian News reported earlier, on July 6, the Verkhovna Rada debated
a package of 14 bills required for Ukraine's accession to the WTO, submitted
by the Cabinet of Ministers.
On July 6, of the package the parliament passed four bills in general (on
intellectual property, on auditor activity, on import of transport vehicles
and on development of car industry).
The Verkhovna Rada also passed the first reading of three bills (on export
duty on sunflower seeds, on export duty on scrap ferrous metals and on
opening of affiliates of foreign banks in Ukraine). The rest of bills were
either rejected to be put on the day agenda, were denied or put off. At
this, during the parliamentary meeting the MPs blocked the tribune and a
fight started between separate MPs.
During July 5 consultations with President Viktor Yuschenko, Prime Minister
Yulia Tymoshenko and leaders of the deputy groups and factions a decision
was made to reject special procedure for consideration of laws required for
Ukraine's accession to the World Trade Organization and consider them
under the normal procedure. -30-
===============================================================
3. FIGHTING BREAKS OUT IN UKRAINIAN PARLIAMENT FOR SECOND DAY
Communists and Socialists launch aggressive attacks against WTO
Associated Press (AP), Kiev, Ukraine, Thu, July 7, 2005 .
KIEV - Lawmakers scuffled for a second day Thursday as parliament tried
to debate controversial legislation needed for entry to the World Trade
Organization, forcing the session to end early. Communists and pro-
government lawmakers shoved each other and threw punches, crushing
up against Parliament Speaker Volodymyr Lytvyn.
Bodyguards escorted Lytvyn out of the hall through the shoving crowd. Lytvyn
adjourned the session after about two minutes, shouting to make himself
heard above wailing sirens sounded by Communists. Lawmakers were
scheduled to return in the evening for more debate.
President Viktor Yushchenko's government is determined to push through
the 14-bill package, whose passage, foreign investors say, will be a
critical test of the government's pro-West ambitions.
But Communists and the Socialist Party have launched an aggressive attacks,
warning that the legislation would make the economy subservient to foreign
demands.
Lytvyn had said earlier that the package could still pass "but for this, we
need patience and time." But pressure is building because lawmakers
adjourn for summer recess on Friday.
The latest turmoil erupted after lawmakers approved changes to an insurance
law and on export tariffs on seeds, which were part of the WTO package.
Communists sounded shrill sirens and jammed around the rostrum, before the
fighting broke out.
Only three of the WTO measures have been adopted, but the most critical
part of the entire 14-bill package -legislation on copyright protection -
was adopted Wednesday.
Prime Minister Yulia Tymoshenko, who again came to parliament to see
through the legislation, said she was optimistic the package would pass.
The pro-Yushchenko faction, Our Ukraine, said opposition's actions would
"isolate Ukraine from the integration process ... (and) threaten national
security."
Gaining WTO membership is seen as a major goal for the new pro-Western
government, which needs massive amounts of foreign investment to raise
living standards in this nation of 48 million. Yushchenko's government hopes
to receive an invitation to join the WTO at the trade organization's fall
meeting.
Officials also fear that Russia will win WTO membership this year, then
impose new conditions on Ukraine, delaying Kiev's admission. -30--
===============================================================
4. PARLIAMENT ADOPTS TWO LAWS NECESSARY FOR UKRAINE'S
WTO ACCESSION THEN SESSION DESCENDS INTO CHAOS
Communists occupy speaker's bench, rip out microphones
Interfax-Ukraine news agency, Kiev, in Russian 7 Jul 05
BBC Monitoring Service, UK, in English, Thu, Jul 07, 2005
KIEV - Parliament adopted two more of the 14 bills necessary for Ukraine's
WTO accession on 7 July before its work was completely disrupted by
Communist MPs, Interfax-Ukraine has reported.
Parliament adopted the law on introducing amendments to the law on export
duty rates for the seeds of a number of oil crops, Interfax-Ukraine reported
at 1009 [0709 gmt]. Out of 357 MPs, 231 supported the bill. According to the
law, the export duty rate for flax seed, sunflower seed and false flax seed
will be 16 per cent of customs value starting from 1 January 2006.
Parliament also adopted the law on introducing amendments to the law on
insurance, Interfax-Ukraine reported at 1010 [0710 gmt]. Out of 480 MPs,
245 supported the bill. The law liberalizes the access of subsidiaries of
non-resident insurers to the Ukrainian insurance market.
After these bills were adopted, Communist MPs occupied the speaker's
bench, ripping out the microphones and pulling speaker Volodymyr Lytvyn's
seat out from under him, Interfax-Ukraine reported at 1019. Lytvyn and his
first deputy Adam Martynyuk were forced to leave the hall. Parliament
adopted four of the WTO bills on 6 July. -30-
===============================================================
5. LYTVYN DOUBTS UKRAINIAN PARLIAMENT WILL APPROVE ALL
LAWS ON WTO BEFORE SESSION ENDS ON FRIDAY, JULY 8
Ukrainian News Agency, Kyiv, Ukraine, Thu, July 7, 2005
KYIV - Parliament Speaker Volodymyr Lytvyn doubts that the parliament will
approve all the 14 draft laws aimed at securing Ukraine's admission into the
World Trade Organization before its seventh session ends on July 8. Lytvyn
expressed this doubt to journalists.
Among other things, he expressed the view that attempts to resume
consideration of the draft laws that have already been rejected could result
in an escalation of the situation in the parliament and prevent adoption of
other important laws.
"If we will again return to consideration [of the rejected] draft laws, the
forecast is pessimistic," Lytvyn said.
He said that after consideration of the draft laws on admission into the
World Trade Organization on Wednesday he held consultations with the
leadership of the Cabinet of Ministers, from whom it received a proposal
to return to consideration of all the laws, including the rejected laws.
"Again, there is a proposal to return to consideration of all the draft
laws, which will result in extreme agitation in the session hall," he said.
According to Lytvyn, the Cabinet of Ministers' insistence on voting on the
draft laws on accession to the World Trade Organization as a single
package without debating each one of them has escalated the
confrontation in the parliament.
Moreover, he said that some of the draft laws presented in the parliament
were not sufficiently well prepared for parliamentary consideration.
Specifically, he said that they lacked conclusions by parliamentary
committees, as a result of which they were set aside.
As Ukrainian News earlier reported, the parliament considered a Cabinet
of Ministers-proposed package of 14 draft laws necessary for Ukraine's
admission into the World Trade Organization on July 6.
Out of the package, the parliament approved four (on intellectual property,
auditing, importation of means of transportation, and development of the
automobile industry).
Moreover, the parliament approved the first reading of three draft laws (on
the export duty on sunflower, on the export duty on nonferrous scrap metal,
and on opening affiliates of foreign banks in Ukraine). -30-
==============================================================
6. BREAKING SPEED LIMITS ON THE ROAD TO THE WTO
Rada treats draft WTO laws with indignation
Kyiv Weekly, Kyiv, Ukraine, Thu, July 7, 2005
According to a presidential decree, the government must complete the
negotiation process with the member countries of the Working Party on
Ukraine's accession to the World Trade Organization by September 30,
2005.
The actions of the Cabinet of Ministers, which has tried to lead the
parliamentarians in making the necessary decision using every possible
means, showed that being granted membership in the WTO is truly a top
priority goal for the new Ukrainian government.
In the meantime, the Verkhovna Rada treated the package of draft laws
required for entry into this organization with indignation. Specifically,
the parliament adopted only several bills on this subject in the first
reading in June. Such reactions of the deputies proved that they have
major doubts regarding entry into the WTO.
The logic of Ukraine's president and the government is understandable.
Despite the fact that joining the WTO poses a threat to those industries of
Ukraine's economy, which are technologically less developed, the current
conditions of entering this organization can appear to be more liberal than
the terms Ukraine may face in 2006.
Indeed, Ukraine is currently negotiating subsidies for the agricultural
sector and protectionist measures for the car manufacturing industry
suitable for domestic producers. Meanwhile, in a year the situation might
change for the worse. It is planned that this December at the forum in Hong
Kong the issue of curtailing subsidies and the further liberalization of the
markets of agricultural and industrial goods will be reviewed.
The government's officials also express the opinion that in the event Russia
is granted membership in the WTO before Ukraine, it will start dictating its
own terms and to the latter conditions.
Valeriy Kelestin, a people's deputy from the Ukrainian National Party
faction and a member of the parliamentary-governmental working party for
drafting bills on the WTO confirmed the existence of this threat in
conversation with the KW journalist. He said, "Of course, the Russian factor
is very important. If Russia joins the WTO before Ukraine does, then it
cannot be ruled out that negotiations with its northern neighbor will be the
most difficult ever.
