"UKRAINE REPORT-2004"
In-Depth Ukrainian News and Analysis
"The Art of Ukrainian History, Culture, Arts, Business, Religion,
Sports, Government, and Politics, in Ukraine and Around the World"

"The overwhelming majority of Ukrainians favor a national election of
the President of Ukraine, rather than an election by the parliament. A poll
by the Democratic Initiatives and SOCIS shows that 88.7 % of adult
Ukrainians prefer election of the president by national vote rather than
by the lawmakers." [article two]

"UKRAINE REPORT-2004," Number 10
U.S.-UKRAINE FOUNDATION (USUF)
www.ArtUkraine.com Information Service (ARTUIS)
morganw@patriot.net, ArtUkraine.com@starpower.net
Kyiv, Ukraine and Washington, D.C., Tuesday, January 20, 2004

INDEX OF ARTICLES

1. THE YEAR OF CRUCIAL CHANGES
COMMENTARY by Yuri Scherbak
Ambassador Extraordinary and Plenipotentiary of Ukraine
Published by "UKRAINE REPORT-2004," Number 9
www.ArtUkraine.com Information Service (ARTUIS)
Kyiv, Ukraine, Tuesday, January 20, 2004

2. 88.7% OF UKRAINIANS FAVOR NATIONAL ELECTION OF
THEIR PRESIDENT BY THE PEOPLE AND NOT BY PARLIAMENT
Ukrayinska Pravda, www.pravda.com.ua, Kyiv, Ukraine, Jan 19, 2004

3. THREATS OF FORCE USED TO COMPEL THE OPPOSITION TO
VOTE FOR INTRODUCTION OF AMENDMENTS TO CONSTITUTION
www.Glavared.info, Chief Editor, Kyiv, Ukraine, January 19, 2004

4. MAIN GOAL OF POLITICAL REFORM IS TO RID UKRAINE OF
THE REMNANTS OF THE AUTHORITARIAN SOVIET SYSTEMS
According to Viktor Medvedchuk, Head of the Presidential Adminstration
Inter TV, Kiev, in Ukrainian, 19 Jan 04
BBC Monitoring Service, UK, in English, Jan 19, 2004

5. UKRAINIAN TOP ECONOMIC OFFICIAL RESIGNS STATING
EXECUTIVE POWER IS AILING AND INEFFICIENT
Urges Radical Administrative Reform
Interfax-Ukraine news agency, Kiev, in Russian, 19 Jan 04
BBC Monitoring Service, UK, in English, Jan 19, 2004

6. UKRAINE HARVESTS CRIME AFTER POOR GRAIN CROP
By Pavel Polityuk, Reuters, Kiev, Ukraine, Sun, January 18, 2004

7. TENSION GROWS
COMMENTARY by Vlad Lavrov, political writer, Kyiv, Ukraine
Published by the "UKRAINE REPORT-2004"
www.ArtUkraine.com Information Service (ARTUIS)
Kyiv, Ukraine, Tuesday, January 20, 2004

8. UKRAINE JOINING NATO DEPENDS ON PRESIDENTIAL ELECTION
No Improvement in US-Ukraine Relations As Long As Kuchma Is In Power
Eastern Economist Daily (EED), Kyiv, Ukraine, January 20, 2004

9. CONSULTANT'S VERDICT ON ODESSA-BRODY POSTPONED
[To Reverse or Not to Reverse, That is the Question]
Interfax-Ukraine, Kyiv, Ukraine, January 17, 2004

10. UKRAINE UPS INDUSTRIAL OUTPUT BY 15.8%
Interfax-Ukraine, Kyiv, Ukraine, January 19, 2004

11. COUNCIL OF EUROPE CRITICIZES UKRAINE
Associated Press, Kyiv, Ukraine, Jan 19, 2004

12. UKRAINE APPEALS RULING OF CANADA COURT ON DEBT DISPUTE
ITAR-TASS, Moscow, Russia, January, 19, 2004
=========================================================
UKRAINE REPORT-2004, No. 10: ARTICLE NUMBER ONE
=========================================================
1. THE YEAR OF CRUCIAL CHANGES

COMMENTARY by Yuri Scherbak
Ambassador Extraordinary and Plenipotentiary of Ukraine
Published by "UKRAINE REPORT-2004," Number 9
www.ArtUkraine.com Information Service (ARTUIS)
Kyiv, Ukraine, Tuesday, January 20, 2004

At the end of 2003 France was commemorating the 500th anniversary of
Michelle Nostradamus, an astrologer and prophet. Thanks to the skillfulness
of contemporary interpreters, the mysterious verses of Nostardamus are put
into the specific political language of today. Thus, mentioning the defeat
of an unknown Southern king can always be interpreted as the prophesy of
Saddam Hussein's fate.

