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Action Ukraine Report

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

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

Mystery Ukrainian Holds Major Stake In RosUkrEnergo
The disclosure of Dmytro Firtash's stake in RosUkrEnergo AG -- made by
bankers who hold his shares in the company -- is unlikely to quiet a
political storm over the company, which is being investigated by officials
in Washington. (Articles 1, 2, 3, 4 & 5)

Mr. E. Morgan Williams, Publisher and Editor

-------- INDEX OF ARTICLES --------
Clicking on the title of any article takes you directly to the article.
Return to the Index by clicking on Return to Index at the end of each article

By Gregory L. White, David Crawford and Glenn R. Simpson
The Wall Street Journal, New York, NY, Friday, April 28, 2006

Mystery Ukrainian Holds Major Stake In Rosukrenergo
By Glenn R. Simpson in London, David Crawford in Brussels, and
Alan Cullison in Moscow, The Wall Street Journal
New York, New York, Thursday, April 27, 2006; Page A6

By Stefan Wagstyl and Tom Warner in London
Financial Times, London, United Kingdom, Friday, April 28 2006

By Tom Warner, Financial Times, London, UK, Fri, April 28 2006

By Stefan Wagstyl and Tom Warner, Financial Times
London, United Kingdom, Friday, April 28 2006

One Plus One TV, Kiev, in Ukrainian 1700 gmt 27 Apr 06
BBC Monitoring Service, UK, in English, Thu, Apr 27, 2006

Harvard Ukrainian Research Institute (HURI)
Cambridge, Massachusetts, Tuesday, April 25, 2006

Armoured vehicles sold to Georgia by Ukraine turned out to be useless
24 Saati, Tbilisi, Georgia, in Georgian 26 Apr 06
BBC Monitoring Service, UK, in English, Thu, Apr 27, 2006

ANALYSIS & COMMENTARY: By Jolanda Brunetti-Goetz
All Sole 24 Ore in Italian, Milano, Italy, Tuesday, April 25, 2006
Action Ukraine Report (AUR) #691, Article 9, in English
Washington, D.C., Sunday, April 30, 2006

ANALYSIS & COMMENTARY: Iryna Chupryna, Ukrainian Voter
Action Ukraine Report (AUR) #691, Article 10,
Kyiv, Ukraine, Sunday, April 30, 2006

By Peter Borisow, President, Hollywood Trident Foundation
Los Angeles, California, Friday, April 14, 2006
Action Ukraine Report (AUR), #691, Article 11
Washington, D.C., Sunday, April 30, 2006

Communists now just a rump group facing a strong parliamentary coalition
OP-ED: By Marco Levytsky, Freelance
Edmonton Journal, Edmonton, Canada, Saturday, April 01, 2006

COMMENTARY: By Oksana Bashuk Hepburn
Canada, Friday, April 7, 2006
Action Ukraine Report (AUR) #691, Article 13
Washington, D.C., Sunday, April 30, 2006

PERSPECTIVE: By Geoffrey Berlin, The Globalist
Washington, D.C., Wednesday, April 12, 2006

By Anne Applebaum, Op-Ed Columnist, The Washington Post
Washington, D.C. Wednesday, April 12, 2006; Page A17

Letters in reply to Op-Ed article by Post Columnist Anne Applebaum
by Ukraine Ambassador Oleh Shamshur and Tammy Lynch
LETTERS-TO-THE EDITOR: The Washington Post,
Washington, D.C., Tuesday, April 25, 2006; Page A22

Kyiv Post, Kyiv, Ukraine, Wednesday, Apr 19 2006

Voice of America (VOA), Washington, D.C., Thursday, April 20, 2006

By Gregory L. White, David Crawford and Glenn R. Simpson
The Wall Street Journal, New York, NY, Friday, April 28, 2006

LONDON -- The secretive shareholder in a trading company that handles the
multibillion-dollar natural-gas trade between Russia and Ukraine said he
concealed his identity to win the business with Russian gas monopoly OAO
Gazprom and to avoid political pressure in Ukraine.

In his first interview since revealing that he owns a 45% stake in
Rosukrenergo AG this week, Ukrainian businessman Dmytro Firtash pledged
to make the company more open and said it is likely to seek an initial public
offering or other international financing in the future.
Rosukrenergo became a focus of international attention in January when it
emerged as an intermediary between Moscow and Kiev in a deal to resolve a
dispute over gas prices that had led to a brief reduction in Gazprom's
exports to Europe.

Rosukrenergo's opaque ownership -- Gazprom owns 50%, but Mr. Firtash
had concealed his identity behind a trustee arrangement with Austria's
Raiffeisen Bank AG -- raised questions in the region and in Western capitals
about the possibility of corruption. It remains to be seen whether Mr.
Firtash's emergence will allay the political concerns.

In response to a U.S. inquiry, company representatives met with the Justice
Department in Washington in February and disclosed Mr. Firtash's ownership.

Mr. Firtash insisted Rosukrenergo has no political or other connections, and
said the remaining 5% stake is held by a business associate who isn't
involved in the company's operations.

Having worked for most of the 1990s trading gas between Turkmenistan and
Ukraine, Mr. Firtash said he approached Raiffeisen in 2004 with the idea of
creating Rosukrenergo to allow Gazprom to take a stake in the lucrative
business. Gazprom, whose cooperation is critical to the trade, had publicly
stated its desire to take a greater role in the business.

The Austrian bank provided a brand name as well as financial strength that
allowed Mr. Firtash to secure the deal with the giant Russian company.
Wolfgang Putschek, Raiffeisen's chief representative on the deal, said the
bank introduced Mr. Firtash during negotiations with Gazprom as "our
technical expert" but didn't disclose that he was a shareholder.

Gazprom thought it was dealing with Raiffeisen and was happy with the bank
as a partner, said Gazprom spokesman Sergei Kuprianov. "For all its lack of
transparency at the time, it was pretty understandable for us," he said,
noting that Rosukrenergo pledged to invest in upgrading pipelines to carry
gas from Central Asia across Russia to Ukraine.

Gazprom, Mr. Kuprianov said, received an audit report disclosing Mr.
Firtash's true role only in the past 10 days or so, and top executives only
became aware of it in the past few days. Mr. Kuprianov said Gazprom
intends to continue working with Rosukrenergo.
In Ukraine, where the January gas deal has become a major political issue,
Mr. Firtash said he didn't want his identity to become fodder for the

Mr. Firtash acknowledged that a company he controlled once had as a
shareholder the wife of Simon Mogilevich, who is wanted by U.S. authorities
on racketeering charges. Mr. Firtash said he took over ownership of that
stake as soon as he learned of the connection to Mr. Mogilevich.

He noted the company, High Rock Holdings Ltd., wasn't connected to
Rosukrenergo or its predecessor, Eural Trans Gas.

Ze'ev Gordon, a lawyer for Mr. Mogilevich, confirmed the two men have no
current business relationship but said he couldn't immediately comment on
whether Mr. Mogilevich's wife had ever been a shareholder in High Rock.

Under the compromise reached in January, Rosukrenergo sells gas from Central
Asia and Russia in Ukraine at below-market prices, but more than offsets
those losses, thanks to profit from exports of low-cost Central Asian gas to
Europe at world prices.

It plans to invest in expanding pipelines carrying Central Asian gas to
Russia, as well as in underground storage facilities for the fuel destined
for Europe. -30-
Write to Gregory L. White at , David Crawford at and Glenn R. Simpson at
[return to index ] [Action Ukraine Report (AUR) Monitoring Service]
Mystery Ukrainian Holds Major Stake In Rosukrenergo

By Glenn R. Simpson in London, David Crawford in Brussels, and
Alan Cullison in Moscow, The Wall Street Journal
New York, New York, Thursday, April 27, 2006; Page A6

The secrecy surrounding ownership of an international energy company
causing a political stir from Ukraine to the U.S. was partially pierced with
the naming of a Ukrainian businessman as a major investor.

The disclosure of Dmytro Firtash's stake in Rosukrenergo AG -- made by
bankers who hold his shares in the company -- is unlikely to quiet a
political storm over the company, which is being investigated by officials
in Washington.

Instead, how a little-known businessman came to own such a lucrative stake
is likely to raise further questions about the role of OAO Gazprom, the
Russian gas giant that owns the other half of Rosukrenergo. There are
increasing concerns in the U.S. and the European Union over energy security
and Gazprom's ambitions.

The Wall Street Journal revealed last week that Rosukrenergo is under
investigation by the U.S. Department of Justice's organized-crime division.

In Ukraine, meanwhile, President Viktor Yushchenko is struggling to put
together a coalition government, in part because of his support for the
January agreement that gave Rosukrenergo lucrative rights to sell Russian
and Central Asian gas to Ukraine. Opponents say the company's opaque
structure invites corruption and that its founders may be close to Mr.
Yushchenko personally.

Austria's Raiffeisen Bank AG, which has controlled a 50% share in
Rosukrenergo on behalf of Mr. Firtash and a business associate, yesterday
confirmed their identities for the first time. The statement denied
widespread media reports that Mr. Firtash and Ivan Fursin -- who holds a
small stake in the company -- might be connected to organized crime, saying
the corporate-investigations company Kroll Inc. had checked them out and
found no such connections. Neither man could be reached for comment. A
spokesman for Kroll also declined to comment.

A U.S. diplomat said, "People have been looking very carefully at who's
behind Rosukrenergo...including the banks involved." Austrian Economics
Minister Martin Bartenstein says he sees no need for an investigation of
Rosukrenergo or its owners in Austria.

Mr. Firtash has acknowledged his 45% stake in Rosukrenergo to business
associates and is expected to make public statements today about the matter,
according to lawyers and others involved in the controversy over

Mr. Yushchenko's political rivals said they would continue to demand that
Ukraine scrap the gas deal with Rosukrenergo. A top adviser to former
Ukrainian Prime Minister Yulia Tymoshenko, fighting to reclaim her job, said
the naming of principals of Rosukrenergo is a step in the right direction
but that "it's just the beginning, as far as we are concerned."

"We just don't know anything about the company so far," said Grigory
Nemyria, an aide to Ms. Tymoshenko. "We need to stop at nothing short of
full disclosure."

Mr. Yushchenko has defended the gas arrangement as the only way to get an
acceptable deal for Ukraine during its confrontation over the price of gas
supplied by Russia via Gazprom.

Mr. Yushchenko met Mr. Firtash once, in 2004, according to Mykhaylo
Doroshenko, a presidential adviser. During the Orange Revolution, a
grass-roots revolt that helped overturn allegedly fraudulent election
results, Mr. Yushchenko was worried that Mr. Firtash and other gas traders
would take advantage of the chaos to bypass the state gas company,
Naftogaz Ukraina, and sell direct to consumers, Mr. Doroshenko said.
Write to Glenn R. Simpson at , David Crawford at and Alan Cullison at
[return to index ] [Action Ukraine Report (AUR) Monitoring Service]

By Stefan Wagstyl and Tom Warner in London
Financial Times, London, United Kingdom, Friday, April 28 2006

Dmytro Firtash, the secretive 40-year-old Ukrainian businessman who emerged
this week as a key player in the multi-billion dollar European gas market,
is nervous at the start of his first-ever media interview. He says: "I feel
I am losing my virginity."

But there is nothing bashful about the way Mr Firtash explains his business
and defends himself against allegations - aired in the Ukrainian
parliament - that he had links with Semyon Mogilevich, an alleged Russian
crime lord, who figures on the FBI's most wanted list. The claims were
investigated by Ukrainian law enforcement officials in a probe that was
later dropped.

"I have met Mogilevich a few times. But I have never been in any partnership
with him and have never done any business with him," says Mr Firtash,
speaking in a sleek office in Knightsbridge, central London. Dressed in a
pale pin-stripe suit, Mr Firtash is surrounded by bankers, aides and
associates. But in two and a half hours, they barely say a word. It is his
story to tell, and he tells it well.

