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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
Ukrainian daily names three key suspects in president's poisoning
(Article Twenty-Two)
Mr. E. Morgan Williams, Publisher and Editor, SigmaBleyzer

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

So far only Yulia Tymoshenko has made the economy an election issue.
By Judy Dempsey, International Herald Tribune (IHT)
Paris, France, Wednesday, September 12, 2007

BRIEFING: Oxford Business Group, UK, Thu, 13 September 2007

ANALYSIS: By Ihor Nemchynov, UCIPR project expert
"Your Vote-2007". Issue 4. "Economic Terms of Development of the
State in Vision of Political Forces - Subjects of Parliamentary Elections 2007"
Ukrainian Center for Independent Political Research (UCIPR)
Kyiv, Ukraine, Thursday, September 13, 2007

By John Marone, Kyiv Post, Kyiv, Ukraine, Thursday, Sep 13 2007

COMMENTARY: by Yulia Tymoshenko
Kyiv Post, Kyiv, Ukraine, Thursday, Sep 13 2007

Reuters, Kiev, Ukraine, Thursday September 13, 2007

By John Marone, Kyiv Post, Kyiv, Ukraine, Thursday, Sep 13 2007
By Nazar Kudrevsky, Kyiv Post, Kyiv, Ukraine, Thursday, Sep 13 2007

Consolidated Minerals, Australian manganese miner at centre of takeover battle
By Peter Smith in Sydney, Financial Times, London, UK, Fri, Sep 14 2007

Slovak-Ukrainian border gateway for refugees from Asia and Africa.
In addition, cheap cigarettes, petrol and oil are smuggled from Ukraine.
Czech News Agency (CTK), Prague, Czech Republic, Thu, Sep 13, 2007

Athens News Agency, Athens, Greece, Thu, Sep 13, 2007

AFX News Limited, Monday, September 10, 2007

China, India & Russia top the list then Peru, Ukraine, Zambia &Azerbaijan
Fiona Harvey, Financial Times, London, UK, Thu, Sep 13 2007

By John Reed in Frankfurt, Financial Times, London, UK, Wed, Sep 12 2007

Leaving Crimea on Silver Whisper illustrated spectrum of human experience
By: Mary Gostelow, Kiwi Collection,
Vancouver, British Columbia, Canada, Thursday, Sep 13, 2007


By Stefan Korshak, Deutsche Presse-Agentur (DPA)
Yakivsko, Ukraine, Tuesday, September 11, 2007

INTERVIEW WITH: Volodymyr Bondar, Governor, Volny Region
By Tamara Humenyuk and Serhiy Kychyhyn
2000, Kiev, Ukraine, in Russian 31 Aug 07; p E3
BBC Monitoring Service, United Kingdom, Thu, Sep 13, 2007

In advance of the seventh anniversary of his death on September 16th
International Federation of Journalists (IFJ)
Brussels, Belgium, Wednesday, September 12, 2007

Associated Press (AP), Moscow, Russia, Wed, September 12, 2007
Myroslava Gongadze said investigation has been deadlocked for the last year.
Radio Free Europe/Radio Liberty (RFE/RL)
Prague, Czech Republic, Wednesday, September 12, 2007
Ukrainian daily names three key suspects in president's poisoning
ANALYSIS: By Olena Heda and Serhiy Sydorenko
Kommersant-Ukraina, Kiev, Ukraine, in Russian 13 Sep 07 pp 1, 4
BBC Monitoring Service, United Kingdom, Thu, Sep 13, 2007
Kommersant, Moscow, Russia, Wed, September 12, 2007

Roman Olearchyk, Kiev, Financial Times, London, UK, Thu, Sep 13 2007
Latest novel by Ukrainian writer Andrey Kurkov
REVIEW: Hugh Barnes, New Statesman, London, UK, Thu, Sep 13, 2007
Interfax-Ukraine news agency, Kiev, in Russian 1358 gmt 13 Sep 07
BBC Monitoring Service, United Kingdom, Thursday, Sep 13, 2007
COMMENTARY: By Michael R. Caputo
The Washington Times, Washington, D.C., Wed, Sep 12, 2007
So far only Yulia Tymoshenko has made the economy an election issue.

By Judy Dempsey, International Herald Tribune (IHT)
Paris, France, Wednesday, September 12, 2007

BERLIN: Despite continuing political uncertainty and few economic
initiatives since the pro-democratic Orange Revolution of 2004, Ukraine's
economy is in surprisingly good shape. Economists credit substantial inflows
of foreign investment, a boom in consumer spending and a fairly disciplined
monetary and fiscal policies.

But as Ukraine prepares to join the World Trade Organization next year,
experts say growth can only be sustained if the next government - which will
be elected in 10 days - embarks on an ambitious economic agenda.

"The past year has shown that the economy is less vulnerable to political
crises than originally expected," said Igor Burakovsky, director for
Economic Research and Policy Consulting in Kiev. "But whoever wins the
election cannot take it for granted that this growth will continue.

"It is an illusion to believe that reforms can be delayed and that the
economy can continue to enjoy strong growth," he added. "Too much time
has already been wasted."

The government action, economists say, should include investments in the
infrastructure, including water, health services and energy.

A fresh, more transparent start is also needed for the privatization
process, which was all but stopped over the past year. Heavy industry will
have to be restructured to cope with new competitive pressures expected
once Ukraine joins the WTO. Efforts will also be needed to combat
widespread corruption and strengthen the rule of law.

These issues were neglected by both Viktor Yushchenko, the pro-Western
president and leader of the Orange Revolution, and his political opponent,
Viktor Yanukovich, who is prime minister and leader of the Party of the
Regions, which is based in the country's eastern industrial heartland.

If anything, over the past year the political leadership has been spared any
turbulence in the economy, which is expected to grow between 6 percent
and 7 percent.

Vasily Astrov, economist at the Vienna Institute for International Economic
Studies, said investments in fixed assets alone rose by nearly 33 percent
during the first quarter of this year, compared with a year earlier. The
inflow of foreign direct investment amounted to Euro4.1 billion, or $5.7
billion, compared with Euro1.3 billion in 2003.

While that represents a remarkable increase by Ukrainian standards, it is
paltry compared with its neighbor Poland, which joined the European Union
in 2004.

Foreign direct investment in Ukraine reached only $372 per capita in 2005 -
"just over 16 percent of the corresponding figure for neighboring Poland,"
according to Christian Gianella and William Tompson, authors of a study
published last week by the Organization for Economic Cooperation and

Furthermore, much of the investment was concentrated in the banking,
services and retailing sectors and not in heavy industry, like steel,
metallurgy and aluminum, which are commanding high prices on the world

"This sector could be the Achilles' heel of the economy," Burakovsky said.
"Heavy industry needs foreign investors and foreign technological know-how
to modernize the industry, make it less energy-intensive and prepare it for
competition. This is happening, but only very, very slowly."

Industry has little time to adapt. Besides the competition that will flow
from its WTO entry, Ukraine will soon have to pay more for its energy
imports from Russia. Last year, the price of natural gas was raised to $95
per 1,000 cubic meters from $65. This year it rose to $130. "Next year's
price has not yet been agreed," Burakovsky said.

So far, industry has not taken the steps required to deal with these two
pressures, according to the OECD. "The economy is still dominated by
energy-intensive heavy industrial sectors and this is one reason why so much
past policy has been oriented towards averting rather than facilitating
needed structural change," Gianella and Tompson argue.

Indeed, the governments elected since the Orange Revolution have done
little to improve the investment climate.

"There are high levels of legal, regulatory and policy uncertainty that make
any long-term undertaking highly risky," Gianella and Tompson write. That
unpredictability stems in many cases from a lack of transparency that leads
to corruption and undermines property rights. "Ukraine needs better
regulation rather than simply less regulation," they conclude.

So far, only Yulia Tymoshenko, one of the leaders of the Orange Revolution
who has since founded her own party, the Tymoshenko Bloc, has made the
economy an election issue.

She has promised to make Ukraine a more hospitable country for foreign
investors by making the laws and tax system more transparent.

She has also criticized a recent and rare privatization deal: The sale of
Dniproenergo, the largest power-producing thermal power generator, to
Rinat Akhmetov, one of Ukraine's richest men. He supports the Party of
the Regions and is a longtime rival of Tymoshenko.

"That privatization deal lacked all transparency and was politically
motivated," said Hryhoriy Nemyria, Tymoshenko's political adviser.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

BRIEFING: Oxford Business Group, UK, Thu, 13 September 2007

An Organisation for Economic Cooperation and Development (OECD) report
praised Ukraine's remarkable progress in recent years, but was critical of
its dependence on imported goods and reluctance to reduce red tape.

However, the reception from the international press has been somewhat
negative, focussing on the distance the economy still has to go rather than
the sound base built even during a time of political turmoil.

The report from the OECD, which represents economically developed nations,
came out in early September. While Ukraine is not a member of the 30-nation
bloc, it is seen as a strategically important potential member.

The document lauded Ukraine's economic performance of 7.4% growth between
2000 and 2006 as "impressive" after the transition recession of the 1990s,
when Ukraine had declared independence from the Soviet Union.

Noting that "Ukraine continues to grow strongly", it went on to say that
"the achievement of macroeconomic stabilisation together with the structural
policies of the late 1990s did much to lay the basis for current growth".

The OECD acknowledged Ukraine's economic growth and reform, saying that
changes have benefited the many, not only the few, commenting that "both
unemployment and poverty have fallen sharply since 1999".

There was praise for governments' fiscal discipline since 1999, for having
kept deficits in check and debts low, boosting overall confidence in the
country's creditworthiness and viability as a participator in the European

The OECD also noted "evident progress in simplifying the corporate and
personal income taxes and reducing tax exemptions".

The report featured many positives, describing Ukraine's potential and
outlining prospective roadmaps to unleashing this promise. Highlighting
"sustainable growth", it urged Ukraine to "remove the barriers" to
competition in its market.

However, Ukraine comes under criticism for lagging behind its eastern and
western neighbours, saying that the lack of reform is deterring foreign

The organisation stated that "the scope for catch-up remains considerable"
and expressed concerns that the industries that had led to impressive growth
after 1999, "have exhausted, or will soon exhaust, their potential".

"One of the major disappointments of Ukraine's performance to date has
been its relative failure to attract foreign direct investment," the report
noted, adding that Poland's Foreign Direct Investment (FDI) amounts to 16%
of Gross Domestic Product (GDP). In comparison, Ukraine's FDI inflows
were equal to 9.4% of GDP in 2006.

Comments such as these, portraying recommendations as a warning to the
country that all is not well, have garnered negative headlines and coverage.
The recommendations particularly focused on what Ukraine can do to "make
strong growth more sustainable", especially the reduction of tariff barriers
and red tape.

The report also warned of an over-reliance on energy-intensive industries, a
reminder of the country's dependence on Russia - which has been an
inconsistent supplier of late. The OECD warned that gas price increases
could erode the competitiveness of Ukrainian goods.

Manufacturers in the country currently thrive on relatively cheap imported
energy from Russia. Were supplies to falter, or prices rise, Ukraine could
be left vulnerable.

Finally, inflation is also a concern, and the shift to greater exchange rate
flexibility is seen as a first step in the right direction for the central
bank to establish an inflation-targeting regime.

Despite the negative reception over the OECD's assessment review, the report
showed above all that Ukraine's development over the past seven years has
set it on track to fulfilling its potential.
General Enquiries
Editorial Enquiries
FOOTNOTE: If you would like to have a copy of the complete edition
of the "OECD Economic Assessment of Ukraine 2007" document with
all the charts, tables and graphs, please contact Morgan Williams at the
U.S.-Ukraine Business Council (USUBC) in Washington at The USUBC will send the OECD Report to
you as an e-mail attachment. The attachment is a PDF 2.70 MP file.

