ACTION UKRAINE REPORT - AUR

An International Newsletter, The Latest, Up-To-Date
In-Depth Ukrainian News, Analysis and Commentary

Ukrainian History, Culture, Arts, Business, Religion,
Sports, Government, and Politics, in Ukraine and Around the World

"UKRAINE - THE VIEW FROM THE KREMLIN"

ACTION UKRAINE REPORT - AUR - Number 802

Mr. E. Morgan Williams, Publisher and Editor, SigmaBleyzer

WASHINGTON, D.C., FRIDAY, DECEMBER 29, 2006

-------- INDEX OF ARTICLES --------

Clicking on the title of any article takes you directly to the article.

Return to the Index by clicking on Return to Index at the end of each article

1. "UKRAINE - THE VIEW FROM THE KREMLIN"

Vladimir Putin's Orange nightmare is over, he can now sleep soundly.
ANALYSIS & COMMENTARY: By Walter Parchomenko
Kyiv Post, Kyiv, Ukraine, Wednesday, December 27 2006

2. TWO YEARS AFTER ORANGE REVOLUTION: UKRAINE IN A FUNK
The romance of revolution is long gone as Ukrainians learn to cope
with democracy's disillusions, says Alexander J Motyl.
ANALYSIS & COMMENTARY: By Alexander Motyl
Open Democracy, London, UK, Friday, December 22, 2006

3. GOVERNMENT CHAOS DASHING HOPES OF NEW BEGINNING

POWER SHARING IN UKRAINE
ANALYSIS AND COMMENTARY: By Walter Mayr
Der Spiegel Magazine, Hamburg, Germany, Thursday, December 28, 2006

4. UKRAINE: SUMMING UP 2006
ANALYSIS & COMMENTARY By Volodymyr Hrytsutenko
Professor. of English, Lviv Franko University, Lviv
Published by Action Ukraine Report (AUR) #802, Article 4
Washington, D.C., Friday, December 29, 2006

5. UKRAINE'S FORMER INTERIOR MINISTER YURIY LUTSENKO SETS
UP OPPOSITION MOVEMENT, CIVIL MOVEMENT OF SELF-DEFENCE
TV 5 Kanal, Kiev, in Ukrainian 1115 gmt 20 Dec 06
BBC Monitoring Service, UK, Wednesday, December 20, 2006

6. MAKING IT CLEAR TO PUTIN
EDITORIAL: Kyiv Post, Kyiv, Ukraine, Wednesday, Dec 20 2006

7. UKRAINE RISKS BEING MARGINALIZED
OP-ED: By Vlad Galushko, Kyiv Post, Kyiv, Ukraine, Wed, Dec 20 2006

8. KIEV AND MOSCOW SHOWED THEY CAN COOPERATE

SAYS UKRAINIAN PRIME MINISTER YANUKOVICH
Itar-Tass, Moscow, Russia, Thursday, December 21, 2006

9. UKRAINE: ENTRY TO RUSSIA'S ENERGY MARKET DISCUSSED

By Roman Kupchinsky, Radio Free Europe/Radio Liberty (RFE/RL)

Prague, Czech Republic, Wednesday December 27, 2006

10. YANUKOVYCH CONSIDERS OPERATIONS OF UKRHAZ-ENERGO,
ROSUKRENERGO, GAZPROM AND CABINET OF MINISTERS AS
TRANSPARENT INVOLVING GAS DELIVERIES TO UKRAINE
Dmytro Firtash who owns 45% of RosUkrEnergo attended meeting
Ukrainian News Agency, Kyiv, Ukraine, Friday, December 22, 2006

11. GLOBAL ENERGY WOES SPARK RUSSIAN RESURGENCE
By Michael Scollon, Radio Free Europe/Radio Liberty (RFE/RL)
Prague, Czech Republic, Friday, December 22, 2006

12. THE NEW THREAT TO EUROPE
OP-ED: By Jackson Diehl, The Washington Post
Washington, D.C., Monday, December 25, 2006; Page A29

13. GAZPROM'S CASH REGISTER
COMMENTARY: By Fikret Ertan
Zamon Online, Istanbul, Turkey, Friday, Dec 22, 2006

14. ENERGY FUTURE
On the eve of a new year, Ukraine is again facing tough energy decisions.
EDITORIAL: Kyiv Post, Kyiv, Ukraine, Wednesday, December 27, 2006

15. TROUBLING SILENCE OVER GONGADZE
ANALYSIS & COMMENTARY: By Tammy Lynch
Kyiv Post, Kyiv, Ukraine, Wednesday, Nov 29 2006

16. CARPATHIAN CONFERENCE
By Robin Marshall, The Budapest Sun, Volume XIV, Issue 51
Budapest, Hungary, Thursday, December 21, 2006

17. UKRAINIAN ROCK-BANDS INITIATE EVENT "MAKE NEW YEAR'S
PRESENT TO UKRAINE. SHIFT TO UKRAINIAN LANGUAGE IN 2007!"
Ukrinform, Kyiv, Ukraine, Wednesday, December 27, 2006

18. SEX SLAVERY PLAGUES ROMANIA AND BULGARIA
Other countries in the region, the poorest in Europe, are also hotbeds

for organised crime and illegal trade such as Moldova and Ukraine.
Justyna Pawlak, Reuters, Bucharest, Romania, Tuesday, 26 Dec 2006
========================================================
1. UKRAINE - THE VIEW FROM THE KREMLIN

ANALYSIS & COMMENTARY: By Walter Parchomenko
Kyiv Post, Kyiv, Ukraine, Wednesday, December 27 2006

Vladimir Putin's Orange nightmare is over. The Russian leader can now sleep
soundly. Premier Viktor Yanukovych and the Party of Regions are clearly in
charge in Ukraine and, in their own words, are cleaning house and restoring
order.

Putin's visit to Kyiv has received increasing attention from Ukrainian and
Western political observers. Prediction, in a highly dynamic political
environment such as Ukraine's, is always hazardous.

Consequently, it is not surprising that much of the available commentary
offers sweeping generalizations and often idle speculation about the
possible results of this meeting.

Rather than add to this growing mountain of largely trivial speculation, it
may be more instructive simply to highlight several key but generally
inadequately grasped facts - essential background about recent
Ukrainian-Russian relations.

Doing so may shed light on Putin's true intentions in visiting Kyiv and on
his preferred vision for Ukraine.

FACT 1: President Putin has been and continues to be Viktor Yanukovych's
most loyal foreign benefactor. He has never hidden his support for the
fraud-marred premier.

His public expressions of support have been deftly adjusted since Ukraine's
2004 presidential election to meet the country's changing political
landscape, but his allegiance to Yanukovych and his Party of Regions remains
unswerving.

Amazingly, after blatantly fraudulent rounds of that election, Putin, like a
brash schoolboy, rushed not once but twice to prematurely congratulate
Yanukovych on victory.

Learning from experience, he subsequently adopted a more circumspect but

no less active role in supporting Yanukovych and his Party of Regions in the
2006 parliamentary election.

Significantly, in the short period since becoming premier, Yanukovych has
already met with Putin on several occasions, in Moscow and Sochi, to discuss
bilateral cooperation.

FACT 2: Yanukovych and the Regions-led majority in parliament have
unabashedly rushed to demonstrate their profound gratitude to Putin for his
faithful support in shaping the Ukrainian political scene.

Their conspicuous haste to deliver major political dividends to their
Kremlin sponsor, although tactically imprudent because it diminishes their
already low credibility at home and in the West, tellingly reflects their
steely determination to quickly and steadily repay their enormous political
debt to Putin.

In just over 100 days, they have begun to synchronize important Ukrainian
security policies with those of their northern neighbor. And in the words of
ordinary citizens here in Ukraine: "They are firing Orange-leaning Cabinet
ministers and delivering their heads on a platter to Vladimir Putin."

FACT 3: In Brussels last September, Yanukovych did much more than close
the door on a NATO Membership Action Plan in 2006. Although only dimly
perceived in the West, he also effectively placed a cross on any future
Ukrainian membership in NATO.

To the great delight of the Kremlin and members of Ukraine's so-called
Anti-Crisis coalition in parliament, he rested the issue squarely on a
future national referendum.

It is no secret that Yanukovych's Regions party adamantly opposes Ukrainian
membership in NATO and relishes today's harsh realities: Ukrainian public
support for NATO today is low and declining, anti-NATO activities have
increased over the past year, and the Ukrainian government's support for a
NATO information campaign remains scant.

Moreover, Moscow, as in the past, stands ready to resort to active measures
in Ukraine to support anti-NATO forces, should the need arise. To believe
that this decidedly negative trend line on Ukrainian membership in NATO can
be easily reversed is, indeed, a pernicious myth.

FACT 4: Vladimir Putin waged economic wars - gas, meat, and dairy notably,
in 2005 and 2006 with the clear intention of destabilizing Ukraine's economy
and Yushchenko's Orange government.

These "man-made crises," unquestionably, harmed Ukraine's economy and
measurably influenced the political scene. With his man, Viktor Yanukovych,
now in power, Putin no longer needs to wage economic wars.

Putin, strictly speaking, only seeks good partner relations with Yanukovych
and other Moscow-loyal members of the Regions-led parliamentary coalition.

Putin's aversion to color revolutions and their leaders remains categorical.
His ongoing economic war with Georgia, home of the Rose Revolution and
reportedly 70 percent support for NATO membership, is compelling evidence
of this fact and a stark daily reminder.

At first glance, Putin's decision to end economic wars with Ukraine and help
stabilize its economy, if only to benefit Viktor Yanukovych, is welcome
news. The crucial question, however, is at what price to the nation?

Putin's preferred vision for Ukraine is a mirror image of what he has
accomplished in Russia during his presidency.

Translated, this means total control of the "commanding heights" by a
Moscow-loyal Party of Regions with the virtual monopolization of parliament
by pro-Regions forces, the consignment of any democratic opposition in
parliament to the political wilderness, and judicial attacks upon any
uncooperative big business.

It also means that the future of Ukraine's budding NGOs and any genuine
security sector reform will be in grave jeopardy.

It must be said that in Putin's Russia a distinction is made between
acceptable (government affiliated) and unacceptable (state adversaries)
NGOs, while security services unarguably function as a political instrument.

To what extent do Yanukovych and Party of Regions leaders share such a
vision? Disturbingly, in just over 100 days in government, they have
provided much cogent evidence of their preference for Putin's authoritarian
style of leadership and model of government.

Furthermore, their intent to gravitate toward a Moscow-Donetsk vector in
domestic and foreign policymaking is evident almost daily.

Vladimir Putin will continue to view Ukraine through the prism of velvet
revolutions and their clear and present danger to Russia's influence in the
post-Soviet space.

He will struggle unceasingly to ensure the demise of the Orange Revolution
and a Ukraine outside of NATO. Moreover, Putin and Party of Regions
leaders will likely remain loyal partners in this struggle. -30-
-----------------------------------------------------------------------------------------------
Walter Parchomenko, Ph.D., is a Senior Fellow with the Atlantic Council
of the United States currently based in Ukraine. The views expressed here
are purely his own.
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LINK: http://www.kyivpost.com/opinion/oped/25810/
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]

========================================================
2. TWO YEARS AFTER ORANGE REVOLUTION:

UKRAINE IN A FUNK
The romance of revolution is long gone as Ukrainians learn to cope
with democracy's disillusions, says Alexander J Motyl.

ANALYSIS & COMMENTARY: By Alexander Motyl
Open Democracy, London, UK, Friday, December 22, 2006

Two years ago, in November-December 2004, hundreds of thousands of
Ukrainians peacefully occupied downtown Kyiv in protest against the
falsification of presidential elections.