Mr Firtash has reluctantly gone public after it was disclosed this week that
he is the main partner of Gazprom, the Russian gas giant, in RosUkrEnergo,
a joint venture trading company, that earlier this year won a big contract
to supply gas from central Asia, principally Turkmenistan, to Ukraine and
other European states.

Gazprom owns 50 per cent of RosUkrEnergo. The other 50 per cent is
controlled by Centragas Holding, a company in which Mr Firtash has a 90
per cent stake.

It is all a far cry from Mr Firtash's humble origins in Bohdanovka, a west
Ukrainian village near the city of Chernivtsy. His father was a driver and
his mother a clerk. Aged 17, he left home to study in a railway college. He
worked briefly as an apprentice train driver before serving two years in the
Soviet army.

When he returned from military service in 1986, he failed to secure the
necessary approvals to enter university and moved to Chernivtsy where he got
married and worked as a fireman. But with wages unpaid and the Soviet Union
crumbling, he decided to quit and strike out on his own. "The country was in
chaos, so I decided to act," he says.

He started trading, specialising in meat, butter and other foods, as well as
second-hand cars. By 1990, he earned $100,000 - a huge sum by Soviet
standards - and moved to Moscow in search of bigger fish to fry. But the
young Ukrainian found the competition tough. In 1993, he persuaded
associates to back him in a deal supplying meat on credit to Turkmenistan.

When the buyer, a state company, failed to pay he travelled to Turkmenistan
in pursuit of his $3m debt. The government had no cash, but the economy
minister offered to pay in natural gas, of which Turkmenistan has huge

The minister introduced Mr Firtash to a Ukrainian gas trader called Igor
Bakai who was buying gas on behalf of energy-short Ukraine. "He said he
could buy as much gas as I wanted to sell," says Mr Firtash.

The deal became the foundation of Mr Firtash's fortune. He imported food
into Turkmenistan and bartered it for gas which was sold to Ukraine where he
was paid in cash with which he financed shipments of food and other goods.
"This developed very quickly," says Mr Firtash, who spent much of the 1990s
living in Ashgabad.

It was not easy. He was caught up in furious gas supply battles in Ukraine
in which Mr Bakai fought for market share with rivals, including with Pavel
Lazarenko, the prime minister at the time, and Yulia Tymoshenko, a gas
trader linked to Mr Lazarenko who was later to become prime minister.

The 1990s ended with the emergence of Itera, a gas trader run by Igor
Makarov, who came to dominate gas supplies. Mr Firtash says he stuck
to his side of the business - supplying goods to Turkmenistan.

Mr Firtash says, in 2000, Mr Makarov proposed teaming up with Mr Firtash
to take over the entire goods-for-gas business. Mr Firtash agreed and worked
through a company called Highrock Holdings.

But the market was becoming unpredictable with the Turkmenistan government
demanding to be paid in cash as well as imported goods. Amid the tensions,
the partnership between Mr Firtash and Mr Makarov broke and Mr Firtash set
up on his own again, capitalising, he says, on his close ties with Ashgabad.

Meanwhile, following Russia's President Vladimir Putin's election in 2000,
new managers were brought into Gazprom, who insisted on securing better
control of its operations, including the central Asian transit trade.
Gazprom squeezed out Itera.

But Mr Firtash survived the change by presenting himself as an experienced
trader, now with a new company called Eural Trans Gas that later hired as
its non-executive chairman Cedric Brown, a former chairman of British Gas.

By 2004, Gazprom wanted a more direct stake in the transit trade. With its
huge clout, it secured a new arrangement with Mr Firtash in the form of
RosUkrEnergo, which began operating in 2005 and expanded its role, amid
great controversy, with the signing of a new Russia-Ukraine gas deal in
January 2006.

Mr Firtash says he secured his fortune through his long-standing contacts in
Turkmenistan, his knowledge of the gas business and his sheer hard work. "I
work 24 hours a day. No days off. Nobody knows this business as I do."

He insists he has worked largely on his own except in the partnership with
Mr Makarov and never had any business dealings with Mr Mogilevich. Mr
Firtash's background was probed by Austria's Raiffeisen Bank, which holds in
trust the RosUkrEnergo shares owned by Mr Firtash and a minor Ukrainian
partner, Ivan Fursin.

Wolfgang Putschek, a Raiffeisen executive, says: "There were three questions
our compliance department had to answer. First, did the client have any
links to criminal activities. Second, did the client have any links to known
criminals. The answer to both was a clear 'no'.

"The third question was, did the client have any links to known criminals in
the past. In the course of answering that question, some issues came up. But
they were explained. That is they were cleared off."

Mr Firtash is well aware that as he now prepares his company for the stock
market, outside scrutiny will become more intense. But he is ready for it.
"I have nothing to hide." -30-
[return to index ] [Action Ukraine Report (AUR) Monitoring Service]

By Tom Warner, Financial Times, London, UK, Fri, April 28 2006

RosUkrEnergo is not a parasitic middleman charging extortionate fees to
supply Russian and Turkmen gas to Ukraine and Europe, insists Dmytro

The Swiss-registered company is a "complement" to Gazprom, the Russian
natural gas company, that offers greater flexibility to solve the problems
of supplying Ukraine and the European Union with energy in the decades
ahead, writes Tom Warner in London.

RosUkrEnergo's business is to buy gas mainly from central Asia and resell it
mainly in Ukraine, and some in the EU. Portrayals of RosUkrEnergo as a mere
"intermediary" between Gazprom and Ukraine's state oil and gas company are
"completely incorrect", Mr Firtash says.

But the central Asian gas business is "unique", he admits. Gazprom controls
the only pipeline to Ukraine and Europe and thus demanded a share in the
business. In return, Gazprom gave RosUkrEnergo exclusive rights to transit
central Asian gas across Russia.

RosUkrEnergo started life in 2005 with a barter contract. Ukraine's state
oil and gas company, Naftogaz, paid RosUkrEnergo to deliver 36bn cubic
metres (bcm) of gas from Turkmenistan by giving RosUkrEnergo 37.5 per cent
of the gas. RosUkrEnergo sold some gas back to Naftogaz and some in the EU.
RosUkrEnergo made $3bn (Euro2.4bn) in sales and $500m in profits in the
first nine months of 2005, according to Gazprom's financial statements.

Gazprom had also supplied gas to Ukraine but stopped deliveries in January
during a price dispute. The result was shortages across Europe until
Naftogaz and Gazprom agreed to a settlement that expanded RosUkrEnergo's

Gazprom turned over its purchase contracts negotiated with central Asian
suppliers to RosUkrEnergo, which ended up with contracts to buy 56bcm a year
of gas from Turkmenistan, Uzbekistan and Kazakhstan at prices of $55 to $65
per thousand cubic meters (tcm).

A 50-50 joint venture of RosUkrEnergo and Naftogaz called Ukrgazenergo buys
the gas for $95/tcm at the Ukraine border and then sells to industrial
customers or traders at regulated rates, currently capped at a maximum of

The total value of the gas to be traded by RosUkrEnergo under its agreement
with Gazprom and Naftogaz, at current prices, comes to more than $50bn over
five years.

And while some politicians in Ukraine may be talking about annulling
RosUkrEnergo's contracts, Mr Firtash says he is confident his company will
continue to expand.

Mr Firtash says the secrecy he maintained until this week was necessary so
that he could build up the company without negative attention. "Unfortunately
it's still not fully acceptable for Ukrainians and Russians that a fellow citizen
should be rich," he says.

He says he is ready for more transparency, but not just yet. Mr Firtash's
banker from Austria's Raiffeisen Bank interrupts the interview to remind him
that only Gazprom is allowed to divulge RosUkrEnergo's financial figures.
[return to index ] [Action Ukraine Report (AUR) Monitoring Service]
Send in names and e-mail addresses for the AUR distribution list.

By Stefan Wagstyl and Tom Warner, Financial Times
London, United Kingdom, Friday, April 28 2006

Three days ago very few people had heard of Dmytro Firtash. He never gave
interviews, he would not be publicly photographed and until this week he had
refused to acknowledge his co-ownership of RosUkrEnergo, the secretive
company that controls gas supplies from central Asia to Europe.

Yesterday, however, a day after reluctantly revealing himself, he was
already considering taking the company public with a listing on the London
Stock Exchange. RosUkrEnergo, the Swiss-registered group owned by
Russia's Gazprom and two Ukrainian businessmen, gained prominence at
the start of this year when it emerged as a beneficiary of the deal that
resolved the bitter dispute that led to Russia turning off gas supplies to

This week, Izvestia, the Gazprom-owned newspaper, identified the company's
two Ukrainian owners as Mr Firtash and his junior partner Ivan Fursin.
Yesterday, in his first ever media interview, Mr Firtash told the Financial
Times the company was considering a London flotation to raise capital for
big investments in gas supply infrastructure.

The 40-year-old Mr Firtash said RosUkrEnergo would invest in transit and
storage facilities in co-operation with Gazprom, the Russian gas monopoly,
which is bidding to expand its presence in overseas markets, including in
the European Union.

"We are considering an IPO because these are projects that even with
Gazprom we cannot finance ourselves. These are 15-20 year projects," said
Mr Firtash.

His comments, coming soon after Gazprom executives publicly aired ambitious
plans for acquisitions and investments, highlight the growing determination
of Russian and Russian-linked companies to invest in the west, despite
western political opposition to their proposals.

Vladimir Putin, Russian president, yesterday stepped up the attacks on the
European Union over access to energy markets, accusing Europe of double
standards towards Moscow. Speaking in Tomsk, Siberia, after talks with
Angela Merkel, the German chancellor, he said: "When (European) companies
come to us it's called investment and globalisation but when we go there
it's called expansion by Russian companies."

However, Mr Putin was careful to praise close ties with Germany and to thank
Tony Blair, UK prime minister, for signalling he would not intervene to
block possible investments by Russian energy companies in Britain. Gazprom
has identified Centrica, the British gas company, as a possible acquisition

Mr Firtash confirmed this week that he was Gazprom's main partner in
RosUkrEnergo. He is the owner of a 90 per cent stake in Centragas Holding,
a company in a 50-50 joint venture with Gazprom in RosUkrEnergo. The
remaining 10 per cent of Centragas belongs to Mr Fursin, a Ukrainian banker.

Mr Firtash said his fortune was made from trading with the energy-rich state
of Turkmenistan, supplying food and other goods exchanged for gas and sold
to Ukraine. He denied allegations - aired in the Ukrainian parliament - that
he had links with Semyon Mogilevich, an alleged Russian crime lord who
figures on the FBI's most wanted list. -30-
[return to index ] [Action Ukraine Report (AUR) Monitoring Service]

One Plus One TV, Kiev, in Ukrainian 1700 gmt 27 Apr 06
BBC Monitoring Service, UK, in English, Thu, Apr 27, 2006

KIEV - Ukrainian Economics Minister Arseniy Yatsenyuk has blamed Russia
for delaying the signing of an intergovernmental deal to guarantee gas supplies
to Ukraine.

In his interview with a Ukrainian TV channel, Yatsenyuk said Ukraine is
against having a go-between in gas supplies, adding that any gas price
higher than 95 dollars per 1,000 cu.m. of gas would be unacceptable to

Yatsenyuk said Ukraine is waiting for official confirmation of Russian media
reports that two Ukrainians are beneficiaries of a 50 per cent share in the
Rosukrenergo gas trader, which is the sole supplier of Russian and Central
Asian gas to Ukraine.

