Analysis & Commentary: By Lubomyr Luciuk, Special to Kyiv Post

Professor, Political Geography at the Royal Military College of Canada

Kyiv Post, Kyiv, Ukraine, Thursday, January 8, 2009

Letter-To-Editor, by Ethan S. Burger, Adjunct Professor,
Georgetown University Law Center, Washington, DC, US

Geoff Berlin, Chairman, Democrats Abroad Ukraine, Kyiv

Action Ukraine Report (AUR), Wash, D.C., Monday, January 12, 2009

Editorial: by Katya Gorchinskaya, a Kyiv Post Editor

Kyiv Post, Kyiv, Ukraine, Thursday, December 18, 2008

Russia’s embrace of the dictator shows Ukraine is going down a better path

Analysis & Commentary: by Taras Kuzio, Special to Kyiv Post

Kyiv Post, Kyiv, Ukraine, Thursday, December 18, 2008

Reuters, Moscow, Russia, Mon Jan 12, 2009

MOSCOW - Ukraine has signed a fresh copy of a gas transit monitoring agreement and removed earlier conditions, Russian gas export monopoly Gazprom said on Monday.

"A Gazprom delegation conducted negotiations this morning in Kiev. As a result of the negotiations, the Ukrainian side signed .. (the agreement) without any conditions whatsover," the Russian firm said in a statement.

Russian President Dmitry Medvedev on Sunday declared the monitoring deal null and void because Ukraine had added conditions to which Russia objected. (Reporting by Dmitry Zhdannikov; Writing by Christian Lowe; Editing by Conor Sweeney) (christian.lowe@reuters.com; reuters messaging: christian.lowe.reuters.com@reuters.net; +7 495 775 12 42))
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-- Ukraine signed a deal on Sunday allowing EU, Ukrainian and Russian observers to monitor gas flows across Ukrainian territory. Russia and Ukraine have not yet reached agreement on supplies to Ukraine itself and they remain cut off.
-- Experts have said it may take 36 hours from the time gas starts flowing for capacity to build up in pipelines so that supplies reach consumers in Europe.

Writing by Kiev bureau; Additional writing by David Cutler, London Editorial Reference Unit (nyse: UNT - news - people ); (sabina.zawadzki@reuters.com; +380 44 244 9150; Reuters Messaging: sabina.zawadzki.reuters.com@reuters.net)

LINK: http://www.forbes.com/afxnewslimited/feeds/afx/2009/01/11/afx5904952.html
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[return to index] [Action Ukraine Report (AUR) Monitoring Service]

By Andrew Kramer in Moscow, The New York Times, NY, NY, Mon, Jan 12, 2009

MOSCOW — A European Union-brokered deal between Russia and Ukraine to restore the flow of heating fuel to the Continent seemed to be falling apart Sunday evening, less than a day after it had been signed, with Moscow objecting to conditions that Ukraine attached to the agreement after Russia had already signed it.

In what appeared to be a first step toward resolving a dispute that has cut off about one-fifth of the natural gas used in Europe, at the peak of the winter heating season, the governments of Russia and Ukraine and the European Union agreed to establish independent monitors of pipelines that carry Russian gas to the west.

The protocol was a precondition set by Russian energy officials to turn on the gas flow again. Russia shut off the valves on Tuesday after an extended dispute with Ukraine over pricing and accusations of stealing gas from the export pipelines.

In a flurry of shuttle diplomacy over the weekend, the Czech prime minister, Mirek Topolanek, secured the signature of Russia’s prime minister, Vladimir V. Putin, in Moscow and then flew to Kiev, where Ukraine’s prime minister, Yulia V. Tymoshenko, also signed the agreement.

Yet by late Sunday, the off-again-on-again deal appeared to be off again. Russia’s president, Dmitri A. Medvedev, was quoted by Russian news agencies as saying he would not honor the pact.

At issue was a handwritten phrase that Ms. Tymoshenko wrote beside her signature early Sunday morning, after the document had already been signed by Mr. Putin. In English, she wrote, “with declaration attached.”

Ms. Tymoshenko’s declaration, a copy of which was obtained by The New York Times, said that Ukraine had not been guilty of stealing gas from the export pipelines, a statement essentially asking Moscow to backpedal on the allegation that had underpinned its justification for halting shipments to Europe.
Heading into Monday, the prospects for a deal were marked by confusion and uncertainty.

Bloomberg News reported that a European Union official had said that Ukraine had agreed to sign a new version of the accord to authorize the monitoring of the pipelines, paving the way to resume gas shipments. The report said that the new deal came after a phone call between Mr. Putin and the European Commission president, José Manuel Barroso, and would be separate from Ms. Tymoshenko’s declaration.

“Barroso has spoken to Tymoshenko, and they have agreed to separate the two documents,” Ferran Tarradellas Espuny, a commission spokesman, said in Brussels, according to the report. “On one side the declaration, and on the other side the terms of reference.”

The declaration from Ms. Tymoshenko also demanded that Russia, if it wanted to export gas to Europe across Ukraine, provide fuel to operate pumping stations along the pipeline route. Russia has refused to do that, saying it is Ukraine’s obligation as the country responsible for transit.

The Russian authorities quickly said this rendered the agreement void. Mr. Medvedev blamed Ukraine for collapsing the deal and sharply criticized the Ukrainian addendum. “I instruct the government not to use the document that was signed yesterday,” he said.

“These clauses and annexes are a mockery of common sense and an offense against the agreements that were reached earlier,” Mr. Medvedev said in comments published by the Interfax news agency. “These actions are seeking to destroy the existing agreements on the control over the gas transit; they have an expressed provocative and destructive nature.”

Mr. Putin, in a phone call on Sunday to Mr. Barroso, said Russia would not accept conditions added after he had signed the protocol, Interfax reported.
Seeking to sooth Russian concerns, Mr. Topolanek called Mr. Putin to say that Ms. Tymoshenko’s declaration was not binding. Later Sunday, Mr. Barroso said Ms. Tymoshenko had agreed to address Russian concerns over her statement with the goal of restoring gas flows to Europe, Reuters reported.

A spokesman for Gazprom, the Russian gas monopoly, said the company’s chief executive, Aleksei B. Miller, would fly to Brussels on Monday to continue negotiations.

Even once an agreement is in place, it may be days before relief comes to European countries down the line from Ukraine, especially Poland and Bulgaria, which have suffered greatly without heating fuel in the bitter winter weather.

If Russia immediately turned on the flow, it would take about three days to repressurize the European natural gas pipeline system and restore full service, experts said. And the underlying price dispute has still not been resolved.

The Russian authorities maintain that Ukraine began siphoning from pipelines some of the Russian natural gas intended for export to Europe and has been using it to meet internal demand since Russia halted supplies to Ukraine on Jan. 1 because of a dispute over pricing.

LINK: http://www.nytimes.com/2009/01/12/world/europe/12gazprom.html?ref=world

EU Business, United Kingdom, Monday, 12 January 2009

MOSCOW - Russia's standing has taken a battering in the crisis over European gas supplies, undermining its position as chief energy supplier to the EU and spelling some loss of diplomatic muscle, observers say.

As Russia and Ukraine groped towards a deal to restore supplies to Europe and Prime Minister Vladimir Putin warned Kiev against "stealing" Russian gas, analysts and newspapers here were underwhelmed by the Moscow's performance.

"Strategically I think Russia lost," said foreign policy expert Fyodor Lukyanov, editor of the journal Russia in Global Affairs. "Regardless of who is to blame, the general impression in Europe is that the eastern dimension of gas supply is not secure."

"The crisis united Europe," ran a headline in the Russian newspaper Kommersant on Sunday. "The EU will undoubtedly try to find ways of reducing dependence on Russian gas supplies and avoiding such crises in future."

Some experts believe the latest New Year gas dispute to hit Moscow's supplies to the EU should spur investment in new routes from Russia that skirt around troublesome ex-Soviet neighbours, notably a plan for a "Nord Stream" pipeline under the Baltic Sea that has the backing of EU heavyweight Germany.

"Germany will from now on be able to convince other Europeans of the importance of this project," said Nikolai Petrov, an analyst at the Carnegie Moscow Centre.

But while Russia, the source of a quarter of EU gas supplies, is likely to remain the bloc's dominant supplier, others say the crisis puts a question mark over Russian supplies and will spur the EU to pursue alternatives such as gas from North Africa and Central Asia and increased use of nuclear power.

Those who believe Russia has lost the initiative in its efforts to dominate European gas supply point out that energy giant Gazprom has had to scale back its ambitions as its financial position has deteriorated with falling world energy prices and a worsening credit market.