That popular uprising, known as the Orange revolution, ushered in a
pro-democratic government headed by President Viktor Yushchenko and
rime minister Yulia Tymoshenko; it appeared to herald Ukraine's decisive
turn toward democracy and the west.

Two years later, the euphoria that accompanied the revolution and the hopes
that it spawned have dissipated. The popular mood ranges from despair,
anger, and cynicism among the revolution's supporters to confusion,
disappointment, and disillusionment among the revolution's opponents.

Increasingly, Ukrainians are giving up on all their leaders and treating
their promises as empty words.
WHAT WENT WRONG?
The irony is that Ukraine is actually doing well to moderately well in
almost every respect. The economy is robust. GDP is set to grow about 5.5%
in 2006 - despite a twofold increase in gas prices - rebounding from half
that rate in 2005.

Foreign direct investment (FDI) should exceed $3.5 billion, a massive
increase over previous years. The currency is stable, the current account
deficit is manageable, disposable income has grown, and the budget deficit
is under control.

Democratic institutions are also consolidating. The parliamentary elections
on 26 March 2006 were fair and free and, as important, were widely expected
to be fair and free. The subsequent three-month wrangling between potential
coalition partners was oftentimes infantile and always annoying, but it
transpired according to the rules of the game.

The eventual coming to power of the "Anti-Crisis Coalition" headed by prime
minister Viktor Yanukovych's Party of Regions struck the Orange revolution's
supporters as a repudiation of the revolution's gains, but it took place
legally and was made possible by those very gains.

The subsequent power struggle between Yanukovych and Yushchenko - the two
dramatis personae of the Orange revolution - testified as much to the flawed
constitutional reform that increased the powers of the parliament and prime
minister without adequately delineating their, and the president's, limits
as to the power-grabbing proclivities of the Party of Regions. In any case,
that tussle is also taking place according to the rules.

The media are lively and independent. Neither Yushchenko, nor Yanukovych,
nor Tymoshenko are spared constant scrutiny and criticism. A constitutional
court empowered to resolve just the sort of power struggles bedeviling the
government has finally emerged - after parliament had refused for one and a
half years to appoint its share of justices lest they declare the
constitutional reform deal reached by Orange and anti-Orange forces during
the revolution unconstitutional and re-empower the president.

Civil-society organisations remain vibrant - from credit unions to
non-governmental organisations to rock-bands to church groups to student
clubs. Perhaps most important, Ukraine's young are smart, independent,
cosmopolitan, and cynical about authority - attitudes that bode ill for
possible elite attempts to reestablish a paternalistic regime.

All this, and yet Ukraine's population remains gripped by a sense of
malaise. People have lost faith in the present, and they are losing
confidence in the future. Some Ukrainian intellectuals suggest that this
growing passivity will either fail to resist what they believe is
Yanukovych's inevitable turn to authoritarianism or, perhaps worse, at some
point even welcome a strong man promising to get the country moving.

Optimists counter by pointing to the growth of institutions that, they
argue, will both constrain elites from acting too undemocratically and
ensure that Ukrainian civil society will remain strong - even if Ukrainians
believe that it is weak.
THE MALAISE'S FIVE SOURCES
The malaise has five causes.

[1] The first is that popular expectations of immediate, rapid, and
comprehensive change after the Orange revolution greatly outstripped

the reality of the changes instituted by the Orange governments in 2005-06.

Those governments made a difference, they did change Ukraine for the
better - but that difference and that change could only be less than what
the population had hoped for.

Not surprisingly, Yushchenko is now widely reviled, while Tymoshenko,
whom he fired in September 2005, has come to embody the hopes of
those desiring radical change.

[2] The second cause is the seemingly endless elite squabbling that has
characterised Ukrainian politics since at least mid-2005.

The 26 March parliamentary elections should have produced an Orange
coalition, but bad faith, excessive ambitions, and the unwillingness to cut
deals produced the programmatically bizarre Anti-Crisis Coalition of the
pro-oligarchic and generally pro-business Party of Regions and the
antediluvian and unreformed Communist Party and the business-sceptical
Socialist Party.

Yanukovych promised an end to the squabbling and forceful governance,
but his government has proven equally prone to tussles over personnel,
contradictory signals, and policy stagnation. Unfortunately, his opponents -
grouped in the Yulia Tymoshenko Bloc and Yushchenko's Our Ukraine -
have done no better.

Tymoshenko and her allies in the parliament represent the main opposition
but have still to act in a critically constructive way and offer genuine
alternatives to government policy. Tymoshenko's calling the government's
planned cuts in social spending "genocidal", for instance, showed just how
far she has to go to become a mature opposition leader.

Our Ukraine, meanwhile, has gone into a free fall, unwilling and unable to
reinvent itself in the aftermath of its disastrous attempt to head a
coalition government by playing off the Party of Regions against the
Tymoshenko Bloc -and losing everything in the process.

[3] The third cause is distrust of Yanukovych and his party. Yanukovych and
the Party of Regions tried to change their image, with the assistance of the
veteran American political consultant, Paul Manafort. Yanukovych now sports
better clothes and, in an attempt to dispel his pro-Russian reputation,
makes an effort to speak in Ukrainian.

His speeches, statements, and interviews say all the right things and
studiously avoid President Vladimir Putin's predilection for alarming
rhetoric.

Yanukovych has even openly endorsed the values of the Orange revolution and,
in an interview with the Frankfurter Allgemeine Zeitung, supported Ukraine's
membership of Nato - after having told the alliance in September that
Ukraine wasn't ready for the Membership Action Plan.

Not surprisingly, Yanukovych's detractors remain unpersuaded, point to the
mismatch between words and deeds, and decry what they consider his seeming
willingness to sacrifice Ukraine's best interests to better relations with
Russia. Ardent supporters of the Orange revolution retain a visceral dislike
of him and tend to interpret every one of his actions as indicative of evil
motives.

The fact that the power behind the throne is Ukraine's richest oligarch, the
Donetsk-based billionaire, Rinat Akhmetov, a man with a decidedly checkered
past who claims to want to move Ukraine's economy toward Europe, only
increases suspicions.

But even a substantial chunk of Yanukovych's electoral base in Ukraine's
southeast has serious doubts about his ability to improve the economy, unite
the country, and govern effectively. Thus far, Yanukovych has done little to
assuage those doubts. And blaming his predecessors for his own government's
failings is beginning to wear thin.

[4] The fourth cause of the malaise is the belief that the Orange
revolution's primary promise - to implement justice by throwing the "bandits
into jail" and to empower the people - has proven hollow.

The bandits - whether Yanukovych the ex-felon and his thuggish Donbas pals,
the high-flying Akhmetov who was elected parliamentary deputy, the tycoons
bankrolling Our Ukraine and the Tymoshenko Bloc, or Vitaly Hayduk, the
Donbas oligarch and Akhmetov opponent whom Yushchenko appointed to
head his national security council - are not just around, still. They're
running politics.

Optimists argue that having the rich play openly formal governmental roles
is preferable to their pulling strings in the background or to their
languishing in jails. That way, they can be kept accountable, at least to
some degree, they can channel their formidable resources into legitimate
political activities, and they can balance the equally dubious personal
ambitions of the politicians.

That may very well be the case, but it's no surprise that the Ukrainian
people, who expected their country to join Europe, become fully democratic,
and escape Russia's grip, feel irrelevant and betrayed.

[5] The fifth cause concerns Europe. During the Orange revolution Ukrainians
either expected or feared that Europe would welcome them with open arms.
But nothing of the sort has happened.

The European Union did declare that Ukraine had a market economy, and it
does hope to sign a new partnership agreement with Ukraine by 2008. But
the EU has signally failed to give Ukraine a clear signal of its willingness
to take it in - even if at some point in the distant future.

Yushchenko implored the EU to do just that on the eve of its summit in
Finland - arguing that it could play the role of a lighthouse or guiding
star for Ukraine - but the EU failed to budge. Poland supports Ukraine's EU
aspirations, but the prickly Polish government has few friends in Europe.

Finland and the Baltic states have also been supportive, but they lack the
weight of Germany and France, which are manifestly indifferent, preferring
good terms with Russia, and especially the state-controlled gas giant,
Gazprom, to close relations with a budding democracy such as Ukraine.

To be sure, Europe has its own worries - a fact that Ukrainians often
overlook. The French are distracted by forthcoming presidential elections
and the possibility of a female president (which raises the intriguing
possibility that, by 2009, France, Germany, the United States, and Ukraine
could all have women leaders.)

The Germans worry about where Angela Merkel's reforms might lead. The
Italians fret about their country's inability to reform itself. The Dutch
are obsessed with veils. The Poles, Hungarians, Slovaks, and Czechs are
trying to cope with bad governments (or in the last case, effectively none).

The EU has to finesse Romania's and Bulgaria's imminent membership, while
trying to prevent the Turkish "train-wreck" that the EU's own irresponsible
policies toward Cyprus and Turkey directly brought about. And the United
States, labelled Ukraine's "strategic partner" even by Yanukovych, is
focused on unfolding defeat in Iraq and the possibility of failure in North
Korea and Iran.

It's small wonder, then, that Ukrainians are in a funk. Their leaders look
incompetent at best and malevolent at worst, and no one - and especially
those countries that wax eloquent about the virtues of soft power - seems to
care.
RUSSIA, AND UKRAINIANS, TO THE RESCUE
Russia, of course, does care about Ukraine - but only Ukraine's deeply
conservative, ethnically Russian population in Luhansk or Crimea might be
inclined to see that as an indisputably good thing. The pro-Orange forces
tend to see Russia as the source of all bad things. Yanukovych's supporters
have always taken a far more sanguine view of Russian intentions, but even
they must be having second thoughts today.

It's hard to have any illusions about Gazprom's boundless ambitions anymore.
And no one living in Ukraine can fail to appreciate that their country's
energy dependence on Russia is a source of growing instability and
insecurity.

Yanukovych's government, which criticized its Orange predecessors for
striking a bad gas deal with Russia at the height of the January 2006 "gas
war", has done little better.

Like the Orange governments, it agreed to a price rise - from $95 per
thousand cubic meters to $130 in 2007 - in exchange for a greater market
presence in Ukraine for the shadowy Gazprom-controlled middleman
organisation, RosUkrEnergo. And, like the Orange governments, it is pursuing
energy-diversification negotiations with Poland, Azerbaijan, and Kazakhstan
and encouraging foreign investment in the development of Ukraine's
supposedly ample own oil and gas deposits.

No less disturbing, even for Yanukovych's eastern Ukrainian supporters, are
several developments in Russia. These include Moscow's strongarm tactics
toward Georgia, Moldova, and the unabashedly pro-Russian Belarus (whose
dictatorial president, Alexsander Lukashenko, has responded with, of all
things, a resoundingly nationalist defense of Belarusian sovereignty); the
alarming outbreaks of chauvinism and xenophobia in a variety of Russia
cities; the officially encouraged mass expulsion of Georgians from Moscow
in the aftermath of Russia's cold war with Georgia; and the recent spate of
killings of Kremlin critics.

The professional "hits" are especially worrisome. Whether or not the Kremlin
was actually responsible for the assassinations, the KGB's long-time record
of "wet works" and Russia's sharp turn to the right make it all too easy to
believe that it was. Russian and Ukrainian rumour mills have constructed
fantastic interpretations that, their veracity aside, all serve to discredit
Putin and his government - as either complicit or incapable of controlling
rogue elements.

The killings have special meaning for Ukrainians, who know that Anna
Politkovskaya was born Hanna Mazepa, the daughter of Ukrainian diplomats in
New York. They also know that the poisoning by radioactive polonium of the
former KGB officer, Alexander Litvinenko, in London is all too eerily
reminiscent of the poisoning by dioxin of their own president on the eve of
the Orange revolution.