Regarding Ukraine, one does not have to be a Nostradamus to foresee that
the year 2004 will become one of the crucial years in the modern history of
the young state which will influence the development of Ukraine in the first
quarter of the XXIst century.

In 2004 in Ukraine the following will simultaneously be taking place:

- political reform with the switching to the parliamentary-presidential
model;
- presidential elections in the condition of heavy confrontation from the
competitors;
- further increase of Russia's pressure with the purpose of the ultimate
"tying" of Ukraine to the Euro-Asian common space, and to the fuel and
energy transportation "liberal" empire created by Moscow, in which Ukraine
will be given a part of a subdued, ruled from a single center province.

The seriousness of Ukrainian problems in 2004 will be characterized by
twisted and difficult to forecast situations with each of the above points.

The political reform, due to its incomplete nature and being aimed at
serving the interests of a small group of people who want to remain in
power, contains several dangerous points that are not yet fully comprehended
by Ukrainian political circles. The reform was put together in haste,
without a thorough, long term forecast of what its consequences might cause,
destabilization of the system of power. It might be appropriate to compare
it with a change in genetic code: changing a single part of it might create
new, unseen before biological forms, including mutants not capable of
living.

It is not hard to foresee aggravation of the political reform battles in the
Verkhovna Rada. In 2004 the Parliament will practically remain the only
working branch of Ukrainian democracy, whose historical significance and
responsibility to the people will increase drastically. One would want to
believe that the pro-governmental majority will show responsibility for
Ukraine's fate and abstain from passing the decisions aimed to please a
group of people capable of anything to preserve their administrative and
financial power.

Let's hope that the opposition which suffered the series of defeats in 2003,
will find more effective arguments to the current regime than the wailing of
sirens and blocking podium in the Verkhovna Rada. Only well-thought of
and intellectually brave initiatives, clearly understood by the whole
society, will give the opposition a chance to be heard by the people.

But the main thing is that the Verkhovna Rada will not fall prey to
political provocations and will remain a normally working branch of the
legislative power with significant controlling functions. Year 2004 gives
the Verkhovna Rada the chance to become once again like in 1990-1991
the center of political life of the country, where the most important
decisions are passed in an open and transparent manner.

The course and nature of the presidential elections will largely depend upon
whether or not the President, L. Kuchma, takes part. Passing by the
Constitutional Court the unprecedented, lacking any legal logic and common
sense, decision allowing L. Kuchma to be elected president for the third
term might significantly worsen the situation in Ukraine, not to mention a
highly negative reaction of the international community. We can only hope
that the president himself will demonstrate political wisdom and keep his
word not to seek reelection.

The presidential campaign in Ukraine will lead to an increase in Russia's
pressure on Ukraine: most of the candidates will flirt with Moscow, assuring
brotherly friendship and creating the illusion of the pro-Russian stance
of Kyiv with the purpose of getting support during the elections from the
northern neighbor. The other thing is to what extent these assurances will
be followed up after the elections.

Yet, one cannot doubt that the harsh strategy of Moscow towards Ukraine
which was continuously demonstrated in 2003 through the method of "whip and
carrot" (the "whip" is the conflict over the Tuzla island in the Kerch bay;
the "carrot" is the promises of a free-trade zone between the two
countries), will only become tougher in 2004 when the agreement on Common
Economic Space will need to be ratified, or when it is time to make the
decision on the gas transportation consortium on Ukraine's territory.

Analyzing the tough and coherent Russian policy towards Ukraine, one should
keep in mind the ambitious geopolitical plan of Moscow to build (with
Western, mainly US support) the world fuel and energy transportation
"liberal" empire, the supplier of oil and natural gas to the USA, Japan,
China, Turkey, and Western Europe. In such an empire, Ukraine would be a
very important adjoining part on its South-Western borders. Ratification of
the Common Economic Space agreements would be a serious sign of Ukraine's
entering a new geopolitical formation which might ruin all plans of
Euro-Atlantic integration.

And what about the West, what is their response to the challenges of year
2004 regarding Ukraine? There is very limited maneuvering space
considering the cold calmness (if not indifference) of the EU leaders to
Ukraine. It may all end up with appeals for transparent elections in
Ukraine, not more than that.

The gradual warming up of the US-Ukraine relations since the Ukrainian
peacekeepers have taken part in the Iraq campaign gives us a little more
hope. The US support of Ukrainian attempts to join the NATO could
become an important aspect of restoring the balance in the Central and
Eastern European region.