There is yet another aspect: the competition is tough for Ukrainian
companies in the markets of raw materials and products of low recycling,
which are traditional for the country. If domestic enterprises do not gain
new market outlets in the nearest future, then Ukraine's foreign trade
balance will worsen considerably and the country will find itself on the
outskirts of world trade."
Besides the economy, politics is playing an important role. The fact that
Ukraine has been attempting to enter the WTO for the past 12 years was
explained by the absence of the political will of the ex-president Leonid
Kuchma. Meanwhile, on January 25, 2005 President Yushchenko declared
in his speech at the plenary meeting of the OSCE that Ukraine would join
the WTO by the end of this year.
Moreover, the representatives of the European Union had repeatedly stated
that the accession of Ukraine to the WTO is one of the main conditions for
developing talks about the creation of a free trade zone between Ukraine
and the EU.
Finally, Ukraine's procrastination of the process of joining the WTO would
disappoint foreign investors. On June 17 at the closing meeting of the
"mini-Davos" forum in Kyiv its participants named the adoption of
legislative acts needed for the country's accession to the organization by
the Verkhovna Rada by the end of its summer session one of the 10 desirable
steps for the president to improve the confidence of investors. Moreover,
investors expressed their persisting wish that if necessary he parliament
should postpone the start of its summer recess.
It is possible that all these reasons might not outweigh those disadvantages
the country will face from joining the WTO. But in any case, the executive
authorities have demonstrated the union of the teams of the president and
the premier and their will for victory. In the meantime, this circumstance
could produce a greater psychological impact on Ukrainian voters than
dissecting all the possible "pros and cons" arguments. -30-
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LINK: http://www.kyivweekly.com/english/?165
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7. UKRAINIAN PARLIAMENT SPEAKER LYTVYN CRITICAL OF
CABINET'S WORK ON WTO BILLS
UT1, Kiev, in Ukrainian 1610 gmt 7 Jul 05
BBC Monitoring Service, UK, in English, Thu, July 7, 2005
KYIV - The speaker of the Ukrainian parliament, Volodymyr Lytvyn, has
offered reserved criticism of the WTO accession bills proposed by the
cabinet.
Interviewed live on state-run UT1 TV's "In Focus" show on 7 July, Lytvyn
said the bills were poorly reasoned and failed to take the risks of WTO
accession into account.
"The proposed bills are far from containing sufficient reasoning. They just
say that joining the WTO would be good for Ukraine," Lytvyn said. "They
do not mention the risks to farming and machine-building above all."
However, Lytvyn added that he and his People's Party faction voted for the
bills to express their support for the government's and President Viktor
Yushchenko's programme.
"We proceeded from the idea that the government should be given carte
blanche so that it can implement its declared programme," Lytvyn said.
Speaking about fighting which erupted in the session hall as opposition
MPs protested against the draft laws necessary for WTO entry, Lytvyn
said it showed how divided Ukrainian society is.
"What is going on in parliament is a sign that the authorities are in
crisis," he said. "This indicates that society is not calm, that it has
different views and interests. We are not consolidated."
On 7 July, the Ukrainian parliament approved three out of the 14 WTO-
related bills submitted by the government. On 6 July, four bills necessary
for WTO accession were passed. -30-
===============================================================
8. GOIN' THROUGH THE WTO MOTIONS
Yushchenko watched the Communists grab the microphones
Kyiv Weekly, Kyiv, Ukraine, Thu, July 7, 2005
President Viktor Yushchenko declared the plans of Ukraine to join the WTO
by the end of this year as one of the elements of the new European strategy
of Ukraine for the first time in his speech before the Parliamentary
Assembly of the Council of Europe in Strasbourg on January 25.
But the destiny of these plans remained undecided until the last week of the
plenary sessions of the parliament prior to the summer recess. And it's no
wonder given that the new government team had to agree on a large number
of business interests before making its final decision.
On May 20 the National Security and Defense Council (NDSC) met to discuss
the measures required for joining the WTO. In the meantime, the president
signed the decree putting the decision of the NSDC into effect only on June
15.
The decree listed 25 draft laws that must be adopted, but only 19 of them
were registered by the parliament, which started to seriously considering
these bills only on June 23, i.e. two plenary weeks before the end of the
current session. Thus, the participants of this process brought the
situation to a state of emergency in order to later heroically resolve it
using extreme measures.
On June 23, it became clear that the situation is quite complicated when the
people's deputies refused to adopt or even begin to consider several key
bills. One of them dealt with lifting the ban on the export of non-ferrous
scrap metal. The typical counter-argument of the deputies can be formulated
as follows: "If this bill is adopted, then we will once again face the
problem of destroyed grave stones in cemeteries and damaged cables."
Some other rejected draft laws suggested the liberalization of export of
certain species of oil-yielding crops, livestock and leather raw materials
and liberalization of the sugar processing market (the deputies
counter-argument: "we should protect domestic agrarians!").
Besides that, the draft law on compact discs regulating export-import
relations in this industry and establishing criminal liability for their
illegal sale also failed to be adopted. As a result, Ukraine found itself a
few steps away from total collapse of its plans of joining the WTO by the
end of this year.
Then Premier Yuliya Tymoshenko actively joined the fray. She decided that
the draft laws had more chances of being adopted if they are amalgamated
into one package. But after several statements by VR Speaker Volodymyr
Lytvyn it quickly became clear that such "package voting" was nothing other
than a utopian dream.
To be sure, the speaker declared on several occasions that the matter was
not in terms of Ukraine's accession to the WTO, rather the principle. He
stressed that the parliament was not a plant for rubberstamping "raw" bills
and that the VR deputies should not be turned into scapegoats.
Meanwhile, the Socialists displayed similar moods and were not shy to
voice the thoughts that Lytvyn probably had in mind but failed to express.
Specifically, the bills in question would deal a severe blow to farmers and
no potential future benefits from WTO membership would compensate for
the lost sympathies of the rural residents leading up to 2006 parliamentary
elections.
This consideration was also the reason why the deputies from the faction
of the Party of Industrialists and Entrepreneurs of Ukraine (PIEU) did not
display any particular enthusiasm in giving their votes in favor of the
adoption of the bills.
In the meantime, the opposition parties, having once again raised the issue
of pluralism as one of their key elements in the "fight against the ruling
regime", declared the possibility of supporting the package of bills only in
the event all pluralist deputies give up their deputy mandates.
In response, Tymoshenko decided to pull out the "big guns" when she invited
President Yushchenko to personally come to the parliament on July 5 and
persuade the deputies to vote for the package of draft laws. According to
information available to KW, the inner circles of the president attempted to
discourage the president from taking up the offer to visit the parliament,
apparently expecting that this might create an awkward situation.
Despite this, the president visited the parliament where he spoke of the
advantages of the WTO. After his speech he listened to complaints of
deputies from the SDPU(u), the Party of Regions and the Communist Party
of Ukraine that moonlighter deputies are constantly violating the
Constitution.
He also watched the communists trying to grab the microphone away from the
speaker and understood that the moods in the parliament had considerably
changed since his inaugural speech.
At the end of the session, Lytvyn announced that package of bills would be
annulled and suggested returning to individual consideration of each bill.
This is precisely what the deputies did the following day.
So, one conclusion can definitely be drawn from this whole episode that the
parties of Moroz, Lytvyn and Kinakh regard themselves as independent players
in the 2006 election campaign and they are not going to play into the hands
of the Yushchenko-Tymoshenko alliance on issues of principle if this will
cost them lost votes. -30- [Action Ukraine Report Monitoring Service]
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LINK: http://www.kyivweekly.com/english/?165
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9. CD PIRATES LOST AND BURIED AT SEA!
Ukraine was first punished by the US for CD piracy in 2001
Kyiv Weekly, Kyiv, Ukraine, Thu, July 7, 2005
Karl Marx once said that there is no crime that capital would not commit in
order to receive a 300% profit. Vitaliy Maiko, a VR deputy and member of
the Industrialists and Entrepreneurs parliamentary faction, said that the
profitability of optical disc production can be as high as 1,000%. Though
the figures are difficult to verify, the heated discussions over the
approval of legislative bills on the protection of intellectual property
rights prove that these figures are not far off.
For example, the bill on implementation of legislation in line with the
requirements of a multilateral agreement on the commercial aspects of
intellectual property rights was considered seven times in different
editions. Only on July 6 was the bill finally adopted by the parliament. Its
author, deputy Serhiy Osyka from the Yedyna Ukraina faction, says that the
law will "reduce the output and sales volumes of pirated DVD and CD
products".
