"THE ACTION UKRAINE REPORT - AUR"
An International Newsletter
The Latest, Up-To-Date
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"
STATEMENT BY INTERNATIONAL MONETARY FUND (IMF)
STAFF MISSION TO UKRAINE
Reducing inflation remains the main macroeconomic challenge
To reduce inflation to single digits, the NBU should increase operations
to restrain base money growth, and adopt a monetary framework that
enables it to better achieve its inflation goals, including by
shifting to greater flexibility in the exchange rate.
Among the key steps the IMF mission recommends are:
(1) rapid and transparent resolution of the reprivatization issue;
(2) other steps to improve the difficult investment climate;
(3) early implementation of the remaining legislation needed for
World Trade Organization (WTO) membership;
(4) measures to develop domestic capital markets;
(5) continued efforts to strengthen the financial sector; and
(6) reforms to restore the financial viability of the public pension fund.
"THE ACTION UKRAINE REPORT - AUR" - Number 537
Mr. E. Morgan Williams, Publisher and Editor
morganw@patriot.net, ArtUkraine.com@starpower.net
Washington, D.C. and Kyiv, Ukraine, FRIDAY, August 5, 2005
------INDEX OF ARTICLES------
"Major International News Headlines and Articles"
1. STATEMENT BY IMF STAFF MISSION TO UKRAINE
Reducing inflation remains the main macroeconomic challenge
International Monetary Fund (IMF)
Kyiv, Ukraine, Wednesday, August 3, 2005
2. STATE AGRARIAN FUND OF UKRAINE IS NOW FULLY FUNDED
TO PURCHASE GRAIN FROM AGRICULTURAL PRODUCERS
REPORTS PRIME MINISTER TYMOCHENKO
PM supports state company Khlib Ukrainy entering grain export market
Ukrinform, Kyiv, Ukraine, Thursday, August 4, 2005
3. UKRAINIAN PRIME MINISTER TYMOSHENKO GETS CABINET TO
SUPPORT IMPORTING RAW SUGAR TO REDUCE SUGAR PRICES
Ukrainian News Agency, Kyiv, Ukraine, Thu, August 4, 2005
4. UKRAINIAN PM CRITICIZES MINISTERS FOR INTERFERING
Prime minister dismissed widespread criticism of her
handling of Ukraine's economy after IMF report
Associated Press, Kiev, Ukraine, Thursday, August 4, 2005
5. UKRAINE'S PRIME MINISTER EXPANDS HER MEDDLING
AND INTERFERING IN UKRAINE'S PRIVATE COMMODITY MARKETS
Government becomes major player in the grain business
OP-ED: Inside Ukraine Newsletter, Kyiv, Ukraine, Fri, August 5, 2005
6. POLISH AMBASSADOR CRITICIZES METHODS USED BY UKRAINE
TO CANCEL INCENTIVES RELATED TO FOR FREE ECONOMIC ZONES
'Polish investors are concerned, if not to say outraged'
Ukrainian News Agency, Kyiv, Ukraine, Thu, August 4, 2005
7. UKRAINE'S CABINET ENDORSES 530 FINANCIALLY TROUBLED
STATE COMPANIES FOR PRIVATIZATION DURING YEARS 2005-2006
Ukrainian News Agency, Kyiv, Ukraine, Wed, August 3, 2005
8. AES-KYIVOBLENERGO PROTESTING AGAINST CUT OF
INVESTMENT PROGRAM BY NERC - STATEMENT
Interfax-Ukraine, Kyiv, Ukraine, Friday, July 29, 2005
9. REDYTPROMBANK RECEIVES EUR 5 MILLION FROM CARGILL TRADE
STRUCTURED FINANCE TO PROVIDE LOANS TO UKRAINIAN IMPORTERS
Ukrainian News Agency, Kyiv, Ukraine, Friday, July 29, 2005
10. UKRAINE'S NCRC ISSUES LICENSE TO VOLIA FOR CREATING
MODERN TELECOMMUNICATIONS NETWORK
Ukrainian News Agency, Kyiv, Ukraine, Thu, August 4, 2005
11. LARGE POLISH TRANSPORT & FORWARDING COMPANY PEKAES
PLANS TO EXPAND EASTWARD TO UKRAINE AND RUSSIA
Polish News Bulletin, Warsaw, Poland, Wed, Aug 03, 2005
12. UKRAINE: COUNTRY OUTLOOK
The Economist Intelligence Unit Limited
The Economist, London, UK, Thu, August 4, 2005
13. MUTUAL FUNDS TARGET UKRAINIAN REAL ESTATE MARKET
ANALYSIS: by Roman Bryl, Ukraine Analyst
IntelliNews - Ukraine This Week
Kyiv, Ukraine, Monday, August 1, 2005
14. GONGADZE'S WIDOW MYROSLAVA OPPOSES PIECE BY PIECE
TRANSFER OF CRIMINAL CASE ON HER HUSBAND'S MURDER TO COURT
Ukrainian News Agency, Kyiv, Ukraine, Thu, August 4, 2005
15. ROMA REALITIES AND POSSIBILITIES
U.S. Peace Corps Volunteer reports from Uzhgorod, Ukraine
ANALYSIS AND COMMENTARY: By Matt Hagengruber
The Christian Science Monitor, Boston, MA, Tue, Aug 2, 2005
16. POLAND REVIVES WICKER TRADITION
By Adam Easton, BBC News correspondent
In Rudnik-on-San in Poland, Tuesday, 2 August 2005
17. LUKASHENKA'S TRAP: WITH THE POLES SCAPEGOATED, A
COLOURFUL REVOLUTION IN BELARUS LOOKS UNLIKELY
Lukashenka is not Kuchma
ANALYSIS: By Andrzej Brzezeiecki, Foreign Editor
Tygodnik Powszechny weekly
Article featured in Gazeta Wyborcza
Polish News Bulletin, Warsaw, Poland, Wed, Aug 03, 2005
18. VOLODYMYR THE GREAT, THE "RADIANT SUN" OF UKRAINE-RUS'
To the 990th anniversary of his death
By Oleh Yastrebov, Candidate of Sciences (Engineering)
The Day Weekly Digest in English, #25
Kyiv, Ukraine, Tuesday, 26 July 2005
=============================================================
1. STATEMENT BY IMF STAFF MISSION TO UKRAINE
Reducing inflation remains the main macroeconomic challenge
International Monetary Fund (IMF)
Kyiv, Ukraine, Wednesday, August 3, 2005
KYIV - The following statement was issued today in Kiev, Ukraine, by an
International Monetary Fund (IMF) mission:
"An IMF mission visited Kiev during July 25-August 2 to conduct the annual
Article IV consultation discussions. The mission met with Finance Minister
Pynzenyk and National Bank of Ukraine (NBU) Governor Stelmakh, and other
senior officials. The discussions covered recent economic and financial
developments, fiscal and monetary policies, the status of structural
reforms, and economic prospects for 2006 and beyond.
"Since 2004, inflation pressures have mounted while real growth has slowed.
Inflation is approaching 15 percent. Growth has eased from 12 percent in
2004 to 4 percent in the first half of 2005. Strong consumption should help
increase the pace of growth next year, with a rebound in investment if
uncertainty about the government's reprivatization plans is resolved quickly
and the difficult investment climate improves.
"Reducing inflation remains the main macroeconomic challenge. The NBU
has undertaken operations to absorb liquidity and, in April, took first
steps toward a more flexible exchange rate. But these efforts have been
insufficient to set inflation on a declining path.
"To reduce inflation to single digits, the NBU should increase operations to
restrain base money growth, and adopt a monetary framework that enables
it to better achieve its inflation goals, including by shifting to greater
flexibility in the exchange rate.
"Fiscal policy has been tightened in 2005 and many tax loopholes closed,
but large increases in public pensions and wages have stoked inflationary
pressures. The budget performance so far this year is consistent with a
general government deficit of 2½ percent of GDP, well below the 4½
percent of GDP deficit reached in 2004.
"However, the government should address risks that the 2005 deficit target
may be exceeded due to VAT refund claims payable, possible shortfalls in
transfers from state enterprises, and social spending pressures.
"To help control inflation, the mission recommends maintaining a tight
fiscal stance in 2006 (a general government deficit somewhat lower than
this year's target). This would leave little room for new spending
initiatives or tax cuts, and require that further wage and pension increases
be strictly limited.
"The authorities have articulated a vision of sweeping structural reforms,
which the mission supports. However, much remains to be done to
translate this vision into reality.
"Among the key steps the mission recommends are:
(1i) rapid and transparent resolution of the reprivatization issue;
(2) other steps to improve the difficult investment climate;
(3) early implementation of the remaining legislation needed for
World Trade Organization (WTO) membership;
(4) measures to develop domestic capital markets;
(5) continued efforts to strengthen the financial sector; and
(6) reforms to restore the financial viability of the public pension fund.
"These efforts should be undertaken in a cohesive and well-communicated
government strategy that avoids sending mixed signals.
"Discussions between the IMF and the Ukrainian authorities will continue
on Thursday and Friday, with the visit of IMF Managing Director Rodrigo
de Rato, who will meet with President Yushchenko, Prime Minister
Tymoshenko, and NBU Governor Stelmakh." -30--
=============================================================
2. STATE AGRARIAN FUND OF UKRAINE IS NOW FULLY FUNDED
TO PURCHASE GRAIN FROM AGRICULTURAL PRODUCERS
REPORTS PRIME MINISTER TYMOCHENKO
PM supports state company Khlib Ukrainy entering grain export market
Ukrinform, Kyiv, Ukraine, Thursday, August 4, 2005
KYIV - The [State] Agrarian Fund of Ukraine has been fully provided with
money for purchase of grain from agricultural producers. Prime Minister
Yulia Tymoshenko announced this to journalists on Thursday.