But strategically the USA has yet to determine more clearly their
geopolitical vision of the future of Ukraine and of the Central and Eastern
European region as a whole. And even though the presidential elections in
the USA in 2004 make it a hardly suitable period for geopolitical projects,
there is no time for hesitation.

The loss of Ukraine as a strategic partner of the USA might have long-term
negative consequences, the significance of which may not be fully realized
until 2025-2030.

But not everything is yet lost today: one only needs to reflect upon the
situation that we have at the beginning of 2004, and make the responsible
decisions regarding the future of Europe, so that it is not divided into
empires and enemy blocs. (END) (ARTUIS)
----------------------------------------------------------------------------
EDITOR'S NOTE: Dr. Yuri Scherbak was born in Kyiv, Ukraine on October
12, 1934. He graduated from Kyiv Medical University in 1958, and has both
Ph.D. and D.Sc. degrees in epidemiology. He is a member of the National
Academy on Environmental Sciences of Ukraine and honorable member of
Scientific Studies Institute of Harvard University.

Dr. Scherbak began his active political career in 1989 when he won a seat in
the USSR Supreme Soviet, where he was a close associate of Dr. Andrei
Sakharov. As an opposition leader and chairman of the subcommittee on energy
and nuclear safety, Dr. Scherbak initiated and led the first parliamentary
investigation of the Chernobyl accident and the nuclear catastrophes in
Semipalatinsk and in the Urals.

Never having been affiliated with the Soviet Communist Party, he founded and
became the leader of the Ukrainian Green Movement (organization which united
more than 500 Ukrainian NGOs) in 1988 (it became the Green Party in 1990).

In 1991, he was appointed minister of environmental protection of Ukraine,
and a member of the National Security Council. He was Ukraine's first
Ambassador to Israel in 1992 and remained in that post until November, 1994,
when he was appointed Ukraine's Ambassador to the United States.

In 1997 he was appointed Ukraine's first ambassador to Mexico (concurrent
with his service as Ambassador to the United States). In November 1998 Dr.
Yuri Scherbak finished his duty as Ambassador to the United States and was
appointed Adviser to the President of Ukraine on International Issues.

>From March 2000 till May 2003 Dr. Scherbak acted as Ambassador of Ukraine
to Canada. Since 1993 he has a diplomatic rank - Ambassador Extraordinary
and Plenipotentiary of Ukraine.

An eyewitness to the 1986 Chomobyl nuclear disaster, Dr. Yuri Scherbak wrote
the sensational expose documentary novel "Chernobyl," which has been printed
in most of the former Soviet republics and also in the West. The novel was
published in English in 1989. Dr. Scherbak also has written extensively on
the Stalinist man-made famine hi Ukraine in 1932-33. In 1998 Harvard
University Press published Dr. Scherbak's book "The Strategic Role of
Ukraine".

As a writer, Yuri Scherbak is a well-known novelist who has authored 20
books of prose, plays, poetry, and essays and more than 200 publications and
interviews on medical, ecological, political and historical issue. He is a
member of Ukraine's Writer's Union and Cinematographers' Union, and was on
the executive board of the Writers' Union from 1987 to 1989. He was been
awarded medals and prizes in literature, medicine, and for his work as a
Ukrainian statesman. Ambassador Scherbak and his wife, Maria, have
two children.
---------------------------------------------------------------------------
Comments about the Scherbak article are welcome to morganw@patriot.net.
This article can be republished with credits to the author Yuri Scherbak, to
"UKRAINE REPORT-2004" Number 9, and to the publisher,
www.ArtUkraine.com Information Service (ARTUIS), Kyiv, Ukraine.
LINK: http://www.artukraine.com/buildukraine/shcherbak2.htm
========================================================
UKRAINE REPORT-2004, No. 10: ARTICLE NUMBER TWO
=========================================================
2. 88.7% OF UKRAINIANS FAVOR NATIONAL ELECTION OF
THEIR PRESIDENT BY THE PEOPLE AND NOT BY PARLIAMENT

Ukrayinska Pravda, www.pravda.com.ua, Kyiv, Ukraine, January 19, 2004

KYIV....The overwhelming majority of Ukrainians favor a national election
of the President of Ukraine, rather than an election by the parliament. A
poll by the Democratic Initiatives and SOCIS shows that 88.7 % of adult
Ukrainians prefer election of the president by national vote rather than
by the lawmakers.

At this, only 5.6 % want head of state to be elected by the Verkhovna Rada,
as envisaged by the political reform bill crafted by Kuchma's chief of staff
Viktor Medvedchuk and Communist Party leader Petro Symonenko.

Citizens were also asked in which way the changes to the Constitution about
the procedure of electing the President of Ukraine should be approved. Some
80,4 % of Ukrainians answered they must be approved by the nationwide
referendum. 8.8 % of the polled believe the decision on such changes to the
Constitution can be taken by the Verkhovna Rada. 10.8 % remained undecided.