The following is an excerpt from Yatsenyuk's interview he gave to the
Ukrainian One Plus One TV on 27 April; subheadings have been inserted

[Presenter] Good evening. This is the Seven Minutes programme. We have
Economics Minister Arseniy Yatsenyuk in our studio. We will mostly talk
about the economy and primarily about gas. Good evening, Mr Yatsenyuk.
[Yatsenyuk] Good evening.

[Presenter] How do you think making public the structure of the Rosukrenergo
intermediary's ownership will affect Ukrainian-Russian gas relations?

[Yatsenyuk] To be honest, this is a very specific question, especially for
the economics minister. But I think the news has long been covered with
dust. This is hardly information that has not been known. What effect will
this have?

I think that at issue is a certain project for divulging the information and
possibly considering the expediency of replacing a particular intermediary.
Our position is as follows.

It makes no difference to us who will sell gas. We are interested solely in
one issue. This is price. If talk is about a certain company that has broken
domestic or international law, it must be prosecuted by the appropriate
special services that are in charge of this in line with the law. So I want
to reiterate that we are not interested in companies, we are interested in

[Presenter] Isn't the reputation of partner companies of interest to the
[Yatsenyuk] It is not the government that is the partner of this company. I
would like to recall that the national joint-stock [oil and gas] company
Naftohaz Ukrayiny is the partner of this company, and you are aware of the
developments inside Naftohaz.

[Presenter] Which is state-owned?
[Yatsenyuk] Yes. I would like to say that if a company is accused or
suspected of money laundering, the management of this company should
definitely - excuse me - be put in jail. But this is not the government's
job. This is the job of appropriate special services. The government's job
is to ensure normal prices, gas prices included.

[Presenter] You have said that everyone has long been in the know about
Rosukrenergo's owners. But in reality most Ukrainian government officials
kept saying that they were unaware of who specifically stood behind the
company share that belongs to Raiffeisen Bank. Why do you think Ukraine
has been unable to learn about this officially for so long, while it was so easy
for Russia's [newspaper] Izvestiya to do so?

[Yatsenyuk] I would like to reiterate that Russia's Izvestiya is a media
outlet. Media outlets are free to comment on any events and facts. It will
be official if a particular registration agency in charge of this confirms
this. So we can only discuss this at the level of a media report that needs
to be confirmed.

But even if this is confirmed, I reiterate that the key position that not a
single Ukrainian official or the authorities have anything to do with
Rosukrenergo's ownership, which the Ukrainian president [Viktor Yushchenko]
emphasized, probably has its confirmation.
But the second key aspect is the following. Rosukrenergo does not solve the
problem of reliable gas supplies to Ukraine. We should go back to the thesis
about which everyone has forgotten due to certain political events. We need
to sign a bilateral protocol with Russia, as required in the
intergovernmental agreement. This is a key issue at present.

The second key issue is that we are against any intermediaries. There can
only be direct relations between Naftohaz and [Russian gas monopoly]
Gazprom. But a key issue is the price in this case.

If we agree on 95 [dollars per 1,000 cu.m. of Russian and Central Asian gas
to be supplied by Rosukrenergo to Ukraine], then this is 95. If we don't
agree, then any other price is unacceptable at today's stage of the
development of the Ukrainian economy.

[Presenter] What are the prospects for signing an intergovernmental
agreement shortly?
[Yatsenyuk] Regrettably, the prospects are extremely vague. We should speak
openly about this, because we have been trying to do so for the past three
months. But the attempts have led to nothing. There is a draft
intergovernmental protocol, but the Russian side is delaying signing it,
because undertaking intergovernmental agreements is hardly a topic of big
interest for the side that supplies gas to us.

[Presenter] How do you assess the impact of the latest rise in gas prices on
the general state of the Ukrainian economy, at least in the first quarter of
this year?

[Yatsenyuk] The first quarter is not demonstrable, because the gas prices
rose at the end of the first quarter. So we will experience the main
inflation pressures and the main inflation shocks in the second and third
quarters. The positive aspect is that we have a certain inflation lag, with
the inflation rate for the first quarter being a mere 2.7 per cent.

Therefore, the increased gas price will objectively have an adverse impact
on both the macroeconomic development and on the dynamics of inflation for
particular goods. But we see no grounds to change the inflation projections.

We believe that the inflation rate will be sufficiently moderate as a result
of last month's deflation and that we will end the year at the level of
between 11.4 and 11.6 per cent. [Passage omitted: Yatsenyuk lists food stuff
prices that may be the most affected.] - 30 -
[return to index ] [Action Ukraine Report (AUR) Monitoring Service]

Harvard Ukrainian Research Institute (HURI)
Cambridge, Massachusetts, Tuesday, 25 April, 2006

The energy question in Ukraine remains at the top of the policy and research
agenda. As part of the ongoing series of energy-related activities at the
Harvard Ukrainian Research Institute (HURI) (in particular the conference
"The Ukrainian-Russian Gas Crisis and Its Aftermath: Economic, Political and
International Ramifications, February 5-6, 2006), on April 6 the Institute
hosted Dr. Christian von Hirschausen, Chair of Energy Economics at the
University of Dresden and Research Professor at the German Institute of
Economic Research (DIW), Berlin.

In his presentation on "The Globalization of Natural Gas Markets:
Implications for Ukraine", Prof. von Hirschhausen discussed the global gas
market in the context of which Ukraine's gas crisis of early 2006 took
place, and in the context of which the new Ukrainian government will need to
frame its renewed negotiations with Russia, and, in particular, the
renegotiation of the January 4 gas trade agreements which, due to their
non-transparent nature, led to a wave of outrage in the Ukrainian public
opinion and contributed to the defeat of president Yuschenko's Nasha
Ukraina in the March 26 Rada elections.

Von Hirshausen paid special attention to the new trends in the global gas
market and their possible impact on Ukraine. The most significant new trend
is the growing use of Liquefied Natural Gas (LNG) technology, which, by
transforming natural gas from a gasified to a concentrated liquid form,
makes possible its transcontinental transportation in tankers and thus the
supplying of far away markets without the expense and high investments
required by pipeline transportation, until now the only practical way of
transporting gas.

Although LNG technology has been around for a number of years, its use
so far had been limited by the high costs involved, which made its use
uneconomical compared with pipeline transportation. As gas prices have
risen dramatically in the last years, the relative costs of liquefaction and
transportation using LNG technology have decreased, ushering in a
revolution in gas markets.

If until now gas markets, due to the limitation to transportation via
pipelines, remained overwhelmingly regional markets, the popularization of
LNG technology is leading to the development of a global gas market where
Russia, Norway, Trinindad, Venezuela, Nigeria, Algeria, Iran, Egypt and
other Middle Eastern gas suppliers must compete for markets as
geographically diverse as the Western Europe, the US, and Japan.

This affects Russia as an exporter, as it will have the opportunity to
export gas well beyond its traditional markets (to the US for example), but
also in the sense that new suppliers will have access to its traditional
Western European markets. For Ukraine as a transit country, however, the
effect will be negligible.

This is so because the transport of Russian gas to Western European markets
via pipeline remains the cheapest alternative. Because of Ukraine's
well-developed gas pipeline network and the fact that its capacity can be
significantly expanded (from its current 130 billion cubic meters (bcm) per
year to 200 bcm) at a relatively low cost, Ukraine will remain by far the
most important transit country for Russian gas.

(In this sense, Dr. von Hirschhausen, a former member of the German
government's Advisory Group in Ukraine, considers the recently announced
"Northern European Pipeline" bypassing Ukraine and Poland and linking Russia
and Northern Germany directly an uneconomical, environmentally dubious,
politically-motivated "pipe dream" "not necessary to assure West European
natural gas supply in the medium-term.")

Thus, despite changes in global gas markets, Ukraine stands to benefit
greatly from its position as most important transit state for Russian gas

Although Prof. von Hirschausen deferred judgment on the domestic political
implications of this situation to Political Scientists, the implications for
Ukraine's political development are clear: if Ukraine pursues a sensible and
well thought-out energy transit policy, it stands to benefit greatly from
its position as premier gas transit state in Europe, and could use the
proceedings (estimated by von Hirschhausen at a possible $3 billion per year
should Ukraine use its full gas transit potential) to finance both general
economic reform and the reform of its own energy system to make it more
energy efficient (Ukraine's levels of energy efficiency are today one of
the lowest in the world).

This presupposes, however, that transit policy will be decided and
implemented in a professional, non-corrupt way, free from the corruption and
non-transparent deals that have plagued most of independent Ukraine's gas
transit history, and evident in the January 2006 agreements as well.
FOOTNOTE: For more information on the domestic aspects of Ukraine's
energy situation, streaming video footage of the entire HURI February gas
crisis conference, and additional materials, please go to .
To obtain DVD copies of the conference video, please call
HURI at 1-617-495-4053 or e-mail
Dr. Margarita M. Balmaceda, Associate Professor
John C. Whitehead School of Diplomacy and International Relations
Seton Hall University, South Orange, NJ 07079 USA
Associate, Harvard Ukrainian Research Institute, Harvard University
1583 Massachusetts Ave., Cambridge, MA 02138 USA
[return to index ] [Action Ukraine Report (AUR) Monitoring Service]
NOTE: Send in a letter-to-the-editor today. Let us hear from you.
Armoured vehicles sold to Georgia by Ukraine turned out to be useless

24 Saati, Tbilisi, Georgia, in Georgian 26 Apr 06
BBC Monitoring Service, UK, in English, Thu, Apr 27, 2006

TBILISI - Georgian Defence Minister Irakli Okruashvili is starting with
Ukraine on his new mission to open up foreign markets for the Georgian wine
that has incurred the wrath of Russia's chief public health officer. This is
only the start of a long road.

The unprecedented decision [on Okruashvili's new role] made by the Georgian
president in China has spawned many conundrums for the public. Some think
that Saakashvili no longer trusts the economic team and [Prime Minister]
Zurab Noghaideli and is preparing the defence minister for the prime
minister's job.

Others believe that by giving the defence minister such an unusual task the
president is trying to weaken Okruashvili, whose approval rating once
overshadowed that of Saakashvili himself with the influence of controlled TV

Incidentally, by suggesting Ukraine as a kind of pilot project to
Okruashvili, the Georgian president, willingly or not, has created
legitimate grounds for such mutually exclusive discourse.

If we look at the first of these theories, Okruashvili, ideally, should not
return empty-handed from Ukraine where Georgian wine is protected from
political phobias. Georgia has become a sales market for Ukrainian arms
since Irakli Okruashvili became defence minister.

It has not been calculated precisely, but the tanks, infantry fighting
vehicles, armoured personnel carriers, firearms, and, finally, Kolchuga air
defence systems purchased from Ukraine have cost the Georgian budget
approximately 50m dollars. In exchange for that, hardly anyone would
reproach Okruashvili for exporting several million additional bottles of
Georgian wine to Ukraine.

On the other hand, however, things are not so simple if we consider the
other of the two theories. It is possible that Ukraine may become a kind
of Waterloo for Irakli Okruashvili's rising image.

First and foremost, it is impossible for Ukraine not to recall that its
image as an arms exporter was damaged during Irakli Okruashvili's tenure
as minister. The investigation into the purchase of inoperable armoured
vehicles in Ukraine, for which three Georgian high-ranking officers have
been imprisoned for a year now, has not yet ended in Georgia.

According to the preliminary investigation, the impartiality of which is
being questioned by many experts to this day, 38 out of 40 armoured vehicles
sold to Georgia by Ukraine's largest exporter Ukrspetseksport turned out to
be useless. At the time, Ukraine was so shocked by this scandal that
Ukrainian political circles started talking openly about the pro-Russian
nature of the Georgian government.