"The state budget provides for filling the fund with 335 million hryvnia
through the sale of the remainder of last year's harvest." Mrs. Tymoshenko
said. Moreover, according to her, the State Committee for Material
Reserves (the State Reserve) already has the 400 million hryvnia required
for purchases.
Mrs. Tymoshenko also said that the Khlib Ukrainy national joint-stock
company is also actively purchasing grain on commodity exchanges and
has already concluded contracts for export of 2.5 million tons of grain.
=============================================================
3. UKRAINIAN PRIME MINISTER TYMOSHENKO GETS CABINET TO
SUPPORT IMPORTING RAW SUGAR TO REDUCE SUGAR PRICES
Ukrainian News Agency, Kyiv, Ukraine, Thu, August 4, 2005
KYIV - The Cabinet of Ministers has adopted a set of documents, including
those granting permission for the import of raw sugar into Ukraine, which
would allow for a reduction in the sugar price to UAH 3.00-3.20 per
kilogram. Prime Minister Yulia Tymoshenko made the statement at a news
conference.
She specified that part of the decisions was taken at the last two meetings
of the Cabinet of Ministers. "A wonderful model was created how to trim the
peaks of sugar prices," Tymoshenko said.
In particular, she said that it is envisaged the import of raw sugar in
Ukraine and to use the earnings from its sale for purchasing and creating a
strategic reserve of sugar in the State Material Reserve.
"All the profit from the import of raw sugar will to towards replenishing
the State Reserve with money and creating a strategic stock of sugar in
the State Reserve," she said.
At the same time, Tymoshenko did not specify how much raw sugar it is
planned to import into Ukraine, noting only that it will be imported in
fewer quantities then that of last year or the one before the last.
Tymoshenko also did not specify how much sugar it is planned to buy for
the State Reserve, noting that this information is secret.
Tymoshenko stressed that the Cabinet of Ministers was forced to adopt the
set of documents in order to normalize the sugar prices due to the fact that
the Verkhovna Rada refused to pass the law granting permission for the
import of raw sugar.
She moreover added that Rada permitted import of 360,000 tons of
raw sugar in 2003, and 125,000 tons of raw sugar in 2004, which made it
possible to normalize sugar prices in the peak seasonal time of preparing
in the summer preserved food.
As Ukrainian News reported previously, the prices for sugar on retail
trading rose in June in all regions by 10.8-40.6% to UAH 3.55-4.77 per
kilogram over that of May. Sugar prices on retail trading were UAH 2.90-
3.20 per kilogram in September to December 2004. Specialists estimate
the annual size of the domestic sugar market at 2 million tons. -30-
=============================================================
4. UKRAINIAN PM CRITICIZES MINISTERS FOR INTERFERING
Prime minister dismissed widespread criticism of her
handling of Ukraine's economy
Associated Press, Kiev, Ukraine, Thursday, August 4, 2005
KIEV - Ukrainian Prime Minister Yulia Tymoshenko sharply criticized
members of her cabinet for interfering in her work Thursday.
"I am stumbling over such obstacles that were unheard of in the previous
government," Tymoshenko told reporters. Her remarks reflect the divisions
that plague the cabinet as it tries to reform the ex-Soviet republic.
"I would prefer if the government in Ukraine could work as a balanced team,
but at the moment that's not the case," she said. Her remarks come only a
day after Agriculture Minister Oleksandr Baranivsky criticized the
government for a decree that would allow imports of Brazilian sugar at the
expense of the local sugar industry.
Tymoshenko regularly clashes with her deputy Anatoly Kinakh, who is the
leading pro-business member of Ukraine's Western-oriented government.
The prime minister also dismissed widespread criticism of her handling of
Ukraine's economy, after the International Monetary Fund Wednesday
recommended the country's financial authorities do more to combat the
inflation surge this year.
The populist policies of Tymoshenko's government, that have led to an
increase of pensions and wages, have fueled inflation, the IMF report said.
=============================================================
5. UKRAINE'S PRIME MINISTER EXPANDS HER MEDDLING
AND INTERFERING IN UKRAINE'S PRIVATE COMMODITY MARKETS
Government becomes major player in the grain business
OP-ED: Inside Ukraine Newsletter, Kyiv, Ukraine, Fri, August 5, 2005
Ukraine's Prime Minister Yulia Tymoshenko has this week expanded her
meddling and interfering in Ukraine's private commodity markets. This is
causing great concern and alarm in the domestic and international private
business community, in the capital's of the various western countries whose
leaders closely follow economic developments in Ukraine and with the
managers of the international financial institutions.
On July 27 GAK "Khleb Ukrainy,' a state owned company, made bids on
23 regional commodity exchanges planning to buy 2,3 mln tons of grain.
The starting prices were: wheat 4th class - UAH 486, wheat 5th class -
UAH 445,5, wheat 6th class - UAH 441, barley 3rd class - UAH 620.
According to sources on August 3rd, GAK "Khleb Ukrainy," the state
owned company made the following bids : for feed wheat - UAH 441, for
feed barley - UAH 630 on EXW (=UAH 740 on CPT, Ily).
On July 27 the Cabinet of Ministers took some measures, upon the
recommendation of the Prime Minster, concerning grain purchases-crop
year 2005. Those measures were very preferential for Ukrainian state
owned companies and directly hurt private companies. The measures
were strongly protested against by the UZA (Ukrainian Grain Association)
and many other private organizations and companies.
The Cabinet of Ministers ordered the following direct, substantial
subsidies for the state owned companies:
(1) to lower by 30% the tariffs for the reception and shipment of grain
for state companies Goscomreserve and GAK "Khleb Ukrainy";
(2) to lower harbor dues and export services in ports for state
companies Goscomreserve and GAK "Khleb Ukrainy";
(3) to reduce till 31.12.2005 by 15,62% railway tariffs for grain
transportation for export for the same companies.
In the past when the Ukraine government engaged in these types of
subsidized, unnecessary, counterproductive business activities the
commodity transactions were between special companies to benefit
special interests. There was considerable corruption involved and at
the end of the day substantial losses were incurred which resulted in
major hits on the state budget at the expense of the average taxpayer.
All of this was supposed to change after the Orange Revolution took
place but recent activities by the Ukrainian government indicate very
little has changed.
Were are the economic and business reforms that were promised to
support the building of a strong private business sector which will
create the wealth and jobs that are needed by the people of Ukraine?
What is the government doing interfering in the grain business, in the
sugar business, in the meat business, in the gasoline business and on
and on? What is the point of these anti-private business, anti-private
markets, exercises which are moving Ukraine rapidly in exactly the
wrong direction?
As of today only one company still has the government's permission to
fumigate grain in Ukraine, not even the government's own quarantine
people are allowed to fumigate. This state granted monopoly to a
special private company has been in place for some time. When will
the new government put a stop to this major inequity and others like it?
It is now time for President Yushchenko to step in and stop all this
nonsense just like he did regarding the Prime Minister's meddling
and interfering in the private energy markets a few weeks ago.
==============================================================
6. POLISH AMBASSADOR CRITICIZES METHODS USED BY UKRAINE
TO CANCEL INCENTIVES RELATED TO FOR FREE ECONOMIC ZONES
'Polish investors are concerned, if not to say outraged'
Ukrainian News Agency, Kyiv, Ukraine, Thu, August 4, 2005
KYIV - Poland has criticized the cancellation of preferences for free
economic zones by Ukraine in March. Outgoing Polish Ambassador to
Ukraine Marek Ziolkowski stated this in an interview with the Den
newspaper.
"We do not like the manner in which the cancellation of [incentives for]
special economic zones was conducted," the ambassador said.
He emphasized that the matter is not in the zones themselves, but in the
methods that were used to cancel the incentives: without warning, without
talks with investors. "Polish entrepreneurs are concerned, if not to say
outraged," Ziolkowski stated.
As Ukrainian News earlier reported, President Viktor Yuschenko instructed
the Cabinet of Ministers to analyze by September 1 the appropriateness of
closing or retaining the free economic zones.
The Verkhovna Rada adopted in March the changes that were proposed to
the state budget for 2005 by the Cabinet of Ministers, which envisage
cancellation of preferences that were previously awarded, particularly for
free economic zones and territories of priority development.
In June, Yuschenko promised investors that they will be compensated
damages from the cancellation of preferences for free economic zones.
There are presently 11 free economic zones operating in Ukraine, whereas
special regime for investment activity in territories of prioritized
development has been introduced in 9 regions. -30-
=============================================================
7. UKRAINE'S CABINET ENDORSES 530 FINANCIALLY WEAK
COMPANIES FOR PRIVATIZATION DURING YEARS 2005-2006
Ukrainian News Agency, Kyiv, Ukraine, Wed, August 3, 2005
KYIV - The Cabinet of Ministers has endorsed 530 companies for
privatization in 2005-2006. Journalists learned this from State Property
Fund Chair Valentyna Semeniuk, who cited the Cabinet of Ministers'
resolution on endorsement of the privatization plan for 2005-2006, which
was adopted at the Cabinet of Ministers' meeting on August 3. "530
facilities in 2005-2006", Semeniuk said.
According to her, on the list are the facilities proposed by sectorial
ministries that are running at a loss or need partial investment.
She also added that the Cabinet endorsed at its meeting on August 3 the
schedule for pre-privatization preparation of 13 large-scale facilities.
At the same time, Semeniuk noted that the SPF did not submit to the
Cabinet its forecasts of the receipts that may come to the 2006 national
budget from privatization.
Semeniuk also added that endorsement by the Cabinet of Ministers of
companies to be privatized in 2005-2006 is a move towards endorsement
of the privatization program for 2005-2006 submitted by the State Property
Fund to the Cabinet of Ministers.
As Ukrainian News reported, in January-May the SPF transferred to the
budget UAH 685.6 million received from the sale of national property.
In 2004 the SPF transferred to the budget UAH 9.415 billion received
from the sale of the national property, with the planned UAH 5.2 billion.