For the executive summary or the policy brief go to:
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

ANALYSIS: By Ihor Nemchynov, UCIPR project expert
"Your Vote-2007". Issue 4. "Economic Terms of Development of the
State in Vision of Political Forces - Subjects of Parliamentary Elections 2007"
Ukrainian Center for Independent Political Research (UCIPR)
Kyiv, Ukraine, Thursday, September 13, 2007

Notwithstanding discontent of Ukrainians with actions of the orange power
in 2005-2006, it has to be stated that over the past year and a half,
democratic transformation in Ukraine▓s economy have been shifted into low
gear, which affected not only citizens▓ income but economic indicators of
the country on the whole.

Specifically, in 2006, Ukraine ranked the 125th by the Heritage Foundation
Index of Economic Freedom, though a year before it was the 99th. The
negative balance of foreign trade in commodities in 2006 totaled USD 6.667
billion as compared to USD 1.9 billion in 2005.

Needless to say, the early parliamentary elections mean the elite▓s
recognition of the need to alleviate social tension.

However, the relaxation suggested by politicians is very similar to the
method of ⌠blowing off steam■ known since the former USSR, which
diverts attention of voters from day-to-day troubles but cannot essentially
influence the country▓s development.

In fact, the elections put forth just a few proposals. Analysis of program
documents and practical actions of main participants in the electoral race
allows several conclusions to be made.

[1] First, program documents of political parties have nothing in common
with their practical activity.

[2] Second, non-execution of any article of their own programs threatens
parties with nothing, which allows them to constantly address voters with
the same mottos and promises.

[3] Third, the public opinion about the division of political forces into
the coalition and the opposition is false in view of their attitude to some
vital economic issues.

Presently, the key economic issues are the formation of the land market,
further privatization-re-privatization (the protection of property rights)
and the tax reform for the small and medium business (the right to business
and freedom of entrepreneurship).

Analyzing the attitude of political forces to the solution of these
problems, we face an ambiguous situation that complicates forecasts as to
not only the existence of long-term strategic alliances but also the
creation of tactical coalitions around certain economic issues.

THE LAND MARKET ISSUE: land is the only national resource that has
not been turned into commodity yet. So, one of major economic intrigues
of the early elections is a discussion of the elimination of the moratorium on
trade in agricultural land.

Analysis of party programs and actions of main election participants allows
a conclusion that next year, the moratorium on trade in fertile land will

Two influential political forces, Yulia Tymoshenko▓s Bloc and the Party of
Regions, support the moratorium. The same stands true for the communist
and Socialist Parties as well as Lytvyn▓s Bloc and N. Vitrenko▓s Progressive
Socialist Party.

Our Ukraine-People▓s Self-Defense will obviously back up the President▓s
efforts to repeal the moratorium, though this political force will not have
enough votes for the approval of a respective law. There is a possibility to
reach an agreement between Our Ukraine-People▓s Self-Defense and Yulia
Tymoshenko▓s Bloc.

Most likely, in late 2007, the moratorium on trade in agricultural land will
be extended for 2008, whereas the issue of the land market will be heatedly
debated by main political actors.

THE PROPERTY RIGHTS: the protection of property rights remains on
the agenda. Under any option of the new parliamentary majority, a vigorous
re-privatization campaign will not be waged in the near future.

Should some enterprises be re-distributed, this would occur on the basis of
unofficial agreements and by means of pressure, when owners would have to
sell property to specific customers at underestimated price.

As 2009 approaches, re-privatization might again become a trump card in the
political game. Traditionally, on the eve of the presidential elections,
attention of main political actors is focused on possible re-distribution of
property and means of the protection of their interests against
encroachments of a new team.

It has to be stated that much will depend upon the country▓s economic
position and shifts in the public opinion. If in a year or a year and a half
most voters encourage re-privatization, another call to revise privatization
results might become a winning point of the presidential campaign of the
most sensitive to ⌠public needs■ candidates.

THE TAX REFORM: considering different approaches of political forces,
which, according to forecasts of analysts, will participate in the formation
of a governmental coalition, the tax reform will progress very slowly and

In case of the Party of Regions-Our Ukraine-People▓s Self-Defense coalition,
the taxation system model by M. Katerynchuk will be totally in conflict with
that by M. Azarov.

In case of Yulia Tymoshenko▓s Bloc-Our Ukraine-People▓s Self-Defense
coalition, difficulties will be linked only to the value added tax.

If Yulia Tymoshenko insists on its abolition and members of Our Ukraine
stubbornly attempt just to improve its administration, the story of this
most criminal tax will last for long.

The adoption, by the Party of Regions-Communist Party coalition, of the
Taxation Code suggested by M. Azarov might adversely affect his electoral
prospects as the presidential candidate from the Party of Regions.

FREEDOM OF ENTREPRENEUR: analyzing party programs and principles
of activities, it is safe to assume that the coalition composed of the Party
of Regions and the Communist Party will unambiguously support large
businesses and lobby different privileges and preferential conditions for their
development under the mottos of ⌠investment attractiveness■ and ⌠innovation

On the contrary, the majority of Our Ukraine-People▓s Self-Defense and Yulia
Tymoshenko▓s Bloc, which has felt the support of the small and medium
business since the time of Orange Revolution, will be forced to tackle
problems of this economic sector more seriously.

In the first case, the coalition▓s pressure on small entrepreneurs will
increase (especially, on the eve of the presidential elections), whereas in
the second case, gradual changes could be expected concerning the creation
of conditions for the execution of the civil right to entrepreneurship.

It is rather difficult to forecast actions of the coalition made of Our
Ukraine-People▓s Self-Defense and the Party of Regions, since their
approaches to the formulation of government policy for the small and medium
business are totally different but finding of common positions is possible.
However, each of these forces will have to compromise for the sake of joint

Among other things, excessive social commitments undertaken by all the
participants in the parliamentary elections pose a threat to the
liberalization of business and the creation of conditions for free

Although President Victor Yushchenko states that budget revenues will grow
as a result of deshadowing the national economy and restricting corruption,
it is unlikely to expect their sharp increase due to the application of
respective preventive actions in the above areas.

It has to be reminded that over the next year, candidates for the office of
the President of Ukraine will actively mobilize their voters. Hence,
solution of key economic problems will be postponed for another period
after the elections.
This article was published and translated into English in the framework of
the "Increasing Institutional and Program Capacity/2006-2007" Project of
the Open Society Institute Zug Foundation.

For more details about the our activity, please contact the UCIPR by tel.:
(38-044) 235-65-05, 230-91-78, 599-42-51 or e-mail:
Contact persons - Yulia Tyshchenko, Kostyantyn Mykhailychenko,
Maxim Latsyba
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

By John Marone, Kyiv Post, Kyiv, Ukraine, Thursday, Sep 13 2007

With just over two weeks left before Ukraine's snap parliamentary election,
the top candidates to head the next government are focused as much on
wooing Western investors as they are on winning over rank-and-file voters.

Prime Minister Viktor Yanukovych's Regions party and the bloc of fiery
opposition leader Yulia Tymoshenko (Byut) are expected to come in first and
second in the elections respectively, just as they did last year.

So the real contest has become determining which of them can form a
coalition with the third-place faction of President Viktor Yushchenko, who
has a reputation among foreign investors as a liberal reformer.

While there is also the possibility that another party, such as the
Communists, could muster enough voter support to offer their services in
forming a coalition, Yushchenko's camp is viewed as the main kingmaker for
coalition talks.

Tymoshenko, who served as Yushchenko's first premier in 2005, presented
her bloc's Contract with Investors to an international audience of CEOs and
diplomats at Kyiv's newly built Hyatt Regency Hotel on Sept. 10.

The contract addresses all the issues long of concern to international
investors, such as administrative, tax, judicial and land reforms.

Tymoshenko also discussed old themes, such as transparent privatization
and even the cancellation of shady privatization sales.

However, fired as premier amid allegations of state intervention and
nationalization in 2005, she is eager not to be seen as a crusading

"Everything will be done legally," Tymoshenko told her guests. It was
Tymoshenko who spearheaded the 2005 resale of Ukraine's largest steel mill,
Kryvorizhstal, for $4 billion more than politically well-connected
businessmen had paid for it a year earlier.

Most foreign investors are keen on the establishment of transparent auctions
open to all, but blench at the prospects of auctions cancelled for political

Taking advantage of the opportunity to present Yanukovych's governing
coalition as corrupt, Tymoshenko threatened to reverse the recent
acquisition of a large stake in the Dniproenergo energy generating company
by a leading figure in Yanukovych's party - billionaire Rinat Akhmetov - for
a fraction of its worth. The former premier accused the outgoing
parliamentary majority of using their seats in the legislature to "cover
their business interests."

Appearing before a similar audience on the same day in Kyiv, Yanukovych
also tried to present himself as a friend of the free market.

"Our policy will always be directed at supporting a competitive economy,
local producers and increased cooperation between the authorities and
foreign investors," he said.

Discredited abroad after his fraud-marred presidential bid against
Yushchenko in 2004, Yanukovych returned as premier in 2006 with a new,
Western-friendly image.

Fielding concerns about bureaucratic obstacles, VAT returns and import
restrictions, Yanukovych called on investors to help initiate change.

"I propose that council of investors members create a working mechanism to
prepare legal amendments and state policy in the sphere of investment," he

That Yanukovych and Tymoshenko chose the same day and same time to
address virtually the same audience underlined the two politicians' fierce

Martin Nunn, the director of Whites International public relations, which
organized the Tymoshenko event, told the Post that they had narrowly avoided
a conflict of schedules.

"We had already pre-arranged the event about a week before. When we heard
about the premier's event, we moved ours closer to breakfast."

Nunn said that Tymoshenko had carefully prepared for the investor meeting,
using information and research gathered by the American Chamber of Commerce
and European Business Association in composing her Contract with Investors.

The press service at the Cabinet of Ministers, which organized Yanukovych's
investor meeting, told the Post that the concurrence of the events was a

Yanukovych, who returned as premier in 2006 due to the inability of
President Yushchenko to forge an alternative parliamentary majority, is
determined to hold onto power following the Sept. 30 vote. "Without a
doubt, I have a big desire to be prime minister of Ukraine for at least five
years," Yanukovych told journalists.

Since taking over the government last year, the more Moscow-friendly
politician has relentlessly challenged Yushchenko for executive power.

However, Yushchenko's relations with Tymoshenko have been almost as tense,
leading some analysts to speculate on a deal between Yushchenko and
Yanukovych rather than an Orange coalition between Yushchenko's and
Tymoshenko's blocs.

Yurij Yakymenko of the Razumkov Center for Economic and Political Studies
said judging by recent polls, either Yanukovych or Tymoshenko would form a
coalition with the Yushchenko-loyal Our Ukraine-People's Self-Defense bloc.

But, he added, it would be politically damaging for the president and even
the premier to tell their voters before the elections that they are
attempting to work together again as president and premier.

"The formation of a grand coalition is a negative message for both the
Orange parties and the Regions," Yakymenko said. "Voters on both sides
had enough of that last year."

It was the destabilizing power struggle between Yushchenko and Yanukovych
that led the former to demand snap elections in the first place. But as the
upcoming elections look to produce a similar outcome as last year - minus
the Socialists, who were essential in helping Yanukovych form a coalition
without the president - a deal has to be struck somewhere.

According to Vadym Karasiov of the Kyiv-based Institute of Global
Strategies, the fight for the right to form a coalition with Yushchenko has
already started.

"No one is thinking about Sept. 30 right now. All eyes are on early October,
after the elections have taken place and a new government needs to be
formed," he said.

Cultivating an image as a friend of international investors is as important
for a stable coalition with Yushchenko as it is to a shot at the presidency
in 2009.

Karasiov said both Tymoshenko and Yanukovych have their eyes set on both
positions and want all the international support they can get. "They want to
start getting Western public opinion on their side right now, to allay any
concerns about their past governance."
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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COMMENTARY: by Yulia Tymoshenko
Kyiv Post, Kyiv, Ukraine, Thursday, Sep 13 2007

Not so a long ago, Rinat Akhmetov threatened to hire clever American experts
and draft a plan of development for Ukraine for the next 20-30 years.