Even if this were not so, no-one will be able to promise Okruashvili new
shelves for Georgian wine today while negotiations on forming a
parliamentary majority in Ukraine continue, especially given that Party of
Regions leader Viktor Yanukovych, who does not have the same warm and
friendly feelings for the Georgian president as "orange" leaders Viktor
Yushchenko and [former Prime Minister] Yuliya Tymoshenko, still has a
great chance of becoming prime minister.

Therefore, Ukraine is both an easily achievable objective and an
insurmountable obstacle for Irakli Okruashvili who has so far only been
used to conquering heights in his career. -30-
[return to index ] [Action Ukraine Report (AUR) Monitoring Service]

COMMENTARY: By Jolanda Brunetti-Goetz
Il Sole 24 Ore in Italian, Milano, Italy, Tuesday, April 25, 2006
Action Ukraine Report (AUR) #691, Article 9, in English
Washington, D.C., Sunday, April 30, 2006

Eclipsed by the presence of its large Russian neighbour which for some time
has been exercising a stronger attraction on the West, the many resources
and opportunities of Ukraine - wide-open spaces and fertile land, mineral
deposits, a well-structured food and agro-industrial sector, an able
workforce and services ripe for development - have been underrated by
foreign investors.

Particularly important in this respect has been the absence of valid banking
and insurance services.
However, recently the banking system has been reorganized and liberalized,
opening the way to diversification and thus offering better support for the
anticipated expansion of local firms and the entry of foreign businesses. It
is no coincidence that important European investors have been arriving in
this region of late.

Credit Agricole (with 240 million dollars), BNP Paribas, the Austrian
banking group Raiffeisen which has bought Bank Aval for over a billion
dollars, and the Italian Banca Intesa which has just gained 1.88% of the
fourth largest Ukrainian bank, Ukrsotsbank, for 1.161 billion dollars.

The arrival of large foreign banks represents a second 'silent revolution'
as it signals the start of joint activity between West- and East-European
entities that is very promising for both. Indeed, the foreign banks too,
encouraged by limited economic growth in Western Europe, are seeking
more attractive markets ready for development.

In particular, this sector is less overshadowed by Russia, as the degree of
liberalisation achieved in Ukraine is greater than that in Russia. Hence,
this is a very attractive operation which unites various interests at a
particularly favourable time.

Economic prospects will derive from this for ... + .. present in Ukraine,
for whom the expertise brought in by foreign banks will offer a broader
spectrum of services and better access to credit at lower cost. There will
also be new opportunities for agricultural credit, essential for the
development of Ukraine. Lastly, consumers will enjoy better terms and have
access to new financial instruments for private purchases.

The new borders of the European Union have transformed Ukraine into an
important neighbour. Interest in integration is being increasingly promoted
by an economy based on Community regulations favouring exchange and
direct investments.

In fact Ukraine recently obtained recognition as a 'market economy' by the
United States which, among other things, signed with Kiev an agreement on
accessing the goods and services market, thereby accelerating the entry of
the country into the WTO.

As for the European Union, the new 'good neighbour' policy envisages the
gradual construction of the four pillars of a single market: free movement
of capital, people, goods and services. But it goes further than that:
following enlargement in 2004, Europe assigned Ukraine a central role in the
development of cross-Europe corridors.

For Italy a further fact of interest is so-called Corridor V which provides
our country with an outlet under the Alps toward the East, freeing it of the
restrictions imposed by the Alpine passes.
The purchase of Ukrsotsbank by Banca Intesa offers Italy a huge network of
branches (527) in the area and significant products already up and running
such as credit cards and mortgage loans. Furthermore, Italy's presence will
strengthen the feeble confidence of the Ukrainian consumer in credit

For example, it is estimated today that only 15% of the population has a
bank account for receiving salaries. But, more importantly, Banca Intesa may
become an essential support for Italian SMEs which are looking with interest
at a market so near and promising. And it should not be forgotten that many
Ukrainians speak or study Italian: a workforce that is often qualified and,
especially, in sustainable conditions.

Thus the Sistema Italia is taking shape. It all started with the welcome
given to the children of Chernobyl. The speculator Shevchenko was one of

This operation, which has been going on since 1986, brings into Italy about
7 thousand children for holidays with Italian families every year.
Innumerable adoptions have enabled Italian couples to offer Ukrainian
orphans a family life. In turn, the labour of so many Ukrainians in Italy
contributes to our prosperity.

This is the time to firm up relations between the two countries. The
political framework, essential for the stability sought by the markets, is
showing the way forward: the parliamentary elections of 26th March not only
confirm the democracy achieved by the system but also pro-European
orientation on all fronts - with the exception of a modest Communist party
which is already an anachronism. -30-
Jolanda Brunetti-Goetz was the Italian ambassador in Kiev from 2000
to 2004. Il Sole 24 Ore,
+ Translator's note; One or more words missing here.
FOOTNOTE: AUR thanks Andrei Spivak and Thomas Eymond-Laritaz
for sending us to this article. Mr. Eymond-Laritaz provided the English
translation for our readers.
[return to index ] [Action Ukraine Report (AUR) Monitoring Service]

ANALYSIS & COMMENTARY: Iryna Chupryna, Ukrainian Voter
Action Ukraine Report (AUR) #691, Article 10,
Kyiv, Ukraine, Sunday, April 30, 2006

This year, spring in Ukraine is cold and not sunny. On Monday, March
27, the day after the historic parliamentary election 2006, the rain didn't

The preliminary election results are not sunny either: Party of Regions
obtains above 30 percent, Yulia Tymoshenko Bloc - around 24, Our
Ukraine - 16 with the constant trend to decline.

The smaller "orange" projects (People's bloc of Kostenko-Pliusch and the
Civic coalition of PORA and Reforms and Order party) didn't overcome the
3-percent hurdle to enter parliament. In an ironic twist, votes for them
will most be redistributed to the winners, the Party of Regions and Yulia
Tymoshenko Bloc, forces for whom these voters would never cast ballots.

On Monday morning the 5th TV Channel conducts the regular interactive
poll for politically active citizens. What are impressions on the exit-poll
results: despair, joy or surprise? Most of the respondents chose "despair".
However, the team of the Party of Regions enjoys the triumph. They have
probably already started the improvement of our lives (as stated in the main
message of their political commercials). The defeated loser of the 2004
Presidential election Yanukovich now has the right to victoriously greet the
crowd as he does in the commercial.

His joy is no doubt shared by the falsifier of the Presidential election:
ex-Chairman of the Central Election Commission Sergey Kivalov, along with
ex-Persecutor Svyatoslav Piskun and billionaire Rinat Ahmetov. Those
"heroes of Ukraine" will shape the country's future and influence the
legislative process for next 5 years.

Dear voters, do you believe those people will protect your interests and
national priorities of Ukraine (such as protection and furthering of
Ukrainian language and culture, advocating the strong position of Ukraine
on international scene, etc.)?

Unfortunately, Ukrainian society is not yet mature for genuine democracy.
Having obtained an opportunity to take part in Ukraine's first truly
transparent and democratic elections, without intimidation and abuse of
"administrative resources," the Ukrainians expressed black ingratitude to
the President, giving the pro-Presidential bloc only 15 percent of votes.
Ukrainians voted for populism and "improvement of life already today".

But not only citizens and their vague civic stand are to be blamed for this
result. Above all, those patriotic political forces that simply failed in
their electoral campaign, and unpatriotic political forces that didn't spare
themselves and millions of dollars for it, are guilty for this situation.
Many voters were plainly misinformed. Apart from the limited audience of
Internet users, who occasionally and with effort could come across the
truth, the average citizen hardly knew about the skills of his favorites to
manipulate and play the hypocrite.

To give an example, virtually all the members of the faction of the Yulia
Tymoshenko Bloc in Parliament voted FOR the adoption of the law on
immunity for deputies of all levels (34 out of 41 for, 0 against). Yet, after a
couple of months, without feeling any remorse, Yulia hanged in the building
of Verkovna Rada the big banner "BYuT - against the immunity for deputies".
Afterward some MPs lost their nerve, and the regular deputies' fight

The main political Pharisee of Ukraine Yulia Tymoshenko repeatedly
proclaimed on TV: "Our government is the most successful for the whole
history of Ukraine". The successes of this "phenomenal" government expressed
themselves in the drop of GDP by 8,1 percent! (in January 2005 the growth of
GDP was 6,5 %, in August the growth rate was negative - 1,6 %, illustrates
the Committee of Statistics of Ukraine. )

Moreover, intentions to carry out the reprivatization of around 3000
enterprises scared many potential domestic and foreign investors. Also the
"people's government" of Tymoshenko presented a whole range of crises to
Ukraine: meat crisis (April-May), currency crisis (April), petroleum
(April), gas, etc.
Unfortunately, the voters of Ukraine, who took close to their hearts the
endless appeals to save the ideals of Maidan, in its majority was not aware
of the fact that exactly Turchynov (head of the electoral headquarters of
Tymoshenko, and SBU Director under her government) on the critical night of
November 21, 2004 called people to leave Maidan and go home. And only a
handful of the freezing Pora activists stayed on the Maidan.

They decided to stay until the morning. In the morning the first tents were
set up by Pora representatives and peoples deputies Stetskiv and Filenko.
They also erected the famous scene on Maidan, where the former party
functionary Tomenko acquired the title of a famous revolutionary. Where was
Turchynov at that time? Where was the "orange princess"?

Few people know that Roman Bezsmertniy virtually lived in the tent camp on
Khreshchatyk and held working meetings for the commandants of the camp each
night at 1 AM. He was responsible for a lot of necessary staff - from food
to toilets for protesters.

Meanwhile the "orange princess" called on groups of "hotheads" to storm the
governmental buildings, risking bloodshed and giving the Kuchma regime
rhetorical ammunition to potentially crack-down on "threats to public
order," as the then-President threatened to do.

In fact, we could have witnessed the Belarusian scenario, when the
opposition leader Kozulin contrary to the opinion of his allies led people
to special detention places, which resulted in numerous injuries among the
demonstrates after the violent crackdown by police.

Even fewer people know that from the end of December 2004 until the
inauguration of Yushchenko on January 23, 2005, the tent camp on
Khreshchatyk was no longer inhabited by genuine revolutionaries, but by
people backed by Tymoshenko to provide her with an outpost to fight
in case of being not appointed a Prime Minister.

She didn't spare herself to organize chanting "Yulia!" during President
Yushchenko's inauguration ceremony on Maidan, and indeed made the
President surrender to the "people's voice".
Regretfully, we have to admit that the pro-Presidential bloc Our Ukraine
totally failed in its conduct of the electoral campaign. A mere 15 percent
support for the pro-Presidential political force is above all the
humiliation for the President himself.

Our Ukraine didn't hold meetings with voters and campaigning tours across
Ukraine, while Tymoshenko in her own words, twice traveled around the globe
during the electoral campaign period. She systematically co-opted from
Yushchenko's disaffected and confused electorate, criticizing work of his
team and accusing the leadership of his party of corruption.

Our Ukraine responded with barely comprehensible justifications and without
substantive rebuttals to the charges. Huge orange billboards with the appeal
to who knows whom "Don't betray the Maidan" provoked primarily indifference
of an allergic response among people. Our Ukraine lacked charismatic
representatives who could compete for votes on the same level as the
eloquent and artistic Lady Y.

Our Ukraine failed to find a talented speaker who could comprehensively
transmit to voters the messages about the remarkable economic achievements
of the government of Yuri Yekhanurov. The prime-minister, who was really
saving the Ukrainian economy from disaster, as well as other Cabinet
members, were too busy to distract themselves for campaigning. No one
performed this mission in their stead.

Yekhanurov managed to get market economy status for Ukraine both from EU
and USA and pulled the economy out of catastrophic decline - but the voters
remembered only the haunting recitatives about "dear friends of the
President", who are stuck in the corruption and continue to rob Ukraine. But
those charges were substantiated with NO SINGLE evidence.