==============================================================
8. AES-KYIVOBLENERGO PROTESTING AGAINST CUT OF
INVESTMENT PROGRAM BY NERC - STATEMENT
Interfax-Ukraine, Kyiv, Ukraine, Friday, July 29, 2005
KYIV - The closed JSC AES-Kyivoblenergo opposes the ban on execution
of a five-year investment with the budget of over UAH400 million aimed at
ensuring the top level of power system safety and quality consumer services.
AES-Ukraine has issued such a statement after the National Electricity
Regulatory Commission did not approve implementation of the investment
program, which threatens drawing in the foreign capital into the country.
AES Vice President Garry Levesley is quoted as having said that the
company had thoroughly worked out a harmonious investment program for
five years. This program, as well as another one developed by another
Ukrainian company AES - the closed JSC AES-Rivneoblenergo, provided
an opportunity to draw in a loan of $45 million from the International
Finance Corporation incorporated into the World Bank.
According to the IFC, this investment program meets the frontrunner
experience of distribution companies at the same stage of development
as the Ukrainian AES enterprises.
Garry Levesley said AES-Kyivoblenergo and AES-Rivneoblenergo are the
first private companies in the energy sector of Ukraine that engaged such a
loan, having proved the advantage of international strategic investor.
Implementation of the investment program is breached for any notable
reason, damaging the long-term development of the power sector of
Ukraine, the press release accents.
The NERC does not agree that Ukraine can utilize the world's best practice
and tries to thrust on the company the shortened variant of the investment
program based on old standards and methods, AES believes.
AES sees its priority in Ukraine in upgrading and developing power grids.
Half of the invested amount was planned for grids, another - for replacement
of meters, better consumer service and upgrade of billing systems, the press
release reads.
In 2005 the company was planning to increase investment in power grids
1.5 times in comparison with the previous year to UAH28 million. The funds
were targeted at the weakest priority sectors of power grids identified
using modern techniques successfully utilized by AES in other countries.
AES Corporation now owns controlling interests in AES-Kyivoblenergo and
AES-Rivneoblenergo. -30- [The Action Ukraine Report Monitoring Service]
=============================================================
9. REDYTPROMBANK RECEIVES EUR 5 MILLION FROM CARGILL TRADE
STRUCTURED FINANCE TO PROVIDE LOANS TO UKRAINIAN IMPORTERS
Ukrainian News Agency, Kyiv, Ukraine, Friday, July 29, 2005
KYIV - Kredytprombank, one of the largest Ukrainian banks, has received
a EUR 5 million loan from Cargill Trade Structured Finance Europe company
to provide loans to Ukrainian importers of equipment and components.
Ukrainian News learned this from a bank's report. Cargill Trade Structured
Finance Europe, a part of the Cargill Group, deals with financing of trade
agreements.
Kredytprombank attracted more than USD 100 million in all from foreign
banks and national expert agencies under projects for structural and trade
financing. Its trade financing operations amounted to USD 30 million in the
first half of this year.
As of July 1, 2005, Kredytprombank's net assets were valued at UAH
1,679.19 million, loan portfolio UAH 1,228.98 million and capital UAH
321.43 million, the Association of Ukrainian Banks reported. The bank
ended 2004 with a profit of UAH 14.71 million.
Its shareholders breakdown is as follows: Homertron Trading limited
(Ireland) 35.39%, Salesi Investments Ltd (Cyprus) 9.98%, Mungisdale
Enterprises Ltd (Cyprus) 9.64%, Krasnoarmiiska Zakhidna Coalmine
No.1 (Krasnoarmiisk, Donetsk region) 9.16%, Savi limited liability
company 6.63%, Energon Capital Finance (Greece) 5.67%, Yasynivskyi
coke chemical plant 5.42%, Donetskstal metallurgical plant 4.22%, and
other companies 13.89%. -30- [Action Ukraine Report Monitoring]
=============================================================
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=============================================================
10. UKRAINE'S NCRC ISSUES LICENSE TO VOLIA FOR CREATING
MODERN TELECOMMUNICATIONS NETWORK
Ukrainian News Agency, Kyiv, Ukraine, Thu, August 4, 2005
KYIV - The National Communications Regulation Commission has adopted
a decision to issue a license to the Volia company, the largest operator of
cable television in Kyiv, to carry out activity in the telecommunication
sector with respect to technical servicing and operation of the networks of
air-time television and radio broadcast, cable radio broadcast and
television networks. The company disclosed this in a statement, the text of
which Ukrainian News has obtained.
"Our objective is the creation of a world-class network where only the
latest equipment will be used," it is mentioned in the statement with
reference to Pavlo Kurmachev, the director of Kyiv Telecommunication
Networks, which is one of the enterprises in the VOLIA group of companies.
According to the statement, sophisticated networks will allow the company
to provide digital television services with more than 70 programs or
Internet access services with speed of up to 2 megabits per seconds.
It is mentioned in the statement that Volia Cable and Kyiv Telecommunication
Networks will in the future improve the technologies for providing
subscribers with the most modern telecommunication services.
The Volia company provides analogue cable television broadcasting services
under the brand name Volia Cable, digital broadcasting under the brand name
Volia Premium TV, and also access to the cable networks under the trademark
Volia Broadband.
Over 500,000 apartments in Kyiv receive Volia's cable services. The Volia
group of companies is owned by the UGF (Ukrainian Growth Fund), which is
managed by the SigmaBleyzer international company. -30-
=============================================================
11. LARGE POLISH TRANSPORT & FORWARDING COMPANY PEKAES
PLANS TO EXPAND EASTWARD TO UKRAINE AND RUSSIA
Polish News Bulletin, Warsaw, Poland, Wed, Aug 03, 2005
WARSAW - Pekaes, one of the largest transport and forwarding companies
in Poland, has begun working on a new business strategy for 2006-2010.
According to Jan Dalgiewicz, the company's chairman, the document should
be ready in October. The board wants to invest more in logistics.
Pekaes intends to move east, mainly to Russia and Ukraine, but also to
Kazakhstan. Dalgiewicz claims that these regions are characterised by high
demand for transport services. Pekaes is also planning to take over some
new companies. Only three weeks ago, Pekaes bought 85 percent of
shares in Expolco Transport, a company operating in sea forwarding and
land transport.
Moreover, negotiations concerning the acquisition of a delivery service
company are being finalised and should be completed in August. This year's
acquisition negotiations involved seven companies, of which at least three
or four have serious chances of a successful conclusion. -30-
=============================================================
12. UKRAINE: COUNTRY OUTLOOK
The Economist Intelligence Unit Limited
The Economist, London, UK, Thu, August 4, 2005
OVERVIEW: The new Ukrainian leadership, which has been in place since
early 2005, will ensure greater political openness than existed in the past,
and will push for faster economic reform. However, occasionally poor policy
formulation and government in-fighting will continue to limit the extent of
improvements.
Moreover, the 2006 parliamentary election and the planned switch to a
more parliamentary political system will bring significant distractions.
Even after the election, the new pro-government majority in parliament will
be unstable. The Economist Intelligence Unit expects real GDP growth to
decelerate to 5% in 2005 and to 4.8% in 2006. Year-end inflation is
forecast to slow to 9% by 2006.
The currency will remain broadly stable in nominal terms against the US
dollar in 2005-06, with only a slight appreciation expected. The
current-account surplus reached a record high in 2004, but will decline in
2005-06 as export growth decelerates.
[1] DOMESTIC POLITICS: The president, Viktor Yushchenko, and the prime
minister, Yuliya Tymoshenko, are expected to continue to co-operate with
one another during the rest of the 2005-06 forecast period. The risk of
political instability and inefficacy will nevertheless remain very high.
Ukraine's new leadership represents an uneasy coalition of heterogeneous
political forces that frequently disagree over policy and the division of
responsibilities. These differences will become harder to contain as the
March 2006 parliamentary election approaches, and as the debate heats
up over the implementation of constitutional changes that are scheduled to
come into effect in 2006.
Moreover, the pro-government majority that is expected in parliament after
the election is unlikely to be cohesive or to work smoothly with the
executive branch.
[2] INTERNATIONAL RELATIONS: Ukraine's relationship with the West will
be far better than it was during the tenure of Mr Yushchenko's predecessor,
Leonid Kuchma. Despite the recent rejection of the EU constitutional treaty
by French and Dutch voters--which has produced a backlash against
enlargement--Ukraine will continue to prioritise its relationship with the
EU and push ahead with implementing the commitments contained in the
EU-Ukraine Action Plan signed earlier in 2005.
However, there is now more of a risk that the Action Plan will be a less
effective policy anchor than had been expected prior to the French and
Dutch referendums.
[3] POLICY TRENDS: The election of Mr Yushchenko as president in late 2004
has given new impetus to the process of economic liberalisation. He has
appointed a government that is by far the most reform-minded in Ukraine to
date. We therefore expect greater progress on key issues than in the past:
privatisation sales are likely to become more transparent, fiscal policy
will be rationalised, energy sector reform will resume, and a more concerted
effort will be made to bring businesses out of the shadow economy.
The government's performance to date nevertheless shows that conflicting
priorities and limited capacity to generate and implement effective policies
will on occasion hamper reform. Policy initiatives continue to be badly
prioritised, legislation is frequently poorly thought out, and co-ordination
between the two branches of power remains problematic.
Moreover, the government has already shown a willingness to prioritise other
goals ahead of its interest in economic liberalisation. These goals--which
include a desire to rectify perceived injustices from the Kuchma era, weaken
the power of oligarchs and win the 2006 parliamentary election--potentially
conflict with that of creating a more liberal economy.
[4] INTERNATIONAL ASSUMPTIONS: With economic policy being tightened
in a number of countries and high levels of debt weighing on consumers,
companies and governments, a global slowdown is in prospect for 2005-06.
We forecast a deceleration in world GDP growth on a purchasing power parity
(PPP) basis, from an estimated 5.1% in 2004 to 4.2% in 2005 and 4% in 2006.