According to the plan, (which I read on the Internet), it was supposed to
be, at the very least, a "Marshall Plan for Ukraine."

However, whether marshals have ended somewhere there, beyond the ocean, or
something even worse has happened, I don't know. Except, that instead of a
Marshall Plan, they have given us the "proFFesor's Plan" [reference to Prime
Minister Viktor Yanukovych - Ed. Note] as usual.

Analyzing the stage-by-stage implementation of the "Marshall Plan" from
Akhmetov, I became convinced that it was probably written by domestic
specialists ("marshals" or generals from the SCM), because it would never
occur to any average manafort [Reference to paid US political consultant
Paul Manafort - Ed. Note] to make the first issue of such a plan the task to
"steal Dniproenergo from the state."

The history of fraud with Dniproenergo, 40 percent of the shares of which
Akhmetov controls now, is a classic scheme that has been used effectively
more than once by those with power.

First, an enterprise is led to bankruptcy, then a "good" creditor appears
(in this case, these are the enterprises of Rinat Akhmetov), which then
receives a tasty strategic object. And now, it is Akhmetov who decides what
will be the price per kilowatt-hour of electric power for the population.

The more quickly the electricity meters turn, the quicker the life of the
"regional," [Reference to Akhmetov, who is a leader of Yanukovych's Regions
Party - Ed. Note], who controls the largest generating company in the east
of country becomes better.

The real cost of Dniproenergo, according to the prognoses of experts, is Hr
10 billion ($2 billion). It looks like Rinat Akhmetov, acknowledged as the
richest man in Ukraine, has serious intentions to improve his record in
world ratings.

In general, the privatization of Dniproenergo sufficiently clearly
characterizes the actions of the team under the name of "Yanukovych and

It appears that it wasn't for nothing that Forbes wrote that during the
periods under Yanukovych's management, business circles close to the
government increased their turnover by $17 billion. At least now it is clear
for whom exactly has taken place the "improvement in life already today."

By the way, experts warn that the history of Dniproenergo could be repeated,
but the name of the generating company will be Tsentroenergo. This
enterprise also has a large creditor debt.

All of the electrical energy in the country can end up in the hands of
Akhmetov after the parliamentary elections. And he will not be engaged in
charity when selling the electric power to the population.

These people are tough pragmatists. They understand that they are in the
last days and weeks of their power. They acknowledged that the cabinet of
Yanukovych is doomed, like a communal house of Vasisualiy Lokhankin [A
Soviet movie character - Ed. Note].

That's why they are trying to steal everything that is in bad shape. Their
real program is grab the biggest chunk and then run as far away as possible.

Akhmetov gets Dniproenergo, while 1 percent of Ukrtelekom goes to Valya
Semenyuk [the head of the State Property Fund and a member of the Socialist
Party, which defected to the Regions-led coalition in parliament - Ed.
Note], which should be enough to ensure a comfortable pension. She has
been trying to sell Ukrtelecom this year with a zeal that is becoming of
Bessarabka market Turkmenistan melon sellers.

Viktor Fedorovych [Yanukovych] took a liking to the Mezhgorye state
residence, and right at this moment, he is trying to transfer it onto the
balance of National Joint Stock Company Nadra Ukrainy, with the goal of
its further privatization, together with what's left of the above-mentioned

Rinat, if you are so worried about domestic energy and all that is linked
with it, why not privatize the Chornobyl Nuclear Power Plant, for example?

At the same time, while you're at it, there you could also build a summer
residence for the prime minister. The Residence of Viktor Yanukovych -
"Ukryttya," [Cover or Shelter - Ed. Note], or "Sarcophagus." Doesn't sound
bad, does it?

Besides, the land is wonderful there, there are no neighbors, goldfish, they
say, grow the size of whale sharks there, and strawberries the size of
watermelons. How do you like that offer?

Remember how they pecked at me for so-called re-privatization. Even today,
they say: "God forbid, don't talk about it, don't recall it, don't even hint
about it." Consider that would be the end of your international image.

But do you know what I think: and so what, this image.

Everything that has been brazenly stolen from the state should be
immediately returned to the state. I acknowledge no other policy.
Whoever doesn't like it can complain to the UN.
NOTE: This opinion piece was originally published in Russian on Sept. 8
in Korrespondent, a sister publication of the Kyiv Post.

Yulia Tymoshenko was a former prime minister under President Viktor
Yushchenko, a fierce leader of opposition forces during the Orange
Revolution of 2004, and is currently the leader of her own Byut opposition
bloc, which is also one of the prime contenders for seats in parliament with
the upcoming elections scheduled for Sept. 30.

Like Korrespondent, the Kyiv Post is prepared to publish reply commentaries
from anyone who is mentioned in the above piece by Tymoshenko. Please
send responses and commentaries to
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

Reuters, Kiev, Ukraine, Thursday September 13, 2007

KIEV - President Viktor Yushchenko's suspension of the privatisation of a
leading chemicals producer sends an "extremely negative signal to investors"
and threatens the 2008 budget, the Ukrainian government said on Thursday.

Yushchenko, long at odds with his government, headed by his arch-rival
Viktor Yanukovich, suspended the sale of the Odessa Pre-port plant on
Wednesday, saying a new buyer could gain a monopoly and be able to squeeze
out other chemical producers.

"(The president) is deliberately creating a threat to the implementation of
the 2008 budget, because he knows that, because of procedures, the sale of
the Odessa Pre-port plant may not be concluded this year," the government
said in a statement.

About eight companies from Ukraine, Russia and Canada are interested in the
plant, according to the country's privatisation agency, which expects the
company to fetch far more than the $500 million starting price.

It said last month it had provided documents for the sale to Russian firms
Evrokhim and Akron and Ukrainian companies Azot , DneprAzot and
Chernihivske Khimvolokno. A tender had been set for Oct. 30.

The government plans for a budget deficit of 2.33 percent and hopes the sale
of fixed-line operator Ukrtelekom , in the pipeline for 10 years, will help
patch up the budget gap.

Sell-offs have become one of several issues around which the president and
government have squabbled for a year.

So far this year, privatisation revenues total 1.62 billion hryvnias ($320
million) against a planned 10.6 billion hryvnias, at a time when politicians
of all hues are promising higher social spending in the run-up to a
parliamentary election.

Yushchenko called an early Sept. 30 election to break the impasse between
him and Yanukovich, but analysts say little is likely to change in the
political landscape.

Yushchenko is sensitive to a popular perception that several sales, since
overturned by courts, were mired in corruption. During the 2004 "Orange
Revolution" that swept him to power, he promised to clean up business

He has since shied away from any notion of a sweeping review of previous
privatisation deals, despite the successful resale of the country's largest
steel mill, Kryvorizhstal, for $4.8 billion, after a court overturned an
initial $800 million deal.

Yanukovich, whose government drew up the tender conditions of the Odessa
Pre-port plant, has said that such reviews have spooked domestic and foreign
investors and caused Ukraine "shame throughout the world".
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

By John Marone, Kyiv Post, Kyiv, Ukraine, Thursday, Sep 13 2007

A multinational furniture retail giant intent on expanding its presence in
Ukraine looks set to finally get land to build a store after years of delay.

IKEA, a Swedish conglomerate registered in the Netherlands, has been trying
for more than three years to acquire a plot on Kyiv's left bank, where it
wants to put up a $400 million shopping mall, but a dispute over the land
has delayed the vast shopping mall project.

Now, IKEA is close to clinching retail space in Odessa. "Yes, it looks like
we are on our way," Director of IKEA's Ukrainian office Frida Malmqvist
told the Post on Sept. 12.

She said negotiations are still in progress for land in six different
Ukrainian regions, but "we are currently most hopeful about Odessa."
Malmqvist said the company is prepared to invest around $2 billion in these
projects, but first has to get land.

IKEA had originally set its sights on launching Ukrainian retail operations
at a wooded site on the edge of Kyiv, but the city has stalled approval,
citing environmental concerns.

The plans for Kyiv's left bank include a family shopping center with up to
150 different retail and entertainment facilities.

The main problem in acquiring land in Ukraine, according to Malmqvist, is a
shortage of adequate plots. IKEA seeks green areas on the outskirts of urban
areas but close to main transportation arteries.

The task is complicated by Ukraine's moratorium of the sale of agricultural
or forest land, which necessitates getting a waver from top officials.

Amidst the country's continuing political chaos, the question becomes:
Who do you ask?

In July 2004, IKEA founder Ingvar Kamprad first met with now former
President Leonid Kuchma to discuss the company's investment plans. In
March 2005, Kamprad returned to Ukraine to meet with newly elected
President Viktor Yushchenko.

It was during this visit, according to IKEA spokespeople, that Kamprad
received "verbal approval" for the company's $1.2 billion investment plans.

But negotiations were stalled, as environmental groups, such as Ukraine's
Greens Party, protested against developing the wooded area that same year.
The city offered IKEA an alternative plot of land in another part of the
city, but IKEA continued to pursue the left-bank plot.

Six years earlier, in March 2000, the furniture giant had opened its first
store in Moscow, where it has pumped hundreds of millions of euros into
building retail outlets surrounded by modern shopping malls replete with
restaurants and recreational facilities.

"We are always looking for new places," Malmqvist said. "But we have still
not given up hope of opening our first store in Kyiv," she added.

In the meantime, IKEA Ukraine is involved in another segment of the company's
operations - buying and exporting locally made furniture. "We don't just
open stores, we trade furniture as well to widen our income base," Malmqvist

Currently, IKEA Ukraine has around 20 employees in Ukraine involved in
seeking out Ukrainian furniture makers that meet the international company's
standards. The furniture is exported and sold abroad under the IKEA brand

IKEA launched its Ukrainian trading operations in 2005. "They are still very
small compared to Russia," Malmqvist said.

IKEA has also operated a saw mill and furniture plant in western Ukraine's
Transcarpathia Region for more than a decade, but is better known for its
furniture outlets and the shopping centers it builds around them.

The Swedish company sells low-priced products, including furniture,
accessories, bathrooms and kitchens at retail stores around the world.

IKEA boasts more than 100,000 coworkers in 44 countries, 210 stores in 24
countries, 45 trading service offices in 31 countries, and 26 distribution
centers and 10 customer distribution centers in 16 countries.

The Swedwood Group, the industrial division of IKEA, has 36 factories and
sawmills in nine countries. IKEA Group sales for the financial year 2006
totaled 17.3 billion euros.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
NOTE: Send in a letter-to-the-editor today. Let us hear from you.

By Nazar Kudrevsky, Kyiv Post, Kyiv, Ukraine, Thursday, Sep 13 2007

WPP Group Plc, the world's second biggest advertising and marketing services
company, has acquired a 49.9 percent stake in PBN Holdings, LLC, (The PBN
Company), WPP announced Sept. 6.

The deal enables WPP to enhance its presence in the region and continue
expansion of its business. With this deal, WPP will strengthen its positions
in PR market, since currently only two of its PR agencies, SPN Ogilvy and
Burson-Marsteller, operate on CIS markets.

Myron Wasylyk, senior vice president of the PBN office in Ukraine, said that
the deal is a sign that the company's assets were effectively evaluated and
the partnership provides PBN with great growth opportunities in the country.

PBN is a leading international integrated strategic communications
consultancy focused on CIS countries. The company has offices in Kyiv,
Moscow, Almaty, Riga, London, Washington, DC, and Chisinau. PBN
provides services to many companies in the region.

"Our clients include market leaders in telecommunications, FMCG, companies
in the energy sector, investment banks, investment funds and others,"
Wasylyk said.

PBN serves big multinational and regional blue chip companies. A list of the
company's Western clients includes BP, Bristol-Myers-Squibb, Enel, Merrill
Lynch, Mittal Steel, Motorola, Telenor, Xerox and the Western NIS Fund.

PBN also serves a range of the region's top businesses, including Basic
Element, Ferrexpo, Renaissance Group, Sberbank UkrEximbank and others.