At that time Yushchenko's domestic opponents used to quip that he had
probably eaten some spoiled food or that the poisoning had been staged for
political reasons. Even his most fanatical and closed-minded detractors must
now be having doubts about the benign nature of Russian power.

The growing suspicion of Russia and growing disillusionment with Europe
leave Ukraine and Ukrainians with no choice but to rely on themselves - a
turn of phrase that even Yanukovych has adopted. The doubts may therefore
turn out to be a blessing in disguise. The expectation of salvation from
east or west was always illusory, and it arguably deterred Ukraine from
making some of the tough choices that it still has to make.

The main task before the government is further liberalisation of the economy
and decentralisation of the state. The government is still too heavily
involved in running key sectors of the economy, and government regulations
remain far too many and far too burdensome - the result being economic
inefficiency and bureaucratic corruption. Ukraine is also much too
centralised, and the administrative structure it inherited from Soviet times
is no longer appropriate for a democracy and market economy.

Besides, the government is far too ineffectual to run too many things well.
Joining the World Trade Organisation would break some of these habits.
Yanukovych says he expects Ukraine to enter the WTO in early 2007. His
critics doubt his sincerity, but he probably means it - if only because
Akhmetov knows that his own wealth depends on Ukraine's ability to
integrate into the world economy.

The expectation of salvation from Ukraine's government was also illusory,
and it has deterred Ukrainians from recognising that only they, and not
their incompetent elites, can build a real democracy and a genuinely
prosperous society. The main task before the population is thus to pursue
their economic, social, and cultural interests as if there were no
government to rely on, to plead with, and to expect to save the day.
A MIXED LEGACY
Old Soviet paternalistic habits die hard, but growing self-reliance may
already be happening -thanks in no small part to the Orange revolution's
empowerment of large segments of the population. A few examples may
suggest that, despite elite squabbling in Kyiv, life goes on in ways that
justify a cautious optimism about Ukraine's future.

The city of Lviv now has four branches of the Rotary Club, each of which
consists of self-confident and affluent business people who know they have
the power to change things and recognize that they do not need the
government to do so.

The Kyiv-based newspaper, Day, recently organised a student conference,
consisting of young political scientists from four regional universities, in
Odessa. The students spent several days arguing, disagreeing, and learning
to bridge their differences - in an undertaking that could herald the
emergence of a national student dialogue.

One civic organisation, disturbed by the absence of Ukrainian-language films
in Ukraine, decided to start a petition demanding that foreign films be
dubbed into Ukrainian and not just Russian. Much to their surprise, the
organisers collected 600 signatures in just two days.

Perhaps the most impressive example of civic activism is, paradoxically, the
parliament's adoption of a law designating the terror-famine of 1932-33, in
which several million Ukrainians died, a genocide. That wouldn't have
happened if Ukraine's intellectuals hadn't been arguing the case for the
last fifteen years, thereby creating a discursive force that even sceptics
couldn't resist.

Accordingly, the Party of Regions and the Communists, not wanting to be
seen opposing an apple-pie issue, abstained from the parliamentary vote.

The news from Ukraine is therefore mixed. The population is demoralised,
but, with continued economic growth, foreign direct investment, a critical
press, a fire-breathing Russia conveniently demonstrating that the
alternative to democracy really is lousy, and a little luck, that
demoralisation may not matter too much.

In any case, it may not impede ongoing positive trends within society.
Despite their funk, despite - or because of - their declared disillusionment
with politics and politicians, Ukrainians may have finally figured out what
the real meaning of the Orange revolution was: that an empowered population
can, and should, decide its own fate. -30-
-------------------------------------------------------------------------------------------------
Alexander Motyl is professor of political science and deputy director of
the Center for Global Change and Governance at Rutgers University, New
Jersey. Among his books are Dilemmas of Independence: Ukraine after
Totalitarianism (1993) and Imperial Ends: the decline, collapse, and revival
of empires (Colombia 2001).
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http://www.opendemocracy.net/democracy-ukraine/two_years_4218.jsp

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[return to index] [Action Ukraine Report (AUR) Monitoring Service]
========================================================
3. GOVERNMENT CHAOS DASHING HOPES OF NEW

BEGINNING -- POWER SHARING IN UKRAINE

ANALYSIS AND COMMENTARY: By Walter Mayr
Der Spiegel Magazine, Hamburg, Germany, Thursday, December 28, 2006

The hero and antihero of Ukraine's 2004 Orange Revolution are now sharing
power in Kiev. The political trench warfare between President Viktor
Yushchenko and Prime Minister Viktor Yanukovych is shattering the Ukrainian
people's dreams of a new beginning and moral rebirth.

The bitter political rivals Viktor Jushchenko and Viktor Yanukovych now have
to work together.In Ukraine, questions about the future invariably entail an
excursion into the past.

It's a journey that passes through electronic security gates in the Kiev
building that houses the Ukrainian cabinet, into a Soviet-made elevator and
up to the seventh floor -- where courtiers whisper, petitioners wait
patiently and a padded door opens silently. The prime minister approaches
from the depths of the room.

"Hello," says Viktor Yanukovych.

For a moment it seems as though time had stood still here. Yanukovich was
prime minister once before when the so-called Orange Revolution broke out
and hundreds of thousands marched through the streets of Kiev, shivering in
the cold, singing and waving orange flags -- in an effort that eventually
brought down Yanukovich's corrupt regime. It happened two years ago.

Yanukovych was the principal target of popular fury when crowds took to the
streets to demonstrate against election fraud and nepotism, against
corruption and the regime's failure to investigate contract killings of its
opponents.

Ukrainians were demonstrating against everything for which they believed the
policies of President Leonid Kuchma and his would-be successor Yanukovych
stood for.

After the country's supreme court annulled the election for being fraught
with irregularities, Yanukovych was defeated in a repeat of the second round
vote. He conceded defeat and resigned as prime minister in January 2005.

But on Aug. 4, 2006, only 19 months later, he returned to the position of
prime minister, after being personally nominated by Viktor Yushchenko, the
new president and Yanukovich's old arch rival.

The two men have ruled jointly since then, in what has been more of an
adversarial than a cooperative relationship. The president has written the
prime minister indignant letters ("I demand that you address the facts I
have presented"), has publicly criticized Yanukovych's maneuvering to block
NATO membership for Ukraine and, in late November, horrified Washington by
threatening to veto his prime minister's upcoming visit to the United States
on the grounds that he felt left out of the loop.
BITTER RIVALS
The prime minister, for his part, has insisted that the parliament,
controlled by his coalition, be placed in charge of foreign policy. When
Yanukovych traveled in late November to meet with his Russian counterpart,
Mikhail Fradkov, the Ukrainian foreign minister, an ally of Yushchenko, only
accidentally learned of the trip from journalists.

Although Yushchenko vetoed Yanukovych's dismissal of the country's
pro-Western chief diplomat a short time later, the foreign minister kept
being prevented from attending his cabinet meetings.

Yanukovych insists that what looks like the work of an amateurish puppet
theater on the national stage is merely the unavoidable consequence of
cohabitation a la Ukraine -- a "transitional phase" in the process through
which the once-feuding camps of the president and prime minister must now
pass.

In Yanukovich's view, the effects of friction between the two groups have
not been serious. "There are no hostile maneuvers nor is there a hostile
mood. There are just many emotions," says Yanukovich.

And there is a sense of numbness among the general population. It's almost
as if a thick layer of lava had coated everything that happened in Ukraine
in 2004, creating a crust that has all but buried dreams of greater freedom,
truth and prosperity.

More than ever, this divided country that stretches from the Carpathian
Mountains to the Sea of Azov, and from the Crimean Peninsula to the Pripyat
marshes -- once the Soviet Union's bread basket and now a critical conduit
for natural gas being transported to Western Europe -- seems to be suffering
from its failure to find its place on the continent.

The president wants to guide his country into NATO membership, a plan the
premier currently opposes. The president promised a settling of accounts
with the old system, a system the prime minister practically embodies.

The president wants to see the Ukrainian economy blossom in the wake of a
post-revolutionary slump, but the prime minister is beholden to the coal and
steel magnates in his native, Russian-speaking Donbass region, who expect
him to leave them and the billions they raked in in the 1990s untouched.

What may look like chaos is actually democracy in action, cynics in Kiev
say. The disappointed complain that what began as an honest popular uprising
is ending in lethargic compromise at the highest levels of government.

Yanukovych insists that he has no problem with the president -- nothing
against Yushchenko who, in December 2004, after suffering the effects of
severe dioxin poisoning following a dinner with the head of the Ukrainian
intelligence service, assigned part of the blame for the attempted
"political murder" to Yanukovich.

"On a human level, I have felt sympathy for him since the day I learned of
his poisoning," says Yanukovych, as he stares off into the distance. "But
everything I know about the case I learned in the media."

The November 2004 presidential election is another contentious issue between
the two men. At the time, an irate Yushchenko told his rival: "You must
acknowledge that you and your team stole three million votes."

Today Yanukovych insists that it is clear that there was no "massive voting
fraud," and that the affair involved, at best, "individual violations on
both sides -- because the people were not yet accustomed to democratic
standards."
TRANSFORMED BY US CONSULTANT
The new Viktor Yanukovych is unflappable, even more so than in the past. He
chooses his words carefully, keeps his facial expressions under control and
avoids using the kind of prison jargon for which he was once notorious.

A 6'6" man from the country's southeastern coal and steel-producing region,
Viktor Yanukovych has learned his lesson.

His advisors maintain a deliberately low-key presence in a ground-floor
office at Sophia Street 4 in Kiev. There is no sign on the door, no doorbell
and no security guard.

The man running the office is Phil Griffin who, like most US-funded
crusaders for more democracy and transparency in Eastern Europe, remains
tight-lipped about his work.

Griffin's reticence is understandable, given that he works for Paul
Manafort. Manafort is the kind of behind-the-scenes political operator who
makes but never appears in headlines.

A discreet grand master of political campaign management, Manafort worked in
the White House under former US President Gerald Ford and later helped run
the election campaigns of presidents from Ronald Reagan to George W. Bush.

He has also had a successful career as a lobbyist, with clients ranging from
Philippine dictator Ferdinand Marcos to Angolan rebel leader Jonas Savimbi.

In 2005, Manafort received a call from Ukraine. His latest assignment would
entail transforming Viktor Yanukovych from a failed presidential candidate,
a bogeyman who was ejected from the Ukrainian political scene in disgrace,
into a statesman who could bring order to Europe's largest country.

It turned out to be less of a challenge for Manafort's team than might have
been expected. Yanukovych, a former communist, has a reputation for being
tenacious and yet open to advice -- a virtually ideal combination from an
American political standpoint.

US geostrategists, led by John Herbst, the US ambassador to Ukraine, had
expressed concerns about Yushchenko well into the 2004 presidential
election. Though considered respectable, Yushchenko also had a reputation
for being an eccentric loner.

But thanks to the efforts of Manafort and other advisors, Yanukovych was
completely repackaged just in time for the parliamentary elections in March
2006. He now sports a more dynamic-looking haircut, dark blue suits and
matching silk ties, and he has become adept at charming the press.

"I was shocked when I saw him for the first time after his absence," says a
reporter in the prime minister's press corps. "He talks a lot now, but he
doesn't say anything anymore," says another journalist. "In the past you
could tell what he was thinking by looking at his eyes. Those days are
gone."

Yanukovych's "Party of Regions" won a majority in parliament in March,
trumping the alliance between now-quarreling revolutionary heroes Yulia
Tymoshenko and Viktor Yushchenko.

Unlike Russian political advisors who were responsible for his political
demise in 2004, "people of the caliber of a Paul Manafort never give advice
that could lead to violations of the law," says Yanukovych today. "They tell
you what the voters expect."