"Gazprom and all Russian companies are suffering from the (financial) crisis. It's not the same Gazprom it was a year ago. It's had to cut down many of its ambitious projects," said analyst Yevgeny Volk, of the Washington-based Heritage Foundation.

He added that Gazprom would in fact be more reluctant than it is admitting to open up the corruption-ridden gas trade with Ukraine to outside inspection, as foreseen under an EU-brokered resolution.

"Just as in Georgia, it certainly means Russia has to make concessions, to agree with a certain international machinery and agenda.... Russia will have to open up many things that Gazprom and the Russian energy industry are not eager to open," said Volk.

For his part Lukyanov believes the crisis has shown up the inability of Russian gas giant Gazprom to deal with Ukraine alone and could herald an advance by more capable European energy companies into Russia's energy market.

"Both sides understood that the illusion Gazprom can do everything itself is impossible -- Ukraine showed it's a monopoly too, a transit monopoly, and Gazprom can't do anything against it," said Lukyanov.

On the diplomatic front, the use of EU monitors to solve another crisis on Russia's borders -- the same solution that ended last year's war in Georgia -- confirms that Moscow has conceded the lead role in adjudicating disputes in its neighbourhood, he added.

While Ukraine is even further from its goal of EU membership due to the current dispute, the EU is increasingly playing the role of "patron" in solving the problems of eastern neighbours, ranging from the current gas dispute to efforts to police the crime-ridden Ukrainian border with Moldova.

"The European role is growing. Any claim by Russia that we will solve our problems ourselves and don't interfere has been greatly undermined," said Lukyanov.

LINK: http://www.eubusiness.com/news-eu/1231724829.75

Bulgaria, a member of the European Union and NATO, has been trying to shrug off its Communist past. The crisis has made it acutely aware of its
vulnerability to Russia, once a steadfast ally. Bulgaria, the poorest country in the European Union, relies almost entirely on natural gas from Russia.

“The situation is reminiscent of the siege of Stalingrad,” Vlado Todorov Panayotov, a Bulgarian member of the European Parliament, said Thursday at
an emergency hearing in Brussels, referring to the misery endured in World War II when the Nazis tried to take that Russian city, now known as Volgograd.

Bulgarians said they felt betrayed by their own government for making them defenseless victims of Russia’s pipeline politics, by the European Union for
its failure to rescue them, and by the Kremlin and Prime Minister Vladimir V. Putin for forcing this country to suffer because of a faraway geopolitical dispute.

In Sofia, the capital, at a maternity ward where mothers cradled their newborns in front of space heaters, Amelia Mladenova, 24, said she could not
believe that a disagreement over energy prices was putting the lives of children at risk. “Moscow has put economic interests ahead of human rights,” she said, rocking her 4-day-old son, Miroslav, in her arms.

Since the crisis began, dozens of kindergartens and 68 schools across the country have been closed, and some hospitals have had to postpone operations. Drivers of Sofia’s commuter streetcars and buses have been ordered to turn off the heat.

And at the Sofia zoo, the African monkeys were being fed warm herbal tea to prevent them from falling ill. “The only animals happy with the current
temperatures are the Siberian tigers,” said Ivan Ivanov, the zoo director.

The halt in gas supplies also sent shudders through Bulgaria’s economy, which was already reeling from the global financial crisis. The gas monopoly, Bulgargaz, halted supplies to 72 big industrial companies and forced dozens of producers of glass, steel, beer and metal to shut down. According to the economy minister, Petar Dimitrov, 152 companies reported losses totaling $5.9 million a day.

The crisis has also caused many bakeries to raise the price of bread by 10 percent, to about 48 cents, forcing many poor families to do without.The crisis has been met with particular bitterness here. Russia and Bulgaria share the Cyrillic alphabet and the Eastern Orthodox religion. Russia is Bulgaria’s second-largest trading partner, and the Russian energy giant Lukoil is one of Bulgaria’s largest investors.

During the cold war, Bulgarians were inculcated with the lesson that Russia had twice liberated the country, from the Ottoman Empire in the 19th century, and from the Nazis.

Only a year ago, the country’s president, Georgi Parvanov, who is pro-Russian, declared that Bulgaria had “hit a grand slam” after the country signed

several energy deals with Moscow aimed at ensuring its gas supply, including one for a pipeline that would connect Russia and Italy and run through Bulgaria.

Last week in Varna, a Bulgarian port city on the Black Sea, residents protested the gas stoppage in front of the Russian Consulate, holding banners that read, “Stop Putin’s Gas War.”

Alexander Bozhkov, a former Bulgarian deputy prime minister who is currently chairman of the Center for Economic Development here, said the crisis had
laid bare for Bulgaria the enormous human and economic cost of relying on Russia. He predicted that it would result in the electoral defeat of the Socialist government and that it would reorient the country firmly toward the European Union and Washington.

“Because of our history, we have many reasons to like the Russians. But this crisis will make a lot of people rethink this,” Mr. Bozhkov said. “We are the biggest victims of this crisis, and it is a huge embarrassment. Russia thinks it can get Bulgaria and the western Balkans back into its orbit anytime, but they may have miscalculated the fallout from forcing people to shiver through the cold.”

LINK: http://www.nytimes.com/2009/01/12/world/europe/12bulgaria.html?ref=world
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Letter-to-the-Editor: from Dmitry Peskov

Press Secretary to the Prime Minister's Office, Russian Federation
The Wall Street Journal, New York, NY, Friday, January 9, 2009

Your assessment of the gas dispute between Russia and Ukraine ("The Winter Gas War," Review & Outlook, Jan. 7) fails to reflect the reality of the situation. This is not a crisis of Prime Minister Vladimir Putin's making.

It is the result of Ukraine's flagrant violation of its commercial and legal obligations as a transit country, set out in the bilateral agreement between Russia and Ukraine, and as stipulated in Article 7 of the European Energy Charter.

Gazprom has done everything possible to avoid the current situation. Far from using a "crude pressure tactic," Gazprom made unprecedented concessions to Naftogaz Ukrainy, offering to set the gas price for Ukraine this year at $250 per 1,000 cubic meters -- almost half the prevailing price in Europe this month. Unfortunately, Ukraine unilaterally walked away from the negotiations.

Over the last 50 years Russia has been a consistent and reliable supplier of energy to Europe. That record is now held hostage by Ukraine's illegal actions. We urge Ukraine to urgently allow Russian gas to be pumped through Ukrainian pipes so as to avoid a humanitarian catastrophe.

LINK: http://online.wsj.com/article/SB123154909457170065.html

Analysis & Commentary: By Roman Kupchinsky

Eurasia Daily Monitor, Volume 6, Issue 4,

Jamestown Foundation, Wash, D.C., Thursday, Jan 8, 2009

How does Russia’s Gazprom set the price for the gas it sells its customers in the former Soviet republics and the EU? Few, if any, managers in Gazprom can answer this question with any measure of certainty. The formula for calculating this seemingly capricious price, if there is such a formula, remains a highly confidential “commercial secret” closely guarded by Gazprom and its customers. For years, opacity, secrecy, and backroom deals seem to have been the main factors used to establish the price for Russian gas.

During the current “gas war” between Ukraine and Gazprom, Gazprom managers and Russian Prime Minister Vladimir Putin have managed to quote four different prices for gas in less than a month ranging from $250 to $450 for 1,000 cubic meters (tcm). Gazprom has been playing fast and furious with numbers while accusing the Ukrainian buyers of “stealing gas” without offering a shred of hard evidence that this theft actually took place.

In December Alexei Miller, the CEO of Gazprom, announced that beginning in January 2009, Ukraine would pay $450 per tcm of Russian gas. During the December negotiations between Ukraine and Russia, the Russians set the price at $250, a difference of $200 from what Miller initially stated. How was this possible?

Did the price of oil, which is indexed to the price of gas, suddenly drop in a few days to warrant this change? The oil price did indeed go into free fall in the second half of 2008, but the indexing lags six to seven months before it has an impact on gas prices.

Miller, it appears, was talking on behalf of his alter-ego, Vladimir Putin, who at that time had decided to punish the Ukrainians for various pro-Western political sins. Putin quoted the absurd price of $450, thereby showing that he was not fully versed in gas price formation.

Putin kept juggling his figures. On January 2 Itar-Tass reported that Russia had updated its contract to purchase gas from Turkmenistan “at world prices” and would now pay $340 per tcm. “If transit prices are added to this price, the price of gas for Ukraine will be $380 per one thousand cubic meters,” the prime minister said, a far cry from the $450 he had quoted a day earlier.