And messages about the trials lost by Oleksandr Zynchenko (former State
Secretary of Ukraine, who first brought the corruption charges against the
close allies of the President in September 2005) stayed unnoticed. But the
unjustified accusations raised by Brodsky, Zynchenko and Turchynov against
the allies of President lingered in the minds of Ukrainian voters.

There was nobody there to easily explain to the voters (either in the
political commercial or by grass-root work) that the sharp increase in
prices for almost all groceries in 2005 was caused by the fact that
government of Yanukovych had significantly raised pensions as a campaign
ploy before the Presidential election 2004, and the funds for this (several
billions of UAH) had been taken from the budget of the next year 2005.

The orange governments had to cope with this situation. If Yanukovych stayed
in power, the rise of prices would have been far more catastrophic. This
argument was only couple of times mentioned on TV by Viktor Pynzenyk, but
no efficient counter-reaction was developed to the populist commercials by
Party of Regions.
Yulia Tymoshenko is an endlessly power-hungry person that doesn't care
about the national interests of Ukraine. And very soon our "protest"
electorate that has bought into the populist slogans and streams of the
unjustified blames will understand this.

Having showed bad performance as the prime-minister, the orange princess
excellently carried out her electoral campaign, drawing in all the arsenal
of possible means: several influential Internet-resources and printed media,
expensive showings at the most popular TV -channel Inter, chick color
posters, which underlined her beauty, and the most important, tireless
electoral tours across Ukraine.

Even her undisputable attractiveness and good actor talent contributed to
the success, and last but not least the sympathy for a female politician,
which is a rare phenomenon in the Ukrainian society.
Our Ukraine didn't find anyone to tell the voters that the electoral list of
the Bloc of Yulia Tymoshenko is rich on genuine kuchmists and oligarchs. To
give an example - Mr. Bohdan Hubsky (# 27), member of the notorious group
of 7 comprised of Surkis brothers, and the former Head of Presidential
Administration under Kuchma Viktor Medvedchuk, who participated in all the
projects of this "Kyiv clan".

Another person on this list - Mr. Oleksand Abdullin (# 74), us a business
ally of Igor Bakay, who after orange revolution fled to Russia. In the
Verkhovna Rada of Ukraine Abdullin was a member of SDPU (o) faction,
which he left for BYuT only March 4, 2005.

On the list one can find also the Buriak brothers, bankers, whose financial
structure - Brokbusinessbank - belongs to the top ten of the biggest banks
of Ukraine, Konstiantyn Zhevago, also a well-known banker and member of
pro-Kuchma majority in the Parliament. This list can be continued.

Number 1 on the party list, the ardent fighter for justice Yulia continues
to hysterically call everywhere for "division of power and business." Dear
disappointed orange voters, who made up more than 20 percent - you were
simply cheated.

Therefore, people who think and analyze, viewed the exit-poll results with
The President Yushchenko has also committed a lot of mistakes. [1] First and
foremost was the appointment of Svyatoslav Piskun as General Persecutor, who
sabotaged the investigation of all the cases of the crimes during the Kuchma

[2] It is also the President's fault that Kushnariov (the manager of the
Yanukovich electoral campaign), who is accused in committing crimes, feels
himself a real winner and listens with disdain to a journalist's question on
1+1 TV-channel: "And what are you now going to do with Mister Lutsenko
(Minister of internal affairs) for all his eccentricity last year?"

It's painful to see the humiliation of Yuri Lutsenko, who is really one of
the most honest persons in the Ukrainian politics.

[3] The Presidential error was also to sign the Law on Immunity for Deputies
of Local Councils - this was skillfully used by Tymoshenko in her electoral
rhetoric. We can also recall his Memorandum with Yanukovych, inarticulate
press-conferences and speeches by Yushchenko.

But in any case, our genuinely patriotic, moral, honest, pro-European
President didn't deserved the slap in the face by the Ukrainian people
during the parliamentary elections. Likewise a very efficient Prime Minister
Yekhanurov, number 1 on our Ukraine list.

Dear voters, do you still believe that Hubsky and Feldman won't reach a
consensus? And that the regular division of property awaits Ukraine? Do
you really believe that you struggled for justice?

I only want the spring Sun to appear and people to see the things clearly.
"Don't sleep, my dear motherland." -30-
NOTE: Iryna Chupryna lives in Kyiv. She says she is a concerned and active
Ukrainian citizen and voter and is a staff member of the Secretariat of the
Freedom of Choice of Ukrainian NGOs" CONTACT:
[return to index ] [Action Ukraine Report (AUR) Monitoring Service]

By Peter Borisow, President, Hollywood Trident Foundation
Los Angeles, California, Friday, April 14, 2006
Action Ukraine Report (AUR), #691, Article 11
Washington, D.C., Sunday, April 30, 2006

Ukraine's future, independence and identity were all in play in the
parliamentary elections this spring as chaos menaced the political
landscape. There was a serious fracture in the Orange Coalition. Scandal
engulfed the Presidency. There were 46 different political parties vying
for a place in the eternal sunshine of the prosecution immune Verhovna
Rada. The Party of the Regions, packed with rich oligarchs and led by
Yanukovich (who lost to Yushchenko in 2004) was running first in the

Moscow and its friends had hired the best American advisors and image
makers that money could buy. Washington was, once again, trying to sit
on both sides of the fence. After the gas crisis this winter, there was
concern that the West might sacrifice Ukraine on Russia's rich gas fired

Yes, they finally revoked Jackson-Vanik, but who would potentially benefit
from that more than Ukraine's Russophilic oligarchs? Washington announced
a new Ambassador to Ukraine the week before the elections. Although it was
described as a "routine rotation", even the really stupid ones know that
routine rotations aren't done the week before a critical election.

Also of concern was the relatively low number of international election
observers this year, less than half of those in 2004. That smaller number
of international observers was, however, compensated by the large number
of poll watchers from Ukraine's many political parties.

Every party was entitled to have two representatives at the polls and many
took that literally. With so many competing eyes watching, no one was going
to pull a fast one without being noticed. Where there were any complaints,
everyone knew about them very quickly.

Complaints were mostly about mechanical issues - too few poll workers, not
enough voting booths, cramped facilities. There were as many as five
different paper ballots, some over three feet long. National, regional and
local elections were being held simultaneously. Many older voters were
confused, some taking 10 minutes in the voting booth to fill out all the

Others wandered around polling stations looking for someone to help them.
People were filling out the ballots just about any place they could find a
flat surface. The crowds waiting to get into the polling places were large,
sometimes in the hundreds.

Thank God Ukrainians are among the most patient people on earth. Although
many grumbled, most waited patiently and voted. And, once again, individual
Ukrainians proved they were equal to the challenge. The atmosphere among
the poll watchers from competing parties was collegial.

Perhaps because they had done it before, perhaps because they were just
more comfortable with the concept of free voting, this time the tension,
hostility and paranoia that was present in 2004 was simply not there.

When the polls closed at 10:00 PM, the massive task of counting all those
votes became a reality. In Dnipropetrovsk, an area expected to be
problematic - Yulia country, hotly contested by Regions - a location with
two adjacent polling stations sharing the same building provided an
interesting contrast.

One was run by an older crowd of folks who could at one time have been
party apparatchiks while the other was run by a twenty-something crowd,
the next generation. The younger group was better organized and more
efficient, but the older group was getting things right as well. Ukrainians
had adapted successfully to the democratic voting process.

The trend emerged soon after the Central Electoral Commission began
tallying the votes. Of the 46 parties that entered the election, no more
than five or six would qualify for the Rada. The extreme players, on
both the right and the left, failed to meet the 3% threshold.

While it was sad to see old nationalist warriors like Hmara miss the boat
and Pora's young veterans failed to qualify, there was palpable satisfaction
among virtually everyone that radicals like Vitrenko were left by the

None of the old Kuchma crowd survived. Even Lytvyn, who started the
campaign with over 10%, crashed and burned. Despite all the pre-election
anxiety, good old Ukrainian grass roots wisdom found the common sense
center and solidified there. By the end of the counting it was down to five
parties - Regions, the Tymoshenko Bloc, Our Ukraine, the Socialists and the

The Ukrainian people had declared their independence from the politicians of
the past. They rejected both Moscow's and Washington's plans for Ukraine's
future. They found their own political identity - Ukrainian, pro-democracy,
pro-European, free enterprise with a social conscience.

The Party of the Regions was the big loser. Although the western press was
bizarrely headlining a Regions "victory", the reality was the opposite. The
Regions group dropped from 47% in 2004 to 35%. Their only allies to
survive the election, the Communists, proved to be a dying dinosaur -
geriatrics sustained by fractured memories, IV fluids and Moscow funding.

Relentlessly retired by God onto the trash heap of history, the Communists
would not survive the next round of elections. Without them Regions was
down to 32%. All their money and slick advertising failed to make a silk
purse out of a sow's ear. In danger of becoming marginal players, Regions
will now have to change to stay relevant and avoid similar extinction.

Yulia was the biggest winner. She did not win by simply re-playing the
fiery Joan of Arc who rallied the Maidan at its darkest hours. Despite her
differences with some of the President's men, she stood her ground, always
wrapping herself in both yellow/blue and orange, always professing her
loyalty to the nation and to the President. The people loved it.

She got more votes than anyone had predicted, even making inroads in eastern
areas previously deemed solidly pro-Regions. She held the center and
captured those disaffected with Our Ukraine. She built a new, larger center
around herself. Far from being just a pretty face who could give a good
speech, Yulia Tymoshenko proved she is one of the smartest politicians in

The second winner, albeit so far unsung, was President Yushchenko. To
appreciate his success, we need to put in perspective the Orange Revolution
and his role in it. After the scandal of the second round in 2004, world
politicians started looking for a "win-win" solution, a compromise that
would be a "Victory of the Two Victors" (Yushchenko and Yanukovich) -
a division of influence in Ukraine between Moscow and the West.

It was the half million ordinary Ukrainians who stood in the Maidan and
refused to leave who turned the crisis into a real victory for Ukraine.
They made the Orange Revolution a success and they chose their heroes.

Yuschenko's fate was sealed by the ham-fisted attempt to kill him. He
became the inescapable face of the revolution - a face that suddenly
reflected all the evils that had persecuted Ukraine throughout its history
and tormented its present.

When he was inaugurated as the democratically elected President of Ukraine,
he didn't just have to hit the ground running - he was expected to work
miracles, to instantly fix not just decades, but centuries of wrongs.

Yushchenko was stuck with the previous corrupt regime's hostile legislature.
His inner circle of trusted friends had experience mostly in opposition and
revolution. The transition to trustworthy allies capable of governing was
not only inevitable but also inevitably tumultuous.

Along the way, Moscow, still dreaming of regaining its rapidly atrophying
empire, did everything imaginable to destabilize Ukraine. And, Ukraine's
oligarchs and wannabe oligarchs, interested only in whatever would make
them rich or even richer, grabbed what they could for themselves while the
party lasted.

Despite all this and his constant and painful health issues, Yushchenko took
Ukraine through a democratic election process that can serve as a model for
any country in the world. Ukraine is proceeding united into the future as a

Three hundred fifty years of Russian colonialism, even a quarter century of
genocide that killed 18 million people, fully half of its 36 million
population, had not destroyed the Soul of Ukraine. Little more than a year
after being given their first opportunity in three and a half centuries,
Ukrainians slipped comfortably and safely into democracy.

The third winner was Moroz. Long maligned as a Trojan horse by his rivals,
the head of the Socialist Party proved to be a mature leader, neither taking
advantage of his leverage to gain personal wealth nor holding out for
impossible terms.