The new Yanukovych has become cautious, deftly wrapping his rhetoric around
two central themes -- "democracy" and "reforms" -- and rarely forgetting to
mention that Ukraine's future role should be that of a "bridge" between
Europe and Russia. His goal is to send a message of reconciliation to the
West without disappointing his friends and supporters in the East.

Listening to this former communist party functionary speaking today, and
watching him maneuvering his way around the political stage, conjures up the
image of an honest old farm horse that has been carefully trained to perform
in the ring, and in the process has mastered the high art of trotting in
place.
FROM PRISON TO PRIME MINISTER
Yanukovych has come a long way for someone who was once thought of as
little more than a thug from the brewery district of the mining town
Yenakiyevo near Donetsk.

After losing his mother at an early age, Yanukovych was raised by his
grandmother and soon developed a reputation for rowdiness in the polluted
coal-mining and steelmaking region of his youth.

Former friends in Yenakiyevo say that Yanukovich and his companions were
known for "drinking, swearing and stealing fur hats."

He acquired a criminal record as a result of two serious incidents in 1967
and 1969. Both cases involved violent altercations, with the second case
resulting in moderately severe bodily injury, and in both cases the young
Yanukovych was convicted and imprisoned. In 1972, shortly after his release
from prison, he married and completed his education.

Yanukovych's political rivals believe they understand the reasons behind his
fairy tale-like career, which would later culminate in the governorship of
Donetsk and the office of prime minister.

Grigory Omeltchenko, a member of parliament in the "Yulya Tymoshenko
Bloc" and a veteran of the intelligence service himself, says: "Yanukovych
was with the KGB.

He was recruited after he came out of prison." Fellow party member Alexander
Turchinov, who headed the SBU, the Ukrainian successor to the KGB, until
September 2005, says that because of his obligation to preserve secrecy he
can only comment "unofficially." According to Turchinov, "there are signs
that Yanukovych was with the KGB."

Yanukovych himself finds the accusations so absurd that he even discussed
them on a television program with Yushchenko. Smear campaigns are a routine
political tool in the post-Soviet Ukraine, a form of security in the
struggle for power.

"Everyone has a skeleton in their closet or a corpse in their septic tank,"
says Ukraine's leading columnist, Yulia Mostovaya of Kiev's Weekly Mirror.

As a symptom she mentions the latest hit by "Okean Elsi," the cult band that
got its start in the days of the Orange Revolution -- because it is a
signal, a swan song to the achievements of the revolutionaries who stormed
the barricades in 2004. In the lyrics, which have caused a sensation
nationwide, the singer explains "Why I will no longer walk with them."

The parliamentary groups, says Mostovaya, even those of Tymoshenko and
Yushchenko, have been taken over by a caste of politicians who came of age
as "bazaar dealers" in the 1990s, without even the slightest understanding
of "the needs of the state and of society as a whole. They have spent their
entire lives thinking only of themselves."

The old figure of 300 dollar millionaires in parliament -- two thirds of all
members of parliament -- has apparently even been exceeded in the new term
running since the March election.
YUSHCHENKO SEEMS HELPLESS
Quarrelsome on details, but almost helpless overall, Viktor Yushchenko has
been looking on as the achievements of the 2004 popular uprising are
gradually being dismantled.

The constitutional reforms of December 2004, ratified in the waning days of
the Kuchma era, severely curtailed the president's powers in favor of the
parliament and the government. How to interpret these reforms has become the
subject of bitter controversy.

Journalist Mostovaya believes that there are also psychological reasons for
the president's weakness. Yushchenko, an enigmatic "pretty boy with the soul
of a bookkeeper," who is passionate about beekeeping and folk art, a man
whose looks were once sufficiently dazzling to cause "western Ukrainian
peasant women to drop like flies," has never quite overcome the devastating
effects of dioxin poisoning on his face.

In a flight of courage though, Yushchenko has now removed his "dear
friends" -- former patrons, comrades-in-arms and sycophants with oversized
egos and little political experience -- from his immediate surroundings,
replacing them with pragmatists.

The deputy head of the presidential administration is now a former economics
minister. His boss is a businessman from the Carpathian Mountains, a man who
is as shady as he is successful and whom Western intelligence services
linked to organized crime only a few years ago.

The more embittered their day-to-day rivalry, the more alike Yushchenko and
Yanukovych are becoming in their choice of methods and personnel.

Yushchenko's new man at the head of the National Security Council, Vitaly
Gaiduk, a brawny Donetsk industrialist and former deputy prime minister, was
a member of the leadership in Yanukovych's party until recently. Gaiduk was
also Yanukovych's deputy when he was governor of the Donetsk region.

Despite having defected to the enemy camp, the media-shy Gaiduk still has no
difficulties getting meetings with Yanukovych whenever he asks to see him.
The shared experience of having grown up in Donetsk, the country's
industrial heart, continues to unite, even across party lines.

Many of the moderately disreputable industrial barons from the Donbass
region, sometimes with an entourage of drivers, cleaning women and servants
in tow, now hold seats and influence in the parliament in Kiev.

Parliament guarantees them immunity from prosecution for past misdeeds, a
strategy invented by Rinat Akhmetov, the cardinal of the southeast, the
country's richest man and president of the Shakhtar Donetsk football club,
who hopes to reorganize the steel, coal and coke market in his region.
Akhmetov was kind enough to suggest the candidates to his friend
Yanukovych.
PROTECTED MILLIONAIRES
Akhmetov, a red-haired Tatar with a boy-like build known for his cool
demeanour, apparently views Yanukovych as a man who can provide him with
political influence -- someone who will not stand in the way of his business
interests, will keep hungry Russian oligarchs out of the market and who
won't touch the legal status quo of shady privatization deals struck in the
1990s. But Yanukovych can only do these things if he is in power.

This is where Paul Manafort comes in. Akhmetov is said to have hired
Manafort in 2005, well before the election, to help ensure Yanukovych's
return to political power, and the plan worked.

Now that Yanukovych, together with communists and socialists, holds a
slim majority in the parliament, there is little risk that old wounds from
the country's more recent history will be torn open.

It's telling enough that the former head of the state-owned natural gas
company, the scandal-ridden driving force behind billions in construction
projects to bring Russian gas to Ukraine, has since been named to the post
of energy minister.

The head of the central election commission, fired from his job in December
2004, was rewarded with a position in the justice committee. In parliament,
he rubs shoulders with the general public prosecutor from the Kuchma era,
whose former role in life was to act as a legal shield to the ruling class.

Armed with a coterie of former co-conspirators ensconced in parliament,
reassured by love letters from Moscow and friendly talks in Washington two
weeks ago, Yanukovych appears to be doing well both domestically and abroad.

But where is this divided country headed? "To the West," says Yanukovych,
without batting an eyelash. "First we must join the World Trade
Organization. The decision will be reached in February."

The next item on his agenda, says Yanukovych, is a "free trade zone with the
EU." He also wants a new ten-year agreement that sets milestones towards
"Ukraine's path into the EU."

As a small concession to persistent doubters, the prime minister, while in
Washington, trotted out a sentence from his new box of tricks.

Further political maturing, says Yanukovych, cannot be ruled out. "Just as
there can never be too much democracy in Ukraine, there also can never be
too much freedom." (Translated from the German by Christopher Sultan)
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LINK: http://www.spiegel.de/international/spiegel/0,1518,456042,00.html
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4. UKRAINE: SUMMING UP 2006

ANALYSIS & COMMENTARY: By Volodymyr Hrytsutenko
Professor of English, Lviv Franko University, Lviv
Published by Action Ukraine Report (AUR) #802, Article 4
Washington, D.C., Friday, December 29, 2006

To me, the main result of 2006 is that Ukrainians have started to discard
the myths imposed upon them by their past present political leaders.

First, they were disheartened and baffled by repulsive horse-trading for
influential posts by Our Ukraine in the wake of March 2006 parliamentary
elections which led to the collapse of the Orange coalition.

It was followed by no less frustrating pressure on OU from Viktor Yushchenko
to join in the coalition with the rogue party, the Regions. Result: such
political games have opened the eyes of many Ukrainians.

We have thus learned a couple of important lessons in 2006: our leaders must
be judged not by their words, but by their deeds. And, second: if we do not
stand up for ourselves, our leaders will never do this for us.
CRASH COURSE IN UKRAINIAN POLITICS
Since the Maidan revolution in 2004 the era of self-study in politics for
Ukrainians has set in. Before, we had been successfully brainwashed by our
political leaders. The latter were in abundance, had goodie-goodie looks,
talked earnestly about the right things and met all the imaginable electoral
tastes.

Now the new unbiased media conceived by Maidan helped frank and scathing
debates on TV, radio, and in the printed press. They brought home to many
the realization that the grassroots are not merely a mob that goes to
polling stations once in 5 years to elect a president and parliament.

Grassroots can have effective leverage over those in high elected offices in
between voting days, too. They have their rights and can use them
successfully to keep politicians on a short reign - through trade unions,
political parties, professional associations, NGOs.

Even Ukrainian schoolchildren have become increasingly aware of their
rights. Skiing on a slope last winter, I asked a couple of 10-year olds that
came after me not to sledge on the same stretch because of risks of
collision and move 15 meters away. The answer was quite unexpected:

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5. UKRAINE'S FORMER INTERIOR MINISTER YURIY LUTSENKO SETS
UP OPPOSITION MOVEMENT, CIVIL MOVEMENT OF SELF-DEFENCE

TV 5 Kanal, Kiev, in Ukrainian 1115 gmt 20 Dec 06
BBC Monitoring Service, UK, Wednesday, December 20, 2006

KYIV - [Presenter] The former interior minister, Yuriy Lutsenko, has
launched a movement called the Civil Movement of Self-Defence and invites
all conscientious people to join him. His initiative was prompted by, I
quote, the lawlessness of the incumbent authorities.

The presidential advisor believes that [Ukrainian Prime Minister Viktor]
Yanukovych's team has usurped power. On 20 January, Lutsenko is

planning to visit Ukraine's regions to unite people around this idea.

[Lutsenko] I am launching the Civil Movement of People's Self-Defence. The
incumbent government has practically declared war against all people of
Ukraine. So far, it has only been an economic one. Therefore, people should
get united to defend themselves from such authorities.

I would like to stress that I am not joining any political project. This
union is open to party members and non-affiliated people, followers of any
confession, people who speak any native language, who see democracy,
freedom, law and fairness as the biggest values. -30-
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6. MAKING IT CLEAR TO PUTIN

EDITORIAL: Kyiv Post, Kyiv, Ukraine, Wednesday, Dec 20 2006

Vladimir Putin is in Kyiv this week to meet his counterpart, Viktor
Yushchenko, as part of the first session of the Russian-Ukrainian interstate
commission. There should be a lot to talk about.

Relations between the two countries have been delicate ever since the
breakup of the Soviet Union, but this year has created particular strains.

It started out with price dispute over natural gas that threatened to
leave Ukrainians as well as Europeans short on fuel.

Since then, there have been the usual arguments over the rental rights of
the Russian Black Sea Fleet, based in Crimea.

Several Russian citizens have also been banned from entering Ukraine, even
including controversial deputy speaker Vladimir Zhirinovsky - at least
temporarily.

A visit to Kyiv in October by Russian Prime Minister Mikhail Fradkov should
have improved relations, especially as he was met by Ukrainian counterpart
Viktor Yanukovych, recently re-elected and largely seen as pro-Russian.

Indeed, the Kremlin unapologetically supported Yanukovych's fraud-marred
bid for the presidency in 2004, which led to the West-endorsed Orange
Revolution. But instead, Fradkov was lambasted for suggesting that Russia
would "shield" Ukraine from outside interference.