The survey was held December 26 to January 5, 2004, i.e. after the initial
approval of the changes to the Constitution by lawmakers' show of hands. The
survey has covered the adult population of Ukraine across the country among
1200 respondents with margin of error within 3 %. (END) (ARTUIS)
=========================================================
UKRAINE REPORT-2004, No. 10: ARTICLE NUMBER THREE
=========================================================
3. THREATS OF FORCE USED TO COMPEL THE OPPOSITION TO
VOTE FOR INTRODUCTION OF AMENDMENTS TO CONSTITUTION

www.Glavared.info, Chief Editor, Kyiv, Ukraine, January 19, 2004

KYIV.......Member of Parliament Oleh Rybachuk of the Our Ukraine bloc has
accused MPs Nestor Shufrych of the Social Democratic Party of Ukraine
(united) of meting out threats of force to compel the opposition to vote for
introduction of amendments to the Constitution, according to Our Ukraine's
press service.

According to the statement, Rybachuk personally heard these threats from
Shufrych. "You must understand that arguments will be found, we will all the
same conduct this reform by your hands, using your votes," Rybachuk quotes
Shufrych as saying.

Rybachuk notes that this might lead to a repeat of the situation of 2002,
when a large group of deputies from the opposition factions and in
particular from the Our Ukraine made a crossover to the pro-presidential
majority. In the opinion of the opposition, they did this under pressure
from the security agencies, in particular the State Tax Administration,
Internal Affairs Ministry and the prosecutor's offices.

According to earlier reports, since late December 2003 Our Ukraine, Yulia
Tymoshenko Coalition and the Socialist Party had blocked the work of Rada.
They are attempting not to allow cancellation of direct national elections
of the President in the process of political reform.

The opposition does not recognize the results of voting on political reform
that was conducted by the parliamentary majority and the Communist Party. As
a result of the blocking the work of parliament was paralyzed, and the 4th
session of Rada was closed earlier than planned. (END) (ARTUIS)
=========================================================
UKRAINE REPORT-2004, No. 10: ARTICLE NUMBER FOUR
=========================================================
4. MAIN GOAL OF POLITICAL REFORM IS TO RID UKRAINE OF
THE REMNANTS OF THE AUTHORITARIAN SOVIET SYSTEMS
According to Viktor Medvedchuk, Head of the Presidential Administration

Inter TV, Kiev, in Ukrainian, 19 Jan 04
BBC Monitoring Service, UK, in English,Jan 19, 2004

The presidential administration head [Viktor Medvedchuk] met the rapporteurs
of the Parliamentary Assembly of the Council of Europe today.

Their conversation lasted for an hour and a half. Viktor Medvedchuk
emphasized that the main goal of political reform was to rid Ukraine of the
remnants of the authoritarian Soviet system. The parliamentary-presidential
system of power, to which Ukraine aspires, corresponds to European
standards more than any other system, he said.

Constitutional amendments can be introduced only under the current
president. To postpone the reform means to give it up. Discussion on its
provisions practically began back in 1998 and the opposition, both
right-wing and left-wing, played an active role in it. In 2002, the head of
state summarized all proposals and announce the beginning of changes.

The main thing is that all changes do not conflict with current legislation
and the constitution. As regards turbulent events in parliament, this is an
element of legislative process, which frequently occurred in the parliaments
of other countries.

So, crisis is not the issue. The vote by a show of hands [on 24 December
2003] was quite legitimate, the presidential administration head said.
Moreover, 276 MPs confirmed it with their signatures [after the voting].

Medvedchuk also gave arguments in favour of the Constitutional Court ruling
regarding the possibility for the current head of state to run in the 2004
presidential elections.

For their part, the PACE representatives said that the Council of Europe
considered any constitutional changes to be Ukraine's internal affair. The
only requirement is that they must promote the development of democracy and
be carried out in a democratic way. (END) (ARTUIS)
========================================================
UKRAINE REPORT-2004, No. 10: ARTICLE NUMBER FIVE
========================================================
5. UKRAINIAN TOP ECONOMIC OFFICIAL RESIGNS STATING
EXECUTIVE POWER IS AILING AND INEFFICIENT
Urges Radical Administrative Reform

Interfax-Ukraine news agency, Kiev, in Russian, 19 Jan 04
BBC Monitoring Service, UK, in English, Jan 19, 2004

Kiev, 19 January: The head of the Ukrainian State Committee for Regulatory
Policy and Enterprise, Inna Bohoslovska, has tendered a letter of
resignation. She made it clear in an open statement, whose text
Interfax-Ukraine received today.