As Interior Minister, the Socialist's Lutsenko became a symbol of the war
on corruption and one of the most popular members of Yushchenko's
government. As soon as the vote was clear, Moroz was the first to stand
front and center, ready to do his bit for the democratic coalition.

The biggest winner, of course, was Ukraine itself. Now, there is no doubt
there will be a free and independent Ukraine in our children's future. For
a while, at least, our sacrificed ancestors can rest in peace. How fitting
that a new Ukraine, free, democratic and Ukrainian, has risen this spring,
right on the eve of Easter. -30-
[return to index ] [Action Ukraine Report (AUR) Monitoring Service]
If you are receiving more than one copy of the AUR please contact us.
Communists now just a rump group facing a strong parliamentary coalition

OP-ED: By Marco Levytsky, Freelance
Edmonton Journal, Edmonton, Canada, Saturday, April 01, 2006

Last weekend's parliamentary and local elections in Ukraine may well go down
as a watershed event in that country's so-far brief history of independence.
While much attention has been focused on the party standings and the
personalities involved, there are several elements to these elections which
may be more significant in the long term because they reflect fundamental
changes in societal values.

FIRST, these were "the first genuinely free and fair parliamentary elections
in the country," according to the International Election Observation Mission
which monitored them. They were preceded by the first campaign in which all
parties received fair coverage and the media was free from government

This, in itself, is a major accomplishment and shows the democratic
achievements of the Orange Revolution have taken firm root. Once in place,
they will be most difficult to dislodge.

SECOND, this election marks the almost total collapse of the once-powerful
Communist Party of Ukraine. This party, which was the strongest political
force in Ukraine during the '90s and ran a strong second in the 2002
parliamentary election with 20 per cent of the popular vote, plummeted to
only 3.6 per cent in this election -- just barely passing the minimum
three-per-cent barrier required for qualification.

Had the barrier not been lowered to three from four per cent in the recent
electoral reforms, the Communists would have been wiped off the political
map altogether. Nevertheless, considering their current standing and the
average age of their supporters, this election most likely marks their last
gasp in Ukrainian political life.

While the Party of Regions of former prime minister Viktor Yanukovych, to
which the Communist vote moved en masse, has embraced many of their policies
and remains the chief representative of the old Communist hierarchy, or
nomenklatura, it at least pays lip service to democratic principles and has
rejected the totalitarian past. This is one step in the right direction.

The collapse of the Communists has been accompanied by the rise in support
for parties espousing democratic values. Whereas in 1998 only Rukh (with
nine percent of the vote) passed the four-per-cent barrier, the three Orange
coalition parties now have an absolute majority in parliament.

This has as much to do with the transformation of existing parties as it
does with a shifting electorate. The Socialist Party of Ukraine, which began
in 1992 as a refuge for the then disenfranchised Communists, and continued
as an erstwhile ally of the reconstituted CPU throughout the '90s and the
early part of this millennium, have been gradually transforming themselves
into a European-style social democratic party.

They're now among President Viktor Yushchenko's most loyal allies, second
only to his own Our Ukraine. The firebrand revolutionary Yulia Tymoshenko
first entered parliament in 1998 as part of the Hromada faction, the
political wing of former prime minister Pavlo Lazarenko's Dnipropetrovsk
clan. Following Lazarenko's arrest for money laundering in the U.S., she
took over that power base and transformed it into what became her own
democratic movement.

Changes may even be on the horizon for the Party of Regions itself.
Billionaire Rynat Akhmetov is emerging as the fresh new face to replace the
corruption-tainted Yanukovych. Akhmetov, who was elected to parliament on
the POR list, also bankrolled the recent campaign, hiring a number of U.S.
consultants to help conduct its course.

Unlike the 55-year-old Yanukovych, the 40-year-old Akhmetov is more in tune
with the post-Soviet entrepreneurial class. A Russian-speaking ethnic Tatar,
Akhmetov has recently started taking Ukrainian lessons -- a sign he may be
considering a more active political role. Akhmetov speaks of running a
government of "professionals" who would promote economic growth. He could
find a common language with Our Ukraine's technocrats.

Finally, this election also marks the first time that one political
coalition has managed to get an absolute majority in parliament. Previous
parliaments were seriously fractured, which led to ever-shifting alliances
and continuous instability.

Though the nascent democracy faces many challenges, not the least will be
the ability of the Orange coalition members to overcome their personal and
ideological differences and move the country forward, the undercurrents that
fed this watershed will continue to move Ukraine in a definite direction --
further from Russia and Belarus, and closer to her EU neighbours.
Marco Levytsky is the Editor and Publisher of the Ukrainian News.
[return to index ] [Action Ukraine Report (AUR) Monitoring Service]
Send in a letter-to-the-editor today. Let us hear from you.

COMMENTARY: By Oksana Bashuk Hepburn
Canada, Friday, April 7, 2006
Action Ukraine Report (AUR) #691, Article 13
Washington, D.C., Sunday, April 30, 2006

Ukrainians should be proud of what they accomplished during the
parliamentary elections on March 26. They choice reaffirmed their support
for the values of the Orange Revolution: a pro-West president, clean-up of
corruption and greater economic wealth through the re-privatization of
questionably acquired state property. Around 42%, gave the parties
belonging to the Orange forces their vote-the go-ahead to form a government
to implement this platform.

However, President Victor Yushchenko does not appear to be listening. After
nearly two weeks, there is little progress to form a government even though
Ukraine badly needs one. There is little clarity why the Orange power
parties-- Yulia Tymoshenko's Bloc with 129 seats in the Rada, Nasha
Ukrajina with 81, and the Socialist Party with 33-a total of 243-- are not
being asked to get going.

At present, the President is calling for unity among the winners-it sounds
like he is including the pro-Russia Party of Regions with 186 seats. Why?
The Orange forces don't need this union to govern. Moreover, in a democracy
monolithic unity is not a good idea: without a strong opposition to serve as
people's watch-dog, there is temptation for the insiders to cut favourable
deals for themselves.

Given Ukraine's record of government corruption, associated with the Party
of Regions in particular, such cronyism is highly undesirable. Equally
important, Russia's ability to manipulate Ukraine's government policy in
its own interest-opposition to NATO and concentration of the former USSR's
nuclear power in its hands-- could make a coalition government, without a
strong opposition, dangerous to world peace.

Besides, thank-you very much, Ukraine has had nearly a century of the
ultimate in political unity: communist dictatorship. Ukrainians should be
every mindful of the dangers political unity carries.

By stalling, the President is undermining the will of the people and not
helping him own reputation. Many blame him for splitting the Orange vote
during the elections by firing former Prime Minister Yulia Tymoshenko.
Despite this, and thanks to her party's commanding win, the three Orange
parties obtained enough votes to form a government for the next four years.

For this she seeks, and rightfully deserves, the position of the Prime
Minster. Asking her to put her political interests aside at this juncture,
is inappropriate and begs the question: where do the President's interests

The President's interests have not always been clear. After the 2002 Rada
elections, Mr. Yuschenko allowed more than 20 of his party members to
cross to President Kuchma's side, thereby loosing the rightfully won Nasha
Ukrajina majority. Before that, there was his prominent absence from the
anti-Kuchma demonstrations aimed at ousting his corrupt pro-Russia

He has made other questionable moves like firing former Prime Minster Yulia
Tymoshenko. Some say he did it twice: last year, and at the bidding of
president Kuchma in the late 1990's. Some of his statements in the recent
elections campaign were unhelpful by drawing attention to unfulfilled
promises of the Orange Revolution.

For instance, he spoke of punishing violators of the electoral process while
the key violator of the 2004 elections, Sergij Kivilov, head of the Central
Elections Commission was enjoying a sinecure as head of the justice
department in Odessa's university. Even more incredulously, he ran for a
seat in parliament on the Party of Regions ballot and now may be asked to
join the ruling coalition!

The President's ineffective politics culminated in the gas fiasco with
Russia. The situation to Ukraine could have been dire if the European
Union, fearful that its gas may be cut-off, had not cried foul. But why did
the President of Ukraine not lead the charge and cry foul when his own
people were in danger of freezing? Why the hush-hush RosUkrEnergo deal?
And why the on going lack of transparency on this matter?

To redeem himself, President Yuschenko must stop stalling and call for the
formation of the government. If he is the pro-West democratic Ukrainian
patriot of the Orange Revolution, he needs to ask Yulia Tymoshenko to form a
government now. That was their vote. A true democrat will honour the will
of the people.

However, if he is being lured into another sphere -one that, perhaps,
favours Russia's interests over Ukraine's; is pro-oligarch rather than pro
the people; or however is bound from responding clearly and transparently to
the voters' choice, he will vacillate.

He will do this by calling for unity dialogues, rationalizing the election
results, catching paralyses by analyses, and stall until some powerful hand
forces an option favorable to its self-interests, rather than those of
Ukraine. This is the danger for Ukraine.

That force might be Victor Yanukovych of the Party of Regions. However,
having lost nearly half of the support he had during the presidential
elections of 2004, neither Russia nor the oligarchs see him as a winner.
More than likely, it will be the Party's real money and power man, Renat

Considered one of the richest men in the world by Forbes magazine, on
questionably acquired state properties in Ukraine, the lofty position as
Prime Minister of the second largest country in Europe, will be good for

He aspires to be an international entrepreneur with a seat on international
stack exchanges, including London's. This requires not only money, which he
has, but respectability and gentrification, both of which come with a prime
minister's title. But is this good for Ukraine?

The people did not think so. They did not choose this. Against all odds,
they rallied around Yulia Tymoshenko. They elected her at the expense of
the Party of Regions and the likes of Mr. Akhmetov.

The President can respond to the will of the people or to other interests.
His reputation in history and the future of Ukraine lie in his choice.
NOTE: Oksana Bashuk Hepburn is the President of U*CAN, a consulting
firm in Canada, a former OSCE elections observer in Ukraine, and a
commentator. Contact:
[return to index ] [Action Ukraine Report (AUR) Monitoring Service]

PERSPECTIVE: By Geoffrey Berlin, The Globalist
Washington, D.C., Wednesday, April 12, 2006

President Viktor Yushchenko and his Our Ukraine party have suffered a
stinging blow just one year after Ukraine's Orange revolution. As Geoffrey
Berlin argues, a broken compact of integrity has created a lack of
confidence in Yushchenko's government - and he now faces the difficult task
of creating a coalition from a position of weakness.

It is rare to see such a flameout as Ukraine's President Viktor Yushchenko
and his Our Ukraine party have suffered in the year from Ukraine's Orange
Revolution to the country's March 2006 parliamentary elections.

The Ukrainian people catapulted Viktor Yanukovitch and his Party of Regions
back to the forefront of politics with a first place finish with 32% of the
vote, after coming up on the losing side of Ukraine's Orange Revolution.

They dealt another blow to Yushchenko by giving the former "Orange" prime
minister Yulia Tymoshenko's Fatherland party 22% of the vote, well ahead of
Yushchenko's Our Ukraine party with 14%.
Democracy is indeed vibrant and coherent in Ukraine. Those who supported
Yanukovitch in the presidential election confirmed that Yushchenko's
performance as president has not led them to rethink their original choice.

Likewise, a majority of the "Orange" voters have chosen to sanction the
president by backing Tymoshenko.

Despite a flourishing of civil society during the last year, with a newfound
openness for the Ukrainian press and media, why have Yushchenko and his
coalition partners not been able to expand their base? And why did
Yushchenko's Our Ukraine party lose so much ground to Tymoshenko's
Fatherland party in these elections?
Were expectations unrealistic after the Orange Revolution, with people
expecting "too much, too fast"? Did Ukraine's economic slowdown trump
Yushchenko, with GDP growth declining from 12.1% in 2004, when
Yanukovitch was prime minister, to 2.6% in 2005, when the Orange coalition
came to power?