When the Ukrainian side rejected the $250 price, Miller weighed in again and stated that since Ukraine had rejected a reasonable offer (one that had little in common with the wellhead price for gas in Russia), it would now be forced to pay $418. A few days later Miller (possibly on instructions from Putin), with no market justification for his actions, raised the price by $32, back to $450.

According to Gazprom spokesmen, the average price for Russian gas in the fourth quarter of 2008 for EU countries was $460 to $520 per tcm (Kommersant, November 11, 2008). Yet, the former Ukrainian deputy foreign minister responsible for energy negotiations with Russia, Oleksandr Chaliy, told the BBC’s Ukrainian Service on January 6 that German companies buying gas from Russia had paid $290 per tcm in 2008. Why were they getting such a deal? Which countries in the EU were paying the alleged price of more than $500 for Russian gas in 2008?

The answer is unknown because of Gazprom’s non-transparent pricing policy, the use of murky intermediaries, and the self inflicted silence of its customers who refuse to disclose at what price and for what political payback they purchase Russian gas.

One possible explanation for the chaos in Russian gas prices might be that the Russian government headed by Vladimir Putin and Russia President Dmitry Medvedev are co-conspirators in a criminal scheme to defraud European consumers. By first artificially raising gas prices and then attempting to raise prices even higher by cutting off most gas deliveries in the middle of a freezing winter, their hope might be to create a panic-driven market in which spot prices for Russian gas would go through the roof.

Can such tactics be prevented? The first step should be to legally require all energy companies to publish the price they pay for gas and the terms of the purchase contracts. A breath of fresh air in the gas business would help prevent situations like the January 2009 gas cutoff from reoccurring.

Gazprom and most other gas companies are infamous for hiding the terms under which they sell their product to different companies. The practice of calling the terms of almost any transaction a “commercial secret” is more often than not a vehicle for bestowing favors on certain countries or key individuals in return for their support. It goes this way: We give you a better price for gas; you give us your souls. (http://www.jamestown.org)

Analysis & Commentary: By Lubomyr Luciuk, Special to Kyiv Post

Professor, Political Geography at the Royal Military College of Canada

Kyiv Post, Kyiv, Ukraine, Thursday, January 8, 2009

It’s cold in Ukraine right now. In the dead of winter the country’s energy supplies have been cut. Think back to the last time when your power failed and the heat went off in your home or office. It gets pretty damned cold awfully fast doesn’t it?

Of course we’re lucky to live in a civilized place where every effort is made to restore power quickly. No one but a cad or a criminal would turn off your heat in January. Yet the Kremlin did just that to Kyiv on Christmas eve in the Orthodox Christian world – “from Russia with love.”

Ukraine has reserves but those will soon run out. Then what? Since many Western European states are addicted to Siberian oil and gas and Russia makes no secret of its contempt for Ukraine’s democratic tilt, countries like Germany, supported by Italy and France, have ironically become Moscow’s handmaidens, isolating Ukraine by blocking her admission into the European Union and NATO. The strudel, spaghetti and croissant eaters comply because they don’t want the lights to go out in their beer halls, their espressos to get cold or their pizzerias to get chilly.

Certainly Kyiv is not blameless. What passes for a government there has generally been ineffective and corrupt, increasingly an embarrassment to a Ukrainian emigration that yearned for so much more after Ukraine recovered its independence.

Having done little to wean itself off Moscow’s teat, preferring to remain seduced by the cheaper-than-world-price-energy dolled out by their “Elder Brother,” Ukrainians now find themselves at a bully’s mercy. They’re screwed. They don’t have the coin for what they need. Ought they to have known better? Yes.

This is not the first time their neighbor to the North has mucked them about. The man in charge, Vladimir Putin, questions Ukraine’s very existence and insists the Soviet empire’s undoing was the greatest geopolitical catastrophe of the 20th century. Oddly enough I recall most people celebrating the collapse of Communism. But I suppose a KGB man harbors a different perspective.

What is to be done? Realistically there seems little alternative but for Ukraine to start paying market prices for its energy, most imported from next door. It’ll be dear. But since the pipelines moving oil and gas into Western Europe cross Ukraine’s territory it’s also time for Kyiv to start raising those transit costs, significantly.

If Europeans want gas from their Russian friends they should pay more for Ukraine to allow them to get it. In the longer term Ukraine must also diversify its energy sources. Getting over Chornobyl by developing nuclear energy is critical, as is exploiting oil, oil shale and gas deposits in the Black Sea littoral and securing reliable energy supplies from the Near and Middle East.

TIME FOR REDRESS FROM RUSSIAN FEDERATION
It’s also time for redress from the Russian Federation. In 1991 “Mother Russia” quickly seized the greatest share of the Soviet empire’s wealth. Josef Stalin’s beneficiaries can now shoulder their fair share of a less pleasant legacy. They can start paying reparations for the crimes of Communism, particularly for the Holodomor, the genocidal Great Famine of 1932-1933 that snuffed out the lives of many millions of Ukraine’s citizens.

The precedent was set by West Germany paying billions to Israel and the Jewish Diaspora for the Holocaust. As for the objection that some Ukrainians also served Stalin that’s easily resolved. If any such villains are found they must get a fair trial. Then they should be executed.

Since Ukraine apparently isn’t good enough for membership in Europe’s club it need not worry about the prissy standards of Brussels when it comes to capital punishment. Few had a problem with hanging Nazis. Applying the Nuremberg noose when dealing with Commissars seems fitting.

DEVELOP NUCLEAR WEAPONS
Ukraine shouldn’t stop there. Developing its own short and intermediate range nuclear weapons will allow Kyiv to protect its interests just like India and Pakistan do or, for that matter, France and Israel. Ukraine doesn’t need NATO once it has a credible nuclear deterrent. And, unlike Russia, Ukraine has never posed any threat to the West.

If Muscovites can manage missiles why can’t Ukes have nukes? I don’t recall president Yushchenko threatening president-elect Obama the day after the US elections. Russia’s president Medvedev did.

As for those countries that imposed their Führer and their fascism on the rest of Europe, it’s time for them to atone. No other country in Nazi-occupied Europe suffered as many civilian casualties as Ukraine. For decades that truth was buried by Soviet propagandists and fellow travelers blathering on about “20 million Soviet dead” while foisting the myth about a “Great Patriotic War” that began June 22, 1941.

Didn’t World War II begin on Sept. 1, 1939? In whose interest was it for us to ignore how “Uncle Joe” Stalin and Adolf were allies when Poland was dismembered, the Battle of Britain joined and the gates to hell first opened at Auschwitz?

It was a cold Christmas in Kyiv. I have no gift with which to warm the long-suffering folks there. Instead I’ve been thinking about how the Old Testament warns us that sons pay for the sins of their fathers.

Today the French, the Germans and the Italians are mollycoddling Moscow, much as their forefathers once did. They might end up by sparking a new Cold War, one they might not win.

NOTE: Professor Lubomyr Luciuk teaches political geography at the Royal Military College of Canada. Luciuk also edited the newly published book "Holodomor: Reflections on the Great Famine of 1932-1933."

LINK: http://www.kyivpost.com:80/opinion/33018

These days, Stephen Sestanovich, a senior fellow at the Council on Foreign Relations, sees signs of “policy confusion” as Moscow’s leaders adjust to Russia’s sudden economic slide. Moscow has allowed the Georgia crisis to subside, but has escalated tensions over gas with Ukraine.

The choice the elites face, Mr. Sestanovich said, is whether to keep talking in ways that make them look like “angry risk-takers and disturbers.” “Is that still their real view of themselves, and of the appropriate policy in a time of crisis?” he said. “It may be. But I’m not sure, and I don’t think they are.”

The United States has real interests in a cooperative Russia; it wants help in curbing Iran’s nuclear ambitions, and NATO needs more supply routes into Afghanistan. And with Mr. Obama’s arrival in the White House, there seems room for compromise on two big Russian concerns: possible NATO expansion to Ukraine and Georgia, and the plan to station missile-defense facilities in Poland and the Czech Republic.

But in the deep freeze of a Moscow January, the gains of August are still thrilling. When Mr. Putin went on television last week to cut gas shipments to Ukraine — retaliation, he said, for thefts from Russia’s pipeline — who could miss the glint of satisfaction at another tough-guy stance?

Foreign policy emits an energy that goes far beyond mere economics, and the new year will call for all the resources Moscow can muster. To a Russia intent on reclaiming great-power status, there may be something elemental about resisting America.