Speaking about reasons behind her decision, Bohoslovska said that "the
executive power system is ailing and inefficient in this country" and urged
"a radical administrative reform". "This ugly system leads to recurrent
institutional mistakes and makes it impossible to develop the necessary
strategy and tactics. This ugly system generates ugly phenomena, notably
Azarovism [Mykola Azarov is the first deputy prime minister and finance
minister].

It is impossible to change anything at the level of just one selected state
committee under such conditions. It is not productive to fight for common
sense inside this system. It is necessary to leave this system, draft a
course of treatment and implement it with those who can hear and cure,"
Bohoslovska stated.

"In my work, I have come across insurmountable contradictions between
ideology and the principles of work professed by First Deputy Prime Minister
Mykola Azarov, who supervises the economic sector in the government,"
Bohoslovska said.

Ukrainian President Leonid Kuchma appointed Inna Bohoslovska to chair the
committee for enterprise by his decree in May 2003.

Bohoslovska, an honorary lawyer of Ukraine, was a deputy of the Supreme
Council of Ukraine [parliament] of the third convocation (elected from
constituency No 169 in Kharkiv). She was a member of the Working Ukraine
faction and first deputy head of the parliamentary committee for budget, as
well as a member of a commission for privatization.

Together with a former economics minister, Valeriy Khoroshkovskyy, and
famous journalist Mykola Veresen, she topped the list of the Winter Crop
Generation Team in the 2002 elections. The Winter Crop Generation Team
failed to overcome the 4-per-cent barrier [to get to parliament].
[Khoroshkovskyy resigned on 3 January, also citing deep policy disagreements
with Azarov; see Hromadske Radio via Radio Roks, Kiev, in Ukrainian, 1200
gmt 3 Jan 2004.] (END) (ARTUIS)
=========================================================
UKRAINE REPORT-2004, No. 10: ARTICLE NUMBER SIX
=========================================================
6. UKRAINE HARVESTS CRIME AFTER POOR GRAIN CROP

By Pavel Polityuk, Reuters, Kiev, Ukraine, Sun, January 18, 2004

KIEV, Ukraine (Reuters) - Facing grain shortages not seen in more than 50
years, Ukrainian millers and traders are scrambling for wheat deals.

And many now face a new kind of trader on the former Soviet republic's
market -- a "phantom grain trader" offering bundles of wheat backed up with
a sophisticated array of documents from banks, foreign investors and
companies. The problem is, the wheat never appears.

"Everyday some people call us, offering large or small volumes of grain at a
good price," a representative of a large foreign grain company told Reuters.

According to him, and many others, as soon as the buyer accepts the offer
and pre-pays for delivery the sham is exposed. They are left high and dry at
ports or railways where officials know nothing about any grain deliveries.
Calls to the company do not help either -- the people have long moved on.

Ukraine harvested less than four million tonnes of wheat in 2003, about four
times less than it did in 2002. The country, once the breadbasket of the
former Soviet Union, has started imports to meet demand of about six million
tonnes of milling wheat a year.

The government has said repeatedly that Ukraine has set fair and attractive
rules on the grain market to allow local and foreign traders to supply grain
to the republic.

But facing the need to import at least four million tonnes of food grain to
ensure its 48 million people have enough bread this season, Ukraine has seen
a jump in the number of people offering cheap, readily available grain.

After a bumper crop which turned the former Soviet state into a net exporter
of wheat last year, many millers and traders are just too inexperienced to
spot the signs of a bad deal. They go ahead with signing contracts, agree
to pay up front for the deliveries and turn up to find nothing.

"There was a spate of such offers. We have enough practice to recognize
these "sellers of air," but regional companies, those with a lack of
experience in imports, could get involved in such attractive offers," one
trader said.

"In the beginning these people offered significant parcels, but now they
propose a small volume at a realistic price. But you have to be careful
if they ask for pre-payments or decline to give all the details about the
company or grain."

THE AMERICAN CHOICE

Traders said many had started to offer U.S.-origin wheat, trying to
capitalize on Ukraine's confidence in American firms.

"They offered 200,000 tonnes of U.S. wheat CIF Odessa at $162 per ton.
But there is not one firm in Ukraine able to buy such a volume," another
trader said.

Analysts said others have tried to get loans from commercial banks to buy
grain for Ukraine, and there is no end to the different attempts to commit
"grain crimes."

"We have already understood how to recognize primitive crimes, but now we
are facing more sophisticated deceptions that use the banking system, false
contracts, letters of credit," said an official from a big Ukrainian
state-run grain company.

He said a lack of practice in working with foreign companies, a lack of
Western-educated traders and gaps in Ukrainian legislation allowed some to
get away with it.