Considering the Kremlin's heavy-handed policy under Putin, a healthy dose of
caution is in order. Hundreds of Georgian citizens were deported from Russia
after the authorities in Tbilisi detained a couple of Russian citizens on
spy charges.

Western-leaning Georgia has also had its wine and mineral water exports to
Russia banned. But Russia's main weapon of intimidation seems to be gas,
which Ukraine and, increasingly, Europe are frightfully dependent on.

It would be naive for anyone to believe that Russia, feeling particularly
vulnerable itself, will not continue to try and cow Ukraine and its other
neighbors. The now distant chance of Ukraine joining NATO particularly
annoys the Kremlin, as does the more likely possibility that Kyiv may join
the WTO first.

Ukraine should try to have the best relations with Russia as possible, and
Putin's visit can lay the groundwork for this. But conceding on issues of
strategic security (i.e. NATO) or international trade relations (i.e. WTO
entry) won't help.

More importantly, the country has to come up with an intelligible foreign
policy. A good start would be to decide who's in charge of the Foreign
Ministry. Ukraine's Constitution says the president, so Yanukovych should
back off. It doesn't matter whether pro-Western Borys Tarasyuk's recent
dismissal by the Yanukovych-controlled parliament holds or not.

If Ukraine cannot define a clear foreign policy, how can it expect to be
understood internationally? The confusion just makes Russian hegemony
easier. -30-
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LINK: http://www.kyivpost.com/opinion/editorial/25773/
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7. UKRAINE RISKS BEING MARGINALIZED

OP-ED: By Vlad Galushko, Kyiv Post, Kyiv, Ukraine, Wed, Dec 20 2006

The recent visit of Ukrainian Prime Minister Viktor Yanukovych to Washington
was supposed to become the final crescendo in the protracted (and often too
obvious) public relations campaign aimed at cleansing his image abroad.

The speech at the Center for Strategic and International Studies was a
laborious exercise of hitting all the right points within a record-short
timeframe.

Mr. Yanukovych assured all that he had no double standards in dealing with
the U.S. and Russia, emphasized his passion for the pillars of democracy and
spoke of his commitment to the stability of energy supplies.

Those worried about re-privatization had their fears allayed; those
concerned about corruption and justice received assurances of forthcoming
reforms; and those anxious about internal divisions found some solace in the
vision shared between the prime minister and the president of what Ukraine
should look like in some twenty five years.

Therefore, whoever you were and whatever concerns you might or might not
have had, the speech was served as a soothing, if not curing, pill for all
of them.

Unsurprisingly, it is becoming increasingly hard to separate the kernel of
what was accomplished during the trip from the chaff of political spin
lavished by an ever-growing society of mutual adoration within and outside
of Yanukovych's party. Few reliable assessments clarify that the real
accomplishments seem rather modest.

Upon reviewing them, one is left with the feeling that relations between
America and Ukraine are at risk of becoming like the ones under President
Leonid Kuchma, when the lofty rhetoric of cooperation was never translated
into real actions.

However, the pattern of rhetoric without substance could be even more
detrimental for the future of Ukraine than it was during the presidency of
Kuchma. The reasons for this grim prediction lie both in the domestic
situation in the United States and international conditions in general.

The recent release of the Iraq Study Group report has indicated a curious
revival of realism in American practices of foreign-policy making.

With the theoretical school back in vogue, and the 2008 presidential
campaign already in high gear, it can be expected that many from the
continually expanding pool of Republican and Democratic presidential
candidates will go to great lengths to outbid their opponents in offering
themselves as the most pragmatic and most open to practical policy
suggestions.

Their zeal is understandable, since on the international arena the United
States finds itself in a truly critical phase.

Not only does it have to resolve a multitude of pressing questions (such as
the sectarian war in Iraq, and nuclear proliferation in Iran and North
Korea), but it also has to engage in the profound task of coming to terms
with a more multi-polar world, inhabited by, among many others, the chaotic
Middle East, increasingly authoritarian Russia, an uncertain Europe and a
rising China.

How and why, you might ask, should all of these issues concern the Ukrainian
government? The answer is two-fold. The first part has to deal with the
country's relevance.

A Ukraine where the two major political figures can agree on a common vision
for 2026, not 2006, is not a helpful member of the international community
right now. It is currently losing the coherence and strength of its external
voice due to internal squabbles over the position of Foreign Minister.

Ukraine may soon lack the needed credibility if Mr. Yanukovych's activities
continue to run parallel to his pronouncements, and if President Viktor
Yushchenko's strategies continue to deepen his political marginalization.

In the end, a country that doesn't know what it wants to be (or whose
leadership has difficulty establishing a link between words and actions)
will be pushed to the temporary periphery of American interests.

The second part of the answer is about Ukraine's development. Contrary to
the way it seemed in Washington last week, our relations with the U.S.,
Russia or any country, for that matter, are supposed to increase the
wellbeing of ordinary Ukrainians. But cooperation is a two-way street.

If Ukraine is viewed as uncertain, unreliable, or unstable (or a combination
of all three), the expectations of increased foreign direct investment from
the U.S. will be dreams that are simply not meant to come true. Taking into
account the size and power of the American economy, the loss will definitely
be that of Ukraine.

It is also clear that, given the magnitude of problems elsewhere, the United
States can wait until our political leadership begins to speak with one
voice and mean what it says.

However, the question remains whether Ukrainians can afford to waste another
two or three years that could further keep them from achieving greater
economic and political progress here and now. -30-
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NOTE: Vlad Galushko is a doctoral student in International Studies at

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8. KIEV AND MOSCOW SHOWED THEY CAN COOPERATE

"There is no more problems with the use of the Russian language in
clerical work, educational and medical establishments as well as in courts.
Parliament will soon approve a bill on languages to preclude a repetition
of such a situation."

"The new status of the Russian language will be ensured either by parliament
or by a referendum. I guarantee: nobody will infringe upon the rights
of Russian-speaking population in Ukraine," Yanukovich concluded. -30-
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9. UKRAINE: ENTRY TO RUSSIA'S ENERGY MARKET DISCUSSED

By Roman Kupchinsky, Radio Free Europe/Radio Liberty (RFE/RL)

Prague, Czech Republic, Wednesday December 27, 2006

Following his talks in Kyiv with visiting Russian President Vladimir Putin
on December 22, Ukrainian Prime Minister Viktor Yanukovych announced

that they had discussed the possibility of their countries jointly producing
Russian and Caspian gas and oil.

Yanukovych told the press that discussions about joint energy production
with Russia have been under way for some time now, saying that "a 50-50
arrangement is better than a concession."

Many analysts, however, believe that Naftohaz Ukrayiny, Ukraine's
state-owned oil and gas monopoly, does not have the funds needed to enter
the Russian or Caspian gas- or oil-production market. The general thinking
is that the most Ukraine could provide would be expertise and skilled
workers.

Furthermore, Ukraine, which has its own modest gas reserves, has not been
able to develop them sufficiently and continues to rely largely on imported
Turkmen gas and Russian gas and oil. This situation has opened the door to
Ukraine's fuel-production market to a number of Western companies.
BRINGING IN THE MIDDLEMAN

Yanukovych also pitched his joint-venture proposal during a December 22
meeting with Ukrainian energy officials and managers and owners of
RosUkrEnergo, the Swiss-based middleman company that has monopoly

rights to deliver Turkmen gas to Ukraine.

The Ukrayinski novyny news agency reported that "Yanukovych called on the
participants in the meeting to assist Ukraine in the extraction of natural
gas on the territory of Russia as well as in countries in the Caspian
region."

Yanukovych (right) will hope better relations with Putin pay off (epa file
photo)In addition, according to the agency, Yanukovych praised
RosUkrEnergo's activities in Ukraine and "thanked the leadership of Gazprom
and [RosUkrEnergo part owner Dmytro] Firtash for the work that ensured
steady delivery of natural gas to Ukraine during the first half of 2006....
We have learned to work in difficult conditions and adapt to very difficult
issues."

RosUkrEnergo is 50 percent-owned by Gazprom and 50 percent by two

Ukrainian businessmen: Firtash, who owns 45 percent, and Ivan Fursyn,

who holds 5 percent.

On December 22, "The Wall Street Journal Europe" reported that a number of
Western law enforcement agencies are currently investigating Firtash for his
alleged connections to organized crime. Firtash has denied any such links.

By inviting cash-rich RosUkrEnergo into this project, Yanukovych is
apparently attempting to expand the obscure company's role from that of a
middleman to a full-scale oil and gas company. Last year, Firtash applied
for a license to drill for gas in Russia but his application was rejected.
PRIVATE ENTERPRISE
In the past, Ukraine has offered to work with various countries to help
develop their energy resources. A few weeks ago, Deputy Prime Minister
Andriy Klyuev announced that Ukraine is seeking to help Egypt develop its
gas resources.

Ukrainian delegations have visited Libya on numerous occasions over the past
five years and offered the country's services in helping develop Libyan gas
fields. These offers have yet to yield any results, but the Ukrainian
government continues to persist.

One private Ukrainian company, the Industrial Union of the Donbas (ISD), has
been successful in working to develop Uzbekistan's gas infrastructure in
return for gas. However, in 2006 RosUkrEnergo warned the ISD that it is the
only company allowed to deliver Central Asian gas to Ukraine, requiring that
the ISD work with RosUkrEnergo if it wants to continue its work in
Uzbekistan.

Yanukovych may be hoping that renewed good relations with Gazprom will

make his offer acceptable. He failed to mention what exactly he expects in
return, but it is widely believed that Ukraine will insist on a percentage
of the gas produced by such a joint effort.

But it is also worth noting the possibility that, in return for allowing
Ukrainian participation in Russia, Gazprom might insist on a quid pro quo
and demand to be allowed to drill for gas in Ukraine, thus gaining a larger
role for its already substantial presence in the Ukrainian gas market. -30-

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10.YANUKOVYCH CONSIDERS OPERATIONS OF UKRHAZ-ENERGO,
ROSUKRENERGO, GAZPROM AND CABINET OF MINISTERS AS
TRANSPARENT INVOLVING GAS DELIVERIES TO UKRAINE
Dmytro Firtash who owns 45% of RosUkrEnergo attended meeting

Ukrainian News Agency, Kyiv, Ukraine, Friday, December 22, 2006

KYIV - Prime Minister Viktor Yanukovych believes that the policies of
Russia's Gazprom gas monopoly, the RosUkrEnergo company, which is the
exclusive supplier of natural gas to Ukraine, and the Ukrhaz-Energo company
as well as the policies of the Cabinet of Ministers members in charge of the
energy sector are transparent.

Yanukovych announced this to journalists during a meeting with the Cabinet
of Ministers members responsible for the energy industry and representatives
of RosUkrEnergo and Gazprom.

The meeting was attended by Dmytro Firtash (who owns 45% of the shares in
RosUkrEnergo), Konstantin Chuichenko (RosUkrEnergo's executive director,
head of legal department and deputy chairman of the Gazprom company), Oleh
Palchykov (executive director of RosUkrEnergo), Deputy Prime Minister Andrii
Kliuev, Ukrhaz-Energo's acting board chairman Ihor Voronin, and Naftohaz
Ukrainy's board chairman Volodymyr Sheludchenko.

Yanukovych thanked the leadership of Gazprom and Firtash for the work that
ensured steady delivery of natural gas to Ukraine during the first half of
2006. "We have learned to work in difficult conditions and adopt very ...
difficult issues," Yanukovych said.

He added that the policy being implemented in the area of gas deliveries was
very predictable and that this has generated confidence in the future of
cooperation in this area.

"It is very important that the policy that is being implemented by you
(RosUkrEnergo and Gazprom) and the Cabinet of Ministers members in charge
of the energy sector is predictable. This is very important for the economy
and to Ukrainian consumers," he said.