However, a number of other parliamentarians accused Osyka of poor
drafting of the law and lobbying the interests of the U.S. Socialist deputy
Mykola Rudkovskiy stated that "every government that has wanted to
bootlick America has submitted the bill under question for review by the
parliament."
Indeed, if it were not for pressure from the U.S., Ukraine would not be
burden itself with the issue of protecting intellectual property rights for
a long time to come, even if it concerned the intellectual property of its
own citizens. But since the adoption of this law is one of the conditions of
Ukraine's accession to the WTO, the government was forced to return to
this burning issue.
Ukraine was first punished for piracy in 2001, when the U.S. International
Trade Commission passed a decision to temporarily suspend the duty-free
import of a number of Ukrainian goods to the U.S.
Washington explained its position by arguing that despite numerous
promises, official Kyiv never managed to put an end to the mass production
of pirated CDs. Then sanctions were laid against textile goods and metal
products, the export volumes of which amounted to about US $40 mn
based on the program of duty-free import to the U.S. It is not surprising
that the voices of those protecting CD manufacturers have faded into the
background.
After all, due to the lobbying of one industry, those for whom export is
critically important for Ukraine are the ones to suffer. Vice Premier for
European Integration Oleh Rybachuk was quite harsh in his statement,
accusing the son of one of the former heads of the government for
involvement in the production of pirated CDs. "Everybody knows the son of
which former premier owns such a plant," he stated recently, adding that as
soon as a bill concerning the issue is submitted for by the parliament "the
Communists begin to object."
Indeed, the Communists were staunch opponents of bills aimed at fighting
piracy every time they were brought to the floor for debate. Though Rybachuk
did not give any names, it is not difficult to guess that he was referring
to Ihor Masol, the president of one of the largest CD manufacturers in
Ukraine JSC Rostok and son of Vitaliy Masol, who headed the Council of
Ministers of the Ukrainian SSR in 1987-1990 and the Cabinet of Ministers
of Ukraine in 1994-1995.
Despite this, the younger Masol says that the accusations against him are
unsubstantiated and claims that Rostok only manufactures legal products. He
gave an example that this past May when Ukraine hosted the Eurovision
Song Contest, the Petrivka Market in Kyiv (where primarily pirated discs are
sold) was closed. During this period the production volumes of CDs at his
plant increased 1.5 times. His argument was that his company has legal
outlets throughout the city for selling his product.
It is quite possible that the truth lies somewhere in between. Indeed, there
is a possibility that under the pretext of fighting piracy, the Americans
are trying to eliminate the competition. On the other hand, if optical disc
manufacturers produce only legal copies, then why are they so afraid of
reinforcement of control and criminal liability for piracy?
One way or another, Ukraine's government and the parliament managed to
meet half way concerning the production of CDs on the eighth and presumably
last attempt. All that industry players can hope is that such a compromise
will end up being suitable for both Ukrainian CD manufacturers and the
United States. -30- [The Action Ukraine Report Marketing Service]
--------------------------------------------------------------------------------------------------------
LINK: http://www.kyivweekly.com/english/?165
===============================================================
10. A FOREIGN TRADE POLICY FOR UKRAINE - YEAR 2003
The main tenet of Ukraine's trade policy in year 2003 must be
to gain early accession to the World Trade Organization (WTO)
By Anders Aslund, Professor,
Consultant UNDP; Senior Associate,
Carnegie Endowment for International Peace (CIPE)
Ukraine UNDP Trip Report - March 31, 2003
Washington, D.C., March 31, 2003
EXECUTIVE SUMMARY
Ukraine has proceeded far in its postcommunist economic transformation. In
recent years, its exports have surged soundly, and they are now driving the
country's economic growth. Access to foreign export markets has become a
key question for Ukraine's economic future. Trade policy has gained such
importance for Ukraine's aspiration's for accelerated growth and reaching
its Millennium Development Goals that it should be Ukraine's predominant
economic policy and international policy priority. This is an attempt at a
formulation of a strategy for foreign trade policy for Ukraine.
The main tenet [FIRST] of Ukraine's trade policy must be to gain early
accession to the World Trade Organization (WTO). A realistic but ambitious
target is 2004. That requires the Ukrainian government to concentrate
single-mindedly on resolving all the outstanding issues. The primary focus
should be to accelerate the composition and adoption of a final report on
Ukraine's trade regime and adopt all the requisite legislation for entry
into the WTO.
[EDITOR: This was written in March of 2003. It is now July of 2005 and
the Ukraine government and especially the Parliament is still having a
very serious problem, if not an impossible one, in concentrating single-
mindedly on resolving all the outstanding WTO accession issues.]
SECOND, remaining bilateral issues need to be resolved to complete the
even remaining bilateral negotiations, notably with the US and Moldova.
THIRD, Ukraine should formulate a clear policy on agricultural subsidies and
reach agreement with its WTO partners. For Ukraine, swift entry into the WTO
is far more important than the exact conditions of accession, because its
membership of the WTO is the only plausible basis of its trade policy. The
WTO should be seen as a universal tool for all trade policy rather than an
end in itself.
As soon as Ukraine has joined the WTO, it should try to improve its market
access to key markets by concluding free trade agreements with the other
eleven Commonwealth of Independent States (CIS) countries, the European
Union (EU), the US and other key countries.
Ukraine has concluded and ratified a free trade agreement with all the CIS
countries. This could serve as a basis for its future trade relations with
these states, but this free trade agreement should be based on WTO rules
and standards. Ukraine has no reason to waste time on discussing a customs
union with any CIS countries, because such an agreement cannot be
implemented, and a customs regime designed for countries with very different
economic structures will not be beneficial to Ukraine's economic interest.
The idea of a currency union in the CIS appears absurd given the devastating
failure of the recent currency union and the absence of any advantageous
preconditions. Any coordination with CIS countries in Ukraine's accession to
the WTO could only complicate and delay it for years. When both Russia and
Ukraine have become members of the WTO, they should be able to resolve
their many bilateral trade disputes more effectively.
To Ukraine, Russia's current discrimination against it in gas pricing is
unacceptable and reconcilable with a free trade regime. Russia's export
tariffs on natural gas must be abolished or waived, and Russian Gazprom's
price discrimination against Ukraine needs to be alleviated.
Ukraine is subject to extreme trade discrimination from the EU. It is not
recognized as a market economy, it is not member of the WTO, and it has
no free trade agreement with the EU, while its Partnership and Cooperation
Agreement (PCA) with the EU has turned out to be almost empty.
It suffers badly, having little trade with the EU and enjoying comparative
advantages in products, whose importation the EU resists. Ukraine should
focus on requesting a comprehensive free trade agreement with the EU rather
than a complex and nebulous agreement on a Common European Economic
Area. FIRST, however, it must become a member of the WTO.
Ukraine has approximately the same problems on the US market as on the
EU market, though the US is less important for its trade since it is more
distant. Also with the US, Ukraine should aim at a comprehensive free trade
agreement, which requires that it first become a member of the WTO.
Ukraine needs to persuade the EU and the US to declare Ukraine a market
economy, which it actually is, with free prices, small subsidies, few trade
quotas and low import tariffs.
[EDITOR: The recommendation above from Anders Aslund was written in
March of 2003. It is now July of 2005 and Ukraine has still has not
persuaded the EU or the US to declare Ukraine a market economy.]
The status of a market economy is important for antidumping investigations.
Non-market economies have few chances of winning antidumping cases,
and as a consequence prohibitively high tariffs are slammed on them.
Antidumping cases tend to focus on steel and chemicals, which account or
half of Ukraine's exports.
This procedure is independent of the WTO accession and bilateral trade
negotiations. Both the US and the EU have already acknowledged Kazakhstan
and Russia as market economies. The US steel lobby, however, holds back
this status for Ukraine, arguing that its steel industry benefits from tax
exemptions, but that is no longer the case. The EU complaint about an
excessive role of the state in the Ukrainian economy, which is less tangible
and thus harder to counter, but it does not appear a relevant objection.
INTRODUCTION [Report written in year 2003]
In recent years, Ukraine has passed most of the hurdles of postcommunist
economic transformation. Macroeconomic stabilization was accomplished
long ago. Prices and trade are liberalized. Privatization has proceeded so
that about two-thirds of GDP arises in the private sector. For the last
three years [200-2002], Ukraine has had a sound average economic growth
of over 6 percent a year, and it is likely to stay around 6-8 percent a year
for the foreseeable future.
A fast economic restructuring is taking place. Industries in which Ukraine
appears to have comparative advantages have grown particularly fast: steel,
food processing, agriculture, and light industry. Within each sub-industry a
desirable consolidation of 3-5 leaders is apparent. Although a few
oligarchic groups hold out, they are becoming more normal conglomerates,
and a sizeable number of new large and medium-size corporations have
emerged.