“It’s just the way things are,” said Mr. Nikonov, whose grandfather, Vyacheslav Molotov, was Stalin’s foreign minister. Searching his memory for periods of warmth between the two countries, Mr. Nikonov came up with two: March and April of 1917, and August through December of 1991.

LINK: http://www.nytimes.com/2009/01/11/weekinreview/11barry.html?pagewanted=1

Analysis: By Douglas Birch, Associated Press Writer, AP, Moscow, Russia, Sun, Jan 12, 2009

MOSCOW -- The European Union was dragged unwillingly into the Russia-Ukraine gas war, but analysts say the EU's role as mediator now gives it the chance to seek reforms of Russia's multibillion-dollar gas trade.

Critics have charged that shadowy intermediaries earn fortunes from Russia's estimated $75 billion in annual gas sales to Ukraine and Europe, and recently top Russian and Ukrainian officials have joined in calling for reform.

"We have to work together in Europe to try to force Russia and Ukraine to adopt a level of transparency," said Tom Mayne of Global Witness, a London-based rights group that focuses on resource issues, on Sunday.

Anders Aslund, senior fellow at the Peterson Institute of International Economics in Washington, said in an email that the EU should call for the elimination of all middlemen from the gas trade "as they are just means of stealing from (Russian state gas company) Gazprom and the Ukrainian state, and the corrupt revenues are poisoning Ukraine's politics."

The EU has negotiated a deal to monitor Russian gas flow via Ukraine pipelines in a bid to end the cutoff that has left large parts of Europe without heat in freezing temperatures. Russia said it would only resume supplies if EU monitors track the flow and make sure Ukraine doesn't siphon off gas intended for Europe.

Both Russia and Ukraine have strong interests in developing ties with the EU, and they both aggressively sought its support in the crisis. Russia needs support from Europe for prospective pipelines bypassing Ukraine, while Ukraine has been seeking membership in the EU and NATO as part of its efforts to shed Moscow's influence.

Russian Prime Minister Vladimir Putin claimed the current dispute reflected a "high degree of official corruption" in Ukraine. He did not mention Russia.
Putin told reporters that Ukrainian authorities were fighting "not for the price of gas but for a possibility to maintain one or other intermediaries so that they can use the proceeds for their personal gain and also get resources for future political campaigns."

But Aslund and others say that powerful figures in both Ukraine and Russia profit behind the scenes from the gas business. At a Dec. 30 conference in Washington, Aslund said the Russia-Ukraine gas dispute was "a conflict between very shady businessmen" rather than a dispute between sovereign nations.

"And the amazing thing here is that the EU countries do nothing to secure their energy supplies," he said. "Here they allow themselves to be vulnerable because of some shady organized crime deals."

The main intermediary in Russia's gas trade is RosUkrEnergo, a Swiss-based trading company. According to corporate Web sites, it is half-owned by Russia's Gazprom and half by CentraGas Holding AG, a Vienna-based company controlled by two Ukrainian businessmen.

Critics question the need for Gazprom, a mammoth corporation, to sell fuel through RosUkrEnergo. "We simply can't understand why the company exists," said Mayne of Global Witness. "There just isn't a good reason for it." Efforts to reach the company Sunday were unsuccessful.

On its Web site, RosUkrEnergo said it serves Russia and Ukraine "as a coordinative platform for the sale of Central Asian gas in the Ukrainian

marketplace" and seeks to ensure "a stable pace of growth in the amounts of Central Asian gas supplied to Ukraine and Europe."

Ukrainian Prime Minister Yulia Tymoshenko, a former gas trading tycoon, has called for eliminating RosUkrEnergo from the Russian gas trade.
Volodymyr Omelchenko, an analyst with the Razumkov Center of Sociological Studies in Kiev, said RosUkrEnergo helps finance the political organization of Tymoshenko's bitter rival, Ukrainian President Viktor Yushchenko.

Yushchenko, however, has denied rumors that he has ties to the gas business. "My family and I are being accused of involvement in gas," he said last year. "I have more interesting things to do."

Yushchenko beat a Kremlin-backed presidential candidate in December 2004, in the wake of the 2004 Orange Revolution and despite being severely poisoned. Since then, he has led a campaign to bring Ukraine into the European Union and NATO and out of Moscow's orbit. Russia's criticism of RosUkrEnergo in part may be aimed at weakening Yushchenko politically.

Some media reports linked RosUkrEnergo to Semyon Mogilevich, a 62-year old Ukrainian-born Russian citizen arrested by Moscow police on tax evasion charges a year ago. RosUkrEnergo officials said their company had no relationship with Mogilevich.

But shortly after his arrest, a U.S. Justice Department official confirmed that the department's Organized Crime and Racketeering Section had been investigating his suspected ties to RosUkrEnergo.

U.S. officials have accused Mogilevich of running a powerful organized crime ring in the 1990s. He has also been on the FBI's wanted list since 2003, accused of manipulating the stock of a Pennsylvania-based company that collapsed in 1998. His lawyer, Alexander Pogonchikov, said Saturday that his client denies the tax charges and was still in jail awaiting trial.

NOTE: Douglas Birch, Moscow Bureau Chief for the Associated Press, has covered Russia since 2001.

Russia's worst gas conflict with Ukraine yet has halted all supplies to the European Union through Ukraine since Jan. 7. The dispute comes as Russia waits for some Baltic Sea countries to finally grant environmental permits to its Nord Stream pipeline.

Now that deliveries traveling via Ukraine have been stopped for at least five full days, cutting power to industry and homes in southeastern Europe, there promises to be new enthusiasm for Nord Stream, which will take gas directly from Russia to Germany, analysts said Sunday. Gas from Nord Stream could supply the entire EU if EU members build links among their gas systems.

Putin said Saturday that construction of Nord Stream, scheduled to come online in 2011, would be a guarantee against supply disruptions in the future.

"The current crisis confirms that there is a need for a true diversification of the ways to deliver our energy resources to the main consumers in Europe," Putin said at a joint news conference with Czech Prime Minister Mirek Topolanek in Moscow.

Putin also suggested building the less-advanced South Stream across the Black Sea and southern Europe and moving ahead with plans to liquefy gas — or chill it into a liquid — to ship by tankers worldwide.

The desire to support Nord Stream and South Stream was a key reason why Russia cut supplies, said Pavel Salin, an analyst at the Center of Current
Politics, a think tank.

Russia reduced supplies to Ukraine on Jan. 1 after it said Ukraine began stealing some of the gas destined for the EU. Moscow severed deliveries
altogether after it said Kiev stopped transiting the gas, keeping it all for itself.

Nord Stream was not designed to replace any existing pipelines but was supposed to meet growing demand in the EU, said Irina Vasilyeva, a
spokeswoman for Nord Stream AG, the company created to build the pipeline.

Russia has gone to great lengths to defend its position in the dispute, and EU reactions are more muted this time than in January 2006, when the West
accused Moscow of using energy as a weapon by cutting off gas supplies through Ukraine.

In a sign that euphoria in Europe from Ukraine's 2004 Orange Revolution is long gone, Kiev has drawn reprimands from the EU in the latest dispute.
European Commission President Jose Manuel Barroso gave Ukraine a harsh warning last week that any failure to meet commitments to deliver Russian
gas to the bloc would hurt its aspirations for closer EU ties.

"If Ukraine wants to be closer to the EU, it should not create any problems for gas to come to the EU," Barroso told a news conference in Prague, where
he was meeting Czech officials who hold the rotating presidency of the 27-nation EU. Barroso stressed that he was not casting blame in the transit dispute.

Other European leaders have also avoided placing the blame on a specific country. "I have no ambition to sort out Russian-Ukrainian relations right now. It was not established as my goal," Topolanek, whose country took over the EU presidency on Jan. 1, said Saturday at the news conference with Putin.

French President Nicholas Sarkozy called the dispute a "bilateral matter" at a joint news conference with German Chancellor Angela Merkel last week.

Hungarian Prime Minister Ferenc Gyurcsany said last week that it was unacceptable for "the bullets that Ukraine and Russia shoot at each other to hit Hungary," IPS news agency reported.

The EU is likely to respond to the latest gas supply crisis by building more underground storage facilities and linking up member states' pipelines to
provide for greater mutual assistance for emergencies, said Pavel Baev, a professor at Norway's International Peace Research Institute.

Even though Russia has generated negative publicity in the conflict, it is faring better than Ukraine in the informational war, said Dmitry Orlov, an analyst with the Agency of Political and Economic Communications. "Ukraine missed every opportunity it could" and is now the bad guy in the eye of European consumers, he said.