Wasylyk said that the PBN management had been receiving a great number of
proposals on selling a stake in the company and that "actually, a proposal
from WPP was more advantageous for that composition of the management
which is now at the company."

He said that in principle, there is a possibility that WPP will want to buy
the entire company, but if such a proposal were to be made, it would be
considered only five years from now.

Wasylyk said that the amount of the deal, which was stated in Russian mass
media as standing at about $20 million was an approximation of the real
amount of the deal, which was signed Aug. 31.

The deal does not foresee any changes in PBN's operations and its current
management composition. PBN's main shareholders will keep a controlling
packet of the company's shares and the company will continue to operate
under the PBN brand.

As for the company's current plans, Wasylyk said that "the key objective is
to strengthen our position in the markets where we operate, and in Ukraine,
it is to strengthen our offerings in government relations, services for
financial communications and corporate communications."

The company is also looking for opportunities in other markets, but "in
Ukraine, we feel that Ukraine is a really an untapped market and there are
many opportunities here for the next five to 10 years," Wasylyk emphasized.

He noted that Ukraine's PR services market is currently undergoing
capitalization, which is a positive sign. "Capitalization of the market
players is taking place and this allows us to understand who the leaders
are," he said.

PBN entered the Ukrainian market in 1996 as a team of managers that worked
on a reform program funded by USAID. The company has been present on
the Russian market since 1990.

PBN was founded by a married couple, Peter Necarsulmer and Susan
Thurman, in 1983 in the US and continues to conduct active operations there.
NOTE: The PBN Company is a member of the U.S.-Ukraine Business
Council (USUBC) in Washington, D.C.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
Consolidated Minerals, Australian manganese miner at centre of takeover battle

By Peter Smith in Sydney, Financial Times, London, UK, Fri, Sep 14 2007

Consolidated Minerals, the Australian manganese miner at the centre of a
takeover battle, switched its board recommendation to Palmary Enterprises
after the Ukrainian group increased its offer to A$1.03bn (US$860m).

Raising its cash bid from A$3.95 to A$4.50 a share, Palmary trumped a
previously recommended A$4.10 offer from Pallinghurst Resources, an
investment vehicle run by Brian Gilbertson, the former BHP Billiton chief

Pallinghurst responded yesterday, saying it would offer a potential "top-up"
payment that would in effect match any rival bid.

But ConsMin said Pallinghurst had not released a "supplementary bidder's
statement or a notice of variation" in relation to the top-up mechanism.

"Accordingly, ConsMin remains unclear on the detailed terms" of the top-up
payment proposed. This absence of clarity on the terms . . . has led the
board ofConsMin to conclude that the increased Palmary offer is superior to
the Pallinghurst offer, notwithstanding Pallinghurst's top-up payment

Demand for resources has led to a surge in commodity prices and a wave
of takeover activity among listed mining groups.

ConsMin shares yesterday closed 2.9 per cent higher at A$4.63, near their
highest level in more than 10 years.

Palmary, ConsMin's largest shareholder with a stake of 14.4 per cent, is
backed by Privat, a Ukrainian group. Territory Resources, an Australian
group run by Michael Kiernan, a former ConsMin chief executive, has also
made a bid.

Palmary entered the fray at the end of last month with a A$3.95-per-share
offer. Pallinghurst had made the first move in February with a bid worth
A$2.28 per share, or A$625m. The revised Palmary offer is worth nearly
double that.

Gennadiy Bogolyubov, Palmary president, on Wednesday attacked
Pallinghurst's offer as "uncompetitive" and "unfair". It gave "an uncertain
value proposition" to shareholders and "attempts to discourage rival bids
for ConsMin shares", he said. "Palmary wants to participate in a genuine
auction process and is offering ConsMin shareholders the opportunity to
sell to the highest bidder."

Mr Bogolyubov claimed his offer represented "excellent value". Palmary
also argued for a break fee worth 1 per cent of its bid.

Palmary's principal asset is a 90 per cent interest in Ghana Manganese
Company. Mr Bogolyubov is based in the Ukraine and has interests in metals,
banking, oil and gas, chemicals assets and development projects.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
Slovak-Ukrainian border gateway for refugees from Asia and Africa.
In addition, cheap cigarettes, petrol and oil are smuggled from Ukraine.

Czech News Agency (CTK), Prague, Czech Republic, Thu, Sep 13, 2007

UBLA, EAST SLOVAKIA - The Ubla border crossing on the Slovak-Ukrainian
border was re-opened today, after a three-month reconstruction connected
with Slovakia's upcoming entry into the Schengen area.

"We have laid the last stone in the mosaic of the Slovak-Schengen border,"
Interior Minister Robert Kalinak said upon the ceremonial re-opening of the
Ubla crossing today.

The border crossing has been equipped with a new hall for checking of cars
and corridors for the clearance of tourists. The securing of its eastern
border with Ukraine was the most important condition for Slovakia's
admission to the Schengen system, scheduled for the beginning of 2008.

This month, Slovakia is also to check the preparation of its airports and
the SIS information system within which Schengen member countries exchange
information on wanted persons, stolen cars and other issues. In June,
Slovakia also completed the reconstruction of the border crossing in Vysne
Nemecke worth 150 million crowns.

The reconstruction in Ubla has been accompanied by a suspicion of corruption
since the contract for it was signed with the Ikores company, a former
sponsor of the ruling party Smer-SD. Kalinak said today Ikores had been
selected because the original company that had made a bid in a public tender
had finally withdrew from the contract.

About 400 cars pass through the Ubla border crossing daily. The
Slovak-Ukrainian border is a gateway for refugees from Asia and Africa. In
addition, cheap cigarettes, petrol and oil are smuggled from Ukraine.
($1=24.197 crowns) tam/mr/hol
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

Athens News Agency, Athens, Greece, Thu, Sep 13, 2007

ATHENS - The Bank of Piraeus on Thursday announced the completion of the
purchase of 99.6 percent of shares in Ukrainian bank "International Commerce
Bank", after banking authorities in Greece and Ukraine gave their approval
to the deal.

The Greek bank said it paid 75.3 million US dollars to acquired the
Ukrainian bank. International Commerce Bank was founded in 1994 and operates
a branch network of 133 units in 38 cities around Ukraine. It has more than
25,000 customers and employs 910 workers.

With the completion of the deal, Bank of Piraeus Group begins its expansion
in the rapidly growing market of Ukraine, further strengthening its
international activities with a presence in eight countries (Romania, Bulgaria,
Albania, Serbia, Egypt, UK, US and Ukraine)
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
If you are receiving more than one copy of the AUR please contact us.

AFX News Limited, Monday, September 10, 2007

MUMBAI (Thomson Financial) - Standard and Poor's Rating Service said the
largest banks in Kazakhstan, Russia and Ukraine continue to perform well but
also face tight liquidity and increased market risks.

'Near-term growth and profitability prospects may be stunted by the current
difficult environment in global credit markets, which has led to a liquidity
squeeze and strained the banks' refinancing plans, particularly in
international debt and capital markets,' the release said.

International debt issuance in the Kazakhstan, Russia and Ukraine banks is
likely to be more protracted and costly than in the recent past, S&P noted.

However the current liquidity squeeze does not highlight the funding and
liquidity vulnerabilities that structurally affect the banks in these three
countries, S&P added.

S&P said it factors these vulnerabilities into the current ratings, however,
it does not expect any negative rating actions to result from the current
market situation, unless they start affecting the fundamentals.

S&P added that weak points remain rising operating cost, an increasingly
tough and costly funding situation, tight capitalisation, high single-name
concentration in both funding and lending, and worsening loan quality.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
Send in a letter-to-the-editor today. Let us hear from you.
China, India & Russia top the list then Peru, Ukraine, Zambia &Azerbaijan

Fiona Harvey, Financial Times, London, UK, Thu, Sep 13 2007

China, India and Russia top the list of the world's most polluted places, a
study of global pollution yesterday found.

The three countries are each home to two of the world's top 10 polluted
sites, while the others are in Peru, Ukraine, Zambia and Azerbaijan.

Linfen and Tianjin are the worst polluted places in China because of poor
air quality and the metal industry respectively. Sukinda and Vapi are the
worst in India, the former because of mining and the latter from general
industry. Norilsk, where metals are extracted, and Dzerzhinsk, home to
weapons manufacture, are Russia's most polluted -locations.

The Blacksmith Institute, which produced the report on the "dirty 30" most
polluted places on the planet, said it was not possible to rank the top 10
in order because of the different forms of pollution in each place and
because they differed widely in their geography and population.

"All sites in the dirty 30 are very toxic and dangerous to human health,"
said David Hanrahan, director of global operations at Blacksmith.

Richard Fuller, director of the institute, said: "The fact of the matter is
that children are sick and dying in these polluted places and it's not
rocket science to fix them."

Mining was found to be the most frequent cause of pollution in the dirty 30
but metals extraction, petrochemicals and other industries were also to

The worst places for air pollution were Linfen, Lanzhou and Urumqi in China,
Magnitogorsk in Russia and Mexico City. The Dandora dump in Kenya made
it on to the list for being the worst site polluted by urban waste.

Chernobyl's legacy of nuclear contamination put the region in the top 10,
and Mailuu-Suu in Kyrgyzstan was also judged one of the worst polluted for
its nuclear site.

The list was drawn up by a panel of experts including members from Green
Cross Switzerland, a charity that works to overcome the damage caused by
industrial and military disasters. The panel based its judgment on the
toxicity of the pollution of the site, its scale and the number of people

The study found most of the polluted sites were far beyond the ability of
local populations to clean up and that national government assistance or
international aid would be needed.

The study said: "Unfortunately there are too many of these industry towns
still carrying on where there is no economic alternative for the local

The authors said the way to clean up such sites was to "begin with
supporting a core group of concerned -people and officials to create a
consensus and build momentum, starting with some simple but visible
improvements to show that progress is possible".
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

By John Reed in Frankfurt, Financial Times, London, UK, Wed, Sep 12 2007

Ford Motor said that it had reached agreement with Romania's government to
buy a car plant where it is due to make more than 300,000 vehicles and
engines a year.

The company was the sole bidder for the Automotive Craiova plant, where it
will make small cars and possibly commercial vehicles, said John Fleming,
Ford of Europe's president.

Ford will pay Romania's government Euro57m ($79.2m) for its 72.4 per cent
stake for the Craiova plant, formerly owned by bankrupt Daewoo. The
Romanian state bought back control of the plant from the South Korean
carmaker's creditors last year.

Ford will offer to buy out the plant's minority shareholders, and said it
would spend another Euro675m to upgrade and modernise the plant.

By 2012 it said it expected to be spending about Euro1bn a year in Romania
to support the Craiova operations. Mr Fleming would not comment on the
specific vehicles Ford planned to assemble in Romania. The company this
week unveiled a prototype of its new global subcompact car, the Verve.

Most recently, Ford's US rival General Motors has been assembling Daewoo
Matiz and other cars in Craiova as part of its GMDat joint venture, which
owns some Daewoo plants and model rights.

GM, which is expanding its operations in Poland and assembles cars in Russia
and Ukraine, examined but held off on making a final bid, as did Russian
Machines, controlled by billionaire Oleg Deripaska.

GM is not commenting on its reasons for pulling out, but is understood to
have done so due to financial liabilities attached to the plant.

Ford of Europe reported a $425m profit last year and a profit of $485m for
the first half of this year, in spite of the record losses at the carmaker's
core North American operations.

Its investment in Craiova comes as it and other carmakers seek to add
manufacturing assets in Eastern Europe, where demand for motor vehicles is

Rick Wagoner, GM's chief executive, told the Financial Times this week that
his company, which is building a plant in St Petersburg, was looking to add
capacity in Russia - one of the world's fastest-growing car markets.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
Leaving Crimea on Silver Whisper illustrated spectrum of human experience

By: Mary Gostelow, Kiwi Collection,
Vancouver, British Columbia, Canada, Thursday, Sep 13, 2007

A few hours before we had been metaphorically blown away by the Panorama
in Sevastopol, sometimes still known as Sebastopol. If the Panorama is not
on the list of Must-Dos before you die, it should be added, now.