Speaking directly with Ukrainians, one finds a different reason: There is a
heightened sense of disillusionment, particularly among those who supported
the Orange coalition parties. Taking a taxi in Zhitomir, about 80 miles west
of Kiev, a few months before the elections, I asked the driver what he
thought about the political situation.

"I had never concerned myself much with politics," he said. "But I went to
Kiev and spent three days and nights out on Maidan in the bitter cold for
the Orange Revolution, and now I'm fed up with these Orange politicians."

I hear the same message from the person who sweeps the tennis courts in
Kiev, from secretaries in offices and the managers in those same offices,
even from civil servants in the government.

What are the people of Ukraine so fed up about?
The Orange Revolution was first and foremost a compact of integrity with
the people. When Yushchenko dismissed the Tymoshenko government in
September, he acknowledged that the government's compact was not being
fulfilled, stating that "at some point my colleagues simply lost the team
spirit and faith.. I am convinced that it was not for this that millions of
people stood in squares."

Yushchenko was right, but his own compact with the people was already
fragile. A few months earlier, he had stepped forward to defend his justice
minister, who had been exposed for misrepresenting his education
credentials. "If the justice minister is not held accountable for speaking
the truth," was the common refrain in Kiev, "then who in government will

In July, Yushchenko lashed out at a journalist for questioning why his
19-year-old son was driving a high-end BMW and flaunting a platinum cell

He later apologized, but his reactions with the justice minister and his son
led people to question his personal commitment to end corruption and embrace
a greater transparency in government.
In the meantime, investigations into high-profile political crimes, for
which Yushchenko had promised answers and justice, remain unsolved, such
as the murder of journalist Georgiy Gongadze, Yushchenko's own poisoning
during the presidential election campaign and the electoral fraud that
precipitated the Orange Revolution.

Moreover, when Yushchenko dismissed the Tymoshenko government in
September, he created the impression that he was diverting attention from
allegations of corruption that the state secretary in the presidential
secretariat, Oleksandr Zinchenko, had leveled against people in Yushchenko's
inner circle.
Yushchenko then signed a political pact with Yanukovitch to secure the
support of the Party of Regions for his nominee for prime minister, Yuriy

One point of the pact called for "the impermissibility of political
repressions against the opposition," effectively offering amnesty to
perpetrators of voter fraud in the presidential election.

This pact marked the effective dissolution of the Orange coalition, just
nine months after coming to power, and Yanukovitch's return to the forefront
of Ukraine's political stage.

The Ukrainian people's confidence in Yushchenko eroded further in January,
when his team signed a gas deal with Russia in which a holding company,
Rosukrenergo, was named to supply all of Ukraine's gas imports.
Gazprom officials claim that they own 50% of Rosukrenergo and that the other
50% stake is held anonymously by Ukrainians. Yushchenko claimed ignorance
when asked who was behind this stake: "I don't know," he said, "they may be
Ukrainians, but I really don't know who these people are."

Does the president really not know which Ukrainians are allegedly behind a
company with so pivotal a role for Ukraine's energy security?
Now that the people have spoken, it is Yushchenko's turn to choose. With no
party holding an outright majority of seats, a coalition must be formed
between at least two of the three leading parties to form a government.

Weakened by this electoral setback, Yushchenko nonetheless holds the cards
to choose between an "Orange" majority with Euro-Atlantic ambitions or a
majority with a pro-Russian tilt that covers Yanukovitch's electoral base
and is more appeasing toward Ukraine's leading business interests.
For a reconstituted Orange coalition to succeed with a thin majority of 54%
of seats in parliament, Yushchenko and his party would have to respect the
voice of the "Orange" voters and cede control by making the necessary
concessions for Tymoshenko to establish a cohesive team.

Such a coalition would have to overcome past tensions from Tymoshenko's
stint as prime minister, when she led a campaign of retribution toward
Ukraine's leading business interests. Yushchenko sought to heal such rifts
after her dismissal with the appointment of the Yekhanurov government.

Yanukovitch's first place victory and the internal pressures at play could
point toward a Yanukovitch-Yushchenko alliance, with at least 59% of seats.

This would require overcoming the divergent priorities of integration with
the West or expanding ties to Russia and the East, as Yanuovitch espoused
during his election campaign.

This would also cede control back to the very person who just over a year
ago was imploring then-president Leonid Kuchma to quash the Orange
Revolution protests in Kiev to affirm the results of a fraudulent vote that
would have given him the presidency.
Wishful thinking

Is it wishful thinking to consider that Yanukovitch and his Party of Regions
have turned over a new leaf, embracing greater transparency and integrity in

On April 4, Ukraine's parliament voted to lift the immunity of prosecution
for local council deputies, an important step toward cleaning up local
government. The measure received the least support among Yanukovitch's
Party of Regions, with only one deputy supporting it.

A third alternative to form a government would be a grand coalition of the
three leading parties, with an absolute majority of at least 88% of seats.
This would be the worst possible outcome: Ukraine needs above all a strong

A grand coalition would be a tenuous alliance and a recipe for corruption,
where these parties could collude by divvying the economic spoils of power
among the business interests that back them.
The question of who will lead the opposition is just as critical as who will
lead the government. Tymoshenko established her credentials in opposition in
the lead up to the Orange Revolution and since the dismissal of her

Yanukovitch has also demonstrated his capacity for leadership in opposition,
which would only be strengthened by his recent electoral success - although
his democratic credentials remain tainted from the presidential election.

However Yushchenko chooses, he must respect the voice of the Ukrainian
people at the urns and then govern to restore his compact with them. -30-
Geoffrey Berlin is Managing Director for Ukraine of GlobalNet Financial
Solutions, LLC., an investment banking firm based in Washington D.C.,
where he is leading the development of projects in the energy, industrial
and financial sectors.

He is also the founder of the Hertz Rent A Car franchise in Ukraine, which
he launched in March 1998. From 2001 to 2003, Mr. Berlin was the Chief
Executive Officer of First Tuesday Ltd., a global business forum company
in the areas of technology and entrepreneurship. From 1988 to 1992, Mr.
Berlin worked with Corporate Values Associates, a French-based
management-consulting firm.

Mr. Berlin has served as the Vice President of the European Business
Association in Kiev, which brings together over 200 European businesses
that operate in Ukraine. He is also the Founder and chairman of Democrats
Abroad Ukraine. Mr. Berlin received an MBA degree from the Wharton
School at the University of Pennsylvania in 1988, and an AB degree with
honors from Dartmouth College in 1984. ( )
[return to index ] [Action Ukraine Report (AUR) Monitoring Service]

By Anne Applebaum, Op-Ed Columnist, The Washington Post
Washington, D.C. Wednesday, April 12, 2006; Page A17

KIEV, Ukraine -- Tell someone in the Ukrainian capital that you have an
appointment with President Viktor Yushchenko, and you will quickly be
showered with advice, suggestions and requests. "Please, tell him to ask the
Americans to fund Radio Liberty," one woman begged. Another gave me a
book she had published, asking me to pass it on.

A Ukrainian journalist said not to bother asking Yushchenko whether he had
yet found out who had attempted to poison him with dioxin during the bitter
2004 presidential election campaign: Surely he knew the criminal's identity
perfectly well. Instead, he said, it would be more interesting to find out
why, exactly, the president had withheld this important information from the

Particularly given the atmosphere of semi-hysteria that surrounds the
president -- the extra-high security, the canceled and rescheduled
appointments, the multiple telephone calls from multiple aides -- this sort
of talk made me feel as if I were about to encounter a remote, all-powerful
figure, the sort of politician who can make things happen with the snap of a
finger. And at some level, this is indeed what Ukrainians expect their
president to be.

Consciously or otherwise, they assume that their democratically elected
leader has the same omnipotence that their communist leaders once had, the
same bureaucratic resources, even the same access to secret information. He
can get the Americans to fund Radio Liberty, help a publishing house survive
and manipulate information about infamous crimes, all at once.

But, of course, he does not have the same powers and resources, as
Yushchenko himself makes clear. I met him in his office, a vast room whose
pretentious, palatial design has been hidden beneath the president's equally
vast collection of Ukrainian folk art.

One of the first things he told me was that the criminal investigation into
his poisoning had stalled. When he first came to office, the Ukrainian chief
prosecutor -- still loyal to the previous, post-communist regime -- had
dawdled, prevaricated and let the top witness in the case depart for Russia.

The president, whose face is still mottled by side effects of the poison,
said that Ukrainian authorities had asked the Russians to hand the witness
over for questioning. And? He shrugged. "You see how it is," he said.

In any country, poor relations with a larger neighbor could damage a
president's political career. But for Yushchenko they pose a particularly
difficult problem. Far from omnipotent, he is surrounded by corrupt
officials, many of whom are easily won over by a Kremlin awash in oil money,
most of whom are still loyal to the previous, pro-Russian, post-communist

As president in a parliamentary system, his powers are limited in any case,
but in Ukraine, where secret information his police officers intercept is
more likely to be sent to Moscow than given to him, they are almost

This might be true even if the Russian government were deeply committed to
keeping Yushchenko in power: But Russian authorities have never tried very
hard to hide their disapproval of Yushchenko, who was declared winner of
the election only after mass demonstrations -- the Orange Revolution -- of a
kind the Russians themselves fear.

Yushchenko speaks carefully about this problem, calling the Russian decision
to switch off Ukraine's gas in January a "development that didn't help our
relations" and describing his personal relations with Russian President
Vladimir Putin as "very good."

He also tried to be positive about Russia and Ukraine's attempts to resolve
their long-standing disputes: over borders, over Russian naval bases on
Ukrainian territory, even over historical issues such as the Ukrainian
famine of the 1930s, which Ukrainians remember as an attempted genocide
and Russians don't officially recognize at all. Commissions had been set up,
Yushchenko said, and committees had been established. But not much, he
conceded, has been resolved.

Some of this explains, at least in part, the poor performance of
Yushchenko's political party in Ukraine's recent parliamentary elections
(which, incidentally, he calls "the most successful in Ukrainian history,"
because they were the first to be conducted without "allegations of tricks
by the authorities").

True, many around Yushchenko agree that his party ran a strangely inept
campaign. The breakup of the "Orange Coalition," the group of politicians
who put him in power in 2004, didn't help either. Yushchenko himself told me
that many Ukrainians saw the coalition as a "political ideal" and have been
disillusioned by the economic and political disagreements that have haunted
the diverse group since they united to bring him to power.

Nevertheless, the unusually large gap between his supporters' extremely high
expectations and his own extremely limited authority are an important source
of the growing disappointment with his presidency, too.

When I emerged from my interview with him, my acquaintances in Kiev again
peppered me with questions. What had he said? Why hadn't he convicted
anyone of electoral fraud? Why were his reforms taking so long?

They suspected a conspiracy, assumed there must be a secret explanation for
the slow pace of political and economic change. But the truth seems much
more straightforward to me. There is Yushchenko, alone in his big office.

There is Ukraine, a country of 50 million people. And in between the two are
thousands of people -- civil servants, politicians, journalists, business
people -- who have deep financial and personal interests in maintaining the
corrupt status quo.

For Ukraine, the Orange Revolution was the easy part, compared with what
lies ahead. -30-
Contact Anne Applebaum,
[return to index ] [Action Ukraine Report (AUR) Monitoring Service]
Letters in reply to Op-Ed article by Post Columnist Anne Applebaum
by Ukraine Ambassador Oleh Shamshur and Tammy Lynch

LETTERS-TO-THE EDITOR, The Washington Post
Washington, D.C., Tuesday, April 25, 2006; Page A22

Post-Orange Revolution Ukraine, with its vibrant democracy, thriving civil
society, bustling cultural life and maturing market economy, is far from
Anne Applebaum's picture of a stagnating country mired in disillusionment
["Poison and Power in Ukraine," op-ed, April 12].