While corruption and repression remain problems, business surveys
undertaken by the European Bank for the Reconstruction and Development
(EBRD) and the World Bank in 1999 and 2002 suggest great improvements.
Ukraine's transition to a market economy has succeeded.
In this situation, foreign trade attracts new attention [in 2003] for many
reasons.
FIRST, with an official GDP at current exchange rates of about $40 billion,
the Ukrainian economy is rather limited, and access to export markets is
critical for future economic growth. In recent years, Ukrainian exports have
expanded fast by slightly over 10 percent a year and are driving economic
growth, but clearly much more can and should be accomplished. The old
adage "trade rather than aid" describes what Ukraine needs now.
SECOND, the Ukrainian economy is very open with exports corresponding to
about half of GDP, and exports have increased at over ten percent a year for
the last three years. Exports comprise the growth engine in the Ukrainian
economy.
THIRD, while the domestic market in Ukraine appears to work reasonably well,
regional distortions in foreign trade are all too apparent. The most recent
statistics for 2002 demonstrate that as little as 19 percent of Ukraine's
exports went to the European Union (EU). According to the gravity model,
which assesses how much countries should trade with one another, given the
size of their economies and the distance between them, it should have been
about 60 percent.
Meanwhile, the share of Ukrainian exports going to Russia has fallen
steadily to only 17 percent last year. Instead, Ukraine is increasingly
exporting to all kinds of new distant Third World markets in Asia and the
Far East, notably China, and the Middle East, which are more open.
It is more important that exports grow than where they go, but this is
not a normal development. With little doubt, this represents trade
distortion, and Ukraine would benefit if it were able to export more to big
markets in its neighborhood. Although Ukraine is a very open economy,
agriculture is considered to be 93 percent self-sufficient, suggesting
substantial sectoral distortions as well.
FOURTH, Ukraine suffers from a predominance of so-called sensitive
products in its exports, that is, goods that are particularly exposed to
protectionist measures by other countries. They account for about
three-quarters of Ukraine's total exports. Steel comprises 40 percent of
Ukraine's exports, while each of the three sensitive commodity groups,
agricultural goods, chemicals and textiles, account for over 10 percent.
According to the WTO, Ukraine came in the 10th place in the world in terms
of suffering from actual antidumping measures from January 1995 to June
2002, with no less than 37 antidumping measures concluded by various
countries.
FIFTH, Ukraine is now facing critical changes in its foreign trade
agreements. Its negotiations about accession to the World Trade
Organization (WTO) are approaching their final stage. [this was written
in April of 2003]
The EU is suggesting that its Partnership and Cooperation Agreement
(PCA) with Ukraine should be replaced with an agreement on a Common
European Economic Area (EEA). The Presidents of Russia, Ukraine,
Kazakhstan and Belarus just signed [2003] a declaration of their intention
to negotiate a free trade zone. Thus, Ukraine is facing monumental
decisions on its foreign trade relations in all directions.
Yet, SIXTH, although Ukraine is facing so many important problems and
decisions in foreign trade, trade issues have been all but ignored in the
country until recently. The preoccupation with getting the domestic market
economic reforms has been so great.
In the mid-1990s, Ukrainians had a tendency to blame the outside world
for their hardships. Now, on the contrary, Ukrainians tend to blame them-
selves for whatever problems they encounter. While an admirably humble
attitude, it does not necessarily reflect the truth.
This paper draws on continuous study of the postcommunist Ukrainian
economy and reading of relevant literature. Its main inspiration, however,
is meetings and conversations with senior representatives for the Ukrainian
government, business, Ukrainian non-governmental organizations,
academics, international organizations, foreign embassies, and foreign
enterprises during a mission to Ukraine March 10-21 [2003].
Its main intentions are twofold: to assess the critical foreign trade
problems and to suggest a foreign trade policy strategy for the Ukrainian
government. As agriculture tends to be of particular importance in all trade
policy, this study lends special focus to the agricultural sector. The
purpose is not to be comprehensive but to concentrate on key issues.
There are always many barriers to trade. This paper aims at focusing on the
most important issues. FIRST, everybody mentions the problem for exporters
to obtain a value-added tax refund. Another query [SECOND] is what the
Ukrainian economy looks like at enterprise level, but it appears a rather
normal market economy. Then, the THREE big trade issues come, trade
relations with the EU, trade with Russia and WTO accession.
The EU should be Ukraine's main export market, but its imports from Ukraine
remain surprisingly low, while Ukrainian exports to Russia are swiftly
dwindling. WTO accession appears to be the key to Ukraine's trade policy.
Agricultural concerns are a topic on their own, but they appear to be less
severe than widely presumed. The last section is an attempt to formulate a
foreign policy strategy for Ukraine............"
NOTE: To read more of the March 2003 report on the website of the
Carnegie Endowment for International Peace (CIPE) click on:
http://www.carnegieendowment.org/publications/index.cfm?fa=view&id=1225&prog=zru
-------------------------------------------------------------------------------------------------------------------------
FOOTNOTE: Our thanks to Necia Quast, Economics Counselor at the
U.S. Embassy in Kyiv for reminding us about the report by Anders
Aslund, which included information about Ukraine and the WTO,
issued in March of 2003. EDITOR
===============================================================
11. UKRAINE AND WTO: HOW TO MAKE THE PLUSES LARGER
AND THE MINUSES SMALLER [YEAR 2002]
Its non-participation in this global economic organization has no
reasonable explanation. Joining the WTO is a prerequisite for Ukraine's
real, not simply declarative, integration with the European Union.
By Volodymyr Sidenko, Olexandr Baranovskyi
Zerkalo Nedeli, Kyiv, Ukraine, 13 July 2002
Published on the website of The Ukrainian Centre for Economics
and Political Studies named after Olexander Razumkov
Kyiv, Ukraine
The issue of entering the World Trade Organization is high on Ukraine's
agenda. Its non-participation in this global economic organization has no
reasonable explanation: in late 2001 the WTO was joined by China,
prospects for Russia becoming its member in 2003 have become more
or less definite.
The beginning of a new round of multilateral trade negotiations in the WTO
frameworks will obviously raise the global economic regulation system to a
new level and will lead to a considerable influence on Ukraine. After all,
joining the WTO is a prerequisite for Ukraine's real, not simply
declarative, integration with the European Union.
On July 3, a round table was organized in Kyiv by the Razumkov Center and
the Kyiv office of the Eurasia Foundation to discuss Ukraine's relations
with the WTO and assess the conditions and likely effects of joining it. The
discussion involved about 150 representatives of government bodies,
foreign embassies, staffers with the National Science academy, experts
with non-governmental research organizations, and representatives of the
mass media.
The new prospects for the WTO are defined in the Declaration of the 4th
Ministerial Conference in Doha, Qatar. The Declaration provides for holding
of talks before January 1, 2005 on a wide range of issues which would
stimulate the development of international economic regulation mechanisms,
extend the sphere of their influence and increase their effect on all
national economies.
It is extremely important for Ukraine to take part in such talks, in order
to maintain its national interests. However, the new round of talks has
complicated the task of adapting to the parameters of the multilateral trade
system and under these conditions Ukraine cannot count on easy terms of
acquiring membership.
Other countries' experience of negotiating WTO membership shows that
concrete terms of joining it may undergo significant changes, depending
on the level of the negotiators' professionalism and political will. That is
why the agreements on joining the WTO differ so greatly: for instance,
countries whose macro-economic performance is better and whose level
of development is higher are given consent to set higher import tariffs.
If any negotiations take less time, it is not necessarily due to the
effectiveness of the negotiation process. The reason could be that the
candidate country wants membership at any cost, including quick surrender
of its positions. And lengthy negotiations may result either from a
principled position or from weak reforms, or from an inability to negotiate
consistently and purposely. In Ukraine's case, we have seen all these
factors at different stages of the negotiation process.
The key question in the context of joining the WTO is: how to maximize the
potential advantages of being part of the multilateral trade system, and how
to minimize any possible negative consequences of entering it?
"----------------------------------------------------------------------------------"
NOTE: To read the rest of this year 2002 article about Ukraine and the
WTO click on the following link; http://www.uceps.org/eng/show/97/
---------------------------------------------------------------------------------------------------------
FOOTNOTE: Our thanks to Andriy Starynsky of the International Centre
for Policy Studies (ICPS) in Kyiv for reminding us about this article on
Ukraine and the WTO from 2002. EDITOR
===============================================================
12. UKRAINE PRESIDENT YUSHCHENKO PROMISES TO SET UP
AN AGENCY ON INVESTMENTS BY JULY 11
Ukrainian News Agency, Kyiv, Ukraine, Thu, July 7, 2005
KYIV - President Viktor Yuschenko has promised to set up an Agency on
Investments by July 11. He made this statement at the Revival of Village -
Business of the Young forum in Sumy.