It relays the story of the tragic defence of Sevastopol 1854-1855 in a way
that makes Disney seem child's play. The classical circular building that
holds it is just under 100 feet high, and the same in diameter.

Inside, the 350-feet endless painting, 45 feet tall, is blended so
brilliantly with a three-dimensional landscape in front that you cannot tell
where the sculpted carnage ends, and the painting behind begins.

You see the British, French and Turkish troops desperately trying to take
Sevastopol from the Russians, with in all about a million or more soldiers

This world wonder artwork was designed and painted, at the beginning of the
20th century, by the so-called founder of Russian Panoramic art, France
Alekseevich Rubo, 1856-1928.

During World War II the painting was cut down and smuggled away for safety,
after which teams of restorers were led by VV Yakovlev and PP Sokolov-Skalia
(the Panorama re-opened in 1970),

And then we sailed away, passing top missile launching ships of the Russian
navy as we left harbour. Yes, Sevastopol is in Ukraine, but it still gives
mooring to the Russian Black Sea fleet,

This was the end of our three-stop cruise of Ukraine. First after we entered
the western part of the Black Sea was the attractive port city of Odessa.

We moored by the famous steps (photo), as shown in the 1925 movie Battleship
Potemkin (and, by the way, there are 157 steps, not the 193 that seem to be
mortalised, erroneously, for evermore).

Odessa is chic-chic, and Roberto Cavalli and Jimmy Choo were among the
many brands seen in chic boutiques in 19th century buildings, many
beautifully restored, in tree-lined avenues.

The young women here all look and dress like models, and it was not only
our discerning party who found them attractive: a few days later, our taxi
driver in Istanbul told us that he often flies to Odessa for a couple of
days, telling his wife that he has to drive out of town on business (for
anyone interested, he said the return Istanbul-Odessa airfare is the same
for the 55-minute flight as the amount for the return 28-hour ferry ride).

But we were in Odessa for culture. Those old buildings, when painted up,
look like multi-colored wedding cakes (the opera house, designed by Viennese
architects F. Felner and H. Helmer in 1887, is now a tasteful shade of
palest caramel highlighted in white, with deep raspberry back-painting).

My lasting memory of Odessa will be going into the crypt of Uspenskiy church
in the middle of morning service, with a pair of Orthodox priests in full
green robes, lots of incense, women of all ages in headscarves and a
sensational all-women choir.

In general, Odessa is high business, fuelled by oil, shipping and
technology. By contrast the next day we were at the leisure base of Yalta.
Here the mood was definitely that of holiday, pleasure, an abundance of
everything - which, judging by some of even the younger visitors, included

The idea in summer is to make your way as early as you can to one of the
miniscule areas of grey sand and pebbles by the sea wall: by 8am, every
square foot of these sandy areas is a pointillism of multicolored umbrellas
and bodies that spill out into the sea.

Highlights of Yalta also include the long, leafy tree-lined pedestrian-only
Pushkin Avenue, walking past supplies of historic clothes that you can put
on, to be photographed for posterity - and our visit to the cool calm of the
dacha (home) and beautiful garden of Anton Chekhov,

And in between all this sightseeing, history and culture we still had life
onboard Silver Whisper, which was full for this rare week-long Black Sea

So, nearly 400 of us were looked after by the same number of amazing crew,
people who thanks to the passion of the Silversea family realise that every
single one of them helps to make a Silversea experience.

Donato the Italian maitre d' literally stored a table out of sight so that
when we arrived late for the weekly barbeque he was able to find us
somewhere to sit.

Lcky from India learned how to make my breakfast coffee (espresso topped
up with filter), the Cape Town-based cruise director Ron made the daily
trivia sessions into a major highlight.

The Hungarian tour manager Gabor (a former fencing champion who on an
earlier cruise taught me pilates) was there as we disembarked early at six
a.m, and the Sicilian captain, Angelo Corsaro, yet again just beat my
husband at backgammon.

The most important things about cruising are the choice of destinations, the
company and the regular clientele it attracts. The Black Sea beautifully
filled the first requirement.

Silversea's Silver Whisper was spotless, and the 60 percent or more repeat
cruisers this time included the former CEO of one of the world's best
airlines and the best-known television linkman on British television of the
last 30 years.

Add to this recipe such spices as an omnipresent and really knowledgeable IT
instructor in the library, which has good wireless and we were able to print
out our plane boarding passes before leaving.

An unexpected highlight was night was a tutored vertical tasting of
Quintessa Meritage wines from Rutherford, in Napa Valley (this was at a
private dinner hosted by the winery's owners, Chilean-born Agustin Huneeus,
one time CEO of Conch y Toro, and his equally-talented wife Valeria,

Another night we shared a bottle of Dom PИrignon with our radiologist friend
Arlene Segal, from Kansas City, and our new friend Sue Richardson, the
very-English onboard Hotel Manager, who had joined Silver Whisper after
looking after Paul Allen's 416-ft Octopus yacht (plus his other two ships
and his three houses).

On Silversea, by the way, all drinks - including the house champagnes,
Nicolas Feuillatte and Pommery, and whatever you want, whenever - are
included, as are all tips.

So put those ingredients together, add Sealy mattresses, Frette linens, an
Elemis spa and your choice of Acqua di Parma, Bulgari or Neutrogena
toiletries and the resulting dish is pretty addictive.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

With property values soaring in the Ukrainian capital city of Kiev, many
potential buyers are being forced to rent. This has provided a good
opportunity for investors in rental properties, and has also helped to
expand the traditional Kiev market further out from the city centre.

The Ukrainian Carpathian Mountains now feature Ukraine's first off plan
Ski resort all signs of a booming Ukraine real estate market

The Ukrainian website Kiev Weekly,, has noted in
several articles recently the trend of rising prices and what it has done to
property investors in the capital city.

With prices rising in the city so much, many people are now looking to rent
instead of buying. Another factor contributing to the large number of
renters is the high interest rate on local mortgages in the Ukraine.

Rates in Kiev have been averaging 12-15% in recent months, significantly
higher than many other European cities. Certainly one reason for the high
rate is the skyrocketing value of property in Kiev.

One local real estate executive, Mykhailo Zhogolev, who is the Director of
the Kiev Office of the Real Estate Experts Association of Ukraine, believes
that renting is a cheaper option for the average citizen given the high
prices and interest rates, noted the Kiev Weekly.

While the high prices and interest rates are forcing many to rent instead of
purchase, this is providing a good opportunity for investors who are
focused on rental income.

International property investors, seeing the increasing value in the market
as well as the need for renters, have scooped up many homes and apartments
and are making a good return on their investment.

Ukraine's first off-plan ski mountain resort complex is considered as one
of the best investment and holiday home opportunities available in the
Ukrainian ski areas.

Learn more here Investment Property Ukraine

The London-based magazine The Business,,
highlighted the fast-growing real estate market in Ukraine. The country's
economy is on the rise and the prices for property in Kiev are still rising
about 2% per month, according to some statistics.

Another result of the boom in Kiev is the increasing popularity of towns
outside the city, such as Khreshchatyk or Borispil, where Kiev's major
airport is located.

Many of these towns and villages are experiencing their own building boom,
with quite a bit of off-plan development under way. Either in the city of
Kiev or the surrounding locations, there are plenty of opportunities for
investors who want to take advantage of the local market.

The major locations for international real estate investors are in Kiev, Odessa,
Lviv and along the Black Sea coast in the Crimea. Other popular places are
the growing ski resorts in the Carpathian Mountains, including Slavsk.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

By Stefan Korshak, Deutsche Presse-Agentur (DPA)
Yakivsko, Ukraine, Tuesday, September 11, 2007

YAKIVSKO, UKRAINE - Spicy Hutsul sausages sizzle over our fire, ignored
by placid cows and yapping shepherd dogs in the pasture nearby.

Down in the valley, on an deserted road, a horse-drawn wagon clops homeward,
carrying field workers and their scythes past pastoral haystacks, pumpkin
patches, and split rail fences straight from the 19th century. Above, the
blue-green Carpathian Mountains roll their way to the EU.

It took some effort to achieve this delightful East European tourist
moment - not least en route to our picnic through the hamlet Polosko where
at 1 p.m. on a work day, two out of three persons encountered on the village
main street were intoxicated, including one man so drunk he was unable to
stand, never mind engage a foreign reporter in conversation. (The chap
tried, but toppled off his bench, ruining the interview.)

Ukraine's Carpathian Mountain region in many ways is a hidden marvel;
where cars are infrequent, the air is clean, the prices are low to dirt-cheap,
tourism is in its infancy, and the wilderness paths are as the peasants made
them, and often omitted from any map.

The problem is, those alluring selling points come in a real-life package:
the former Soviet republic Ukraine's three poorest provinces. Visitors to
Ukrainian Carpathia ignore that socio-economic reality, at the peril of
their vacation.

Collectively covering an area roughly the size of Belgium, Ukraine's
Zakarpatska, Lviv, and Ivano-Frankivsk provinces occupy the Far Eastern
bit of the Carpathian Mountain range, which also crosses Poland, Slovakia,
Hungary and Romania.

The region is a thick eastern European soup of ethnicities; in the city
Chop, for instance, one out of five residents is Roma.

Much of Ukrainian Carpathia is rolling hills and hardwood forests, and
tilled valleys similar to the American Blue Ridge. The higher districts
offer evergreens and rocky streams, sweeping mountains, and even Alpine
landscape inhabited by wolves, bears, eagles, and few people.

Zakarpatska, the flattest and most multi-ethnic of the three, is well known
in Ukraine for health spas, mineral water and year-round tourism.

Here there is choice: a traveller can rent a private room for as little as
10 dollars a night or put up his feet in a newly- built apartment at the
Krasna Poliana health resort for a cool 150 dollars - roughly two months'
salary by local standards.

Smaller hotels abound. A mid-range option can place a family in a two-room
suite in something outwardly similar to a Swiss chalet for 60 dollars a
night, but Ukrainian service inside.

In accommodation inhabited by a dpa reporter, the towel rack came off the
wall, the shower floor was a wooden grate with a few sharp nails projecting
upwards, the toilet seat was broken from the commode - and that was only
the bathroom.

Prices are similar and tourist accommodation is plentiful closer to the
Slovak and Polish borders in the Lviv province, where proper mountains are
to be found and, in the winter, a booming ski industry.

Summer months offer hikers a trip back to the old days of European walking -
trails are unmarked, rest huts do not exist, streams are clean except near
villages where locals dump their trash, and generally one may build a fire
wherever he wants.

Food and housing can be tricky, as tourist infrastructure is clustered
around the ski valleys. Villages not lucky enough to have ski industry
nearby are among the poorest in Europe, and can lack stores, indoor
plumbing, visitor housing, any place to obtain a meal, or much
transportation connection with the outside world save very irregular

A region offering both highlands and lowlands is the Ivano- Frankivsk
province, which in addition is home to a sub-tribe of mountaineers called
the Hutsul, known for their spicy cuisine, handicrafts, and dialect
frequently unintelligible to flatland Ukrainians supposedly speaking the
same language.

The language residents of Ukrainian Carpathia use for outsiders is Russian,
period. English, for practical purposes, is not spoken. The practice of
milking tourists, unfortunately, already has infected the more touristic
portions of Carpathia.

Practically all the scams are for petty amounts, but nonetheless irritating.
A typical example was a Zakarpatska province hotel's practice of charging
guests 2 dollars for a pair of green tea bags, as the power was out in the
restaurant and so there was no hot water.

But in fairness, a cheap meal may be had in Ukrainian Carpathia for 5
dollars, and an excellent one with drinks for 15 dollars. The cuisine is
jammed with hearty delicacies like stuffed peppers, potato pancakes and sour
cream, pork and prune roulades, and forest mushroom soup; with spicing and
local specialities varying from village to village, and according to the
cook's ethnicity.

Ukraine's charming tradition of kindness to strangers, still, sometimes,
manages to trump profit maximization and low service standards.