The most recent Ukrainian elections, which Ms. Applebaum mentioned only in
passing, were an event of historic significance -- transparent, democratic
and fair, with equal opportunity for all to participate.

True, the past year has brought sometimes painful lessons in democracy and
economic reform. No one, however, should disregard Ukraine's achievements
in ensuring freedom of expression, dismantling shadowy economic schemes,
combating corruption, and pursuing a realistic and coherent foreign policy.
The role of President Viktor Yushchenko in all these areas has been

Ukraine still has a significant "to do" list, but it is continuing its
movement along the path of reform to an anchorage among the community
of democratic nations. That was the real verdict of the voters on March 26.
The post-Soviet stage of Ukraine's development is over.

Embassy of Ukraine, Washington
Anne Applebaum suggested that Ukrainian President Viktor Yushchenko
has been unable to push through reforms because his powers are "almost
nonexistent." That is unsupported by the facts.

Throughout 2005 Mr. Yushchenko had more authority than most presidents in
the world based on his office's significant powers of decree and personnel

While Ms. Applebaum suggested that the investigation into his poisoning
stalled because a prosecutor loyal to the former regime remained in place,
the president had the power to dismiss the prosecutor on the first day of
his term. He also had the opportunity to dismiss the corrupt officials who
she said now surround him.

Ms. Applebaum implied that little was accomplished in 2005 in Ukraine.
Important reforms did occur, just not the radical reforms promised during
the revolution. The question, then, is not whether Mr. Yushchenko possessed
the power to push through these reforms, but why he did not -- or could
not -- do so.

TAMMY LYNCH, Kiev, Ukraine
The writer is a senior fellow at Boston University's Institute for the Study
of Conflict, Ideology and Policy. ( )
[return to index ] [Action Ukraine Report (AUR) Monitoring Service]

Kyiv Post, Kyiv, Ukraine, Wednesday, Apr 19 2006

Ukraine's Orange Revolution was above all a revolt against fakery and fraud.
By 2004, local vocabulary had filled up with terms like 'political
technology' and 'administrative resources', as though these were perfectly
acceptable technical aspects of post-Soviet politics.

Over the last 16 months, I have always felt that Ukrainian voters would
initially have forgiven a lot economically, if the first two Orange
governments had done more to cleanse the system of such practices. Instead,
they put economics before politics, hoping to buy votes in the run-up to
2006, and in a crude overture to voters in the south and east.

And of course the economy suffered. But how much has changed politically?
The first obvious difference for the 2006 elections is that we heard much
less about (normally Russian) 'political technologists' this time around.
They were still employed on lucrative contracts, but were not strutting
around Kyiv like an occupying army, or constantly pronouncing from on high,
as masters of the universe. Indeed, the Ukrainian market has opened up to
the outside world and become more of a normal PR market.

The Party of Regions, which gained the most votes in the March 26 election,
employed Americans. President Viktor Yushchenko's Our Ukraine worked with
Russians like Stanislav Belkovsky, according to rumor at least, without of
course accepting a Russian agenda.

The second obvious difference is that fake parties were much less successful
this time around. Ukrainian voters have wised up to 'big board parties',
whose million-dollar budgets made minimal impacts. Many of the supposedly
omnipotent oligarchs miscalculated badly this time. Tycoon Viktor Pinchuk
failed with Viche.

Tycoon Oleksandr Yaroslavsky failed with outgoing parliamentary speaker
Volodymyr Lytvyn. The Industrial Union of Donbass failed with Eko+25%.
(The anti-Western) Ne tak! was too negative, or perhaps just too confusing.
Nobody wanted to vote for a double negative, 'No to No to (former
President Leonid) Kuchma'.

Ironically, there was a 'third force' electorate out there - 21 percent
voted for smaller parties that failed to cross the 3 percent barrier - but
no single project tapped its potential. Lytvyn's party was the biggest
failure in this respect. Its campaign was too long. Its inclusive 'My' (We)
appeal, neutral green colors and pitch to rural voters was just a bit too
rich for a party of urban multi-millionaires.

Its attempt to portray itself as the civilized party between the warring
extremes was just a bit too absurd for a party that in reality functions
like the Oakland Raiders in the NFL or Blackburn Rovers in the English
soccer league - the teams where all the bad guys eventually end up.

Nor was the negative impact of fake parties as important as in the past.
Collectively, they took over a fifth of the vote away from the winners, but
neither side suffered disproportionately; unlike in 2002, when 'fly' parties
took most of their bites out of the then opposition, or in 1998, when they
mainly swarmed around the left.

That said, if Natalia Vitrenko's 'Popular Opposition' bloc were to succeed
in its appeal against the results, then the parliamentary arithmetic would
suddenly look a lot different. The Orange parties currently have a majority
because their three parties took three over-representations from the
'proportional representation' system, whereas this effect was much smaller
for the one-and-a-half parties on the other side (Regions, the Communists).
In other words, only a few more votes for Lytvyn (2.43%), Vitrenko (2.93%)
or Viche (1.74%) may have swung the election.

The result is a strange imbalance in the new Rada. On the one hand, Akhmetov
is the only major oligarch with a (sub) faction of his own - Regions. On the
other hand, every faction now has its 'sponsors'. Our Ukraine has its 'dear
friends', but former Prime Minister Yulia Tymoshenko's bloc has the likes of
Vasyl Khmelnytsky, who was previously notorious for helping Kuchma set up
fake opposition parties to compete with the real opposition; and Bohdan
Hubsky, one of the Kyiv business elite's not-so-magnificent-seven. The
Socialists have Andriy Derkach and 'metallurgists' like Volodymyr Boiko.

Are the oligarchs, large and small, now so ubiquitous that they will shape
the new system, or will the new system dictate to them? Significantly,
Voloymyr Boiko failed to deliver his home-town vassal vote in Mariupol.
Pinchuk and Yaroslavsky have sought to clean up their images after their
recent deals with Banca Intesa and BNP Paribas (to which the two tycoons
recently sold their Ukrainian banks). Akhmetov's recent attempts to fold his
old businesses into more transparent daughter companies like MetInvest and
Embrol Ukraine may mean him taking the same route.

The prevalence of business sponsors on all the party lists, however, meant
that even the Orange parties fought the elections with a certain virtual
veneer. Tymoshenko's ads promoted the message that social 'justice' was
provided by her own 'heart' when she was prime minister, and sought to
identify her conscience with the nation's own. Her outfits carefully matched
the campaign's colors.

However, the 'virtual' part of Tymoshenko's campaign was well-tuned to her
'real' message. 'Justice' was what Orange voters wanted. Tymoshenko's
campaign has also set her up well for the next phase. If Our Ukraine does a
deal with Regions, her eponymous party may well eclipse it completely. If
Our Ukraine does a deal with her, all eyes will be on whether she can
deliver 'justice' in government.

Our Ukraine's campaign has already been forgotten. It wasn't particularly
'virtual'. It was just bad. The 'Don't betray the Maidan!' slogan prompted
the obvious thought that this was precisely what the Yushchenko team had
already done. And at a time when voters were desperate to revitalize the
Orange Revolution, it was far too backward-looking.

Other aspects of the old political system are alive and well. The political
technologists may have taken a back seat, so that there were fewer 'active
measures' in 2006, but it will take years to disentangle the web of
corruption that feeds 'information wars' and the Ukrainian addiction to

There was plenty of shocking negative campaigning, such as the flyers
depicting Tymoshenko as menopausal. There were so many PR 'hits', like
he Pukach 'disclaimer', that it is still difficult to distinguish virtual
scandals from real. Continuing information wars may also give virtual
parties a new lease on life as channels for black PR, as with the notorious
ads for Za soyuz.

Ultimately, the revolutions we remember are the ones that earn labels, the
ones that come to symbolize great changes of epoch, like the 'springtime
of nations' in 1848 or the Iranian 'Islamic revolution' in 1979. Future
historians will continue to write of the 'Orange Revolution', if 2004
acquires adjectives beyond mere color, i.e., if the changes in Ukraine come
to be seen as a turning point in the region, after which politics moved away
from the 'technology' of trickery and actually began to improve people's

So far, however, apart from an arguable immediate impact in the Romanian
election of December 2004 and some inspiration of the half revolution-half
coup in Kyrgyzstan, the Orange contagion has failed to spread to other
states. It has inspired movements, but no actual repeat performances. So
far, negative lessons and the spread of counter-technology have been more

The Belarusian election, for example, was won through an overdose of
'administrative resources', but equally important were new
counter-revolutionary 'technologies'. The authorities prevented any
meaningful parallel count or exit poll that might have served to set off an
'electoral revolution'. They also made it difficult for the opposition to
replicate the tactics of 'strategic non-violence' advocated by the likes of
Gene Sharp, by maintaining a united front and cutting off communication
with potential hinterlands of civic support.

They also used 'political technology' (Gleb Pavlovsky visited Minsk before
the vote). As in 2001, Siarhei Haidukevich was again used to fake the
politics of protest and split the opposition vote. But more serious
questions should be asked about the fourth candidate, Aliaksandr Kozulin,
long-rumored to be a Russian 'project'.

Certainly, his rash call for direct action on the key day of demonstrations,
Saturday, March 25, provided the authorities with the excuse they needed to
crack down, and gave them the virtual 'story' they needed for the domestic
audience. It will be interesting to see how much Lukashenka now 'owes'
Russia for its help.

So at least the contrast with Ukraine is now remarkable. Politics in Ukraine
is a long way from becoming totally clean, but it has already moved a long
way from the regional norm. We should not forget the progress that has been
made since 2004, but we should also not underestimate the strength of the
old system to fight back. -30-
Andrew Wilson is the author of "Virtual Politics: Faking Democracy in the
Post-Soviet World" and "Ukraine's Orange Revolution," both published by
Yale University Press. Contact: Andrew Wilson
[return to index ] Action Ukraine Report (AUR) Monitoring Service]

Voice of America (VOA), Washington, D.C., Thursday, April 20, 2006

WASHINGTON, D.C. - Veteran Voice of America journalist Adrian Karmazyn
has been appointed Chief of VOA's Ukrainian Service. Karmazyn, 45, joined
VOA in 1988, as an international radio broadcaster in the Ukrainian Service.

He served in this capacity as a reporter, writer, producer, translator,
announcer, and also served as a correspondent in Kyiv, Ukraine. Since 1999,
Karmazyn has served as Program Manager of VOA's Ukrainian Service. During
that period the Ukrainian Service significantly expanded its network of
reporters in Ukraine and its cooperation with FM affiliates.

In addition, Karmazyn oversaw the reorganization of Vikno v Ameryku (Window
on America), a weekly TV magazine program, the launch of the daily Chas-Time
television program and regular interactive satellite feeds with TV networks
in Ukraine.

Karmazyn is a native of Cleveland, Ohio. He completed a B.A. in History at
Ohio State University and a M.A. in Russian and East European Studies at the
University of Michigan. -30-
VOA's Ukrainian television and radio programs have a combined weekly
audience of 12.7 percent. For additional information, Mr. Karmazyn may be
contacted at: . For programming information please visit
VOA's Ukrainian Service web site at: .

The Voice of America, which first went on the air in 1942, is a multimedia
international broadcasting service funded by the U.S. government through the
Broadcasting Board of Governors. VOA broadcasts more than 1,000 hours of
news, information, educational, and cultural programming every week to an
estimated worldwide audience of more than 100 million people. Programs are
produced in 44 languages, including English. For more information, please
contact the Office of Public Affairs at (202) 203-4959, or
FOOTNOTE: The AUR sends our congratulations to Adrian Karmazyn
on his appointment Chief of VOA's Ukrainian Service. AUR EDITOR.
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