A fall in oil prices later in 2005 and in 2006 will affect real GDP growth
in Russia, Ukraine's largest export market, although Russian import demand
will remain relatively strong.
The prospects for Ukraine's terms of trade more generally are mixed. Ukraine
will benefit from a modest reduction in the cost of oil imports in 2006.
However, this will be more than offset by a decline in prices for steel,
which is Ukraine's most important export commodity. Average steel prices
are expected to fall by almost 30% in 2006. The slump in steel prices will
reflect slower growth in demand and the coming on stream of new production
capacity.
[5] ECONOMIC GROWTH: Real GDP growth fell to 5.4% year on year in the
first quarter of the year, and then slowed further to 4% in January-June.
The slowdown reflects less buoyant external conditions, particularly for the
large steel sector, as well as sluggish investment trends, which are
prompted by political instability and concerns over the government's review
of previous privatisations.
This review is proving both controversial and protracted, and any
improvement in investment in the second half of 2005 is expected to be
modest. Real GDP growth for the year as a whole is unlikely to exceed 5%.
[6] INFLATION: Consumer price inflation stood at 14.4% year on year in
June 2005. Inflation is expected to ease (to 12%) by end-2005, but will
still remain high owing to sharply rising incomes. A rise in administered
prices, which were generally kept down in 2004 because of the approach
of the election, will also add to inflation.
The narrowing trade surplus and slight currency strengthening expected will
nevertheless contain the pressure on prices by permitting a slightly tighter
monetary policy. Moreover, the government's fiscal policy in the second half
of 2005, although remaining lax, will at least be more prudent than during
the year-earlier period. With fiscal policy staying loose for electoral
reasons, inflation is only expected to fall to around 9% year on year at
end-2006.
[7] EXCHANGE RATES: During the past three years the National Bank of
Ukraine (NBU, the central bank) had often intervened on the interbank market
to keep the hryvnya's exchange rate against the US dollar fixed. The central
bank signalled a shift in policy in April 2005, when it allowed the hryvnya
to appreciate by 3%. The April appreciation has so far proved to be a
one-off attempt by the NBU to mitigate risks inherent in the continued
large-scale inflows of export earnings.
A further sharp shift in the exchange rate of the hryvnya to the US dollar
is not expected, although a slight nominal strengthening in 2005-06 is still
likely. This will be a reflection of the current-account surplus and ongoing
concerns over inflation, and will bring some real effective appreciation--in
view of inflation differentials and the expected greater stability of the US
dollar against the euro.
[8] EXTERNAL SECTOR: With higher incomes and oil prices pushing up
import expenditure, and the steel sector suffering from a less favourable
external environment, Ukraine's current-account surplus is expected to fall
to around 6% of GDP in 2005. Preliminary data already show the trade in
goods surplus in January-May narrowing to just under US$800m, down
from almost US$2.1bn in the year-earlier period.
The current-account surplus is set to narrow further, to around 2.2% of GDP,
in 2006. Prices for steel are forecast to drop by almost 30% that year, and
imports will continue to grow robustly owing to a further rise in incomes
and a pick-up in investment. -30-
[Format editing by The Action Ukraine Report (AUR) Monitoring Service]
=============================================================
13. MUTUAL FUNDS TARGET UKRAINIAN REAL ESTATE MARKET
ANALYSIS: by Roman Bryl, Ukraine Analyst
IntelliNews - Ukraine This Week
Kyiv, Ukraine, Monday, August 1, 2005
First mutual funds appear in Ukraine to invest in real estate
The rapid rise of real estate prices in Ukraine resulted in creation of the
first mutual funds in the country. They represent more efficient financial
institutions than existing funds for construction financing (FBF) and funds
for real estate activities (FREA) that quite successfully operate on
Ukrainian real estate market.
The newly established mutual funds are of the closed type, created as
venture funds. Undeveloped infrastructure of the Ukrainian stock market does
not give many opportunities for successful performance of open mutual funds.
It is necessary for open funds to possess extensive managing experience to
enter the local real estate market, seeking out lower risk instruments.
Involvement with mutual funds allow minimizing own taxation
The main advantage of closed mutual funds is that they receive re-investment
opportunities: money invested and current incomes are accumulated within
the mutual fund, passing from one project to another. Such continuous
reinvestment allows optimizing budget payments because revenues received
from investment activities are not taxed.
Investors pay taxes only if they receive income from selling securities. In
this case, a local investor (juridical person) pays 25% corporate profit
tax. For non-residents, tax on profits received from investments in mutual
funds makes up 15%. This tax is levied in the case when revenue is paid to
the investor.
This tax rate may be even lower if there are bilateral agreements between
countries on avoiding double taxation. All these peculiarities allow direct
investment in real estate objects, removing the need to use expensive and
low-mobile funds of FBF and FREA.
At present 3 large mutual funds are active in Ukraine
Lately 3 financial and investment companies announced about founding their
mutual funds for investment in real estate. They are Parex Asset Management
Ukraine (PAM Ukraine), ART Capital and Liko-Invest (the last company has
created two mutual funds already). The interest in the Ukrainian real estate
market from PAM Ukraine can be explained by the company's experience in
investing in real estate in the 3 Baltic states.
Thus, Parex Fund of Baltic Estate during the first two years of its activity
provided average 17% annual yield to investors. Where as an average interest
rate of banking deposits in Latvia made up 4-6% per annum. PAM Ukraine
plans to reach the same level of profitability in Ukraine.
According to PAM Ukraine forecasts, Parex's first mutual fund - Parex Fund
of Ukrainian Estate (PFUE) - will provide average 20%-25% yield per annum.
The state commission on securities and stock market registered PFUE in
May 2005. The funds are attracted for a 5-year period and the total volume
of the fund amounts to UAH 50mn (USD 10mn).
Every mutual fund of closed type has its own policy for attracting investors
Meanwhile, ART Capital is starting a share placement of a closed
non-diversified corporate investment fund - First Investment Fund on Real
Estate (FIFRE). Starting from Aug 1, 2005 investment company VINKO
manages FIFRE's assets. The fund has a 5-year maturity period with share
par value of UAH 5,000 (USD 1,000).
Managers of PFUE and FIFRE have chosen different ways for attracting
investors. FIFRE is oriented toward a wide range of investors including rich
individual investors. It is expected to attract foreign investors to the
fund, as well.
ART Capital is to invest in projects of construction company Misto. ART
Capital was the underwriter of Misto's bond issues in 2004-2005. Misto's
portfolio includes objects in Kyiv, Kyiv region, Southern coast of Crimea
peninsula, Truskavets and Dnipropetrivsk.
At the same time, PFUE focuses only on juridical persons among clients of
Parex Group. That is why PFUE will not attract many investors, and there
does not seem to be such a target. From Jul 15, 2005 PAM Ukraine started
to propose investment securities to its clients and to clients of Parex
Banka.
Among Ukrainian investors, insurance companies are paying the highest
interest to PFUE. According to latest information of PAM Ukraine, the fund
has already attracted about USD 6mn out of USD 10mn of the total fund
volume. During the initial period of PFUE activities, it is expected to make
investments in real estate in Kyiv city and Kyiv region.
Ukrainian real estate market one of the most attractive in Europe
The initial experience of such mutual funds proves that both local and
foreign investment companies are starting to use progressive financial
mechanisms to secure higher profit margins from the rapidly developing
real estate market.
We should admit the Ukrainian real estate market is almost the most
attractive and profitable among European markets. According to consultancy
Real Estate Solutions, profitability of all segments of the local market is
higher than in London, Prague, Warsaw, Budapest and Moscow.
AT Kearney in its recent Global Retail Development Index ranked Ukraine
the 3rd most attractive country to place investments in commercial property.
Kyiv itself is able to assimilate USD 2-3bn investments in real estate per
year. We will follow other new financial instruments as they appear, drawing
attention from investors trying to maximize profits from Ukraine's rapidly
developing real estate market.
But there remains a risk that the forming price bubble might pop at some
point. Also, betting on financial schemes or instruments like mutual funds
to minimize taxes is politically risky. This is proven quite well by the
Yukos affair in Russia. -30- [The Action Ukraine Report Monitoring Service]
=============================================================
Send in a letter-to-the-editor today. Let us hear from you.
=============================================================
14. GONGADZE'S WIDOW MYROSLAVA OPPOSES PIECE BY PIECE
TRANSFER OF CRIMINAL CASE ON HER HUSBAND'S MURDER TO COURT
Ukrainian News Agency, Kyiv, Ukraine, Thu, August 4, 2005
KYIV - The widow of murdered journalist Georgy Gongadze, Myroslava, has
said she is against the piece-by-piece transfer of the criminal case on the
murder of her husband to court. Myroslava Gongadze made the statement in
an interview with Channel 5 TV.
"The case should be transferred to the court when there would be available
all the elements of this crime, the ordering parties and actual
perpetrators," she said. Myroslava said that in order to transfer the case
to court there is also a need to find General Olesii Pukach, who as
investigators reckon, is the direct killer of Gongadze. Gongadze's widow
said that she plans to attend the court session.
In respond the Prosecutor's General Office stated that it sympathizes with
the journalist's mother Lesa Gongadze and his wife Myroslava, but it is
strongly asking them to refrain from legal assessments of the actions of the
PGO, which is tantamount to exerting pressure on the course of the pretrial
investigation.
The PGO disclosed that investigation of the case relating to the direct
perpetrators of the murder has ended and the PGO continues active actions
at the present time with respect to establishing the identity of those that
ordered and masterminded the murder. As Ukrainian News reported
previously, the Gongadze case boosts nearly 60 volumes.
The PGO announced on August 1 that it had completed investigation of the
first part of the Gongadze case against the actual perpetrators and after
familiarization of the materials of the case by the aggrieved parties and
the accused persons the case would then be transferred to court.