He said Ukraine has failed to prove that it is not siphoning off gas, and with its leaders remaining mostly silent since the gas disruption on Jan. 1, it has given European consumers the impression that it has an unfair competitive advantage in gas purchasing price. Ukraine was paying about half the amount that the EU pays for gas.

The shift in public opinion started after the gas dispute in 2006, when Russia failed to clearly explain its actions, leaving the impression that it was moving impulsively, Orlov said. In a contrast, Putin held an extensive news conference with foreign reporters last week to explain Russia's perspective.

Gazprom has created a special web site dedicated to the gas conflict, www.gazpromukrainefacts.com, and its executives have met with European
partners in Brussels several times.

Interestingly, Putin, not President Dmitry Medvedev, has taken center stage in the conflict. Medvedev, who served as Gazprom's chairman before becoming
president last May, had a phone conversation with Yushchenko last Wednesday and discussed the issue with Gazprom CEO Alexei Miller in Sochi on Friday.

In sharp contrast, Putin has been actively and publicly involved in talks, occasionally broaching Russian foreign policy, an area traditionally reserved for the president.

"What we see right now is the dominant role of Putin," said Nikolai Petrov, an analyst with the Carnegie Moscow Center. "We see him as a real head of
state and its representative vis-a-vis the European Union and Ukraine. "This is not surprising. We are still living in Putin's Russia," Petrov
said.

LINK: http://www.themoscowtimes.com/article/600/42/373442.htm
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14. GAZPROM STOPS GAS DELIVERIES TO UKRAINE - WHAT NEXT?
Murky role of RosUkrEnergo once again surfaces in Russia-Ukraine gas dispute

Analysis & Commentary: By Roman Kupchinsky
Eurasia Daily Monitor, Volume 6, Issue 1
Jamestown Foundation, Wash, D.C., Monday, January 5, 2009

On the morning of January 1, OAO Gazprom, the Russian state-owned gas monopoly, in league with the Russian government, decreased the volume of gas shipped to Ukraine by 90 million cubic meters a day—the amount that Ukraine had contracted for in 2008.

Gas shipments of 300 million cubic meters per day for European customers, shipped via the Ukrainian trunk pipeline, were not affected at first; but on January 2 Hungary, Bulgaria, and Poland began recording drops in pipeline pressure and slight disruptions in supply, while Romania reported a gas decrease of 30 to 40 percent.

In November 2008 Gazprom announced that it would stop gas deliveries to Ukraine on January 1, 2009, unless Kyiv settled all its accounts for gas delivered in 2008, including late payment penalties. Throughout December the two sides could not reach an agreement and did not sign a contract for 2009 gas deliveries.

The issues dividing the two countries were discussed in closed negotiations but with both parties resorting at the same time to public statements and threats as a means of applying pressure on each other.

Ukrainian arrears of $2.1 billion appeared to be the primary reason for the cutoff. The Ukrainian state-owned energy company Naftohaz Ukrainy claimed, however, that the money was owed to RosUkrEnergo (RUE), a Swiss-based intermediary company, 50 percent of which belongs to Gazprom and 50 percent to two Ukrainian businessmen.

Gazprom insisted that the money was owed to them. On December 31, 2008, Naftohaz stated that the debt had been paid in full. Gazprom spokesman Sergey Kuprianov disputed this and claimed that the Ukrainian side still owed $614 million dollars in late charges.

RosUkrEnergo, which was made a middleman for gas supplies to Ukraine at Gazprom’s insistence in January 2006, has been the center of a continuing conflict between Ukrainian Prime Minister Yulia Tymoshenko and Gazprom. Tymoshenko has called the Swiss company a “criminal scheme” (Interfax Ukraine, December 27, 2007) and vowed to force it out of the Ukrainian market.

Gazprom’s price for gas to Ukraine in 2009 is the second major conflict between the two sides. Gazprom management has quoted several possible prices. CEO Alexei Miller said in December that Ukraine would pay $450 per 1,000 cubic meters in 2009. During the unsuccessful negotiations, Gazprom demanded $250, which the Ukrainians rejected, making a counteroffer of $208. Miller responded that since they had rejected $250, they would pay $418.

On January 1 Oleh Dubyna, the head of Naftohaz Ukrainy, offered to buy Russian gas for $235 contingent on a price increase for transporting Russian gas to Europe from the current $1.70 per 1,000 cubic meters per 100 kilometers to $1.80 (RIA Novosti, January 1).

Russian Prime Minister Vladimir Putin rejected this increase and insisted that transit fees were locked into a contract that is due to expire in 2010 (UNIAN press agency, January 1). The next day Ukrainian President Viktor Yushchenko and Tymoshenko made a joint public statement on the crisis in which they upped the proposed transit price to “not less than $2.00” (Ukrayinska Pravda, January 3).

Hidden behind the posturing and threats made by each side in the dispute are issues that deserve to be examined. One of the long-standing points of contention in the Ukrainian-Russian gas trade is the use of intermediary companies such as Eural Trans Gas and its successor RosUkrEnergo.

These highly lucrative opaque companies, alleged to be the brain child of former Gazprom deputy CEO Yuriy Komarov, do not own any gas fields or pipelines, yet Gazprom has insisted on their inclusion in the Ukrainian market since 2002, despite the fact that their role as intermediaries has never been clearly explained and the people involved in these schemes have admitted to ties with Russian organized crime figures. Some suspect that the money earned by RUE goes to line the pockets of high Gazprom and Kremlin officials.

The Tymoshenko faction in the Ukrainian parliament has vowed to rid the market of RosUkrEnergo, yet the company seems to enjoy the highest levels of protection in the Kremlin and, some speculate, has close relations with Yushchenko. Tymoshenko fears that Gazprom, by claiming that the Ukrainian debt has not been paid in full, is seeking a way to keep RosUkrEnergo in place. Her concerns might well be justified.

A second hidden factor is the Kremlin’s dislike for both Yushchenko and Tymoshenko and their pro-Western agenda. By cutting off gas the Kremlin might be attempting to show Ukrainians that their quarrelsome leadership is incapable of dealing with Russia on such a critical question as energy supplies.

If the gas shutoff succeeds in discrediting the Tymoshenko government (Yushchenko’s approval ratings are so low that the gas situation would have no impact on him) then the pro-Russian opposition Party of Regions could find itself getting a needed boost in popularity.

The third aspect of the conflict is the struggle by the Kremlin clan for popularity among Europeans—as well as Russians. With the price of oil and gas dropping and the Russian budget predicted to have a deficit in 2009, the Kremlin would dearly love to pin the blame for its woes on Kyiv.

Gazprom emissaries and Western PR companies hired by Gazprom have been ordered to explain Russia’s side of the conflict and to demonize the Ukrainian leadership, while Russian media reports continuously repeat unsubstantiated reports that Ukraine is once again stealing Russian gas.

What can happen next? The Ukrainian side has more than enough gas in storage to weather out the storm of non-supply and make the case that they are being victimized by Putin and Gazprom. Gazprom, on the other hand, stands to lose billions of dollars in potential revenue by not selling to Ukraine and placing supplies to Europe in jeopardy.

If the Russian strategy is both to discredit the Tymoshenko government and to keep RUE in place, the European outcry might be loud and bitterly anti-Russian as was the case in January 2006 when Gazprom cut off gas to Ukraine for the same alleged reasons as in January 2009. (http://www.jamestown.org)

15. GAZPROM LOSING $120 MILLION DAILY OVER UKRAINE GAS ROW

Letter-To-Editor, By Ethan S. Burger, Adjunct Professor,
Georgetown University Law Center, Washington, DC, US

Sir, Article 15(4) of the Russian Constitution provides that "Commonly recognized principles and norms of international law and the international treaties of the Russian Federation shall be a component part of its legal system".

When Gazprom uses natural gas as a political instrument against European Union members and other states as a means to influence the outcome of its dispute with Ukraine, even though it may be acting at the behest of the Russian government, it runs the risk of running afoul of commonly accepted principles of private international law as well as applicable competition or anti-monopoly legislation.

The Russian state exercises effective control over Gazprom. Thus, depending on the text of the relevant energy gas supply contracts, Gazprom may be found liable for causing harm to its customers and also be subject to sanctions established by its customers' governments.

If the arbitrator(s) or foreign judge(s) as well as foreign governments determine that Gazprom may discover that it must pay direct and consequential damages to its damages as well as fines or other sanctions the relevant governmental body.

Potential plaintiff(s)/foreign governments are almost certainly aware that Gazprom has significant assets located outside of Russia to pursue. Gazprom's management and the Russian government seem oblivious to this scenario.