"An investment agency with territorial units will be created this week. Its
objective is to accompany all investments. We make a non-governmental
organization - a Council of Investors under the President - the aim of which
is to put all problematic questions. By making a state institute on
investments and a non-governmental organization, we step up the
investment market," Yuschenko said.
He noted that investors who encounter difficulties associated with the
Ukrainian regulatory system often abandon their plans. "They want no
bureaucratic ordeals, but to invest money, create jobs and pay taxes,"
the president added.
To attract investors, it is important to simplify land allotment procedures
significantly and they will be different beginning from September, Yuschenko
said. "We will do our best to direct executive bodies and local
self-government towards tackling a new land alienation procedure," he
promised.
Yuschenko noted that local councils must openly decide on allocation of land
and be guided by general and ordinary plans for development of urban
territories. He asked local deputies to allot 50% for housing construction
at a session, to offer lots for sale, and call a tender. "Then you will have
dozens of investors," the president opined.
As Ukrainian News earlier reported, the National Security and Defense
Council has recently recommended Yuschenko to set up a government agency
under the Economy Ministry to deal with investments. NSDC Secretary Petro
Poroshenko said the agency should deal with procedures and legislative
support of investments.
The NSDC also recommended setting up a special investment protection
department at the Prosecutor General's Office. Apart from that, an agreement
has been reached to liberalize the market for upcoming investors by, for
instance, significantly simplifying the procedure for land allotment. -30-
===============================================================
13. COMING SOON: COCONUT HUSK-FUELED POWER PLANT TO BE
BUILT IN THE PHILIPPINES BY A UKRAINIAN ENERGY COMPANY
AN IDEA whose time has come in a land of "nuts.''
Volt Contreras, Philippine Daily Inquirer
Manila, Philippines, Thursday, Jul 07, 2005
MANILA - AN IDEA whose time has come in a land of "nuts.'' A Ukrainian
energy company is set to build "revolutionary power plants'' in the
Philippines that will be fueled by coconut husks, the Department of Foreign
Affairs reported yesterday.
The DFA said Sukhin Energy Inc. has forged an agreement with the
Philippine National Oil Co. to install a 2.5-megawatt synthesized gas
station in Masbate, an environment-friendly power source for the island
province's 600,000 inhabitants.
The $7-million plant is considered the pilot project of the SEI-PNOC joint
venture which will be covering other parts of the country, the department
added.
The Masbate station will house some 320 tons of equipment to be shipped
by end of this month and will require two more months to assemble. It is
expected to reach full production capacity by October this year.
The technology was developed by Ukrainian scientist and SEI President
Yevgeny Sukhin, who unveiled his invention only last month through a
demonstration "using 20 tons of coconut husks shipped from the
Philippines,'' it said.
The demo was then witnessed by a visiting Philippine congressional
delegation led by House Speaker Jose de Venecia, at the Klavdievo
Experimental Plant just outside the Ukrainian capital of Kiev.
Philippine Ambassador to Moscow Ernesto Llamas, who also covered
Ukraine, said the SEI plants will not only reduce local dependence on fossil
fuels but also use up waste products churned out abundantly in the country.
===============================================================
14. UNITED STATES 3M CORPORATION OPENS UKRAINIAN
AFFILIATE CALLED 3M UKRAINE
Ukrainian News Agency, Kyiv, Ukraine, Thu, July 7, 2005
KYIV - 3M, an international multi-profile company, has registered an
affiliate with 100% foreign capital in Ukraine called 3M Ukraine.
Representatives of the company announced this at a press conference. The
company is planning to supply a broad range of products on the Ukrainian
market and assist in bringing Ukrainian standards in line with European.
According to 3M Ukraine's director-general Svitlana Balanova, the main
efforts of the company in Ukraine will be focused on the following areas:
the oil, gas, ore mining, automobile, and automobile repair industries as
well as on industrial production, office goods, road transport safety,
personal security, stomatological, medicine, telecommunications systems,
electronics, and energy.
Balanova said that the most promising areas of the company's operations in
Ukraine would be social areas, including road safety and industrial safety.
Moreover, the company intends to improve the quality of Ukrainian telephone
networks and has already drafted proposals for Ukraine's Ukrtelecom
telecommunications company as well as for private communications
operators.
Moreover, 3M Ukraine intends to supply products for construction and
automobile manufacturing.
According to 3M's Vice President for Europe, the Middle East, and Africa
German Nauerlerts, the company believes that the markets of Eastern Europe
have better prospects than Western markets under the current situation. "Our
company has been represented in Ukraine for more than 10 years, however it
is now that we have reasons to expect a socioeconomic breakthrough from
Ukraine," he said.
3M started operations in Ukraine in 1994, when it opened the representative
called 3M East AG in Kyiv. The leadership of the company decided in 2004 to
open an affiliate in Ukraine.
3M started operations in the United States in 1902. It presently has an
annual turnover of over USD 20 billion. The company annually launches
production of over 500 types of new products. The company's enterprises in
60 countries produce about 50,000 types of goods, which are sold in 200
countries.
As Ukrainian News earlier reported, the State Automobile Road Service of
Ukraine (Ukravtodor) has reached agreements with the French company
Bouygues Travaux Publics and the 3M international corporation on
construction and marking of roads. -30-
===============================================================
15. ISRAELI COMPANY PLANS TO INVEST ONE BILLION DOLLARS IN
CONSTRUCTION OF TWO CONTAINER TERMINALS IN ODESSA SEAPORT
Prime-TASS news agency, Moscow, in English 1246 gmt 7 Jul 05
BBC Monitoring Service, UK, in English, Thu, July 7, 2005 (12:46)
KIEV - Israel's Zima Israel Navigation Ltd plans to invest about 1bn dollars
in the construction of two container terminals at Ukraine's Odessa seaport,
a spokesman with Ukraine's Transport and Communication Ministry
told Prime-TASS Thursday [7 July], citing Tuesday's meeting between Minister
Yevhen Chervonenko and top managers of Israel's Offer Brothers Group. Zima
is part of the Offer Brothers Group.
Chervonenko and the managers signed a memorandum of understanding that
envisions increasing Ukrainian seaports' role, the spokesman said. The
ministry plans to increase the Odessa port's annual processing capacity to
5m 20-foot equivalent units (Teas) by 2010 from the current 300,000, the
spokesman said. [Passage omitted: short info on Zima, Offer Bros]
===============================================================
16. THE ORANGE REVOLUTION IN REVERSE"
Parliamentary elections may come to be an Orange Revolution in reverse
COMMENTARY AND ANALYSIS: By Oley Yahoo, Journalist
Glavred, Kiev, Ukraine, in Russian 0000 gmt 1 Jul 05
BBC Monitoring Service, UK, in English, Thu, Jul 07, 2005
The present period in Ukrainian history, the run-up to the 2006
parliamentary elections, has been described by journalist Oley Yahoo as
one in which a power struggle is taking place between the groups which
make up the new authorities. This internal struggle between President Viktor
Yushchenko and Prime Minister Yuliya Tymoshenko and their supporters is,
she said, the "political format" that is setting the stage for current
politics.
The article surveyed the "political formats" of Ukraine's recent past,
looking at the struggle between the National Democrats and Communists
(1991-99), the reformers and oligarchs (1999-2000) and the opposition and
the authorities (2000-04). Yahoo concluded that the outcome of the present
struggle is still in the balance.
The following is the text of the article, posted on the Ukrainian web site
Glavred on 1 July under the title "The Orange Revolution in Reverse";
subheadings are as published:
Unlike the previous president, Viktor Yushchenko gained a strong competitor
right at the outset of his presidency in the person of Yuliya Tymoshenko. A
struggle for public opinion and real power within the country will
inevitably take place between these two leaders of the Orange Revolution.
In this sense, the parliamentary elections may be an Orange Revolution in
reverse for each of them.
IN TUNE WITH "THE TIMES"
So the new Ukrainian political reality is as follows: since the presidential
elections, the rallying point for absolutely all political forces has
shifted towards a new strategic aim - the parliamentary elections - not so
much as an end in itself as an opportunity either to consolidate their own
position or to considerably extend it.