Traders said business culture was poorly developed across the former Soviet
Union, and only clear and transparent legislation and the full integration
of Ukraine into the world market would stop the "grain crimes."

"The most serious problem here is a neglect of contract obligations. Your
partner could pass up at the last moment and it is too difficult to force
him to compensate any losses," one western trader said.

"Exporters can offer you a load of rubbish from their car after you've
already bought great wheat. Then it is almost impossible to get the money
back," a local trader said. (END) (ARTUIS)
=========================================================
"WELCOME TO UKRAINE" MAGAZINE
Just A Great, World Class Magazine about Ukraine, In English
http://www.artukraine.com/travel/wumagazine.htm
=========================================================
UKRAINE REPORT-2004, No. 10: ARTICLE NUMBER SEVEN
=========================================================
7. TENSION GROWS

COMMENTARY by Vlad Lavrov, political writer, Kyiv, Ukraine
Published by the "UKRAINE REPORT-2004"
www.ArtUkraine.com Information Service (ARTUIS)
Kyiv, Ukraine, Tuesday, January 20, 2004

[EDITOR'S NOTE: This Commentary was written on December 30, 2003]

Year 2003 that is just about to be over will undoubtedly remain in our
memory as one of the most tense years in the modern history of Ukraine. Some
of the events that happened at the end of it will have their further
developments next year, and either in negative or in positive way they will
determine the way in which Ukraine will move on.

Right now, as this article is being written, there are news reports about
the 5,000 opposition rally in the town of Mukacheve, where results of the
mayor's elections where the candidate supported by the opposition bloc Our
Ukraine had won were cancelled and the new elections were announced by the
presidential decree.

The rival of the Our Ukraine's candidate had been the candidate of the
Social Democratic Party (united) (SDPU(o)) whose leader is Viktor
Medvedchuk, head of the presidential administration. The whole irony is that
the Presidential decree mentioned above appoints another member of SDPU(o)
in Charge of the Mayor's office until the next elections, which makes it
very easy to forecast their outcome, given the use of the administrative
resources that the party has at their disposal.

This is just one of the many events that happened this year, that contribute
to the overall picture of modern Ukraine as the country that shows no
willingness to adhere to the standards of a European state that it claims it
wants to become. On the contrary, we have just been given an example of
canceling the elections won by an opposition candidate, and creating most
favorable conditions for his rival representing the party close to the
President to win the re-elections. What is the most remarkable about this
situation is the confidence with which the decisions unthinkable of in any
more or less civilized state are made.

On the other hand, what is the reason not to be confident if last week in
the same manner, ignoring all the voting norms established in the Parliament
members of the pro-presidential majority and the Communists hand-voted for
the preliminary approval of the amendments to the Constitution that would
significantly weaken the President elected in 2004, giving more power to the
Parliament, including electing a Prime Minister. The preliminary approved
amendments also provide that the President will be elected by the Parliament
starting in 2006.

Those who voted for the amendments maintain that they were forced to vote by
hands by the three opposition factions of the Parliament who blocked the
presidium, and presumably broke the voting system used by the Parliament, so
that the majority had to act contrary to the procedure, to ensure that the
voting does take place.

Members of the three opposition factions Our Ukraine, Yuliya Tymoshenko
Bloc, and the Socialist Party of Ukraine call what happened in the
parliament a coup attempt and promised to do everything to defend the people
's right to elect the president. According to the opposition's view of
events the majority is manipulated by the Presidential Administration to
amend the Constitution in order to prevent the most likely candidate to win
the elections Viktor Yushchenko from staying in the office full term and to
significantly cut down his powers as president.

There is a striking similarity to the tactics applied in amending the
Constitution, and in the way the President handled the elections in
Mukacheve. In both cases having actually lost the elections to the
opposition or being afraid to lose them in the future, the President and his
administration resort to canceling the elections, or changing the election
rules to ensure they stay in power, regardless of their outcome. Both of
these tactics are unacceptable for a country that claims to be on its way to
Europe.

Both of these events happened at the very end of this year, and in many ways
they overshadowed some of the other memorable news items like the Tuzla
island conflict, the joint economic space with Russia, Belarus, and
Kazakhstan, firing the Prosecutor General immediately after he announced the
Gongadze murder about to be solved and many other things that took place in
Ukraine this year.

It seemed that once the next elections brought new people to power, it would
always be possible to go back and solve some of those problems, which the
current regime either is incapable or unwilling to do. Now, there is a
situation when, once the Constitution is amended, even after a favorable
result of the elections next year, the new president will not have any real
power, which will only be used by the Kuchma regime for discrediting him.