LINK: http://www.ft.com/cms/s/0/9aa5f218-e04a-11dd-9ee9-000077b07658.html

Geoff Berlin, Chairman, Democrats Abroad Ukraine, Kyiv

Action Ukraine Report (AUR), Wash, D.C., Monday, January 12, 2009

KYIV - Join Americans and guests from all over the world to celebrate the Inauguration of Barack Obama, the 44th President of the United States of America, Tuesday, January 20, 2009 at the Hyatt Regency Kyiv.

6 p.m. reception hosted by the U.S. Embassy. Watch live coverage of the Inaugural Ceremony and parade on big screens.

8 p.m. to midnight: sit-down dinner, with an exciting an exciting entertainment program with dancing, including Hobart Earle, the American music director of the Odessa Philharmonic Orchestra, and Gaitana, who received awards for best female performer and best album at the 2008 Ukrainian Music Awards.

Your participation will also help benefit the Komarikva orphanage, Chernihiv oblast.

Black tie optional. Tickets for $90 each. Advance payment required.

Reservations: inaugural-ball@democratsabroad.org.ua, Tel. +380 67 502-2858

NOTE: Geoff Berlin, Chairman, Democrats Abroad Ukraine, Kyiv, Ukraine
GeoffBerlin@democratsabroad.org.ua; http://www.democratsabroad.org.ua
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By Yaro Bihun, Special to The Ukrainian Weekly, No. 51, Page 1

Ukrainian National Association, Parsippany, NJ, Sun, Dec 21, 2008

WASHINGTON - The U.S.-Ukraine Business Council (USUBC), an association devoted to enhancing trade and investment relations between the two countries, has reached its goal of having 100 member-companies by the end of 2008. And that member is the world's leading developer and producer of computer operating systems and programs - the Microsoft Corp.

That announcement was made here on December 17 by Morgan Williams, at a luncheon during the USUBC's annual meeting in Washington. The meeting also re-elected Mr. Williams as the group's president and CEO.

The USUBC is the largest Ukrainian business related trade association outside of Ukraine. Since its founding in 1995 it has promoted the strengthening of U.S.-Ukraine bilateral cooperation in business, trade and investment.

Microsoft, the creator of the Windows computer operating system and Office program that now dominate the world’s personal computers, now joins with other U.S. corporations in that effort, among them such well-known companies as Boeing, Coca-Cola, General Dynamics, Halliburton, Kraft Foods, Lockheed Martin, Northrop Grumman, Pratt & Whitney – Paton, Proctor and Gamble and 3M, as well as many smaller less-recognizable companies and such non-commercial institutions as the Kennan Institute, Woodrow Wilson International Center for Scholars, the U.S.-Ukraine Foundation and the Ukrainian American Bar Association, among others.

Introducing Microsoft’s senior director of global trade policy and strategy, Dorothy Dwoskin, Mr. Williams noted that Microsoft is already active in

Ukraine, with more than 150 employees dealing primarily with intellectual property issues. Ms. Dwoskin, in her brief remarks, added that Microsoft is also trying to help Ukraine develop its local computer economy.

The luncheon, attended by representatives of USUBC member-organizations and diplomatic and other representatives of the two countries, also heard greetings addressed to the organization from high U.S. and Ukrainian officials, as well as analyses of the current world economic crisis and its ramifications in Ukraine by representatives of the International Monetary Fund and a Washington think-tank.

Ukraine’s ambassador to the United States, Dr. Oleh Shamshur, presenting greetings and expressions of gratitude to the USUBC from President Viktor
Yushchenko, expressed his own hope that “we will weather the current situation together and we’ll find the way out in the quickest and the safest possible way of the dire straits of the world economy.”

President Yushchenko’s former ally, Prime Minister Yulia Tymoshenko, in her message to the group thanked its members for promoting “the right business
practices” in Ukraine. “I ask you to lead by example and help us to move forward in Ukraine,” she said in her message, read by Ron Slim of TD International.

There were also greetings from the U.S. Ambassador to Ukraine, William B. Taylor, Secretary Carlos M. Gutierrez of the Department of Commerce and
Ukraine’s First Lady Kateryna Yushchenko, who thanked the American companies for their commitment to improving the lives of Ukrainian citizens
and called on them to continue to do so by supporting Ukrainian health, education, cultural and arts organizations. “This is particularly necessary now, as the less fortunate sections of our society particularly feel the brunt of the world and national financial crisis,” she noted.

The effect on Ukraine of the current world economic crisis – on a day when the exchange rate for a U.S. dollar surpassed 9 hrv in Ukraine – were addressed in more detail by two representatives of the International Monetary Fund – its alternative executive director, Yuriy Yakusha, and mission chief for Ukraine
and the European Department Division, Ceyla Pazarbasioglu – and Anders Aslund, senior fellow at the Peterson Institute for International Economics in
Washington.

Mr. Yakusha said that no other country in the world equalled the “staggering” drop Ukraine experienced in its Gross National Product in November. He noted, however, that the IMF responded to Ukraine’s request for assistance with “unprecedented speed,” and the $4.5 billion Ukraine received from the IMF gave it “some breathing space.”

Ms. Pazarbasioglu added, however, that the IMF cannot do it alone. There is a need for foreign investment and other measures if Ukraine is to come out of this crisis intact, she said. On the other hand, she said, this crisis can be an opportunity to reform. But it is a global phenomenon in which country-specific
solutions will not be sufficient, she said. “I think that the solutions have to be regional and global.”

What Ukraine is going through is “almost like a perfect storm,” she said. Steel prices are down, and steel accounts for about 40 percent of Ukraine’s

exports. “Going forward, what is desperately needed in Ukraine is a coherent set of measures, a vision of how this crisis will be overcome, and a good way to articulate it to the public,” she said. “Different statements by different parties do not help. It creates a lot of confusion.”

Like Ms. Pazarbasioglu, Mr. Aslund also saw a possible positive result from this crisis for Ukraine. Despite the “tremendous blow” of the 25 percent loss of its steel exports and the massive GDP drop in November, he said, this crisis could move Ukraine to get it right by developing other industries, moving more toward manufacturing and becoming more diversified, and by turning from the Russian market toward Europe. “This could turn Ukraine much more into a middle-class society and less an oligarchic society,” he stated.

LINK: The Ukrainian Weekly, Editor-in-chief: Roma Hadzewycz, staff@ukrweekly, www.ukrweekly.com, two photographs are shown.

EDITORIAL: By Katya Gorchinskaya, a Kyiv Post Editor

Kyiv Post, Kyiv, Ukraine, Thursday, December 18, 2008

Not even an economic crisis can bring a shred of probity to the nation’s leaders

They just don’t get it, do they? The budget leeches continue living as if nothing is happening – as if no kids are dying in hospitals because electricity and heat are switched off because of debts; as if families are not defaulting on their dollar loans because their incomes no longer cover loan obligations; as if industry is not sinking further into recession, sending thousands – if not millions of people – into despair.

Officials keep gorging themselves on taxpayers’ money remorselessly. We’re not even talking here about the billions siphoned off on the gas trade and other shady schemes. We’re talking about bureaucrats’ never-ending sense of entitlement and obliviousness to the toughened financial circumstances of the people they are supposed to be serving.

Earlier this month, the Central Election Commission head tried to set a limit of 3,000 kilometers for the use of official cars monthly. It means that all 15 commissioners can travel 130 kilometers per day in a government-owned car at no cost. According to the proposed regulation, CEC members would be allowed to travel anywhere during their working hours. Business trips at other times would have to be approved by the CEC chief.

Seems fair to me. If you want to use a corporate car outside of your work hours and for personal reasons, ask your boss if you can do it. If your job takes you outside the office during the day, the set limit would be impossible to use up, no matter how hard you try.

But the CEC members revolted. They said the new regulation violates their rights. “[By law, CEC officials] are provided with personal official automobiles … round the clock, without any limitations for their use,” they said in an indignant letter, demanding restoration of their "rights."

Another outrageous parliamentary expense was chronicled by Delo newspaper. The Rada spent Hr 180,000 on a new car-painting center for its vast fleet of Mercedes, Opels and Toyotas. Many of the 450 deputies, of course, are entitled to have a government-owned car and a driver. The speaker gets two convoy cars with drivers on top of that.

It was a very strange purchase, considering that all Rada cars are fully insured and have full maintenance coverage, including repainting. This expense was justified as coming within the Rada’s annual budget of Hr 10 million specifically set for spare parts, new cars and other car-related expenses. But was it really moral or justified? Did it make any sense?