The regrouping of political forces in preparation for the parliamentary
elections has already started. This means that the essence of political
conflict has also changed. The fight between groups has receded into the
background. Moreover, attempts will be made, and are already being made,
to bring about short-lived cooperation (the simplest form being support in
voting in exchange for something).
It is conflicts within groups that have emerged into the foreground. In
other words, a change in the political format has occurred. The format is
taken to mean the basic confrontation that sets the framework for the
conduct of political forces and the content of political discussions. The
change of processes within the country is accompanied by a change in the
formats accommodating these processes.
To better understand the essence of today's format - a power struggle
within the authorities - let us first analyse all the previous ones.
NATIONAL DEMOCRATS VS COMMUNISTS
The first format of the political elite in independent Ukraine was, quite
logically, the division of politicians into those who supported independence
and those who regarded Ukraine's secession from the USSR as a great
mistake.
By and large, the Ukrainian state came into being as the result of a
compromise between the National Democrats and the Communists, whose
camp contained both pragmatists, who understood the advantages of
independence, and members of the CPU [Communist Party of Ukraine],
who were wary of Yeltsin's Russia, which was moving quickly along the
anti-Communist path.
Both the National Democrats and the members of the nomenklatura [the
Soviet, party-appointed elite] who had rejected communism based their
political activities on opposition to the resurgent Communists, urging that
"red revenge" must be kept at bay.
Since its emergence was natural, the "National Democrats vs. Communists"
format enabled politicians to achieve their objectives for quite a long time
by using that theme. During the campaigning in the 1994 presidential
elections, however, [Leonid] Kuchma had already started to hype the need to
fight corruption as his main slogan. "We'll deal with the mafia" and "We are
for clean hands".
This was the leitmotif of many of the slogans voiced by Leonid Kuchma when
he was a presidential candidate. The "National Democrats vs. Communists"
opposition was used only as a background both during 1999 (the "fight
against the Communist threat") and in 1994, when he became president with
the support of the CPU, which hated [the previous president] Leonid
Kravchuk, the supposed Banderole [reference to Ukrainian nationalist Stepan
Bandera].
After the elections, a tripartite agreement was even signed - between
President Kuchma, parliamentary speaker [Oleksandr] Moroz and Prime
Minister [Anatoliy] Mason - to the effect that the government would be given
some time to work in order to implement the new president's programme.
In other words, both the Communists and the National Democrats gradually
lost their positions, or they were used in the schemes of more powerful
politicians and political groups. On the other hand, a new political class
appeared - the so-called centrist parties. It was made up of members of the
nomenklatura who were seeking suitable ways of engaging in politics in the
first half of the 1990s.
In this way, there appeared parties in which the experience of the old
Soviet school of administration was preserved, while democratic rhetoric was
also present. They amounted to a hybrid developed from Communists and
National Democrats. In effect, the rise of new political forces and also the
exhaustion of the main discussion - the struggle for independence - replaced
this format.
REFORMERS VS OLIGARCHS
Leonid Kuchma's re-election to the post of president in 1999 was largely a
compromise between the major political and economic groups or, to put it
more simply, oligarchs. The period 1998-99 saw the peak of oligarchies in
Ukraine. In 1999, [the newspaper] Zerkalo Nedeli published a list of
oligarchs and indicated the criteria for being classed as such. Try as they
might to give the notion "oligarch" at least a fairly positive connotation,
as had been done in Russia and other post-Soviet countries, the word took
on a hopelessly negative shade of meaning in Ukraine.
The exact opposite of the oligarchs were the reformers - the most active
members of the National Democratic camp, who differed from the oligarchs
in that they did not have the opportunity to call in at the president's
office without a prior invitation, did not help to finance or conduct the
1999 presidential campaign and owned a smaller amount of property
than the oligarchs had amassed.
With Yushchenko's election as prime minister on 22 December 1999, the
division into reformers and oligarchs became even more marked.
One can talk endlessly about why Kuchma proposed (and parliament backed)
Yushchenko for the post of prime minister (either Kuchma had promised
Yushchenko the premiership in exchange for his not contesting the 1999
elections; or Kuchma counted on weakening the oligarchs with the help of
Yushchenko and his team; or because the country was on the verge of default;
or because he thought that Yushchenko was a weak figure and would deal only
with economic reforms).
But Mr Yushchenko managed to create in the public mind a system for
classifying politicians: there was one reformer and his team against all the
oligarchs. While in the post of prime minister for 18 months, Yushchenko did
not become identified with the authorities in the public consciousness,
whereas the centrist parties did, and in a negative light.
Consequently, when he was confronted by the need (or the demand) to put into
power (which enabled one to develop one's business) members of the major
political-business groups, who had thrown in their lot with Leonid Kuchma
for the presidential elections and were counting on dividends, he
ostentatiously refused to do so and was accordingly removed from the
premiership later on.
As a result, Yushchenko became the real centre of gravity, as people like to
say nowadays, of the healthy forces in society. And so the next format made
its appearance - the authorities and the opposition.
OPPOSITION VS AUTHORITIES
It was, primarily, the April referendum in 2000 that prompted the formation
of an opposition. The referendum inspired the opposition and gave it the
strength and also the opportunity to act under the slogans of the threat to
parliamentarianism and the looming diktat of the president. The "tapes
scandal", the "Ukraine without Kuchma" protest actions in the winter of
2000-01 and then Yushchenko's dismissal as prime minister on 26 April
[2001] effectively marked the start of a new, "authorities vs. opposition"
format.
At the beginning of 2000, in clear opposition to the authorities stood
Tymoshenko, Moroz, [Anatoliy] Matviyenko and [Serhiy] Holloway (i.e. those
whose quite high ambitions had, in effect, been blocked by Kuchma), whereas,
after the referendum of 16 April and Yushchenko's dismissal, they were
joined by the Reforms and Order Party, both Ruches and many small parties.
The 2002 parliamentary elections were just a rehearsal for the presidential
elections. After Yushchenko had entered parliament, the competition between
the two projects - the pro-Yushchenko and the pro-presidential factions -
moved inside parliament too. The old political elite was certainly stronger
in tactics, but the new one was better at strategy.
After all, it is obvious that, after 10 years of rule by one political
regime, it should be replaced. In this sense, any legal result (legal from
the viewpoint of the Central Electoral Commission) gained by [ex-Prime
Minister Viktor] Yanukovych at the elections would be challenged by the
public, since legitimacy would be on the side of Yushchenko.
The political reform adopted in the package of laws necessary for the third
round of the elections looked then like a compromise between the outgoing
and the incoming ruling groups, whereas now it is a question of reaching
understandings inside the actual team in power.
AUTHORITIES VS AUTHORITIES
The emergence of any political format depends largely on the existence of
politicians of equal calibre. Unlike Kuchma, Yushchenko had a strong
competitor right at the outset of his presidency in the person of
Tymoshenko.
The tone of all the political processes within the country will be set not
by Russia's attempts to bring Ukraine to its knees, as the National
Democrats liked to say, not by the huge appetite of big business and not by
an opposition made up of those removed from power (which has, figuratively,
lost its trustworthiness), but by the competition between the "political
friends" of Yushchenko and Tymoshenko.
In theory, one can imagine Tymoshenko, [Deputy Prime Minister Roman]
Bezsmertnyy and [National Security and Defence Council Secretary Petro]
Poroshenko holding hands and smiling as they travel around the country,
campaigning for a single bloc. However, regardless of that, the principal
struggle is unfolding between Yushchenko and Tymoshenko for the public
and political field.
In the public field, who will be the symbol of the Orange Revolution? In the
political field, who will actually be ruling the country for the next five
years (the term of Yushchenko's presidency)? Who will exercise sole
leadership? - because there will always be competition between
Yushchenko and Tymoshenko until one of them finally outplays the other.
As the five months in which the new authorities have been in office have
shown, Mr Yushchenko wants to delegate operational and tactical matters
to Mrs Tymoshenko, while she needs big politics, economics and even
geopolitics.
In addition, Mrs Tymoshenko wants guarantees: she needs the prime
minister's post and stability. The combined bloc should symbolize the
authorities' stability and longevity, she said in an Interfax interview,
adding that she was backed by at least 50 per cent of the people, who
trust her and on whom she can rely.
Here, though, Mrs Tymoshenko is somewhat distorting the situation when
she invokes the people as a threat. After all, Tymoshenko was appointed,
not elected. The Party of the Regions [led by Viktor Yanukovych] also has a
rating, but what difference does it make? Nobody is giving Yanukovych a
post in the Cabinet of Ministers.
Yushchenko more or less dropped a hint to that effect to Tymoshenko in the
presence of Russian oil traders (if Zerkalo Nedeli is to be believed), when
he is supposed to have said that, if there is something you don't like, go
and play the pipes and beat the drums together with the [opposition] Sods
[United Social Democrats].