A much-appreciated example came on the Uzhgorod-Kiev train when, during a
station stop, a conductor invited a four-year-old child of a tourist into
his compartment to distract the boy with a DVD movie, because it would be
several minutes before the carriage bathroom would be unlocked.

Want to learn more? A highly-recommended English-language site is
TryUkraine, with providing scads of
solid information and advice on the Carpathian region.

Another useful site - - even to those not speaking
Ukrainian, is Khata v Karpatakh (translation: A Home in the Carpathians),
which provides better listings of boarding options for travellers to the
region, than offered by most Ukrainian travel agents. The site operator is
a Lviv travel agency happy for international customers.
[return to index] Action Ukraine Report (AUR) Monitoring Service]
You are welcome to send us names for the AUR distribution list.

INTERVIEW WITH: Volodymyr Bondar, Governor, Volny Region
By Tamara Humenyuk and Serhiy Kychyhyn
2000, Kiev, Ukraine, in Russian 31 Aug 07; p E3
BBC Monitoring Service, United Kingdom, Thu, Sep 13, 2007

Volodymyr Bondar, the governor of Volyn Region, has discussed a broad
range of issues, including local investment projects, crime and politics in an
interview with a Ukrainian weekly.

He said his relations with the regional council are not bad and that there
is no political extremism in the region. He also said he is too busy to have
any hobbies.

The following is an excerpt from the interview with Bondar with
correspondents Tamara Humenyuk and Serhiy Kychyhyn, entitled "Volodymyr
Bondar: 'It would be a great luxury to have a hobby whilst holding such a
job'", published in the Ukrainian weekly 2000 on 31 August; subheadings have
been inserted editorially:

We recognized the building of the regional state administration in Lutsk
thanks to the Internet. True and untrue information, rumors and scandals
involving the name of the governor of Volyn were also in abundance there.

We spent five minutes preceding the interview in a reception room on the
second floor that was probably not like any other Ukrainian government
organization: minimalism, space and simultaneous coziness, exquisite colors
and furniture that is not crying about its value.

We had hardly touched fresh coffee made by a cheerful secretary when a young
man in a dark blue suit, pale blue shirt and a smart blue patterned tie

"Volodymyr," said the young man introducing himself and invited us into his
office. This was Volodymyr Nalkovych Bondar, the head of the Volyn regional
state administration.

In the governor's office the emblem of Volyn and unofficial (and
non-traditional - psychological and expressive) portrait of Yushchenko
caught our eye - on the side near to a window over Bondar's working desk and
a small owl made of natural stone on a conference table.

"Why an owl?" we asked him. "For such an office as this one should have an
owl, which means wisdom," was his answer.
On low wages and unemployment
[Correspondents] The readers of the 2000 newspaper are continually learning
about developments in Volyn from our own correspondent, Petro Chechelyuk.
However, we would like to hear from you about the region's problems. In
which areas does the region require assistance from the centre?

[Viktor Bondar] I think we will be able to cope with everything
independently but this will require time. Of course, one would like to solve
all problems immediately but this cannot be done. There is no doubt that
there are problems in the region.

First, salaries. The region has one of the lowest salary levels in Ukraine
as we are not an industrial region and we will never become one. Hence, an
average salary in the region is only 908 hryvnyas [about 180 dollars].

However, we are proud that we demonstrate the highest growth rate in the
state. Still, we need a long time to attain the average level for Ukraine.

[Correspondents] What about unemployment?
[Bondar] The unemployment level is a very conventional notion. We are able
to meet the level that we set for ourselves. Moreover, we open new
enterprises in the region and work on employing the rural population.
Gives examples of foreign investment
[Correspondents] Could you give us examples?
[Bondar] For example, the Cromberg&Shubert company is a plant built in
fields. The plant should attain a capacity of 3,000 jobs.

This will be the largest enterprise in Volyn in terms of number of staff.
Today, it already employs 1,800 workers.

Even from this perspective, this is one of the largest enterprises. It
manufactures electric equipment for automobiles. Its customers are BMW,
Daimler-Chrysler. At the same time, this is environmentally safe production.

[Correspondents] What is the salary?
[Bondar] Approximately 1,400-1,600 hryvnyas. This is not bad for our region.
Another example is Kronaspam. This is also a serious Austrian investment.

It has fewer staff but this company is very important for the region for it
manufactures flake boards, which finishes the complete cycle of wood
processing in the region - from tree growing to the final product -
furniture that is then delivered to the domestic and foreign markets.

Enterprises that manufacture food products can also be named. Everyone knows
about our Torchyn-Produkt. There were negotiations with senior management of
Nestle. Its vice-president came; the largest plant in their network is now
being built not far from Lutsk.

We are planning to launch production there next year. This will not be
large-scale production in terms of the number of employees - just 500
workers, but, nevertheless, it is significant for us.

The complete rebuilding of our automobile plant is taking place at the
present time. This is a giant of our region in terms of supporting the
budget sector. I expect us to see a rise in the number of workplaces here.

It already employs about 1,200 workers and I believe this figure will reach
2,000. However, we are also discussing development of small business, as
overall world statistics proves that it should sustain people today.

[Correspondents] How many people in the region are currently employed in
small business?
[Bondar] I cannot give you an exact figure. I can only say that it is very
low. It is a pity that small business is not significant for us today.

[Correspondents] Still, could you name at least the areas that it
encompasses? Are their small enterprises engaged in manufacturing?
[Bondar] These are mainly trade and the services sector. Unfortunately, I
cannot name the specific areas of small production. Yet, our objective is to
develop small business in the field of tourist services.

We are striving to become a tourist region, including our northern
territory, which has a serious recreational area.

We could achieve success, for example, in green tourism. We are working hard
to achieve our goal organizing workshops, studying the European experience
and working with private tourist organizations. Our main activity is
developing routes in many settlements and assisting the creation of green
tourism centres.

[Correspondents] How are you doing this - by granting loans or by providing
other types of support?
[Bondar] We facilitate the granting of interest-free loans or reimburse
interest on loans from budget funds; we have a programme for small business

At the same time, we control sanitary and domestic conditions in such green
tourism farmsteads. In order to work under this programme, they must receive
accreditation in the appropriate manner.

[Correspondents] What is the maximum sum of such an interest-free loan?
[Bondar] We are talking about small loans here. We have allocated about
200,000 hryvnyas for this year. These funds are distributed between
individual projects by the regional department of economics - i.e. not the
head of the regional administration, not an officer. And this programme has
been operating for several years now.

[Correspondents] Let us return to problem areas. How serious are the
region's environmental problems? In other words, how healthy is your region?
[Bondar] As regards the environment, unfortunately, we cannot say that we
have solved all our problems.

We still have fume contamination in the cities and the effects of man-made
disasters that Ukraine suffered at different times starting from Chernobyl
(we have two districts that today are liable for the Chernobyl program -
Manevychi and Kyvertsi) and to the recent "phosphorus" leak that took place
in neighboring Lviv Region.

On the other hand, one third of Volyn's territory is covered with forests.
We have over 200 lakes - a true cascade in the north of the region.

According to the findings of ecologists, the north-western part of Ukraine,
which is mainly Volyn Region, is the most environmentally clean part of the
country. This is virtually the lungs of Ukraine, the territory where human
technological activities have not yet reached. We are trying to keep it so
and to turn it into a recreation jewel.

[Correspondents] Are you developing the network of sanatoria and camps on
the Shatski Lakes, on Svitiaz?
[Bondar] There were few sanatoria there. But there were a lot of camps. We
have developed very demanding requirements for them and each year these
requirements become more demanding. They can hardly be called camps.

Sometimes, there were only wagons there, without water or facilities. We
said we would not commission any camp until it had a sewage system. We
constructed an additional cleaning reservoir that helped us to increase the
number of functioning camps. We are currently working to improve the
appearance, i.e. the buildings there.

I do not think that every company or organization (including
budget-supported) has the funds today to provide the highest level of
services but they have to ensure a certain minimum.
Relations with police have improved
[Correspondents] What about the crime rate in Volyn? More specifically -
in Novovolynsk.
[Bondar] When we look at the average regional level we will see that
Novovolynsk really is the most problematic.

The town had no prospects as far back as 5-10 years ago when all the mines
were exhausted, people lost their jobs and traditions did not exist because
the town was still young (it is only 55 years old). As result, there was an
outbreak of drug addiction, crime and AIDS.

However, we gradually managed to solve social problems there. We adopted the
correct decision as to priority development territory, forwarded investments
there and began the building of enterprises.

People received hope for the future. In the past many of them had left
Ukraine for Poland (the Polish border is 12 km from Novovolynsk).

Many of those who stayed made the town socially dangerous. But today people
see the prospects. They are working and new jobs are appearing. The crime
rate is falling. We see that we can fight it and are ready to solve this
problem today.

[Correspondents] Volodymyr, when you began to work as governor there was
information that you wanted to sort out the mess in the law-enforcement
bodies. How did this influence your relations with these bodies?
[Bondar] We have normal working relations. We have all understood a great
deal over this period. I believe we have less politics and more business.

And this is good. In conjunction with law-enforcement officers, we were able
to solve many problems, e.g. the one related to the border - the "Volyn
klondike" of uncontrolled customs clearance of cars, which was a huge
problem for the region.

Today, these illegal activities have been stopped. Of course, there are
individual instances but there is no system any longer. Each such occurrence
is registered and a relevant response follows.

[Correspondents] Do you help the police in any way?
[Bondar] Certainly. I have weekly meetings with representatives of all
uniformed agencies to discuss the current situation.

[Correspondents] Is this in the governor's job description or is this your
own initiative?
[Bondar] Being a representative of the president I am also responsible for
coordinating the activities of law-enforcement bodies.

Furthermore, I am a member of the National Security and Defense Council like
all my colleagues who are the heads of other regional state
administrations - and participate in the work of various commissions, e.g.
the commission on fighting smuggling.

[Passage omitted: wants to raise level of services provided by state
authorities in region and to make authorities more accessible for common
Relations with regional council constructive
[Correspondents] What are your relations with the regional council like?
[Bondar] They vary. But I believe they are essentially constructive. The
regional council is not the administration where everything is strictly

This is a representative body where things are discussed. In my opinion, all
problems that need to be solved are actually solved.

[Correspondents] Today, on the eve of the early election, there are five
distinct political forces in Ukraine. Are they all represented here?
[Bondar] They are, but all to a different degree - some more and some less.

[Correspondents] Can communists or socialists, for example, be heard?
[Bondar] I cannot say that they are playing a significant role here, but in
certain cases they are represented. For example, the issue of renaming
streets was discussed today at a session of Lutsk city council. I do not
know whether they adopted any decision but leftist forces organized a

[Correspondents] What was the problem for them?
[Bondar] The problem was that the street named after Pasha Savelieva was
going to be renamed in honour of Halshka Hulevychivna. But the latter is a
key figure for us in Volyn.

I am not commenting on the problem of renaming the street as such, I am
talking about historical personalities. They are important and should be
commemorated in some way.

I find it difficult to express any stance for it is my personal opinion -
that of a citizen. However, being the head of the regional state
administration I have to take into consideration the views of all political

[Correspondents] Are there any instances of political extremism observed in
the region? For example, were there any egregious cases of xenophobia or
persecution on the basis of language?
[Bondar] I am not aware of any such facts. As regards language - we have
never had this and will never have. This is savagery.

It is most likely if there are such instances registered they are not ours,
not local. I know no people who hold such ideas. And I know the political
environment in the region quite well.

[Correspondents] Is there a special regional mentality in Volyn?
[Bondar] Of course, Volyn has its specific regional mentality. Residents of
the region are balanced in outlook and very hardworking. We have harsh
weather conditions in this region, which necessitate hard work and
tolerance. Yet, you should not irritate or disregard these people.

It can be said that they are slow but sure in their deeds. They are always
serious in their intentions. Inhabitants of Volyn are very peace loving and
hospitable but they will never forgive a person who fails to value their
features or is arrogant towards them.