The news of extravagant expenses came at the same time as the Rada amended this year’s budget, increasing both income and expense targets, and widening the deficit by Hr 2.3 billion to Hr 17.2 billion. These amendments came amid loud complaints by the Finance Ministry and tax authorities about a sharp drop in tax collection in the last two months. In fact, tax rates are so low at the moment that nobody really knows what to do.

But news of absurd expenses didn’t end there. The president’s secretariat announced on Dec. 15 that Victor Yushchenko will only sign next year’s budget if it sets money aside for an early parliamentary election. It will cost the country at least Hr 400 million to re-elect this over-sized, over-fed bunch of pompous louts.

This figure is an outdated estimate, so the actual expenses of a new election would be much higher. Why the president needs to set aside money for an election is a mystery to most people, since the president’s demand – a new coalition – has been met by the Rada deputies, including his own faction. OK, he doesn’t like this particular coalition – but so what? It’s no reason to waste budget money to re-elect the same old gang to parliament once again.

Paradoxically, the only person who is complaining publicly about overblown and careless government spending is Party of Regions leader Victor Yanukovych. He called for the Cabinet of Ministers to reduce its expenses by 90 percent. This is populist nonsense, of course, but he’s moving in the right direction on one thing at least.

What does it take to bring reality to those who think that fat budgets, salaries and perks are their entitlements? A third of the country may soon be jobless. Those who were poor are now destitute. Those who were confident are now in panic. Everyone is tightening their belts. So should those who are running the show. But these pigs are too busy with their snouts in the feedlot to notice that the trough is running dry.

LINK: http://www.kyivpost.com/opinion/op_ed/32135

Analysis & Commentary: by Taras Kuzio, Special to Kyiv Post

Kyiv Post, Kyiv, Ukraine, Thursday, December 18, 2008

In November, Ukraine commemorated the 75th anniversary of an artificial famine that claimed more than four million lives. The official commemoration – timed to coincide with Liberty Day, a holiday established four years ago to celebrate the Orange Revolution – was attended by 44 foreign delegations, including four European leaders.

Russia’s rehabilitation of Stalinism that began under Vladimir Putin precluded an official Russian presence and President Dmitry Medvedev refused to attend the commemoration. Anger over President Victor Yushchenko’s criticism of Medvedev’s snub has probably led to a new gas war and exposed sensitivities over the past. Yushchenko called upon Russia to follow Ukraine’s path in denouncing Stalinist crimes committed on Russian territory.

Medvedev’s refusal to attend Ukraine’s famine commemoration contributed to the daily war of words between both countries. Ukraine’s image in Russia is now the worst it has ever been since the disintegration of the Soviet Union.

Diverging attitudes towards Soviet crimes against humanity have expanded the list of the more commonly known areas of conflict between Ukraine and Russia, such as NATO membership, energy, the Crimea, the Russian Black Sea Fleet and the status of the Russian language.

How a country relates to its past is a mirror image of what kind of regime it is building. And here, Ukraine’s condemnation and Russia’s rehabilitation of Stalinism are indicative of the growing divergence. Think of the alarms that would have gone off if, two decades after the defeat of Nazism, Germany conducted a state-sanctioned rehabilitation of Adolf Hitler and the country was led by a former Gestapo officer?

In Russia, in the second decade after the fall of communism, the country is led by a former KGB officer, while the U.S.S.R. and Josef Stalin are back in vogue.

Yushchenko has taken personal leadership in reviving the historical memory of famine as a crime against humanity, both inside Ukraine and internationally.

But it would be wrong to believe that the famine issue is only promoted by Ukrainian nationalists. The famine issue has been consistently raised by all three Ukrainian presidents who had already laid the groundwork in denouncing Soviet crimes and the famine. Yushchenko is, therefore, no more of a nationalist on the famine question than his two predecessors.

Yushchenko’s greater determination to revive memories about Soviet crimes committed in Ukraine builds on a long-established process. Ukrainian diaspora began the process of setting the record straight and reviving historical memory on the 50th anniversary, in 1983, at a time when the Soviet Union was historically revisionist in claiming there had never been a famine.

In the 1980s, the United States established a government commission headed by James Mace to study the famine. The well-known historian of Soviet crimes, Robert Conquest, authored the book “Harvest of Sorrow.” Later in the 1980s, Ukrainian intellectuals took up the process of reviving historical memory during Soviet leader Mikhail Gorbachev’s perestroika.

Russia’s refusal to heed Yushchenko’s call for a mutual recognition of the famine as genocide says a lot about the rehabilitation of Stalinism under Putin. Russia supported calls five years ago by President Leonid Kuchma to recognize the famine as genocide. Ukraine’s position on Soviet crimes has, therefore, not changed. Under Putin, Russia has moved from condemnation to celebration of Stalinism.

In the first decade after the fall of Soviet communism, President Boris Yeltsin continued the denunciation of Stalinism that had begun under Gorbachev. Putin radically reversed Russian attitudes towards the “greatest tragedy of the 20th century,” as he defined the collapse of the U.S.S.R. Next came a complete rewriting of Soviet history. Crimes against humanity were studiously ignored. Stalin was praised as the Soviet leader who transformed the U.S.S.R. into a respected and feared superpower.

Most telling is the different treatment of history in school textbooks. For the last two decades, Ukraine’s textbooks have taught new generations of schoolchildren about the horrors of Soviet crimes against humanity. Opinion polls show that this educational work has reinforced negative attitudes towards extremism and totalitarianism. Young Ukrainians overwhelmingly are pro-Western, wish to see their country inside NATO and supported the Orange Revolution.

In Russia, school textbooks were rewritten under Putin to ignore Soviet crimes in the 1930s and instead focus on Stalin as the great leader of the 1940s. The result has been that a new generation of Russians has accepted the rehabilitation of the U.S.S.R. and Stalin. Young Russians will become Russian leaders in the not-so-distant future, taking with them their neo-Soviet attitudes and a view of Russia as a great power.

Young Russians flock to nationalist youth groups such as Nashi and hold negative views about the Orange Revolution as a U.S.-backed conspiracy against Russia. It is little wonder that a majority of young Russians hold anti-American views or that an overwhelming majority of Russians supported the invasion of Georgia. Young Ukrainians do not hold anti-American views and did not support the invasion.

Ukraine and Russia’s diverging paths began before the Orange Revolution, but have deepened after Yushchenko’s ascent to power four years ago. Russia’s rehabilitation of Stalinism stands in stark contrast to Ukraine’s condemnation of Soviet crimes against humanity.

This shows the difference between an authoritarian, neo-Soviet Russia and a still young and imperfect – but nevertheless democratic – Ukraine. Ukraine has taken the right path by following post-war Germany in repudiating totalitarianism.

LINK: http://www.kyivpost.com/opinion/op_ed/32132

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26. BULLET NO. 188: VALERIAN PIDMOHYLYN'S LAST JOURNEY

By Yurii Pshenychny, Dipropetrovsk
The Day Weekly Digest in English, #36, Kyiv, Ukraine, Tue, 18 Nov 2008

"We came out of the past and now long for it. Loving a nation is also longing for the past. Reminiscence is the core of a nation. Only he who is psychologically linked with the past of a nation can be part of it." Valerian PIDMOHYLNY, Nevelychka drama (A Little Drama)

November 3 marked the 71st anniversary of the tragic death of our compatriot Valerian Pid­m­ohyl­ny, a prominent Ukrainian writer, the founder of the Uk­rai­nian school of translation, and one of the most illustrious representatives of Ukraine’s “Exe­cu­ted Re­naissance.”

He was born in an ordinary peasant house that stood on the bank of an eternal river in the middle of a boundless steppe. He spent the greater part of his short life in a city but was destined to die from an NKVD bullet in a primeval forest in the Far North.

Pidmohylny was arrested on Wednesday, December 8, 1934, at a writers’ country retreat in Zankiv (Zmiiv district, Kharkiv oblast), on the bank of the legendary Greater Don (as the Donets was called at the time) that had witnessed the notorious battle between Prince Ihor’s army and the Cumans. According to Mikhail Goigel-Sokol, a re­sear­cher of The Tale of Ihor’s Campaign, it is here, on the bank of the legendary Kaiala River, that this historic battle ended.

The Tale’s tragic message pierces, like a deadly thunderbolt, through our entire history. The fight against the pagans, which our distant forefathers launched, has been raging for centuries on end. It is still going on. On that day, the pagans came to take his soul and sacrifice it to their ideological idol. For Pidmohylny, this tormenting rite of sacrifice lasted for almost three years.