In other words, neither Yushchenko nor (even less) Tymoshenko can yet
individually claim to be the symbol of the Orange Revolution. But the slow
"dismemberment" of the results of the revolution is in progress. Tymoshenko
is trying to "cherry-pick" for herself the Maydan [Independence Square in
Kiev, the focal point of the Orange Revolution], the radical section of the
overall Yushchenko electorate, while [parliamentary speaker Volodymyr]
Lytvyn and (partially) Moroz are going for the moderates.
This can already be seen from the regroupings currently taking place in
parliament. It is significant that MPs from the former establishment
factions and groups are in no hurry to dash into Yushchenko's faction;
instead they are joining Tymoshenko and Lytvyn.
A further point of this confrontation will be that the opposition that has
come to power needs to enhance the standing of authority itself as an
institution, which is certainly not helped by government infighting. By
discrediting any establishment group, the authorities as a whole will
discredit themselves.
What is more, the "authorities vs. authorities" format will affect all other
fields, such as the economy and the media. In fact, reprivatization,
privatization, the Gongadze affair, the poisoning of Yushchenko and the
redistribution of the media field have already become bones of contention
between the different political groups.
Yet, apart from rhetoric, nothing is happening either in reprivatization and
privatization or in the handling of high-profile cases (even Kuchma could
not help commenting on Kryvorizhstal [the Kryvyy Rih steelworks, a prime
candidate for reprivatization]: "That tooth should have been pulled out
straightaway instead of dragging on for months and frightening all the
investors away").
What does this mean for the country? It means that there will be nothing
clear cut in politics, economic policy or foreign policy in Ukraine before
the parliamentary elections. The Orange Revolution has erased all the
ideological differences and nuances between politicians. One person may
combine the reformer and liberal with the socialist and populist at the same
time. The elections will be contested by charismatic personalities rather
than by ideas.
Only after the parliamentary elections will it be possible to look towards
some ideological or substantive project. Or rather after the formation of
the post-election team in power, since the shift to a parliamentary-
presidential form of governance (so far, everything indicates that political
reform is unlikely to be called off) and the need for some substantive
programme will, in one way or another, force a decision on what course
the country is to pursue.
The "authorities vs. authorities" format may change before the elections.
Unless the authorities themselves resolve this growing internal conflict, an
opposition will appear automatically. In this sense, the parliamentary
elections may come to be an Orange Revolution in reverse for the current
authorities.
Bearing political reform in mind, Yushchenko may lose real power (retaining
only formal or attributive power), if he is outplayed by Tymoshenko. But Mrs
Tymoshenko, who substantially boosted her status as a politician in the
Maydan, may lose it if she is in a formal alliance with the president's
party, but is sidelined (which is hard to imagine), and is also in
opposition (above all, she may be accused of being eternally in opposition -
under both Kuchma and Yushchenko). -30-
===============================================================
17. "GREAT BARGAINING"
Major Mykola Melnychenko and his compensation talks
A former bodyguard of Ex-Ukrainian President Kuchma
Article by Semen Shevchuk
Ukrayinska Pravda web site, Kiev, in Ukrainian 5 Jul 05
BBC Monitoring Service.UK, in English, Thu, Jul 07, 2005
Major Mykola Melnychenko, a former bodyguard of ex-Ukrainian President
Leonid Kuchma, held talks last year over "compensation" for stopping
publication of the recordings made by him allegedly implicating Kuchma in
the murder of Ukrainian journalist Heorhiy Gongadze, a Ukrainian web site
has reported. Talks with Kuchma's representatives were held with the
mediation of the Russian security services, it said.
However, the conditions posed by Melnychenko turned out to be
unacceptable for Kuchma's representatives, it added. The following is
the text of the article by Semen Shevchuk entitled "Great Bargaining",
posted on the Ukrainian web site Ukrayinska Pravda on 5 July; sub-
headings have been inserted editorially:
Moscow talks with Kuchma's representatives
The question as to what Melnychenko forgot in Moscow is not idle. Any
mention of mysterious talks in the city built of white stone [epithet of
Moscow] during which Melnychenko tried to "agree" with [former President
Leonid] Kuchma's envoys causes morbid reaction among those who still like
the major and believe in his honesty and altruism.
Nevertheless, this information has been confirmed by different well-informed
sources. Melnychenko and [fugitive former MP Oleksandr] Yelyashkevych
actively negotiated in July and October 2004 with Ihor Bakay [head of the
Directorate for State Affairs under Kuchma] with the mediation of Russian
security services on paying big financial compensation to them in exchange
for settlement of the conflict situation related to the cassette scandal
[publication of audio recordings allegedly made by Melnychenko in Kuchma's
office in 1999-2000].
Speculation that Major Melnychenko and his faithful companion Oleksandr
Yelyashkevych had certain important meetings in Moscow were first spread
in autumn 2004. Yelyashkevych admitted that talks had taken place with
representatives of the former authorities during a news conference in Warsaw
on 19 October 2004.
At the same time, Yelyashkevych told journalists some details of his meeting
with the deputy SBU [Security Service of Ukraine] chief [Volodymyr] Satsyuk,
but he did not specify the place and the pretext of their communication.
Alleged Russian involvement
Melnychenko's visits to Moscow were mentioned many times recently by [emigre
Russian tycoon Boris] Berezovskiy's people: staff members of the Civic
Liberties Foundation [established by Berezovskiy] Aleksandr Goldfarb and
Yuriy Felshtinskiy, along with former FSB [Russian Federal Security Service]
colonel Aleksandr Litvinenko who had been granted asylum in Great Britain.
In particular, Litvinenko said that Melnychenko had shown him his air
tickets to Moscow and boasted that he had managed to get a large sum of
money there.
The information obtained from several reliable sources, which actually do
not contradict each other, confirms: Melnychenko really did make an attempt
to bargain with representatives of former Ukrainian authorities in
July-September 2004. Talks took place with the mediation of Russian security
services, and their venue was Moscow.
Previous attempt at bargaining
Let us note that it was far from being the first Melnychenko's attempt to
reach an agreement with Kuchma. On that occasion the aspirations of both
parties to reach certain agreement seemed to be mutual.
Initial talks between the major and people from Kuchma's entourage took
place during the Ukrainian president's visit to Berlin in February 2004. The
person who acted as a mediator was Volodymyr Still - former Ukrainian consul
in Munich and the one who evacuated Melnychenko abroad in late 2000 at the
request of [Socialist Party leader] Oleksandr Moroz.
Participants of the talks from the presidential side were [Radio Liberty
journalist] Volodymyr Lack and [Kuchma's first aide] Serhiy Lyovochkin.
However, they did not manage to reach an agreement with Melnychenko.
Moreover, Still revealed the news to the media that the talks had taken
place.
Russian security services acted as mediators
It was decided to continue bargaining with Melnychenko with Russia's
mediation. There is speculation that this choice was made personally by
Kuchma when he finally made certain for himself that the murder of
Gongadze had been committed by policemen (at his own instruction).
The issue of involvement by the Russian security services in resolving the
"Melnychenko problem" was allegedly agreed at the level of heads of
Ukrainian and Russian presidential administrations - [Viktor] Medvedchuk
and [Dmitriy] Medvedev.
Later on, in July 2004, Russian External Intelligence Service (EYES)
officers established contacts with Melnychenko and Yelyashkevych in the
USA and offered them intermediary services in organizing another meeting
with representatives of the Ukrainian president. Moscow was named as the
venue for the talks. Meanwhile, the Russians gave Melnychenko guarantees
of personal security and made a commitment not to extradite him to Ukraine,
along with full confidentiality of the forthcoming talks.
First meeting: "compensation" demands
This time, Kuchma's authorized representative at the talks with Melnychenko
and Yelyashkevych was the head of the Directorate for State Affairs, Ihor
Bakay, who had been personally acquainted with Melnychenko since summer
2000 and with Yelyashkevych during their joint work in parliament. It is not
a secret that Bakay provided financial support to Melnychenko during his
work at the state guard service.
According to our information, the first meeting between Bakay, Melnychenko
and Yelyashkevych took place on 28 August 2004 in Moscow in the Rossiya
Hotel. The conditions of terminating Melnychenko's and Yelyashkevych's
public activity in disseminating recordings of Kuchma's conversations in
exchange for substantial financial compensation were discussed during this
meeting, among other things.
Talks at the Rossiya Hotel lasted four hours and ended on an optimistic
note: agreement was reached in principle, and the parties agreed to have
another meeting after Bakery's additional consultations with Kuchma.