According to the PGO, Gongadze was suffocated to death, after which his
body was covered with gasoline and fire was set on it. After that the body
was reburied in Tarascha district of Kyiv region.
Gongadze disappeared in September 2000. His headless body was found in
the woods outside Kyiv two months later. His kidnapping triggered a
political scandal in Ukraine, which was centered on the possible involvement
of former president Leonid Kuchma, former head of the Ukrainian Presidential
Administration Volodymyr Lytvyn (currently the speaker of the parliament),
former head of the Security Service of Ukraine Leonid Derkach (currently a
member of parliament), and former Interior Affairs Minister Yurii Kravchenko
(who died in March) in the murder. -30- [The Action Ukraine Report]
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15. ROMA REALITIES AND POSSIBILITIES
U.S. Peace Corps Volunteer reports from Uzhgorod, Ukraine
ANALYSIS AND COMMENTARY: By Matt Hagengruber
The Christian Science Monitor, Boston, MA, Tue, Aug 2, 2005
UZHGOROD, UKRAINE - Most Peace Corps volunteers in Ukraine have
stories about gypsies, and I have a few more than others. Before coming
here 16 months ago and working with some of Uzhgorod's gypsies, I thought
of them as romanticized fortunetellers, moving from city to city and earning
their keep through music, dance, and - in some cases - thievery. Now, I
know them as Roma, their preferred name.
Not all Roma are terribly poor, but that's the perception most Ukrainians
have. Many people here see the Roma as the city's janitors. I see them
rummaging through my garbage in the summer, sitting in the snow begging
for money in the winter, and desperately trying to hold on to their culture.
Almost every time I take my trash to one of the overflowing bins near my old
Soviet-style apartment bloc, a Roma in tattered clothes will take the bag
from my hand. Anything good goes into a cart teeming with scrap metal and
cardboard, pulled by a tired old horse.
"They choose to live that way," a Ukrainian once told me. And if there's too
much trash in the streets, another said, "The gypsies aren't doing their
jobs."
Nearly a millennium after emigrating from India, the Roma are the secret
untouchables of Eastern Europe. Their plight, which is gaining increasing
attention, is a significant social issue the region must overcome. With an
estimated population of 7 million to 9 million, Europe's Roma are now "one
of the largest, poorest, and fastest growing minorities" on the Continent,
according to the World Bank.
And in parts of Eastern Europe - where 6 million of that total live -
poverty rates of Roma are between 4 and 10 times that of non-Roma. And
in some settlements, Roma unemployment rates are nearly 100 percent.
What's more, an estimated 3 in 4 Roma have not completed primary school,
and fewer than 1 percent go on to higher education, the World Bank reports.
In February, a "Decade of Roma Inclusion" (2005-2015) was launched by
prime ministers from eight central and southeastern European countries,
with support from numerous international groups.
The initiative will bring together government officials, Roma leaders, and
civil society to improve Roma's condition in the region.
As these countries, including two of Ukraine's neighbors - Slovakia and
Hungary - work to improve the situation of their significant Roma
populations, how will Ukraine, which was not a part of the initiative,
respond?
Here and in other countries, Roma are at the bottom of society. That means
doing the most to survive, including - in some cases - pulling scams and
stealing. So though most people's prejudice against Roma is backed by
anecdotal evidence, in many cases it is attached by association.
My own perceptions of Roma have changed - I bristle now when someone
cracks a joke about them. But I still make sure my backpack is closed
tightly when I walk past a group of Roma kids. I'd like to go deeper into
Roma culture, but getting in is a difficult task itself. Outsiders are
either not trusted or are seen as a source of money. Infighting among
different Roma ethnic groups keeps them from helping each other.
In Uzhgorod, the Roma live hard lives, often completely off the books
because they lack official documents and are wary of the government in
general. They move often. Bands of kids spend their days in the center of
town, begging and chasing after stray dogs.
I once saw a Roma kid, racing down the street with his friends, stop and
check a trash bin. Inside, he found an empty yogurt cup, which he licked
clean and threw back in the trash. It was a hot August day. There are dozens
of Roma camps in the area, rampant with contagious diseases. Illiteracy and
drugs also abound.
To combat such problems, an organization I work with is trying to create
educational Roma theater to teach people in the camps about drug abuse
and sexually transmitted diseases. Another organization publishes a weekly
newspaper for Roma. Yet another works to get them official documents.
The EU seems focused on improving the lot of the Roma. Will Ukraine, with
a new presidential administration and an eye on eventual EU membership,
follow this lead as it seeks EU membership?
The first step should be to develop cooperation. Government agencies and
nonprofits must reach out to the Roma with offers of help.
The Roma must organize and coordinate their efforts, proving to the rest of
Ukraine that they are ready to participate fully in civil society. Both
sides must learn to trust each other.
It will take reputable organizations like those in Uzhgorod, with their
modest theater projects and advocacy work, to ensure that the Roma of
Ukraine aren't left behind as the EU moves forward.
Whether life will improve for the Roma remains to be seen, but frankly, it
can't get much worse. -30- [Action Ukraine Report Monitoring Service]
---------------------------------------------------------------------------------------------------------------
NOTE: Matt Hagengruber, a former newspaper reporter, is a U.S.
Peace Corps volunteer stationed in Uzhgorod, Ukraine.
=============================================================
16. LUKASHENKA'S TRAP: WITH THE POLES SCAPEGOATED, A
COLOURFUL REVOUTION IN BELARUS LOOKS UNLIKELY
Lukashenka is not Kuchma
ANALYSIS: By Andrzej Brzezeiecki, Foreign Editor
Tygodnik Powszechny weekly
Article featured in Gazeta Wyborcza
Polish News Bulletin, Warsaw, Poland, Wed, Aug 03, 2005
The following is a summary of an article, featured in Gazeta Wyborcza, by
Andrzej Brzeziecki, foreign editor at the Tygodnik Powszechny weekly.
A democratic Ukraine friendly towards Poland is no longer imaginable under
Alexander Lukashenka, writes Brzeziecki. Yet Belarus's future has to be
determined by the Belarussian people themselves.
The Poles should not carry out any revolution instead of them (though that
does not mean Poland should stop supporting the democratic projects). Nor
is the outcome of such a hypothetical revolution certain at all - the
Kremlin political makers also learn on their mistakes.
What is likely is that the Belarussian revolution will be far more dramatic
(i.e. bloody) than the Ukrainian one. And if that happens, Moscow and Minsk
may point the finger at Poland.
Only a couple of months ago the situation east of Poland presented itself in
bright colours. The successful revolutions in Georgia and Ukraine caused us
to look expectantly at Belarus, and even at Russia. We greeted with
enthusiasm the "Carpathian declaration" of the presidents of Georgia and
Ukraine, pledging the "export" of colourful revolutions.
The international success of Poland's efforts on Ukraine's behalf made us
feel that we dictated the EU's eastern policy. Statements by high ranking US
and EU officials declaring support for the opposition fighting "Europe's
last regime" seemed to confirm that optimism. Even the colour under which
the Belarussians would carry out their revolution was being selected.
- LUKASHENKA IS NOT KUCHMA
Lukashenka is not stupid, writes Brzeziecki, and he has drawn conclusions
from the Ukrainian lesson. There Poland was on the offensive, now it has
been cornered, and instead of assisting at the birth of the Belarussian
democracy it has fallen into Lukashenka's smart trap.
By heralding (which is particularly true for the commentators) the
dictator's imminent fall, we were providing him with arguments he is now
using; as a result, Poland's defence of the Polish minority leaders harassed
by Lukashenka becomes an interference into Belarus's internal affairs and an
attempt to overthrow its president.
The Belarussian ruler does not have to fear a potential volte-face from the
oligarchs, because the only oligarch in the country is himself. Nor does he
fear pressure from the outside. Namely, from the West, because:
FIRSTLY, the Belarussian economy is more closely connected to the Russian
one than to the European one, so a potential EU embargo on trade with
Belarussian (if Poland managed to secure it) would be largely symbolic,
especially that Lukashenka can buy everything he needs from Russia.
SECONDLY, Lukashenka will not repeat Leonid Kuchma's mistake and will not
call the president of Poland for help, because he has never pretended to be
his friend. Besides, Kwasniewski's term is drawing to an end, and, whatever
his trespasses, none of his potential successors will have such influence in
the world on Eastern European issue, which puts the Polish diplomacy in a
less favourable position than half a year ago. In fact, Aleksander
Kwasniewski himself has been far less active on Belarus than he was on
Ukraine.
What could be dangerous for Lukashenka is a potential change of mood at
the Kremlin. That is why, though the relations between Moscow and Minsk are
quite complicated, Lukashenka has been courting Putin, signing documents
on Belarus's ever closer integration with Russia.
A threat for the dictator's position could also be posed by the Belarussian
people. So far, however, there has not emerged a politician that could play
the role of Saakashvilli in Georgia, Yuschenko in Ukraine, or, as some are
predicting, Kasyanov in Russia.
Instead, the observers, also Belarussian ones, have been admitting sadly
that the Belarussian society is not yet ready to oppose the despot.
- PERFECT ENEMY
Lukashenka had for years been determinedly eliminating and suppressing the
Belarussian political parties, then the independent press, and finally the
civic society. The Union of Poles in Belarus (ZPB) is simply yet another NGO
on which a sentence has been passed.
Its additional advantage is that it is Polish. Lukashenka is not blind and
sees the Polish-Russian diplomatic frictions. He knows what Putin said, and
what he did not, in his May 9 address in Moscow, and knows that the Polish
president was missing from the recent Kaliningrad celebrations. So he joins
the Kremlin political makers and creatively develops their work.
But if the relations with Poland for Russia are only a fraction of the
country's foreign policy, for Belarus, an enemy such as Poland is a perfect
fit. It is by no accident that Lukashenka has been saying in his recent
speeches that Poland wants to stage a revolution in Belarus, and that would
also mean a revolution in Russia.