In the last moment of his life on this earth, he could only see a deep and wide pit, already filled with his mates executed at the Solovki camp, tall pine-trees, and the sky. We cannot say for sure if he saw the sun and if it was shining on his last path, but we do know that he could not look his executioner in the eyes, for he was shot in the back of the head. The butcher loosed into Pidmohylvy the 188th out of the 265 bullets he had shot from his revolver that day.

Pidmohylny was executed on Nov. 3, 1937, in a locality named Sandormokh, near Med­ve­zhe­gorsk, Karelia. In five consecutive days, Security Forces Cap­tain M. Matveyev personally shot 1,111 Solovki prisoners whom a special troika (three-member board) of the Leningrad Regional Di­rectorate of Internal Affairs had sentenced to death on the eve of the 20th an­niversary of the October Re­vo­lu­tion.

There were 190 ethnic Uk­rai­nians among the executed, in­cluding such figures of Uk­rai­nian literature, art, and scholarship as Les Kurbas, Mykola Ku­lish, Mykola Zerov, Marko Vo­rony Jr., Pavlo Filipovych, Hry­ho­rii Epik, Va­le­rian Polishchuk, My­roslav Irchan, Oleksandr Sli­sa­renko. Mykhailo Yalovy, and Matvii Yavorsky. The UNR minister Anton Kru­shel­nytsky and Soviet Ukraine’s Fi­nan­ce Mini­ster Mykhailo Poloz also met their death in the Karelian forests.

The Sandormokh mass grave was international indeed. Among those who found their last refuge in it were people of all the ethnic groups that populated the USSR: Ukrainians, Russians, Bela­ru­sians, Jews, Georgians, Tatars, Udmurts, Germans, Circassians, Koreans, etc.

Resting eternally in the Karelian soil are such representatives of Dnipropetrovsk oblast as the Ukrainians Valerian Pid­mo­hylny and Hryhorii Epik, the Russians-Ivan Petrov, the chairman of the Nikopol Raion Exe­cu­tive Committee, and Oleksandr Prokhorets, a peasant from the village of Nikolske; the Jews-Yurii Kahn and Yosyp Steinberg, a metalworker at the Krasin Plant; and the German Mykhailo Wolf, a Roman Catholic priest.

“By mid-1937, Solovki had gathered the entire cream of the Soviet Ukrainian intelligentsia and Ukrainian Communist circles,” Semen Pidhainy, an eyewitness to those events, wrote in his memoirs.

In the same year, the Bol­she­viks celebrated the 20th anniversary of their revolution. By human logic, the authorities should have declared an amnesty for their political adversaries on the occasion of this date, but Stalin and his henchmen had a logic of their own about this. So, instead of offering prisoners an amnesty or easing their treatment, they decided to eliminate them in order “not to overstrain the state budget.”

The Solovki inmates called this White Sea archipelago a country of torment and desperation. Fortune smiled on very few Solovki prisoners, who managed to survive inhuman horrors. The vast majority of the convicts were doomed to death.

Ukrainians were first exiled to the Solovki islands as far back as in the 18th century. Among the high-profile captives of the Solovki monastery was the last Zapo­ro­zhian Sich kish otaman Pet­ro Kalnyshevsky who was imprisoned there on Catherine II’s orders. The chivalrous hero languished in subhuman conditions for a quarter of a century. Fate decreed that he live to be 112. His ashes rest in the monastery.

Prisoners in Bolshevik camps did not have this chance of longevity. Their life was prematurely cut short by either an incurable disease (as it happened to Pidmohylny’s friend, poet Yevhen Pluzhnyk) or a bullet discharged by an NKVD executioner. The creators of the first Soviet concentration camp offered the inmates no alternative.

We can assert with 100-percent probability that Mykla Kulish and Les Kurbas, the pride of the Uk­rai­nian theater, were shot be­fore the eyes of Pidmohylny be­cause they were 10 prisoners ahead on the hit list. A few minutes later, Finance Minister Mykhailo Poloz witnessed the death of Pidmohylny and was shot next. Their ashes rest in the same pit which the NKVD men probably forced them to dig.

Shortly before his arrest Pidmohylny wrote:

“There must be people who can remember their lifetime as an uninterrupted streak of joy. There are people whose life is full of both joy and sadness. They are perhaps the happiest people because only he who has suffered grief can know what true happiness is.

“I am looking back on my life. Where are my joys? The life I have lived is like a mud-swamped path on which one does not walk or ride but trudges, slowly moving his feet, too weak to shake off the heavy coat of mud. Tired in the first step and exhausted in the next ones, I am looking for a bright spot on the path I have walked but cannot find one.”

These words were written by an individual who reached the age of Jesus Christ and, maybe, like the Savior, had a presentiment of his further destiny and its tragic finale. The epoch he lived in afforded him less than half of average life expectancy. He belonged to the generation of the doomed.

His generation, like no other, was doomed to death as is vividly evidenced by the history of the first half of the terrible 20th century. These people died in the First and Second World Wars, the Civil War, and the man-made famines of 1921 and 1933 and were exterminated in Stalin’s torture chambers and prison camps.

This generation also included my grandfathers, Nikandr Pshe­nych­ny and Platon Chornovil, who vanished in the dark age of Stalinist repressions in 1938. My grandmothers Ustynia and Maria had to raise my parents and their brothers and sisters in hardship. I know about those tragic years from my grandmother Maria and her next of kin rather than from books or films.

Still, in spite of hardships, they had a place to live in and did not have to eke out an existence, as it happened to Pidmohylny’s family after he was convicted. His wife Kateryna Chervinska and son Roman did not have a place to live and were forced to live outside Ukraine. The same lot befell the families of other convicts.

The system tried to do all it could to have this person’s name forgotten. Even after the official rehabilitation during the thaw, literature barons did their utmost to keep the writer’s works away from the reader.

It was only during perestroika, shortly before the Soviet Union collapsed, that our compatriot’s books began to come out. His creative legacy consists of two bigger and two smaller novels and several dozen short stories. Pidmohylny could only live a full-blooded literary life in the period of Uk­rai­nization which was cut short in the late 1920s. After his novel Misto (The City) appeared in print and its Russian translation was published in 1930 in Moscow, the newspaper Pravda carried a devastating review and the writer’s books were published no more.

Pidmohylny could only keep his family afloat by translating classical and contemporary French literature. He was a past master at this. If his life had taken a different course and he had lived to be over 80, as his elder sister Anas­tasia did, we would have translations of nearly all of French literature — from its beginnings to modern times — because Pidmohylny was remarkably industrious.

Pidmohylny’s oeuvre is one of the brightest pages in Ukrainian and European literature. He is a reputed master in the genre of psychological prose. The writer gave a talented portrayal of the epoch he lived and worked in. But the system did not need artists who could not fit the Procrustean bed of communist ideology. People with a different outlook stood in the way of the system, so the latter would destroy them.

Pidmohylny loved cities and was an urbanist writer. His lifetime and creative path are linked with Ukraine’s three largest cities: Katerynoslav, Kyiv, and Kharkiv. He portrayed these cities and their residents on the pages of his books.

Yes, he loved cities, but cities did not love him, especially Ka­te­ry­noslav (now Dnipropetrovsk), where he began his life and career. It would be profanation of Pid­mo­hyl­ny’s blessed memory to call this megalopolis the writer’s native city.

Neither Dnipropetrovsk nor Kyiv or Kharkiv, the two capitals of Ukraine at different times, have commemorated him with at least a simple plaque, let alone a monument, which would indicate that the writer lived, studied, and worked in a particular building. And yet in each of these cities there are buildings associated with his life.

In his short lifetime, Pid­mo­hyl­ny suffered from many injustices, but the biggest injustice occurred in our times, when Uk­rai­ne emerged as an independent state. And you cannot shift the blame to Stalin’s cult in this case. The city of his childhood and youth does not want to remember its outstanding resident, and this loss of memory is nothing but mankurtism (a term popularized by the Kirghiz author Chinghiz Ait­matov in a tale about what happens to those who forget their motherland and history — Ed.).

P. S. This writer is sincerely grateful to the individualswho have supported his idea of marking the centenary of Valerian Pid­mo­hylny’s birth: Valentyna Talian, former head of the De­part­ment of Culture at the Dnipropetrovsk Oblast Admini­stration; Leonid Hamolsky, former editor in chief of the newspaper Zoria; and Mykola Zhylynsky, director of the Taras Shevchenko Institute of Literature, who held the office of vice premier for humanitarian issues at the time. Thanks to the effort of these and many other people we were able to celebrate this landmark date in a worthy fashion.

LINK: http://www.day.kiev.ua/257141/

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