[Correspondents] Are there Polish, Belarusian or Russian schools in the
[Bondar] There are no Polish or Belarusian schools. There are schools where
the Russian language is taught but there are no purely Russian schools.
Communities, including church communities, organize such teaching in the

[Correspondents] How are your relations with the media taking shape?
[Bondar] Initially, there were some misunderstandings. But we resolved our
problems quickly. Today, our relations are generally friendly. We have
worked together so that the mass media respect the position of the

There is constructive criticism of the authorities when this is deserved.
There is also almost always a response to criticism. I believe we have
relations are business like. [Passage omitted: does not have time for a
hobby due to dedication to work]
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
In advance of the seventh anniversary of his death on September 16th

International Federation of Journalists (IFJ)
Representing over 600,000 journalists in 114 countries worldwide
Brussels, Belgium, Wednesday, September 12, 2007

BRUSSELS - The International Federation of Journalists (IFJ) today
launched in Kiev its third report on the investigation of the murder of
Ukrainian journalist Georgy Gongadze. The report was launched in
advance of the seventh anniversary of his death on September 16th.

The case of Gongadze, the founding editor of the Ukrainska Pravda web site,
concerns above all the impunity of those in power who sanction violence and
intimidation against journalists.

⌠Seven years after the assassination of Gongadze, this new report provides
once again ample evidence that, despite prima facie evidence that senior
politicians colluded in harming him, the Ukranian government continues to
frustrate and sabotage investigations of the murder,■ said IFJ President Jim
Boumelha at the launch.

The report is called ⌠Official Obstruction is Rewarded■ √ a reference to
president Yushchenko▓s award earlier this year to former general prosecutor
Mikhail Potebenko of the Order of Prince Yaroslav the Wise. It was Potebenko
to whom Gongadze appealed for help when he realised he was being followed,
and Potebenko who ignored him.

The report is being published by the International Federation of
Journalists, the Institute of Mass Information of Ukraine, the National
Union of Journalists of the UK and Ireland and the Gongadze Foundation,
who have monitored the case jointly.

⌠That the Ukrainian president has presented Potebenko with a state honour
epitomises the official indifference, and even opposition, to dealing with
issues raised by the case,■ Boumelha said.

⌠If there was ever a political will to find the instigators of Gongadze▓s
murder, it appears that it has now been overtaken by the efforts of members
of the political establishment to protect each other, and each other▓s
reputations. It is a scandalous cover-up that casts a shadow over democracy
in the Ukraine.■

The IFJ says that continued political interference and pressure have played
a major part in these substantial setbacks. It is now quite clear that the
opportunity provided by the political changes in the Ukraine following the
⌠Orange revolution■ has been missed.

The report made detailed recommendations addressed to the president and
government of Ukraine, to the general prosecutor and to the Council of
Europe. Journalists▓ organisations are asked to continue the pressure on the
Ukrainian government by sending protest to coincide with the anniversary of
the murder to President Victor Yushchenko at or fax him
on 380 44 255-72-76.


For more information contact the IFJ at 32 2 235 2207
The IFJ represents over 600,000 journalists in 114 countries worldwide
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

Associated Press (AP), Moscow, Russia, Wed, September 12, 2007

MOSCOW - Media freedom advocates harshly criticized Ukrainian authorities
Wednesday for a lack of progress in the inquiry into the murder of an
investigative journalist seven years ago.

Three former police officers have faced trial in connection with the killing
of Heorhiy Gongadze, whose beheaded body was found in a forest outside
Kiev in 2000, but the probe has failed to track down the mastermind.

"This is the biggest question today: If there is a planned campaign of
political obstruction? And we believe that there is," Jim Boumelha, the
president of the International Federation of Journalists, said at a news

Gongadze crusaded against official corruption. His killing triggered months
of protests after Mykola Melnychenko, a former bodyguard to then-President
Leonid Kuchma, released tape recordings in which voices resembling those of
Kuchma and others were heard conspiring against the journalist.

Western-leaning President Viktor Yushchenko has pledged to make solving the
killing a top priority, but no one has been convicted.

Press freedom watchdogs have particularly criticized Yushchenko for giving a
state medal to the nation's former Prosecutor General, Mykhailo Potebenko.
Gongadze appealed to Potebenko shortly before his murder when he realized
he was being followed, but the prosecutor ignored his plea.

"There are people who try to cover up (for) their colleagues - this is the
only explanation I can give," Gongadze's widow, Myroslava, said when asked
to comment on the stalled official probe.

Melnychenko fled in 2000 to the United States, where he was granted
political asylum, but he later returned to Ukraine to testify.

Seven years ago, Gongadze got into what he thought was a taxi, and was then
joined by three others and driven outside Kiev, according to the suspects.

He was beaten and strangled, his body doused with gasoline and burned.
Experts said Gongadze was decapitated after his death. Numerous tests
have concluded the remains are Gongadze's. His head has not been found.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
Please contact us if you no longer wish to receive the AUR
Myroslava Gongadze said investigation has been deadlocked for the last year.

Radio Free Europe/Radio Liberty (RFE/RL)
Prague, Czech Republic, Wednesday, September 12, 2007

KYIV - Ukrainian authorities don't have the political will to investigate
the case of murdered journalist Heorhiy Gongadze, according to a new
report by the International Federation of Journalists (IFJ).

The report was presented today in Kyiv by Simon Pirani, an IFJ
representative. Pirani said that a change of investigators has resulted in a
deterioration of the probe.

Gongadze, an investigative journalist whose articles often targeted the
administration of former President Leonid Kuchma, disappeared in September
2000. His decapitated body was discovered in a forest near Kyiv shortly

His widow, Myroslava Gongadze, said today that the investigation has been
deadlocked for the last year. "I was always dissatisfied with the process of
the investigation. Sure, I wanted [them] to do a lot more," she said.

"Nevertheless, there were people who could at least have passed the parts of
the case to the court, and it was crucially important," Myroslava Gongadze

"Those people were very deep into the case and were close to getting a
result regarding the orders [of the murder]. Unfortunately, they put aside
the investigation process just when they were as close to [finding] a
resolution as ever."

The report recommends that the Ukrainian government makes public the
priorities of the investigation. It also recommends that criminal cases be
launched against those who have blocked the work of investigators.

The authors of the report have also called on the Council of Europe to
express concern at officials within the Prosecutor-General's Office and
politicians that they say are obstructing the investigation.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
Ukrainian daily names three key suspects in president's poisoning
ANALYSIS: By Olena Heda and Serhiy Sydorenko
Kommersant-Ukraina, Kiev, in Russian 13 Sep 07 pp 1, 4
BBC Monitoring Service, United Kingdom, Sep 13, 2007

The Kommersant-Ukraina daily has managed to learn the names of three key
suspects in the case of Ukrainian President Viktor Yushchenko's poisoning in

On 11 September President Yushchenko publicly asked for Russia's assistance
in uncovering and questioning the suspects who were reportedly hiding there.

The daily quoted its sources as saying these suspects are the former deputy
chief of Ukraine's Security Service, Volodymyr Satsyuk, and two of his
aides. The Russian ambassador to Ukraine, Viktor Chernomyrdin, who rushed to
comment the case, might be reprimanded, the daily added.

The following is an excerpt from the article by Olena Heda and Serhiy
Sydorenko entitled "A striking three" published in the Ukrainian daily
Kommersant-Ukraina on 13 September:

On 12 September, the Prosecutor-General's Office of Ukraine received the
consent from its Russian colleagues to set up a joint commission that will
carry out a number of measures to investigate the case of [Ukrainian
President] Viktor Yushchenko's poisoning. [Passage omitted: background]

Viktor Yushchenko's statement resulted in a diplomatic scandal involving the
Russian ambassador in Ukraine, Viktor Chernomyrdin.

As reported on 12 September, Mr Chernomyrdin denied that President Viktor
Yushchenko had asked Moscow for assistance in this issue. [Passage omitted:

When asked whether this incident may push Ukraine to have the ambassador
recalled, Oleksandr Chalyy [the deputy head of the Ukrainian presidential
secretariat] said it is up to the Foreign Ministry to deal with this issue.

Meanwhile, a high-profile source in the Ukrainian Foreign Ministry told
Kommersant that the dismissal of Mr Chernomyrdin is possible.

"We think this incident will give the Kremlin another important reason to
consider replacing the ambassador. We see that Chernomyrdin's statement
made the Russian leadership feel notably uncomfortable. Plainly speaking,
Chernomyrdin will be punished for his arrogance."

Let us recall that it was Mr Yushchenko who said that three key suspects in
his poisoning case are hiding in Russia. He said the inquiries had been sent
to the Russian Prosecutor-General's Office to ask for its assistance in
organizing the interrogation of these people. The president refused to name
these people, saying this can only be done by an investigator.

The Prosecutor-General's Office did not disclose this information either.
However, Kommersant managed to learn the names of the people that the
Prosecutor-General's Office wants to interrogate.

A source close to the investigation said the inquiry sent to the Russian
Prosecutor-General's Office named Volodymyr Satsyuk, Taras Zaleskyy and
Oleksiy Poletukha.

It is known that in 2004, Satsyuk was the deputy head of the Security
Service of Ukraine [SBU]. Mr Yushchenko repeatedly said that he was poisoned
on 5 September 2004 during a dinner in his [Satsyuk's] summer house.

Taras Zaleskyy, Mr Satsyuk's aide, was also present at this dinner.
Investigators believe (this version was confirmed by several witnesses) that
it was Mr Zaleskyy who brought Yushchenko pilaff dishes, one of which
contained dioxin.

Kommersant failed to establish Oleksiy Poletukha's possible role in the
poisoning of Mr Yushchenko. His name never surfaced the press with regard to
this criminal case.

Kommersant's sources in the Prosecutor-General's Office of Ukraine refused
to comment on this, with one source saying Poletukha was not mentioned among
the witnesses whom Ukraine wants to interrogate with Russia's assistance.

Meanwhile, two close allies of Viktor Yushchenko confirmed yesterday that
Oleksiy Poletukha is a suspect.

It is known that Oleksiy Poletukha was Volodymyr Satsyuk's aide and worked
for businesses controlled by Satsyuk before he was appointed to the Security

However, in 2001, Mr Poletukha left the country after he was put on the
wanted list over financial operations he was involved in as deputy board
chairman of Ukrayina Bank [a big Ukrainian bank that went bankrupt in the
late 1990s].

"On 12 September 2007, Ukrainian national Oleksiy Vladymyrovych Poletukha
is on the international wanted list. He was put there by the Security Service's
Kiev directorate. The measure of restraint in his case is arrest," the head
of the Interpol's Ukrainian bureau, Rostyslav Verheles, said.

We can assume that Oleksiy Poletukha was abroad at the moment Viktor
Yushchenko was poisoned. In this case, we can suggest that his role was to
deliver dioxin from Russia to Ukraine.

Kommersant's source close to the investigation indirectly confirmed this,
"if I say where he was at the moment Viktor Yushchenko was poisoned, you
will immediately understand his role in this crime".

Nevertheless, Ukrainian investigators have no guarantees that even with the
assistance of the Russian Prosecutor-General's Office they will manage to
interrogate all the wanted suspects.

Volodymyr Satsyuk's lawyer, Viktor Petrunenko, told Kommersant that his
client can be outside Russia now, "I am not certain that he is in Russia, he
can be in Ukraine.

Well, recently he needed to improve his health, that is what he did."
Petrunenko said that Satsyuk was not summoned to testify on the Yushchenko
case recently. "As far as I know there are no legal claims against him," he
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

Kommersant, Moscow, Russia, Wed, September 12, 2007

MOSCOW - Ukrainian President Viktor Yushchenko has accused Moscow
of hampering the investigation into his poisoning with dioxin in 2004.
Yushchenko stated that poison of that type is produced only in the United
States, Greta Britain and Russia, and Russia refuses to provide a sample of
its product.