The fly, to use Putin's famous 2002 phrase when he likened Belarus to a fly
feeding on the Russian steak, has finally sat on the steak and is shaking
its fist at everyone around. But this time Putin has nothing against it
because it is not costing him a drop of Russian oil or gas.
Several other factors work in Lukashenka's favour. Europe knows the
nightmare of ethnic strife and is terrified of it. The great 20th century
conflicts all started with ethnic minority issues. Post-Yalta Poland, a
mono-ethnic country, seemed free from that problem. Yet Stalin had set up a
trap for us into which his heirs have now caught us. Resettling the Poles to
the west, he left sufficiently many of them in place so that they could
later be used as hostages.
Yet we all know that the European politicians' preferred reaction to
problems in distant countries is to pretend nothing is happening. For the
Europeans, Poland, and certainly Belarus, are distant countries. And though
the Polish-Belarussian border has recently become the EU border, one can
hardly imagine Europe, still reeling from the fiasco of the constitutional
referenda, and even more focused on its own problems with terrorism and
Moslem minorities, to be particularly concerned about the problems of the
Polish minority in Belarus.
The situation is further complicated by the fact that some of the ZPB
leaders are supported by the Minsk government, which means that there are
Poles there willing to collaborate with the regime. They have already been
saying that the new ZPB authorities, boycotted by Minsk, are an avantgarde
for the opposition Belarussian National Front.
It does not take that much imagination to see a talented Belarussian
propagandist, assisted by someone like Gleb Pavlovsky, likening Warsaw's
support for the Polish minority to, say, Hitler's demands on the Sudeten
Germans in 1938. Or he will say: see, the Poles have gotten rid of their
German minority and even balk at the idea of the Centre Against
Deportations, and yet they try to destabilise a neighbouring country using
its own compatriots as a fifth column.
No longer than two months ago the Belarussian TV suggested that the
activities of Polish diplomat Marek Bucko could lead to a conflict similar
to that in Kosovo.
- GUARANTOR OF STABILISATION
Europe, in turn, writes Brzeziecki, is only as much interested in Belarus as
it is the territory through which Russia supplies its energy commodities to
the west. That means that Europe is interested above all in stabilisation in
Ukraine. Putin wants nothing else.
This, in turn, means that Poland's room of manoeuvre is dramatically
reduced, because it is Lukashenka who guarantees stabilisation. The German
chancellor does not need Poland's opinions when he negotiates with Putin on
further commodity supplies. Who knows whether the hopes pinned on Angela
Merkel in terms of eastern policy are not exaggerated?
The prospect of destabilisation in Belarus may cause Poland to find itself
isolated in Europe. If the key to good relations between Warsaw and Minsk
is hidden in the Kremlin, we have no ability to reach for it. Can we
convince Europe to back us despite the impact that could have on its
relations with Moscow?
One more factor is working to Poland's disadvantage: the pending election
campaign. It is heated period when any issue is good to exploit it for
political gain. And as radicalism pays off in Poland, so the comments on
Belarus have been rather aggressive.
That makes Poland easy to provoke, and Lukashenka knows it. When the
conflicts heats up further, Polish policy will be under pressure to
radicalise itself. Already the majority of the several dozen thousand web
users polled by the leading portal Onet.pl want Poland to severe its
diplomatic ties with Belarus. That is only a poll.
But if the politicians start talking the same way, that will provide the
Belarussian dictator with further ammunition. He is interested in a war of
words and mutual threats. With Moscow at his back, not interested in good
relations with Warsaw, Lukashenka can safely push for further conflicts with
Poland.
- ACTIVE POLICY NEEDED
The Polish Sejm, which has reacted to the anti-Polish campaign in Belarus
with just a statement of the facts and indignation, is evidence that the
Polish politicians have no idea what to do about the crisis. The calling
back of the Polish ambassador for consultations came much too late. On
the other hand, it is true the room for manoeuvre is rather narrow.
Yet there is no justification for the fact that the Polish diplomacy had no
contingency policy plan for Belarus. It was surprised by the attack against
the ZPB, and now it has been surprised by the diplomatic crisis. Its
reaction has been routine and solely reciprocal: expressing indignation and
expelling the Belarussian diplomats. The supply of diplomats to expel will
eventually dry out, the embassies in both countries will become empty.
What then?
The first victims of the freezing of contacts between Poland and Belarus
will be the Polish minority in the country. Their problem is the problem of
Polish-Belarussian relations.
A total cooling in those relations will reduce the Polish policy's capacity
towards Belarus. The lack of support from diplomats in place will make
things more difficult for the Polish journalists visiting Belarus, the civic
society organisations, let alone business.
That is precisely what Minsk, which well remembers the Kiev lesson, is
waiting for - for it, the free press is an avantgarde of revolution.
Lukashenka did not fear to arrest a Russian journalist. He has arrested
polish journalists on various occasions. He is certainly prepared to go
farther than that.
The severing off of diplomatic ties would also affect the 20,000
Belarussians working in Poland. And one of the main goals of Polish policy
should be for the clashes with Minsk not to turn into a cooling of relations
between the Polish and Belarussian peoples.
The overriding policy goal towards Belarus is banal: Poland wants friendly
relations with a democratic Belarus, so that the two countries can develop
their cooperation and the Poles living there can benefit from rights enjoyed
by ethnic minorities in the civilised world. The problem is that no one
knows how to achieve the above goal. But even if we do not know a solution
to some problem, a lot still depends on how we approach it.
Yet foreign minister Adam Rotfeld's reasonable statements will not suffice.
Action is needed. FIRSTLY, agreeing that the issues of the Polish minority
in Belarus and the Warsaw-Minsk relations are exempted from the election
campaign. The point is to prevent rival politicians from overbidding each
other in ever more swaggering but ever less real declarations. On that
point, it is not impossible.
SECONDLY, the incumbent cabinet should meet with the leading opposition
parties to define a common strategy. Such a meeting could take place under
the auspices of president Aleksander Kwasniewski ? but for that, the first
prerequisite would have to be met. However, the politicians' role at such a
meeting should be confined to listening to the invited experts,
representatives of civic society organisations, as well as Belarussian
dissidents in exile in Poland.
President Kwasniewski should immediately hold consultations with the leaders
of Lithuania, Ukraine, and the US. If he has not done so yet - he has made a
big mistake. Lithuania and Ukraine are obviously interested in improving the
situation in Belarus, and thus reducing the Russian zone of influence.
The US president promotes the idea of the export of democracy. Poland has
supported it, with various degrees of success, in the Middle East. It has
the right to request its main ally's support on Belarus. Especially that
supporting democratic initiatives and independent organisations is the
cheapest, most effective, and least morally dubious way of promoting
democracy.
A Belarussian-language radio station based in Poland, an idea mulled in
Poland for years, would cost little. The fact that it has not been
established yet is a shame and a major mistake. Its results were visible
during the latest Belarussian referendum which showed support for the
dictator still strong, irrespective of the electoral falsifications.
If the Belarussian public is today relatively indifferent towards the Polish
minority and its problems, that is also because it feeds solely on official
propaganda.
- Vintsuk Vyachorka leader, Belarussian National Front
Alexander Lukashenka closed down the majority of non-governmental
organisations. He hesitated, however, what to do with the ZPB. He didn't
want an all-out crackdown but he wanted to seize control of the organisation
by putting his puppets at its helm. When that didn't work, the police and
the KGB were used. Lukashenka caused an international scandal.
Unfortunately, until now the EU and other world leaders had been treating
Lukashenka as a young leader who could be educated and tamed. Some
Polish politicians had also been calling for more moderate policy towards
him. But Lukashenka is but a rural swashbuckler who perceives all
concession as weakness.
So I'd advise radical steps, though such that will not punish the
Belarussian people but would instead be directed against the ruling clique.
The whole Belarussian public feels solidarity with the ZPB and its legal
authorities.
No one doubts that Anzelika Borys is the rightful ZPB leader. The
Belarussians fear that, as a result of this campaign, Belarus will be cut
off from Poland, its crucial European neighbour. The most effective
response, in my view, would be to ban certain Belarussian officials from
entering the EU. That hits the regime directly and would certainly produce
results.
- Mariusz Maszkiewicz, Poland's former ambassador to Belarus (1998-2002)
This [the raid on the ZPB and the arrest of its rightful leaders] was the
regime's first such aggressive operation against the Poles. War has been
declared. I cannot hide my indignation and sadness. It's clear the regime is
determined and will not hesitate to use the KGB methods - intrigue and
physical force. Unfortunately, the most likely scenario is the pessimistic
one, where the regime seizes control of the ZPB.
Disobedient and rebellious ZPB members will now be harassed, i.e. fired from
their jobs etc. Tadeusz Kruczkowski, who is to head the "new" ZPB, is widely
perceived as a traitor. He played a very minor role in the ZPB. He was
educated in Moscow, where he received a PhD in history. He is fully obedient
towards the regime, simply a KGB man.
Anzelika Borys and the other leaders lost a battle, but are the moral
victors. I'm full of admiration for them. They increasingly appear as
Belarus's true heroes. How should Warsaw react? More radically, more
decisively than so far. And, above all, support the civic society in
Belarus.
- Kai-Olaf Lang expert, Science and Politics Foundation (Berlin)
Ahead of the upcoming elections Lukashenka had found himself in the Poles
in Belarus a domestic enemy, and in Poland ? an external one. As he himself
says, Poland is the avantgarde of America's and the West's hostile
interests. This propaganda is dictated by fears of a new colourful
revolution, this time in Belarus. But Belarus is not Ukraine, where there
was a fledgling civic society, free press, western foundations, and
independent organisations. That is missing in Belarus. So what happens
next is hard to predict.
The US wants major changes in Belarus, including a change of the regime.
But caution is needed, and the Warsaw government seems to be aware of
that. Its reactions to the steps taken by Minsk have been moderate because
an escalation of the conflict would be painful for the Belarussian people
themselves.