Moreover, Yanukovych called on the participants in the meeting to assist
Ukraine in the extraction of natural gas on the territory of Russia as well
as in countries in the Caspian region.

Yanukovych also expressed the hope that the issue of construction of the
Bohorodchany-Uzhhorod gas pipeline would be resolved soon. "We would
also like to finally consider the issue of construction of the Bohorodchany-
Uzhhorod gas-pipeline segment together with you," Yanukovych said.

He also stressed the importance of introduction of energy-saving
technologies with the aim of reducing gas consumption.

"This is route along which the entire world is moving ... and those
investment programs that we are counting on will enable us to improve

energy saving, " he said.

As Ukrainian News earlier reported, Yanukovych is asking RosUkrEnergo
company, which is the exclusive supplier of natural gas to Ukraine, to hold
its public presentation together with Naftohaz Ukrainy. -30-
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11. GLOBAL ENERGY WOES SPARK RUSSIAN RESURGENCE

By Michael Scollon, Radio Free Europe/Radio Liberty (RFE/RL)
Prague, Czech Republic, Friday, December 22, 2006

As oil prices climbed in 2006 and burgeoning global powers China and India
emerged as major energy consumers, one country above all others appeared
poised to profit -- Russia.

And nowhere were Russia's energy politics more icy than in the former
Soviet republics and the European Union. With the mercury falling, Ukraine
was the first to see what changes 2006 would bring. On New Year's Day,
Russia cut off Ukraine's natural-gas supplies in a dispute over prices and
alleged siphoning.
COLD WAR
Kyiv had rejected a demand by Russia's Gazprom monopoly that it more than
quadruple the price it paid for Russian natural gas, from $50 to $230 per
1,000 cubic meters.

A Gazprom spokesman also claimed the cutoff was a result of Ukraine's
"inclination" to extract gas from shipments destined for wealthier markets
further west.

"Ukraine's refusal to accept the solution proposed by us means catastrophic
consequences for Ukraine's economy and, unfortunately, for the Ukrainian
people," Sergei Kupriyanov said.

"We think it will be very difficult, impossible even, for the Ukrainian
authorities to explain to their people the reasons for such short-sighted
actions."

Gazprom's tactic quickly backfired as the chilly effects of the shutoff
reached Western Europe. With EU states in an uproar, Moscow and Kyiv
hastily reached an agreement on January 4 that resumed gas shipments at a
moderate temporary rate of $95 per 1,000 cubic meters.

But it left Ukraine and the rest of the Commonwealth of Independent States
with a clear message: Moscow was no longer willing to subsidize its
post-Soviet neighbors -- particularly those looking to break free of
Russia's sphere of influence in favor of Western integration.
WHO'S NEXT?
The next countries to learn that lesson were Moldova and Georgia. Chisinau
experienced a gas cutoff in the early days of 2006. And Tbilisi, overreliant
on Russian gas supplies, learned the dangers of dependence when a pipeline
explosion left it lacking heating fuel.

As temperatures dipped to record-low temperatures, the rhetoric of Georgian
President Mikheil Saakashvili grew heated. Russia, he claimed, had
orchestrated the blast to seize control of Georgia's pipeline network and
punish Tbilisi for pursuing NATO and EU membership.

Russian President Vladimir Putin had his own stinging response. "So, a
misfortune has happened -- yes, supplies [of gas to Georgia] have been
stopped," he said.

"But our specialists are working night and day in the mountains in
temperatures of minus 30 degrees [Celsius] in order to restore energy
supplies to Georgia. And what do we hear and see from the Georgian
leadership? They just spit at us."

Over the next 12 months, such energy-related confrontations were to become
a common refrain in many countries in the CIS and the former Soviet bloc.

Belarus, Bulgaria, Azerbaijan, and Romania would all soon find themselves in
compromised positions in working out new gas contracts with Russia.

With the approach of 2007, many countries now find themselves caught
between two unappealing options -- a cold winter, or European-level prices.

Everywhere, Russia's official argument has been the same -- the days of
Soviet-era subsidies are over. It is time for everyone, from Kyiv to Baku to
Tbilisi, to adjust to market realities.

Even loyal Belarus has been handed the threat of a steep gas price hike --
possibly to ease negotiations on Gazprom's long-held goal of owning a 50
percent stake in Belarus's gas-pipeline network Beltranshaz. Russia in
mid-December tightened the pressure by announcing its intention to impose a
tax on Russian crude oil sent to Belarusian refineries.
ENERGY SECURITY
Part of Russia's confidence came from the knowledge that it was sitting atop
a precious and dwindling resource. It has the world's largest reserves of
natural gas and ranks sixth in terms of oil reserves. Further exploration
could boost its projected holdings even higher.

Those facts weren't lost on its traditional top customer -- Western Europe.

Energy security was a priority topic in the European Union throughout 2006.
Just days after the Ukraine debacle, European politicians, like Polish
parliamentarian Jacek Sariusz-Wolski, were warning that Russia would use
energy to gain strategic leverage -- and would be ruthless in doing so.

"The problem of energy security does not concern solely the area of industry
or economics," Sariusz-Wolski said. "Energy has been used as a weapon and a
foreign-policy instrument and hence should be discussed within the context
of foreign and security policy."
NETWORKING IS EVERYTHING

Russia currently provides 25 percent of the EU's natural-gas supplies -- a

calculation that leaves Brussels and other EU capitals vulnerable to Moscow's

political whim.

With some estimates projecting that the world in 2030 will be using 70
percent more energy than it does today, the EU realizes it cannot afford to
stand idle -- especially with China and other states competing for Russian
supplies.

"I think that the attention of the European Union toward energy security was
upgraded," explains Federico Bordonaro, Europe analyst for the "Power and
Interest News Report."

"Firstly, because in January there was the Russian-Ukrainian dispute over
gas, which has actually affected many Central and Western European
countries. And then because oil prices and natural gas prices are now
considered to be structurally high."

Moscow -- which used this year's chairmanship of the G-8 group of major
industrialized nations to strengthen its negotiating stance -- also
squabbled with the European Union over Russia's efforts to gain access to
domestic gas-distribution markets in EU states.

And even as Russia sought to expand Gazprom's reach into Europe, it closed
off Western access to its own energy projects.
ACCESS TO SECURITY
A heated debate was waged throughout the year over Russia's refusal to sign
the EU Energy Charter, which would open Russia's gas and oil pipeline
network to outsiders, and over foreign participation in the exploration of
the Shtokman gas field in the Barents Sea.

In the latest development, Gazprom scored a strategic victory in its battle
for control over Sakhalin-2, the world's largest liquefied-natural-gas
project.

The majority stakeholder, Shell, on December 21 ceded its controlling stake
to the state-run gas giant for $7.45 billion. As the impending deal became
apparent, Britain's "Daily Telegraph" described the move as "a sign that
Russia will no longer tolerate foreign investors controlling strategic
assets."

Mark Hester, editor of Blackwell Energy Research's "Oil and Energy Trends"
monthly, says Russia is growing more and more comfortable with the idea of
using its energy resources to gain political leverage in Europe.

"I think that Europe will become more and more dependent on Russia for its
gas supplies, and the Russian government and the Russian energy companies --
which are very interlinked -- are only too aware of this," Hester said. "And
they will continue to use energy, and gas in particular, as a political
tool, as we saw at the beginning of the year with the Ukraine."

Part of the reason for Russia's aggressive 2006 performance, analysts say,
is the failure on the part of the West -- particularly the EU -- to develop
a unified strategy on Russia in 2006.

Russia's stated aim of striking only bilateral energy deals with European
states drove a wedge between EU members torn between the ideal of a united
Europe and the desperate need to secure future supplies.

"Part of Europe, especially Germany and Italy, will probably become more and
more dependent upon Russian natural gas, and it will be very difficult to
build up a common and effective European energy strategy," Bordonaro said.
SEARCH FOR ALTERNATIVES
At the same time, many European countries are exploring ways to break their
dependence on Russian supplies. In the pursuit of diversity, many of them
are looking to the Caucasus and Central Asia.

Finding a way to get oil or gas to external markets from Azerbaijan,
Kazakhstan, and Turkmenistan was one of the main challenges faced in 2006.

The development of numerous pipeline plans to achieve that goal was watched
closely by Russia, which depends heavily on Central Asian and Caspian
supplies to fuel its own ambitions.

The most notable of these is the Baku-Tbilisi-Ceyhan (BTC) oil pipeline,
which came on line in the summer amid much fanfare.

The BTC, which will pump Azerbaijani and Kazakh oil supplies to outside
markets, is designed to reduce the dependence of Caspian and Caucasus
countries on Russia's pipeline networks for their exports.

The Shah Deniz, or South Caucasus, pipeline is also meant to provide outside
consumers an alternative to Russian supplies.

The Central Asian republics were important throughout the 1990s for Russia,
which used inexpensive gas it received from the region to supplement its own
domestic needs and export its surplus gas to Europe at much higher prices.

But the newly emboldened suppliers turned the tables on Russia in 2006.
CENTRAL ASIA'S ADVANCE
Gazprom announced its intention to increase the amount of gas it purchased
from Central Asia by 33 percent in 2006 and a staggering 260 percent in
2007.

In turn, Kazakhstan, Turkmenistan, and Uzbekistan took the opportunity to
charge from 36 percent to 61 percent more for gas sold to Russia in 2006,
with similar price increases in store for 2007. The transit fees Russia
would have to pay for gas pumped across those countries would also rise
significantly.

RFE/RL energy analyst Roman Kupchinsky says Russia's free ride is over.

"As Russian domestic demand mushroomed, Russia was becoming more

and more reliant on Central Asian gas. The Central Asians, of course, saw

this and raised their prices appropriately," he said. "Today, the Russians

cannot really count on cheap Russian gas to tide them over for the next 10

to 20 years."

Such jockeying is sure to become more and more common in future years as
countries compete for valuable resources, but analyst Bordonaro says the
overall situation is not as dire as many have predicted.

"The wrong message of 2006 was that an energy catastrophe is approaching,"
Bordonaro said. "The right message is that we have big problems, but it is
not true that we are running out of energy in just five or 10 years."

Moreover, the crisis over hydrocarbon fuels has forced alternative -- and
more sustainable -- long-term energy options to be considered.
THE ROAD UNTRAVELED
Hester said the future is unpredictable, but serious discussion of
alternative energy shows a potential bright side to declining supplies of
oil and gas.

"I think in terms of where we turn to fuel, it is much, much more difficult.
I think the situation is very much analogous to the situation as it was with
the first cars in the 1880s and 1890s," Hester said.

"At that point, you had people building diesel engines and petrol engines
and even having steam-powered cars," he noted. "Nobody in the 1880s or 1890s
could say which one was going to become dominant, and I think that is the
situation we find ourselves in with fuel now.

But there are plenty of ideas being talked about. There's bio-diesel and
bio-ethanol, and hydrogen fuel cells, and compressed liquid hydrogen, and
compressed gas. But nobody can say at this point in time which of those
technologies will become dominant." -30-
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12. THE NEW THREAT TO EUROPE

OP-ED: By Jackson Diehl, The Washington Post
Washington, D.C., Monday, December 25, 2006; Page A29

This year began with a European energy crisis caused by Russia's cutoff of
gas supplies to Ukraine, where a democratic government not to the liking of
Vladimir Putin had taken power.

Because Russian gas passes through Ukraine on its way to Western Europe,
the pressure also dropped in Paris and Vienna and Rome -- and Europeans
suddenly realized they were dependent for electricity and warmth on an
autocracy that was prepared to use energy as a tool of imperialism.