In a recent interview, leaders of the opposition Yuliya Tymoshenko, and
Yuriy Lutsenko claimed to have the exact plan of actions in order to prevent
the majority pass the amendments to the Constitution during the final
reading in spring. Their plan will include taking the matter to courts of
all levels in Ukraine and to the Council of Europe. They also mentioned the
address to the people of Ukraine, 3 mln copies of which will be distributed
in the next few days.

That leaves us all with the feeling that year 2004 is bound to bring us some
crucial changes. Whether the opposition is successful in defending the
Constitution with its right for the people to elect a president, or the
Kuchma regime manages to pass the amendments which will make the president
a symbolic figure that will pose no real threat to those who currently are
in power, will determine what happens to our country in the future.

We sincerely wish you a Happy New Year, hoping that the next year, which is
not likely to bring any significant breakthrough in people's prosperity,
will bring all Ukrainian people the feeling that the country is on the right
track to becoming a democratic, European state, which will give us all the
reason to look into the future with cautious optimism. (END)
------------------------------------------------------------------------
NOTE FROM AUTHOR: Today, on December 30, the Constitutional Court
have announced their decision as to whether president Kuchma can run for a
President for the third term. According to the information in the news
reports the expert lawyers asked by the Court to give their opinion, have
unanimously decided that the first term of Kuchma's presidency began in
1999, when the Constitution was adopted, and therefore, if he runs again it
will only be for his second term. Same was the decision announced by the
Court. [EDITOR'S NOTE: This commentary was written on December 30,
2003]
------------------------------------------------------------------------
EDITOR"S NOTE: Comments about the Lavrov article are welcome to
morganw@patriot.net. This article can be republished with credits to the
author Vlad Lavrov, to "UKRAINE REPORT-2004" Number 9, and to
the publisher, www.ArtUkraine.com Information Service (ARTUIS), Kyiv.
LINK: http://www.artukraine.com/buildukraine/tension_grows.htm
=========================================================
UKRAINE REPORT-2004, No. 10: ARTICLE NUMBER EIGHT
=========================================================
8. UKRAINE JOINING NATO DEPENDS ON PRESIDENTIAL ELECTION
No Improvement in US-Ukraine Relations As Long As Kuchma Is In Power

Eastern Economist Daily (EED), Kyiv, Ukraine, Jan 19, 2004

KYIV......Membership of Ukraine in NATO depends on the outcomes of
the presidential elections in 2004, Jane's Intelligence Diary, a British
defense analytical edition has stated. Jane's Intelligence says a decision
on the third wave of NATO expansion (Albania, Croatia, and Macedonia)
will be taken at a summit of the Alliance in 2007.

"Whether Ukraine joins this group will depend on the results of presidential
elections in October 2004," said the edition. President Kuchma, say British
analysts, has expected that sending peacekeepers to Iraq would mend the
country's relations with the US after he was accused of allowing sale of
weapons to Iraq in 2000.

"However, top-ranking sources in Washington say there will be not
improvement in US-Ukraine relations as long as Kuchma stays in power."
says Jane's, according to the Ukrainian service of the BBC. (END)
(Ukrainska Pravada, Jan. 19)
========================================================
UKRAINE REPORT-2004, No. 10: ARTICLE NUMBER NINE
=========================================================
9. CONSULTANT'S VERDICT ON ODESSA-BRODY POSTPONED
[To Reverse or Not to Reverse, That is the Question]

Interfax-Ukraine, Kyiv, Ukraine, January 17, 2004

KYIV.........Energy Solutions, a US registered company, asked on 15 January
Ukraine's Fuel and Energy Ministry for more time to present the feasibility
study the company was hired to conduct on the best use of Ukraine's
Odessa-Brody oil pipeline.

According to a report released by the ministry's press service on 17
January, the results will be presented on 31 January instead of 19 January.
"Energy Solutions has written a letter confirming that it is prepared to
present its final results under the terms of its contract; however, in order
to make them more complete, the company has requested more time for further
analysis, which will be added to the final report," the press release reads.

As already reported, on 15 January, a source at the Ministry reported to
Interfax-Ukraine that the company had already presented its preliminary
findings, which recommended that the pipeline be used in reverse, pumping
oil north to south, for three years. This option is favored by the
Russian-British oil company TNK-BP, but opposed by Western governments. At
the same time, Energy Solutions concluded that it would be in Ukraine's best
interests to pump Caspian oil north through Poland into Europe at the end of
the three years.

UkrTransNafta, which runs Ukraine's pipelines has confirmed receiving a copy
of the company's initial findings. While Ukrainian Fuel and Energy Minister
Serhiy Yermylov reported on 16 January that he hadn't received a copy,
underlining that Ukrainian President Kuchma would take a final decision on
which way the oil should be pumped on 1 February.