The most important question is what significance the EU attaches to Belarus.
The Polish diplomacy has been hard pressed to explain the issue. There is,
of course, the argument that it is the last dictatorship in Europe and the
EU shouldn't tolerate such a situation in a neighbouring country. On the
other hand, the stability of the energy supplies transported via Belarus to
western Europe is not in jeopardy. Belarus is a stable country, even if it
ruled by a dictator.
The EU's interference could destabilise the situation. Poland, which wants
the Minsk regime to be ousted, but without destabilisation, knows that too.
And that limits the room for manoeuvre.
- Pawel Wolowski expert, Eastern Studies Centre (CSW)
The conflict around the Union of Poles in Belarus has resulted in the most
serious crisis between Warsaw and Minsk since the emergence of
independent Ukraine. Solving it is becoming one of the crucial challenges
facing Poland's foreign policy makers. At the same time, it represents
another, following the Ukrainian crisis, test of their ability to convince
the EU to become politically involved.
To "europeise" the ZPB crisis - meant as the violation by the Minsk regime
of the rights of the Polish minority in Belarus - is the best way to
proceed. Warsaw has already exhausted the possibilities of influencing the
decisions made in Minsk. There are no indications to believe that president
Lukashenka will abandon his plan of gaining control of the ZPB, or that he
will change his main political goals or his methods of achieving them.
For Brussels to officially notice the issue and for the 25 states to work
out a common position, it is necessary to urgently conduct in the EU a broad
information campaign about the situation in Belarus and the true causes of
the conflict, directly related to the nature of the Minsk regime. Such a
campaign, focused on the issue of human rights violations, would represent
a very important step in preparing the ground for further political action.
The argumentation should stress that the conflict is not a
"Polish-Belarussian war" but rather the consequence of the violations of
democratic rights by an anti-democratic regime. This time the crackdown
was directed against the Polish minority, next time it may be directed
against Belarussian organisations, including those finances by the EU
member states, thus directly harming their interests.
Above all, however, the main victim are the Belarussian people, de facto
deprived of their fundamental civic rights, including the right to
information and genuine political choice.
The challenge related to the present conflict consists also in the fact that
it may become an impulse for redefining and more decisively implementing a
common European policy towards Belarus. A policy whose main goal, as has
recently been stressed on numerous occasions, is to support the Belarussian
people while punishing the regime.
The atmosphere of discouragement and passivity, widespread among the
Belarussians, can only be changed with a policy demonstrating that the EU is
genuinely interested in the situation in Belarus. The reprisals ordered by
the Minsk regime must be firmly and unanimously condemned by the European
public, the nation state governments, and the EU officials.
Reaching the victims of the reprisals with legal, financial, and
humanitarian aid will make credible other EU activities, aimed at supporting
the Belarussian civic society.
Finally, overcoming the regime's information monopoly by launching an
independent Belarussian-language radio will provide the people of Belarus
with an alternative and make it possible to influence the elites' views. In
all those common activities, Poland can and should play a leading role. -30-
=============================================================
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17. POLAND REVIVES WICKER TRADITION
By Adam Easton, BBC News correspondent
In Rudnik-on-San in Poland, Tuesday, 2 August 2005
Poland, the European Union's biggest newcomer, is often portrayed in the
international media as a predominately rural country where the main form of
transport is the horse and cart.
It is an image that often irritates people here. But in the small southern
Polish town of Rudnik-on-San traditional skills are seen as the key to its
success.
The town and its surrounding area are the biggest wicker-producing centre in
Europe. Poland is the biggest wicker producer and exporter in the European
Union and the fourth largest in the world.
Of the town's 6,900 inhabitants, more than half make their living from
wicker. "In recent years the industry has been growing and unemployment has
fallen from 22% to 19%," says Waldemar Grochowski, Rudnick's mayor.
GROWING DEMAND ---------
Wicker has always grown wild in the poor soil along the river San. But it
was not utilized until 1870 when an Austrian count, Ferdinand Hompesch,
sent a group of villagers to Vienna to learn the wicker trade.
At the time Rudnik was part of the Austrian-controlled province of Galicia.
The town showed its appreciation by erecting a bust of the count in its main
square. Between World War I and II, about 10,000 people in the area worked
in the wicker industry. In the 1960's there were 496 hectares of wicker
plantations in the area.
But the transition from Communism to a democratic, market-driven society
after 1989 were difficult ones for the wicker industry. Both of Rudnik's two
main wicker plants, Jednosc and Wikplast, closed down. In recent years,
demand for traditionally-styled wicker products has been rising, especially
in Western Europe where the craft of using wicker has declined.
So Rudnik's people are returning to wicker. There are now 10 large firms and
around 100 smaller ones. One of the biggest is Delta, which manufactured the
wicker housing for Poland's exhibit at EXPO 2005 in Nagoi, Japan.
The 13-year old firm specialises in garden furniture and baskets. But it
also produces odder items like wicker coffins, for which there is growing
demand in the UK for eco-friendly burials.
EU BOOST ---------
Delta exports all of its produce, mostly to the UK, Germany, France, and
Scandinavia. Its sales are worth 3 million zloty-a-year ($875,000; £508,342)
The company has grown in recent years and was given a boost by Poland's
accession to the EU. "Our task is easier now because the exporting
procedures are easier. Selling our products is easier for various reasons,
such as the fact there is no customs on the border now," Delta's export
director Mariusz Lachowicz said.
This year, wicker plantation owners began receiving European Union
subsidies.
Poland's main competitor in the wicker industry is China. But Polish wicker
has advantages, says Mr Lachowicz. "Our products are better quality. Our
wicker is slightly different too. And we're quicker because we're closer to
the market and we can respond quickly to new trends," he said. Delta
employs around 400 workers in the area. Most of them work from home.
TOUGH WORK ---------
Firstly the wicker is stripped of its tough outer bark on a machine. Then it
is soaked in water for two hours to make it workable.
Franciszek and Stanislawa Baran buy their own wicker and work between
10 and 16 hours a day sitting in a small, spartan basement.
"Afterwards everything aches, my back and my hands. I sometimes wake up
at night because my hands are aching," says Stanislawa. The whole family
can make five baskets a day, earning 200 zlotys ($58).
It takes at least three years to learn the basic skills, says Stanislawa.
Their parents taught them. Now, they've passed on the knowledge to their
children.
"We try to encourage our children but we don't know if they'll carry it on,
but we wanted them to know how to do it," she says. Rudnik has plans to
create a wicker promotion centre with the aid of state and EU funds.
It also hosts a summer wicker festival every year. One of the more popular
events is the wicker fashion show. Last year's collection included wicker
hats, skirts and even conical bras. But it's not clear the trend for wicker
underwear will catch on. -30- [The Action Ukraine Report Monitoring]
----------------------------------------------------------------------------------------------------------
Photo: Rudnick's mayor sees a chance to weave prosperity from wicker
Photo: All kinds of wicker items are increasingly popular
Photo: Stanislawa Baran makes a living from wicker weaving
LINK: http://news.bbc.co.uk/2/hi/business/4739481.stm
=============================================================
18. VOLODYMYR THE GREAT, THE "RADIANT SUN" OF UKRAINE-RUS'
To the 990th anniversary of his death
By Oleh Yastrebov, Candidate of Sciences (Engineering)
The Day Weekly Digest in English, #25
Kyiv, Ukraine, Tuesday, 26 July 2005
This article is about one of the most famous rulers of Kyivan Rus'. Born in
948, Prince Volodymyr Sviatoslavych was the youngest of the three sons of
Kyivan Prince Sviatoslav Ihorevych the Brave and the youngest grandson of
Kyivan Princess Olha the Wise. When Princess Olha died in 969, Sviatoslav
decided to appoint his sons as the rulers of various lands in his state,
Ukraine-Rus'.
Leaving his elder son Yaropolk in Kyiv, he sent his middle son Oleh to
Ovruch, the land of the Derevlianians, and the youngest son Volodymyr to
Novhorod at the request of that city's envoys. The prince himself set off to
Pereyaslavets, the center of the Bulgarian lands that he had conquered
earlier. Since his sons were still young, Sviatoslav instructed two of his
loyal voivodes, Dobrynia and Sveneld, to assist Volodymyr and Yaropolk,
respectively.
As the chronicler Nestor recorded, no sooner had Prince Sviatoslav breathed
his last than an internecine struggle broke out between the brothers. At
first there was a quarrel between Yaropolk and Oleh because the latter had
killed Sveneld's son Liut, who had trespassed upon the Derevlianians' land
during a forest hunt.
The grief-stricken Sveneld began pursuading Yaropolk, a mild and pliant
person, to take revenge on Oleh by attacking him and seizing his land. In
977 Yaropolk marched against Oleh, their troops engaged in battle near
Ovruch, and Oleh's warriors began retreating to the city. There was a
stampede on the bridge in front of the fortress wall.
The panic-stricken people pushed Oleh and some of his troops into the
water-filled moat, where they drowned. As soon as Prince Volodymyr of
Novhorod learned about Yaropolk's march on Ovruch and the death of Oleh,
he went to Scandinavia to reinforce his troops with Varangians, leaving
Novhorod to Yaropolk, who only ruled for a very short time. After mustering
a large Varangian army, Volodymyr recaptured Novhorod and later, in 980,
he seized Kyiv and became the autocratic ruler of the huge Kyivan state
now referred to as Ukraine-Rus'.
VOLODYMYR UNITES ALL THE UKRAINIAN LANDS
Continuing the previous Kyivan princes' policy of uniting the Slav lands
under Kyiv's control, Volodymyr waged wars in 981-993 against the
Yatvingians, Viatichians and Croats, thus completing the long process of
creating the centralized Kyivan state. It was at this time that Ukraine-Rus'
finally demarcated and reinforced its borders, which generally coincided
with the ethnic boundaries of the Eastern Slavs.