It looks like the year will end the same way. Georgia and Azerbaijan, two
other Russian neighbors that have chosen not to kowtow to Putin, are
scrambling to find gas supplies by Jan. 1 to make up for Russian cutbacks
or to avoid a huge and predatory price increase.

So, oddly, is Belarus, which until now has been a Kremlin client -- but
which has resisted a Russian demand that it turn over ownership of a key gas
transit pipeline.

Western energy companies that have invested in Russia are meanwhile reeling
from a crude campaign of bullying designed to force them to give up majority
stakes in oil and gas fields to Kremlin-controlled companies. Shell has
already caved, allowing Gazprom to take a 50 percent stake in a huge
offshore gas field.

It would be nice to report that in the intervening months Western
governments have taken steps to ensure that Russia, which supplies anywhere
between 30 and 100 percent of the gas consumed by European Union countries
as well as much of their oil, is not able to use this leverage for political
or economic extortion.

Sadly, the opposite is true: Though "energy security" has become a favorite
topic for discussion at E.U. and transatlantic summits, next to nothing has
been done about it.

That's partly because solutions aren't easy. Weakening Russia's hold over
European energy supplies requires measures that would be costly and
difficult, such as building new terminals for importing liquefied natural
gas or new pipelines to carry oil and gas from Central Asia and the Caucasus
to Europe.

There's a less excusable problem, however: the failure of European Union
governments to agree on either a common energy strategy or a policy for
responding to Russia's growing aggressiveness.

Some politicians, like German Foreign Minister Frank-Walter Steinmeier,
propose a new Ostpolitik that would entice Russian cooperation with offers
of economic and strategic partnership.

Others say the E.U. should refuse to renew an expiring economic pact withd
Russia unless it stops trying to monopolize European energy supplies.

Though it has a vital stake, the United States has been mostly missing from
the discussion. That's one reason a recent speech by Sen. Richard Lugar
(R-Ind.), the outgoing chairman of the Senate Foreign Relations Committee,
was intriguing.

Lugar has been a pioneer of some of the most farsighted U.S. policies toward
the countries of the former Soviet Union, including the Nunn-Lugar program
for securing and dismantling nuclear weapons and materials.

Now he's proposing that the NATO alliance formally adopt "energy security"
as one of its central missions. NATO, he told a German Marshall Fund
conference alongside the recent NATO summit in Riga, Latvia, is "used to
thinking in terms of conventional warfare between nations. But energy could
become the weapon of choice for those who possess it.

"A natural gas shutdown to a European country in the middle of winter," he
added, "could cause death and economic loss on the scale of a military
attack."

NATO, Lugar said, should resolve to treat "an attack using energy" the same
way it would a land attack by conventional military forces -- that is, an
attack on one country would compel a response by all.

That doesn't mean military action, he said; "rather, it means the alliance
must commit itself to preparing for and responding to attempts to use the
energy weapon against its fellow members."

Lugar pointed out that NATO used to hold exercises to prepare for the
logistical and supply challenge of responding to a Soviet attack. A new
exercise, he said, "should focus on how the Alliance would supply a
beleaguered member with the energy resources needed to withstand
geo-strategic blackmail."

This wouldn't be easy, he acknowledged: In fact, "the energy threat is more
difficult to prepare for than a ground war in Central Europe." Guarding
against an energy cutoff by Russia will mean massive investments in new
supply lines and reserve supplies, as well as the means to distribute them
in a crisis.

That sounds daunting at a time when NATO has its hands full trying to fight
a war in Afghanistan. But the energy threat goes to the alliance's historic
purpose: defending democratic Europe from attack by the autocratic and
belligerent power on its Eastern frontier. And, as Lugar pointed out: "The
use of energy as an overt weapon is not a theoretical threat of the future.
It is happening now." -30-
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========================================================
13. GAZPROM'S CASH REGISTER

ANALYSIS & COMMENTARY: By Fikret Ertan
Zamon Online, Istanbul, Turkey, Friday, Dec 22, 2006

There will be no problem on the Russia-Ukraine-Europe natural gas line at
the beginning of the New Year and supplies will be on time, but there could
be problems with another Russian natural gas line.

This line begins in Russia, passes through Belarus and reaches European
countries, but its volume is not as great as the Ukrainian line. The amount
of natural gas transported by this line is approximately one-sixth of the
Ukrainian line.

Russian has long been talking with Belarus about this line and its natural
gas supply . Russia would like to raise the price of natural gas it sells to
Belarus from the current $46.88/cubic meter to $200.00/cubic meter as of
Jan. 1. In addition to this natural gas price hike, Russia is preparing to
put an additional tax of $24.65 on crude oil exported from Belarus.

Undoubtedly, these price increases on both natural gas and crude oil will
not be easily shouldered by Belarus. They will cost the Belarusian economy
at least an extra $5 billion a year - $3 billion from natural gas and $2
billion in oil taxation.

Due to the fact that it is almost totally dependent on Russia regarding its
energy needs, Belarus is in a helpless situation. Either it will accept
Russia's price hike and turn over the long desired Beltransgaz natural gas
line extending to Europe and compensate the increase with the money it will
earn, or, refuse the new prices and pave the way for a new crisis in the
coming year for some European countries.

Poland would have suffered the most from this probable crisis if it weren't
for its natural gas depots. Of course, this depends on whether or not the
depots have been filled. If we assume they are full, then Poland can manage
on its own at least two months without any additional gas. Belarus can
manage at most one month on the natural gas it has stored.

Russia's mercilessness regarding the price increases to Belarus, a country
that Russia is very close in every respect and one will form a union with,
shows it is determined to abandon the privileged prices given to Belarus for
years. In short, Russia is not going to treat former Soviet republics
differently; it is going to raise the privileged prices it has charged for
years to the level of market prices.

Russia will also apply higher prices in the upcoming year to Moldova and
Baltic countries. Moldova, which is 100 percent dependent on Russian
natural gas, will buy it for $170/cubic meter in 2007.

The Baltic countries will have to pay a price around $200/cubic meter.
Carrying on talks with Gazprom, Latvia has been offered to to accept the
price of $217/cubic meter. A similar price has also been mentioned for the
others.

In short, Gazprom has decided to finally abandon the multiple-structured
natural gas prices it has applied until now. In spite of this however,
Gazprom continues to give some countries a number of concessions and
privileges. For example, Armenia is one of these.

Due to strategic ties with Russia, this country will continue to get natural
gas at $110. Reaching an agreement with Gazprom a few days ago, Bulgaria
will gradually progress from today's price to the market price in 2012.
However, with a few exceptions, Gazprom will apply what it calls the market
price to all countries.

Of course, this means Gazprom's cash register will be filled, while others
will be emptied. (e-mail: f.ertan@zaman.com.tr) -30-
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14. ENERGY FUTURE
On the eve of a new year, Ukraine is again facing tough energy decisions.

EDITORIAL: Kyiv Post, Kyiv, Ukraine, Wednesday, December 27, 2006

Exactly a year ago, Ukraine and the EU states it transits for were
threatened with gas shutoffs, as Russian Gazprom demanded more money
for its exports.

This year, Gazprom is threatening to cut off Belarus, which also gets its
imported gas for below market price. Ukraine transits around 80 percent of
Europe's gas from Russia and Central Asia, while Belarus forwards the rest.

But on Dec. 26, talks broke down between Minsk and Moscow, widely
accused of using its energy resources to cow its former satellite states.

Belarus, which currently pays Gazprom $47 for its gas, declined to pay $75
in 2007. Nor was Minsk keen on giving up shares in its gas pipeline,
Beltransgaz.

Like during its standoff with Ukraine, Gazprom has promised its European
customers that there would be no disruptions in gas supplies.

An added dimension to the post-Soviet fuel brinkmanship is the recent death
of Turkmen dictator Saparmurat Niyazov, who'd ruled for 20 years.

Turkmenistan boasts the fifth largest gas supplies in the world and accounts
for more than 70 percent of Ukraine's gas imports, which nevertheless arrive
through Russian pipelines. Now, with a succession struggle heating up, it's
not clear what conditions and prices Ukraine will get from Ashgabat.

Moldova, which has also been demonstrating its independence from Moscow
in recent years, had its gas bill go from $160 to $170 per cubic meter on
Dec. 26.

Georgia, most defiant of all Moscow's former satellites, is now paying
market prices. But Tbilisi is hoping to strike a deal with energy-rich
Azerbaijan.

Ukrainian Premier Viktor Yanukovych was recently in Azerbaijan, where he
offered Baku to help extend the Odessa-Brody pipeline to Europe, an energy
project intended to make Ukraine and Europe less dependent on Russia oil.

It was under Yanukovych that the pipeline was reversed - in Moscow's favor.
Let's hope that the premier was sincere in Azerbaijan, as Ukraine could use
an alternative to Moscow. Russia has every right to a market price for its
gas and oil, but shouldn't be bullying its neighbors.

Ukraine's gas bill from Russia has increased by around 150 percent in the
last year, and there's no reason to believe that Moscow will decrease the
pressure.

Now is the time for Ukraine to try to break free from the stranglehold,
possibly forging new energy deals with its neighbors and the next leadership
in Turkmenistan.

This isn't another partisan issue between Yanukovych and his political rival
President Viktor Yushchenko, but a strategic task with a limited window of
opportunity that will shape the country's economic and geopolitical future
well beyond this holiday season. -30-
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LINK: http://www.kyivpost.com/opinion/editorial/25811/
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15. TROUBLING SILENCE OVER GONGADZE

ANALYSIS & COMMENTARY: By Tammy Lynch
Kyiv Post, Kyiv, Ukraine, Wednesday, Nov 29 2006

Ukraine's Orange Revolution was commemorated quietly last week. President
Viktor Yushchenko observed the occasion with a short, somber address to the
nation.

In his speech, the president acknowledged the disillusionment expressed by
many just two years into his term, but asked for support and patience. "I
appreciate every bit of current success and know every mistake," he said.

Yushchenko went on to praise the country's economic growth and increased
freedoms, while calling for new programs to reduce poverty. But he ignored
the main issue that had first galvanized Ukraine's protest movement - the
murder of Georgiy Gongadze.

In November 2000, investigative journalist Georgiy Gongadze's decapitated
body was discovered in a forest not far from Kyiv.

Just one month after that, Socialist Party leader Oleksandr Moroz released
recordings on which then President Leonid Kuchma reportedly was heard
ordering the journalist's abduction. The case provided Ukraine's political
opposition with a cause. It sparked the country's largest demonstrations
since 1991 and pointed Ukraine on a path toward revolution.

During the Orange Revolution, signs calling for "Justice for Georgiy" were
common on Independence Square. Demonstrators held posters with Gongadze's
photo, and one of the first tents on the Square was a memorial to the slain
journalist. When protestors chanted "Murderers to Jail," they were referring
largely to Gongadze's killers.

Soon after taking office, President Yushchenko announced that the Gongadze
case would be one of his priorities. "I regard the investigation of the
death of Gongadze as a matter of honor for me and my team," he said.

On March 1, he revealed that several suspects had been detained and would be
charged with carrying out the murder. But, he said, "The main task now is to
get to the most important thing: who organized and ordered the murder." That
was 20 months ago, and no progress has been made on this "main task."

It is commendable that Yushchenko's administration moved quickly to arrest
those who carried out the killing. This is particularly true since the
arrests pointed directly to the involvement of the Interior Ministry. The
three suspects now on trial all worked as part of the Ministry's
intelligence unit.

All of the suspects have confessed, and recently testified in court about
the circumstances of the murder. A fourth suspect, General Oleksiy Pukach,
who led the intelligence unit, is being sought. The trial continues in the
case of the two confessed murderers in order to determine sentencing, which
will be at the discretion of the judge.