The pipeline was first launched in May 2002. It has a capacity of from 9 to
14.5 million tonnes per year with a storage capacity of 200,000 cubic
meters. TNK-BP has promised to deliver 380-420 thousand tonnes of low
grade Russian oil from Urals in advance of 9 million the oil company plans
to export. (END (ARTUIS)
=========================================================
UKRAINE REPORT-2004, No. 10: ARTICLE NUMBER TEN
=========================================================
10. UKRAINE UPS INDUSTRIAL OUTPUT BY 15.8%

Interfax-Ukraine, Kyiv, Ukraine, January 19, 2004

Kyiv. (Interfax-Ukraine) - Ukraine increased its industrial output 15.8% in
2003 to 220.6 billion hryvni, said the country's State Statistics Committee
in a press release.

Production surged 35.8% in machine building, 25.7% in the pulp, paper and
printing industry, 23.6% in timber production and 20% in the food and food
inputs industry.

Ukraine upped production 14.3% in metallurgy, including a 10.8% rise for
ferrous metals and 18.6% for nonferrous metals.

The Ukrainian government forecast a 14% rise in industrial output in 2003
and expects a rise of 6% in 2004. Industrial output grew 7% in 2002.
========================================================
UKRAINE REPORT-2004, No. 10: ARTICLE NUMBER ELEVEN
========================================================
11. COUNCIL OF EUROPE CRITICIZES UKRAINE

Associated Press, Kyiv, Ukraine, Jan 19, 2004

KYIV....A leader of the Parliamentary Assembly of the Council of Europe said
Jan. 18 that the body was strongly concerned that Ukraine's constitutional
crisis threatened to undermine democracy in the country.

Hanne Severinsen, the assembly's top democracy monitor for Ukraine, made the
comments after arriving for talks with political leaders. The Council of
Europe is the continent's main human rights body.

Tensions have been brewing for months over proposed constitutional
amendments that call for the country's president to be chosen by parliament
rather than by voters beginning in 2006. Opponents say the proposal would
undermine the electorate. A week after parliament provisionally approved
the amendments in a vote widely seen as irregular, tensions rose further
when the constitutional court said President Leonid Kuchma could run for a
third term this year.

On Jan. 16, parliament's rules and ethics committee chairman exhibited video
footage and photos of the parliamentary vote that showed some
parliamentarians voting with both hands after members of the opposition
broke the electronic voting system trying to prevent the vote.

Severinsen said PACE was concerned both with the proposed amendments'
contents and with "the way (the vote) was done." In comments before meeting
with parliament speaker Volodymyr Lytvyn, Severinsen stressed that the
former Soviet republic was already "on warning" after conducting a 1999
referendum that PACE refused to recognize.

Lytvyn downplayed PACE's concerns. "The crisis we have shows we're a
democratic parliament," he told reporters after the meeting. PACE is to hold
a debate on Ukraine's troubles on Jan. 29. Severinsen's delegation is
expected to meet with Kuchma's chief of staff, the head of the
Constitutional Court, and media representatives before leaving Tuesday.
=========================================================
UKRAINE REPORT-2004, No. 10: ARTICLE NUMBER TWELVE
=========================================================
12.UKRAINE APPEALS RULING OF CANADA COURT ON DEBT DISPUTE

ITAR-TASS, Moscow, Russia, January, 19, 2004

KIEV, January 19 (Itar-Tass) -- Ukraine has appealed a ruling of Canada's
federal court ordering the sale of an An-124-100 Ruslan plane that was
seized in this country after Cyprus' company had won a debt suit against
Ukraine's State Property Fund. The plane is registered to Avialinii Antonova
company.

Its executive director Konstantin Lushakov told Itar-Tass on Monday that the
company could not be responsible for debts of the state, which is one of
provisions of its charter documents. Besides, the plane has the immunity of
a military aircraft, even though it carries no arms or military signs.

The An-124-100 carried out a flight in the interests of defence ministries
of Italy and Canada. Avialinii Antonova is one of four companies to which
the Ukrainian government allowed shipping military products. The plane was
seized in Canada in late December after two-month court proceedings.

The air company had repeatedly promised to file a counter-suit against the
Cypriot company and the Canadian court seeking 30 million dollars in
damages.

"It is clear that it would be difficult for a Canadian judge to make a
decision at a loss for himself," the first deputy chief designer of
Avialinii Antonova, Dmitry Kiva, told Itar-Tass. He added that a potential
buyer of the plane has no right to re-register it for use. (END)(ARTUIS)
========================================================
"UKRAINE REPORT-2004," No. 10, TUESDAY, JANUARY 20, 2004
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