Volodymyr in fact had begun to consolidate the Kyivan state in 981, when he
quelled an uprising of the Viatichians and imposed the "plowman's tribute"
on them. In 982 Volodymyr again went to war with the Viatichians whom he
defeated. Long before, Volodymyr had annexed the Polotsk land when he
as fighting against Yaropolk.
In 981 he conquered the western-based Great Moravian cities of Peremyshl,
Cherven, Volyn and others populated by the Dulibians and White Croats. From
the Lithuanians Volodymyr recaptured the lands adjacent to the Buh River in
983 and built a city that he named Volodymyr-Volynsky. In 984 Volodymyr
marched against the rebellious Radimichians and routed them on the river
Pishchana. He imposed tribute on them, which, according to a 12th-century
chronicle, "they are still bringing."
Not so successful was Volodymyr's eastward expedition in 985 against the
Volga Bulgars: the Kyivan prince failed to compel them to pay tribute to
him, so he had to confine himself to concluding a peace treaty with them.
Having thus united all the Ukrainian lands in a unitary state, Prince
Volodymyr ensured their security against foreign encroachments.
At the time, the territory of Ukraine-Rus' spanned 800,000 sq. km. and
stretched northward as far as the Chud, Ladoga and Onega Lakes, southward
to the rivers Don, Ros, Sula and Southern Buh, eastward to the valley
between the Oka and the Volga, and westward as far as the Dniester, the
Carpathians, the Western Buh, the Neman, and the Western Dvina. In other
words, ancient Ukraine-Rus' became Europe's largest state.
Volodymyr the Great lived in peace with the neighboring peoples and states,
such as the Poles, Greeks, Bulgarians, Czechs, and Magyars. His only
headache was the Pechenegs, who made frequent forays into the Ukrainian
lands, wiping out entire villages and cities.
VOLODYMYR'S STRUGGLE AGAINST THE PECHENEGS
In addition to conducting military campaigns in order to unite the state,
Volodymyr had to wage a relentless struggle against the Pechenegs, a
semi-savage nomadic people of Turkic origin. They had lived in the Ukrainian
steppes for more than fifty years and would often approach Kyiv.
Nestor the chronicler wrote that the war against them was "never-ending."
To stem the tide of enemy attacks, Volodymyr began to build towns and
fortifications on both banks of the Dnipro, Ostra, Desna and Irpin rivers
and in Left Bank Rus' near the Sula, Trubizh and Seym rivers.
Fortified cities were built at critical points on the defense line, with
high ramparts between them spanning several dozen miles. These fortification
measures helped blunt enemy attacks and allowed Volodymyr to wage a more
effective struggle against the Pechenegs. The chronicler notes that the
Pecheneg wars of 990, 992 (two), 996, 997, 1001, and 1004 brought military
glory to the Kyivan prince. Those battles are the subject of many stories
and bylinas (folk epic poems). Here is a story about one of the battles
fought in 992.
When the Pechenegs reached Kyiv, they saw a mighty force with Volodymyr at
the head. The Pecheneg chieftain said to him, "Let one of your warriors and
one of mine come out and wrestle. If yours overpowers mine, we will not make
war for three years, but if ours gets the upper hand, we will plunder your
land for three full years." At first there were no volunteers among
Volodymyr's troops, while the Pechenegs fielded a very tall and
fierce-looking giant.
When the prince addressed his soldiers again, an old man came up to the
prince and said, "My prince! I've come here to the war together with my four
sons, but my fifth, the youngest one, stayed behind at home. Since he was a
child, there hasn't been a man who could overpower him."
The prince rejoiced and sent for the strong man named Kyrylo Kozhumyaka.
When he arrived, he asked the prince to bring a big, strong bull to test
him. Goaded with a hot iron, the bull was let loose. When it was running
past Kyrylo, he caught its side with his hand and tore off a piece of flesh.
When Volodymyr saw this, he said, "You can fight the Pecheneg."
The next morning the two wrestlers came to a designated spot between the
opposing detachments, clasped each other and began to wrestle. After one
effective grip, Kyrylo squeezed the Pecheneg so hard that his bones cracked
and he dropped dead. Seeing this, the Pechenegs ran away to the steppe, and
Volodymyr did not have to fight with them for the next three years.
But in 995 the Pechenegs advanced to Kyiv's suburb Vasyliv (now Vasylkiv).
Volodymyr and a small detachment of warriors engaged them in battle, and
failing to rout them, he was forced to retreat.
In 997 Volodymyr went to Novhorod to reinforce and replenish his troops for
new battles with the Pechenegs. Learning that the prince was not in Kyiv,
the Pechenegs attacked and pitched camp near Bilhorod. The besieged town
was soon stricken with famine, and at first its residents decided to
surrender.
But a certain wise old man suggested fooling the Pechenegs into believing
that "the very earth in the town produces food, and residents can endure
even a ten-year-long siege." Seeing this, the Pecheneg chiefs were greatly
surprised and ordered their warriors to break camp and leave. After
describing these events, Nestor never mentioned any Pecheneg forays into
Ukraine-Rus' until Volodymyr Sviatoslavych died in 1015.
VOLODYMYR'S ADMINISTRATIVE REFORMS
The final stage of forming the state of Ukraine-Rus' meant that Volodymyr
had to carry out a number of far-reaching social reforms aimed at
consolidating the country, the most important of which was the introduction
of Christianity in Ukraine-Rus'.
This was preceded by the following historical and political events. First of
all, Christian influence had been approaching the borders of Volodymyr's
state since the second half of the 9th century: Christianity was adopted by
Bulgaria in 864, Bohemia and Moravia in 928-935, and Poland in 962-992.
Prince Volodymyr realized that his state could only become a full-fledged
member of the European community if it embraced Christianity. Second,
Volodymyr knew full well that Kyivan Prince Askold had converted to
Christianity in 862 and Volodymyr's grandmother Princess Olha had been
baptized in Constantinople in 955.
Thus, the combination of political and psychological prerequisites persuaded
Volodymyr of the necessity and expediency of adopting Christianity. He was
only waiting for a suitable moment, which soon presented itself. Here is the
chronicler's account of the event.
After returning from a successful expedition against the Yatvingians,
Volodymyr decided to offer a human sacrifice to the pagan god Perun. The
lot fell to the son of a Christian Varangian. He refused to give up his son
and publicly declared that the pagan gods were created by men and were
not genuine, while the only true God was the one worshipped by the Greeks.
The enraged mob of pagans killed both the father and the son.
After this, Volodymyr finally decided to adopt the Christian faith. However,
the prince considered it humiliating to admit his errors to the Greeks and
ask the Byzantine emperors for baptism: he wanted to "conquer" the faith of
Christ and accept it as a victor. After the Byzantine emperors deceived
Volodymyr and refused to give their sister Princess Anna in marriage to him,
the prince mustered a large army and marched to the Greek colony of Korsun
(Chersonesos) in the Crimea.
After capturing the city, Volodymyr sent a message to Emperors Basil and
Constantine, once again requesting the hand of Anna. In the event of a
refusal, he threatened to march on Constantinople, the capital of the
Byzantine Empire. The emperors agreed on condition that he convert to
Christianity. Volodymyr agreed and was baptized in Korsun, at St. Basil's
Church, together with many of his warriors. After the baptism, Volodymyr
married Anna and returned Korsun to the Greeks. All this occurred in 988.
Back in Kyiv, Volodymyr set about baptizing his people. The chronicler
reports that a Greek metropolitan and some priests were invited to Kyiv to
conduct the baptism. At a designated time, the Kyivans came to the banks of
the Dnipro, where they saw Volodymyr and the Greek priests. The sacrament
of baptism was administered in the river, with mothers holding their babies
in their arms.
After the baptism, Volodymyr ordered all the pagan idols to be thrown into
the Dnipro. Once Ukraine-Rus' became a Christian state, scholarship and
education flourished and learned monks began to write the history of
Ukraine- Rus'. This is why there is more information about Volodymyr the
Great than about his predecessors Oleh, Ihor, Olha, and Sviatoslav.
In the same year, 988, the first schools were opened and a church was built
in Kyiv and named after St. Basil (upon his baptism, the prince received the
Ukrainian name of Vasyl). Volodymyr invited Byzantine architects to Kyiv,
who built the Holy Virgin's Cathedral in 989-996. The prince donated a tenth
part of his revenue to the construction - hence the church's other name, the
Church of the Tithes.
As the chronicler points out, Volodymyr's character underwent major changes
after his baptism. He became a pious and loving man, who gave generous
alms, built schools and churches - he became a father to his subjects in the
finest sense of the word. He helped the poor, elderly, disabled, orphans,
and widows. It is no wonder that he was called an affectionate father and
"Radiant Sun."
During his long life Volodymyr ruled the state efficiently and
authoritatively for 35 years, implementing far-reaching and effective
administrative, territorial, and military reforms. He died on July 15, 1015,
in the village of Berestiv near Kyiv and was buried at the Church of the
Tithes, and later canonized and awarded the title of "Equal to the
Apostles."
As Mykhailo Hrushevsky wrote, "The times of Volodymyr the Saint, or the
Great, were the culmination of the building process, the completion, so to
speak, of the mechanical evolution in the process of establishing the
ancient Ruthenian, Kyivan, state."
Today, nearly 1,000 years after the prince's death, the enormous historical
importance of his epoch and the reforms that he succeeded in carrying out
during his 35-year rule of the Kyivan state (980-1015) remains undiminished.
When Volodymyr assumed power, Kyivan Rus' was suffering from incessant
internecine fighting and internal conflicts.
By the time of his death it was a mighty and prosperous state with which all
the countries of Europe had to reckon. The personality and the deeds of
Grand Prince Volodymyr of Kyiv, and those of his son Yaroslav the Wise,
constitute a glorious and "golden" page in the history of ancient Rus'. -30-
------------------------------------------------------------------------------------------------------
LINK: http://www.day.kiev.ua/145727
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