Then SBU deputy chief [Volodymyr] Satsyuk arrived in Moscow the same day
and tried to interfere in the talks, insisting on the necessity of personal
communication with the major. But Melnychenko rejected holding any talks
with him, having accused Satsyuk of an attempt to physically eliminate him
in August 2003. As a result, Satsyuk confined himself to brief communication
with Yelashkevych.
Upon Satsyuk's return from Moscow SBU is known to have formally requested
that the Russian authorities detain Melnychenko and extradite him to
Ukraine. However, the Russians ignored this appeal.
Second meeting: agreement to be signed
The second meeting between Melnychenko, Yelyashkevych and Bakay took
place in the Russian capital in mid-September 2004.
Melnychenko and Yelyashkevych presented their own draft agreement dated
14 September 2004 entitled "On settlement of the conflict situation in
relation to so-called cassette scandal". In his turn, Bakay delivered
pre-payment to the account of the "compensation" designated for
Melnychenko and Yelyashkevych from Kiev.
The proposed agreement envisaged that, as soon as Melnychenko gets his
share of compensation, he would formally register a trademark called "Major
Melnychenko's recordings" in the USA and would conclude a formal agreement
on passing his copyright to a legal entity related to the Ukrainian
presidential administration.
This would have enabled strict regulation of media publications of different
fragments of Melnychenko's recordings and references to them in the future
by way of lawsuits. At the same time, Melnychenko promised to place all
original recordings and recording equipment in a safe in a European bank.
Having received the full amount of compensation (its sum was the subject of
bargaining, and the discussion was about millions of dollars), the major
promised to eliminate this material evidence. In addition, he promised to
persuade the expert Bruce Koenig not to publicize conclusions of the
examination which confirmed the authenticity of the fragments of recorded
conversations involving Kuchma.
Melnychenko also promised that in the event that financial compensation is
paid to him, Gongadze's widow Myroslava would terminate her civil action
against Kuchma and would make a public statement that she did not regard
him as the one who had ordered her husband's murder on condition that the
policemen who had murdered the journalist were put on trial.
(This provision of the agreement obviously causes the greatest doubts: the
"paying" party at least had to receive significant proof of Melnychenko's
ability to "organize" a statement of this kind. But he was unable to present
this proof for certain.)
The obligations of the parties also envisaged payment of financial
compensation to Yelyashkevych in exchange for lifting all his legal claims
against Kuchma. Yelyashkevych took the obligation to apply to the
investigation commission of the Supreme Council [parliament] on withdrawing
the issue of an attempt being made on his life by senior Ukrainian officials
as soon as he receives the money.
The agreement also envisaged that Melnychenko and Yelyashkevych would
hold a press conference for journalists, with its content to be agreed by
the parties in advance as soon as they reach consent with Bakay.
Warsaw statement
A press conference in Warsaw was advertised in advance for this purpose,
but its exact date was not indicated. It was there that Melnychenko planned
to make a statement on suspension of making his recording public:
"Due to the fact that recorded conversations are used by different forces
for bargaining with Kuchma and blackmailing him, Melnychenko does not see
any sense in providing any kind of new facts in the recordings during the
presidential election campaign. This is despite the fact that the recordings
contain facts indicating the real face of both the candidate backed by the
authorities as well as opposition politicians. This step by Melnychenko is
due to the fact that he wants to provide an opportunity for ensuring
democratic elections and in order to stop the blackmailing of Kuchma from
different sides."
Demands of greater "compensation"
Bakay passed 2m dollars in cash to Melnychenko and Yelyashkevych together
as the first installment to the account of paying the "compensation". Before
flying back to the States, Melnychenko took only 100,000 dollars, having
deposited the rest of his share in a Moscow bank.
Yelyashkevych spent several more weeks in Moscow holding further bargaining
talks with Bakay after Melnychenko's departure. But the attempts of the
parties to agree on the amount of "compensation" dragged on and finally
resulted in nothing.
According to one of the versions, bargaining was interrupted as soon as
Yelyashkevych announced that the total sum of "compensation" was 100m
dollars and posed an additional condition: [Russian President Vladimir]
Putin and Kuchma should sign the document "On settlement of the conflict
situation in relation to the so-called cassette scandal".
In Yelyashkevych's opinion, it had to prevent "throwing" this historic
document to the media. These demands by Melnychenko's companion turned
out to be unacceptable for the Ukrainian side. When Bakay explained
rejection of further talks with Yelyashkevych, he said that it had been
Medvedchuk's instruction from Kiev.
Warsaw news conference: no sensations
The news conference which had been earlier postponed many times (it was
postponed for the last time from Thursday, 14 October, to Tuesday, 19
October) took place in Warsaw soon. Melnychenko is known to have arrived
in Poland from Washington and Yelyashkevych from Moscow.
The planned sensation did not happen: Melnychenko announced at his meeting
with journalists that he was going to further publicize the recordings made
both in Kuchma's office and in other interesting premises.
The major presented to the media the recordings of Kuchma's conversations
which confirmed rigging of the 1999 [presidential] elections; however, they
did not cause special interest in Ukraine, which was completely preoccupied
with the ongoing election campaign.
Further visits to Moscow
The aforementioned information on Melnychenko's and Yelyashkevych's talks
in Moscow was received from Ukrainian sources. For this natural reason, it
is at least incomplete. It is not reliably known what else Melnychenko and
Yelyashkevych were doing in Moscow, whom else they met in addition to
Bakay and Satsyuk and what they agreed on.
But there are practically no doubts that Russian security services took
advantage of a good chance to take Melnychenko under their control.
According to some information, one deputy head of the of FSB had informative
discussions with the major in Moscow, along with people from the highest
ranks of EYES.
It is known for sure that Melnychenko renewed his visits to Moscow after the
Orange Revolution and assumption of powers by [President Viktor] Yushchenko.
According to Ukrayinska Pravda's information, Melnychenko was spotted in
one of Moscow's international airports quite recently, in late May 2005.
Melnychenko and Yelyashkevych are known to have made statements broadcast
by the Russian TV company TV Centre ([Andrey] Karafuto's programme Moment
of Truth) in April of this year. It was impossible to either confirm or deny
the information on whether this programme was recorded in the Russian
capital as the programme's producers keep this is a secret.
The question as to other people with whom Melnychenko met in Moscow, apart
from journalists, and on new talks he held there remain open. Just like the
answer to the question on whether Melnychenko's refusal to officially
testify on the Gongadze case to Ukrainian law-enforcers is related to these
circumstances.
Ukrainian security service reluctant to comment
The SBU leadership is well aware of Melnychenko's visits to Moscow, but they
consider making comments on it to be inexpedient. For example, [SBU chief
Oleksandr] Turchynov avoided discussing this topic, saying that "the SBU
does not shadow Ukrainian citizens".
Turchynov is known to have had a personal meeting with Melnychenko in
Washington in late April, and they reportedly agreed that the major will
give evidence to FBI as a witness. According to the author's information,
SBU chief had numerous telephone conversations with Melnychenko since
that time, persuading him to fulfill his promise.
The position of the SBU chief can be easily understood, but one can hardly
expect a positive result from these efforts, taking into account the fact
that all previous efforts to incline Melnychenko to collaborate with the
investigation, including the ones undertaken personally by the president,
produced no result.
Melnychenko unlikely to give evidence
Summing up, the chances that the major will provide exhaustive evidence to
the FBI seem to be extremely low. At best, Melnychenko will confine himself
to the latest political statements instead of answering concrete questions
posed by the Prosecutor-General's Office.
At worst, he will refuse to give evidence at all and will pose new
conditions. For example, he will say that he will give evidence to the FBI
only if a criminal case is opened against Kuchma in Ukraine. Generally
speaking, Moscow will find advice to give this unsuccessful hero of
Ukraine... [ellipsis as published]
Ukrainian authorities' "impotence"
What will the SBU chief - one of the not numerous representatives of the
Ukrainian authorities maintaining contacts with Melnychenko - do in this
case? Will he pretend that "evil forces" hindered Melnychenko's sincere
aspiration to testify against Kuchma again? Will it be easier to recognize
the truth of Melnychenko's contacts with Russian security services now?
Moreover, according to our sources, there is reliable proof of Melnychenko's
stay in Moscow exist, and it is at the disposal of those who initiated and
organized talks in the city built of white stone.
In particular, it concerns the photographs made in autumn 2004 showing
Melnychenko and Yelyashkevych in Red Square. These photographs can be
made public in proper time to finally discredit Melnychenko, the same way as
to demonstrate the impotence of the new Ukrainian authorities, which are
unable to dot their "it's" in the cassette scandal. -30-
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