Gongadze's widow Myroslava suggests that completing the trial, even after
the confessions, is essential. "These people had no personal motives for
killing Georgiy," she said. In other words, they did not organize the
murder. Therefore, she hopes to use the trial to shed light on who may have
planned the killing. She has a difficult road ahead.

While Prosecutor-General Oleksandr Medvedko recently told parliament that
his office continues to investigate the case, it appears little political
will exists to name those who ordered Gongadze's murder. Even more, there
appears to be little will to bring to justice those who apparently worked
for years to undermine the investigation.

On Nov. 8 2005, the European Court of Human Rights ruled on a complaint
filed by Myroslava Gongadze in 2002.

After spending months examining significant evidence submitted by both
Gongadze and the Ukrainian government, the court ruled that during the
investigation, authorities "were more preoccupied with proving the lack of
involvement of high-level state officials in the case than by discovering
the truth about the circumstances of the disappearance and death of the
applicant's husband."

Moreover, the court noted "serious doubts as to the genuine wish of the
authorities under the previous government to investigate the case
thoroughly."

The court ordered monetary compensation of 100,000 euros to Myroslava
Gongadze and her two children. The family fled Ukraine in 2001. In separate
reports, the Council of Europe urged the Yushchenko administration to follow
up on the findings of this case by investigating the alleged "cover up" that
occurred prior to his term of office.

However, in a terse letter to Myroslava Gongadze sent one month ago,
Ukraine's Justice Department officially stated that the case surrounding the

European Court ruling had been closed. Compensation was paid, but the

department did not respond to allegations of investigatory misconduct.

At the same time, Myroslava Gongadze's attorney and at least one witness in
the Gongadze trial have been victims of curious criminal activity. In
September, attorney Valentina Telychenko saw her car vandalized three times.
First, her tires were slashed.

Then, the grill was removed from the front of her car. And finally, her car
alarm was disabled. Although no one has been charged for these incidents,
Telychenko believes that they are connected to her work in the trial. Her
car was known, she said, and parked directly in front of the court house.
She believes someone was trying to make her "unstable" and "afraid."

One month later, a former coworker of Georgiy Gongadze returned home to find
her bedroom ransacked. Nothing was stolen, and the only room disturbed was
hers. Earlier, the coworker had testified that she possessed phone records
possibly showing who had made threats against Gongadze in the days before
his murder. She can no longer locate those records.

As these incidents occurred, the Prosecutor-General's Office completely
replaced the members of the "investigative group" examining the case - which
now includes 40 huge files of witness statements and documents -
significantly disrupting continuity. The new investigators are just now
beginning to examine the case, according to Telychenko.

But perhaps most disturbingly, several politicians are privately questioning
the identification of Gongadze's body, suggesting that remains recently
found in Slovakia may be the journalist.

Georgiy's wife and coworkers have no doubt about the identity of the body,
pointing out that it was confirmed through several different DNA tests -
including one by the United States FBI. They also note that X-Rays showing
several pre-existing bone injuries to Gongadze matched those of the body
recovered in September 2000.

If doubt can be thrown on the identification, however, the authorities will
have the right to close the current trial and open a brand new
investigation. The prospect is chilling. And yet, there has been little
comment from politicians who previously led protests in Gongadze's name.

In fact, despite years of protest, the confession of two murderers, and
numerous international inquiries, the investigation into those who ordered
Georgiy Gongadze's execution appears stalled. The journalist whose death
ignited the first protests against Ukraine's repressive government continues
to wait for justice. -30-
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Tammy Lynch is a Senior Earhart Fellow at Boston University's Institute for
the Study of Conflict, Ideology and Policy.
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LINK: http://www.kyivpost.com/opinion/oped/25604/

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16. CARPATHIAN CONFERENCE

By Robin Marshall, The Budapest Sun, Volume XIV, Issue 51
Budapest, Hungary, Thursday, December 21, 2006

The Carpathian Convention's seven member governments have adopted a
wide-ranging program of work containing immediate measures for promoting
environment-friendly tourism and a regional network of protected areas.

The program was adopted by the first conference for the Framework Convention
on the Protection and Sustainable Development of the Carpathians in Kyiv,
which, from Dec 11-13, brought together Czech Republic, Hungary, Poland,
Romania, Serbia, the Slovak Republic and Ukraine.

Achim Steiner, UN Under-Secretary General and Executive Director of the UN
Environment Program (UNEP), said, "The Carpathians of central and eastern
Europe are among the world's richest regions in terms of biodiversity and
pristine landscapes. As such they hold huge potential for nature- and
wildlife-based tourism.

"Sustainable tourism can draw investors and tourists to rural communities.
This will assist in conserving and developing livelihoods that, until now,
have been largely isolated from the European economy," Steiner added.

The meeting welcomed an ongoing project on reversing land and water
degradation in the Tisza basin, which straddles Romania and Hungary.

It also urged completion of the Carpathian Environmental Outlook, a UNEP-
led assessment that will feature maps, data and analyses of key themes.

Early findings confirm that the loss of biological diversity in mountain and
wetland ecosystems poses a serious threat to the Carpathian region.
KÁRPÁTISTATS
Spread over some 200,000 sqkm (an area 10% larger than the Alps), the
Carpathians region contains vast tracts of forest that shelter large
populations of brown bear, wolf, lynx and other animals that are rare
elsewhere in Europe. Some 45% of Europe's wolves outside of Russia - more
than 4,000 animals - live in the region.

Around 200 unique plants, found nowhere else in the world, are also found
here. Altogether some 16 or 18 million people call these mountains home.

The Carpathians also play a vital role in ensuring Europe's freshwater
supplies. Runoff from the mountains feeds the Danube, the Vistula and other
major rivers that flow into the Black Sea and the Baltic Sea. The
Carpathians hold some of the cleanest streams on the continent.

The Convention entered into force of 4 January of this year and has been
ratified by six of its members (Serbia's membership has been approved by its
government, and is awaiting ratification by Parliament). The next conference
will be held in Romania in 2008. (www.carpathianconvention.org)
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LINK: http://www.budapestsun.com/

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17. UKRAINIAN ROCK-BANDS INITIATE EVENT "MAKE NEW YEAR'S
PRESENT TO UKRAINE. SHIFT TO UKRAINIAN LANGUAGE IN 2007!"

Ukrinform, Kyiv, Ukraine, Wednesday, December 27, 2006

KYIV - Ukrainian rock-bands have launched the event "Make New Year's

Present to Ukraine. Shift to the Ukrainian Language in 2007". Frontmen

Serhiy Fomenko of the "Mandry", Oleksandr Yarmola of the "Haydamaky",

Andriy Tymchuk of the "FlaiZzZa" and Yurko Zhuravel of the "Ot Vinta"

were painstakingly urging Ukrainian citizens to speak Ukrainian in 2007.

This is the 16th event, aimed at popularization of the Ukrainian language.
As many as 5,000 booklets "Make New Year's Present to Ukraine. Shift to the
Ukrainian Language in 2007" will be distributed. A booklet contains useful
recommendations as how to start speaking Ukrainian.

Coordinator of the event Denys Samihin believes one should start to
communicate in Ukrainian to fulfill objectives of the event. -30-
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18. SEX SLAVERY PLAGUES ROMANIA AND BULGARIA
Other countries in the region, the poorest in Europe, are also hotbeds

for organised crime and illegal trade such as Moldova and Ukraine.

Justyna Pawlak, Reuters, Bucharest, Romania, Tuesday, 26 Dec 2006

BUCHAREST - Anca thought girls who spoke on television about being sold
into sex slavery were paid to invent such stories to boost tv show ratings.
That was until she answered a friend's invitation to join her in Germany and

work as a dishwasher in a town near Hamburg.

When she arrived, her passport was taken away and her captors forced her to
work as a prostitute for their clients. Three months later she slid down two
floors on a drainpipe, ran several kilometres (miles) through a forest and
finally found a taxi that took her to a police station and safety.

"The girl who invited me won her freedom by bringing in two other girls,"
said Anca, a quiet 20-year-old from a Romanian village. She asked for her
real name to be withheld to protect her from her captors.

As they prepare to join the European Union, Romania and Bulgaria are
struggling to contain human trafficking and smuggling, particularly in
drugs, which is endemic in the Black Sea region that will soon become the
EU's eastern border.

Every year, thousands of women such as Anca, some as young as 13, are
kidnapped or lured by promises of well paying jobs or marriage and sold to
gangs who lock them up in night clubs and brothels or force them to work on
the streets.

Observers say even more women could be at risk after the two countries join
the EU in January and traffickers seek to increase business by taking
advantage of easier access to western Europe, where most of the victims end
up.

"There is a lot of exploitation in Romania and I am sure the numbers will
get bigger," said Gina-Maria Stoian, Anca's case manager and the director of
The Adpare Foundation, a Romanian organisation that helps victims of human
trafficking. "Already there is sex tourism around the Black Sea."
CRIMINAL ROUTES
Romania and its southern neighbour Bulgaria are among 11 countries listed by
the United Nations as top sources of human trafficking, based on reported
numbers of victims.

Other countries in the region, the poorest in Europe, are also hotbeds for
organised crime and illegal trade such as Moldova and Ukraine.

Poverty, disillusionment with the region's slow reforms after the collapse
of communism, and a fraying fabric of society following decades of forced
repatriation of many communities help gangs flourish and find easy victims.

"There is poverty, dysfunctional families, mentality. The girls have no
roots, no self-esteem," said Iana Matei, who runs Reaching Out, a Romanian
charity that helps trafficking victims.

"The traffickers now look for 13 to 14 year olds. They are easier to
control. They are trained and brain-washed here. They see they can get
little help from police, the system. And they think they can make money and
become independent," she said.

Geography is also a problem. Bulgaria and Romania are part of the "Balkan
route" for transporting heroin from Afghanistan -- which produces the vast
majority of the world supply of poppies -- to Western Europe. Eighty percent
of Afghani heroin reaches Western users through this route.

"Romania will be the final border, the final frontier of the EU," said
Cristian Duta from Bucharest's SECI Center, which supports trans-border
crime fighting in southeastern Europe. "It will be the first step for anyone
who wants to get into the EU."
FIGHTING ABUSE
Some observers worry that Romania and Bulgaria's membership of the EU

could aid the spillover of illicit trade that plagues the Black Sea region into
the west.

Bucharest and Sofia governments say they are doing all they can to combat
trafficking and abuse. Romania has won praise from Brussels for reforming
border controls, combating endemic corruption and improving police
cooperation. But the EU has been more cautious on Bulgaria, rapping Sofia
for not doing enough to fight rampant organised crime.

"Our borders are a 100 percent secure," said Dumitru Licsandru, who runs
Bucharest's state agency against human trafficking.

The agency's data shows about 1,400 Romanian victims of trafficking,
including sexual exploitation and forced labour, were identified in the
first nine months of this year, while some 200 perpetrators were arrested.

Sofia's interior ministry's organised crime unit said 4,000-5,000 Bulgarian
women are trafficked a year. "We cannot deny the fact the problem of
trafficking exists," said interior ministry spokeswoman Katya Ilieva, adding
that the numbers had dropped compared to previous years. Observers say
official figures on the numbers of people trafficked show only the tip of
the iceberg.

Aid workers say police work is not enough. Governments need to train judges
and prosecutors, better protect victims and fight corruption which still
allows traffickers to take women through borders or keep underage girls on
the streets.

They also need to change the mentality in the traditional Balkan societies
which often blame victims for their plight.

"My girls all knew about trafficking. But they thought it only happened to
whores," said Matei, whose charity assists girls caught up in prostitution
rings. (Additional reporting by Kremena Miteva in Sofia) -30-
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LINK: http://www.alertnet.org/thenews/newsdesk/L13181613.htm
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