Major newspapers around the world carried an interview with the Ukrainian
president yesterday in which he said that "The role of all of the
individuals that might be involved in this case is already determined. The
investigation knows who, when, where, which substance was used."

Yushchenko said that there are three key figures in the case, all of whom
are now in Russia. Extradition requests for those persons have been ignored.

Yushchenko refused to name Russian authorities as the culprits in his
poisoning, however, demurring that "If I respond to that question, then the
investigation will have nothing to do."

The Medved Institute of Ecology and Toxicology in Kiev has just completed
a study of the dioxin samples provided by the U.S. and Britain. Deputy
Prosecutor General of Ukraine Nikolay Golomsha stated that Russia has
ignored three requests for dioxin produced in that country.

He added that commercial acquisition of samples would be beyond the
framework of the legal field. Ukrainian presidential representative Nikolay
Poludenny told Kommersant that attempts to purchase Russian dioxin were

Russian Ambassador to Kiev Viktor Chernomyrdin denied that Ukrainian
authorities has contacted Russia for aid in the investigation. "I would most
likely know if they had," he commented. The Russian FSB and Investigative
Committee made similar comments.

Deputy head of the Russian Foreign Ministry's information and press
department Andrey Krivtsov said that the ministry would not make an
official comment on the Ukrainian president's statements.

Natalia Brusentseva of the Prosecutor General's Office of Russia told
Kommersant that a request from the Ukrainian side was received by the
Russian Foreign Ministry on September 7. "It is now under consideration.
Ukraine will receive a response at the appropriate time. There is nothing
else I can add," Brusentseva said.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

Roman Olearchyk, Kiev, Financial Times, London, UK, Thu, Sep 13 2007

Russia has agreed to provide access to its laboratories as part of the
investigation into the poisoning of the Ukrainian president with dioxin
during Ukraine's 2004 election campaign.

Ukraine's general prosecutor's office announced yesterday that Russian
counterparts had agreed jointly to analyse Russian-made dioxin in order to
compare it with that used to poison Viktor Yushchenko when he was a
presidential candidate.

The three-year investigation came back into the spotlight this week after Mr
Yushchenko accused Moscow of not providing key suspects and evidence he
believed were necessary to solve the case.

Earlier this week Russia's top diplomat in Kiev, Viktor Chernomyrdin,
expressed dismay at Mr Yushchenko's comments and signalled that Moscow
would not co-operate. The announcement yesterday that Russian prosecutors
were ready to co-operate came as a surprise.

The heightened interest in the politically-sensitive poisoning case comes
weeks ahead of snap parliamentary elections in which allies of Mr Yushchenko
are vying to oust the governing coalition of prime minister Viktor
Yanukovich, the Moscow-backed candidate in 2004.

In recent interviews, Mr Yushchenko said Ukrainian investigators were close
to cracking the poisoning case but needed co-operation from Moscow.

"The key problem in the dynamics of this investigation lies in the fact that
the three individuals that were key organisers of this poisoning today are
in Russia. And the Russian side has not handed them over," Mr Yushchenko
said in a Financial Times interview on September 7.

Ukraine's prosecutor's office has appealed for assistance to the Russian
side twice since December 2006. Mr Yushchenko said he personally discussed
the matter with Vladimir Putin, the Russian president. Until yesterday, the
Russian side showed no intention of co-operating. It remains un-clear if
Moscow will hand over the three suspects - two Ukrainians and one Russian -
whom Kiev officials suspect of carrying out the poisoning.

Mr Yushchenko said tests from labs in western countries that produce dioxin
had been received to compare with those found in his blood and tissues.
Samples from Russian labs could produce a match, informed sources in Ukraine

On Tuesday, Mr Chernomyrdin expressed alarm regarding allegations of his
country's failure to co-operate. "Why didn't they ask, make requests? I just
don't understand," he said.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
Latest novel by Ukrainian writer Andrey Kurkov

REVIEW: Hugh Barnes, New Statesman, London, UK, Thu, Sep 13, 2007

NEW BOOK: "The President's Last Love"
By Andrey Kurkov, Harvill Secker, 400pp, ё12.99

Life in the former Soviet Union is sometimes compared to a zoo. Predatory
oligarchs are the big beasts in the post-Communist jungle, and their
wildlife antics, including sex and murder, lend colour to otherwise dull
reports of takeovers and mergers. In a way, the journalistic clichИ merely
updates Orwell's Animal Farm.

The nature of bandit capitalism is red in tooth and claw. Yet the comic
novels of Ukrainian writer Andrey Kurkov take the zoological metaphor

Kurkov's masterpiece Picnic on Ice (or Death and the Penguin, as it became
in English translation) tells the story of Viktor, a struggling writer in
chaotic 1990s Kiev who adopts a penguin called Misha because the city's
post-Soviet zoo can no longer afford to feed it. The "death" of the title
refers to a job the hero gets writing obituaries of people who suddenly
begin to die in mysterious and bizarre circumstances.

Ukraine emerges as a place almost dehumanised by corruption and gangsters,
but the satire never feels harsh or one-dimensional.

Indeed Kurkov lampoons the morally grotesque post-Soviet world in much the
same way as his fellow Ukrainians Mikhail Bulgakov and Nikolai Gogol used
magic and surrealism to write fables of oppression under Stalin or the tsar.

His latest novel, The President's Last Love, describes the turbulent life
story of a Ukrainian president of the near future. It was originally
published in Russian, in 2004, a few months before the Orange Revolution
swept Viktor Yushchenko to power.

His face appears on the cover of the Russian edition of the novel - or, at
any rate, half of it does. The other half belongs to Putin, who also has a
walk-on role in Kurkov's novel, hosting celebrations, in 2013, of the fourth
centenary of the Romanov dynasty.

Such a misfit is intriguing. The aptly named Russian leader was "put in" to
power in the first place (rather like our own prime minister) without the
fuss of an election, while Yushchenko's supporters took to the streets to
overturn a rigged poll.

His fictional counterpart, Sergey Bunin, who is also Kurkov's narrator,
wakes from heart transplant surgery at the beginning of The President's Last
Love to find his body covered in freckles due to a poisoning.

The same thing happened to Yushchenko, now completely pockmarked, six
months after the book was published. It's a remarkable case of life
imitating art, or perhaps of would-be assassins reading novels for inspiration.

Other problems cast a shadow over the president's hospital bed. An oligarch
is threatening to cut off the nation's electricity in a subplot oddly
prescient of last year's dispute between Russia and Ukraine over the gas
supply, while the Vatican wants to sanctify the kitchen garden of a crippled
widow in western Ukraine after it begins to yield "miracle" potatoes the
size of footballs.

Widows bulk large in the novel, as they did in the former Soviet Union
itself. One woman demands visiting rights to her deceased husband's heart
now transplanted into the president's chest.

Almost a replica of what happened to Yushchenko after the Orange Revolution,
when his fragile government collapsed amid political intrigue and the
warring ambitions of his supporters, The President's Last Love is a novel
about the corrupting power of innocence.

There are some lovely comic dissonances between high office and low humanity
as Kurkov charts Bunin's various romantic attachments, and how they enabled
him to climb the political ladder.

But the narrative structure is impossibly complicated as the book is divided
into three separate timeframes, roughly corresponding to the early, middle
and later years of the hero. These are shuffled every two or three pages for
no obvious reason.

The overall effect isn't helped by the poor quality of the uncredited
translation, with its broken syntax and sloppy punctuation.

Here, for example, is Bunin describing the "national soap opera" that is
Ukraine: "There was my spinning top of a country, reeling west one minute
and east the next, and nothing I could do about it. There were enemies, both
secret and open. And there were also those for me, again both secret and -
some on my team - open."

Authenticity of language is important in Kurkov's fiction because the text
itself is shot through with political significances that may get lost by
indirect translation.

The novelist is criticised by some intellectuals in Kiev because he writes
in Russian instead of Ukrainian. (He was born in St Petersburg but
emigrated to Ukraine with his family at the age of three.)

In Russia, on the other hand, he is persona non grata because he pokes fun
at the Kremlin. Two years ago, the Russian delegation to the Paris Book Fair
lobbied unsuccessfully for his invitation to be withdrawn. It was another
example of life imitating art, the invisible hand of violence lurking in his
novels and beyond.
Hugh Barnes's "Gannibal: the Moor of Petersburg" is published
by Profile Books, LINK:
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

Interfax-Ukraine news agency, Kiev, in Russian 1358 gmt 13 Sep 07
BBC Monitoring Service, United Kingdom, Thursday, Sep 13, 2007

KIEV - The chairman of the Supreme Council [parliament] of the fifth
convocation and leader of the Socialist Party, Oleksandr Moroz, has asked
the Prosecutor-General's Office to investigate serious flaws made when voter
rolls were compiled.

Moroz said this at a meeting with US Ambassador to Ukraine William Taylor
in Kiev today, the Ukrainian parliament's press service has reported.

"Conclusions about voter rolls can be made on the basis of reports from the
regions two weeks ahead of the election that they have changed by almost 20
per cent in the past two years," Moroz said.

"It is obvious that 'reserves' of electoral resources are being prepared for
those who are in control of them. The biggest threat of vote rigging stems
from here, as the election should have been held on the basis of a single
voter register," he added.

Moroz also drew Taylor's attention to the use of government resources by
the presidential secretariat and local administrations in the regions. He said
that the president is taking part in the election campaign siding with one
of the political forces.

"It's a pity that the president is being used by those who will be the first
to put poles in his wheels in the next presidential election campaign,"
Moroz said.

Taylor said he was concerned by the norms of Ukrainian legislation
envisaging voting at home and voting of Ukrainians abroad.

For his part, Moroz said that these norms are precisely aimed to prevent
possible falsification. "I doubt that the election will be fair, but these norms
will indeed facilitate a free manifestation of people's will," Moroz said.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]

COMMENTARY: By Michael R. Caputo
The Washington Times, Washington, D.C., Wed, Sep 12, 2007

KIEV, Ukraine. -- More than a decade after the collapse of the Soviet Union,
freedom-loving Ukrainians face a vital decision in Sept. 30 elections to
their parliament, called the Rada. Unlike the early years after the fall, a
return to communism is no danger.

But their fledgling democracy could be condemned to another horrible fate.
If the voters are not careful, they could end up just like America - doomed
to a ballot without real choices.

While the United States stands as the paragon of global democracy, our
nation boasts shamefully low voter turnout most election years. In contrast,
up to 80 percent of Ukrainians consistently head to the polls. Despite being
exhausted by three national elections in just two years, locals are
enlivened by a European-style variety of candidates and parties.

Democrats, reformers, fascists, nationalists, socialists, communists, and
more vie for voters. Meanwhile, back home in America, our two-party
system leaves many disenfranchised and casting about for more choices.

But at Kiev's Maidan Square, where hundreds of thousands of Ukrainians
gathered to guarantee fair elections in 2004, a September Sunday walk
showed Ukraine is headed our way. Just three parties were apparent, all a
part of the fractured status quo - and all undeniably a part of the problem.

Reliable polls show Moscow-backed Prime Minister Viktor Yanukovych's
Party of Regions leading with 27 percent. Embattled president Viktor
Yushchenko and his Our Ukraine Party garners 15 percent.

This rivalry busted out globally in 2004 when Mr. Yushchenko survived a
mystifying dioxin poisoning on the campaign trail, made less mysterious by
the old guard's chummy relationship with Russia. That unique strategy for
victory was recalled recently when the Kremlin allegedly tried it again,
this time fatally, on a former KGB spy in London exile.

Sandwiched between the two leading men are Yulia Tymoshenko and her
Bloc Yulia, at 22 percent. The first prime minister after Mr. Yushchenko
recovered and was sworn in as president, the youthful beauty lasted only
eight months before being fired in a sweeping corruption scandal. Angry and
unrepentant, she bolted the Orange Coalition and launched a crusade focused
on her martyrdom.

Soon, Ukrainians were treated to a near biblical transformation: her
ubiquitous braided blonde hair, wrapped atop her head in a halo, was soon
complemented by flowing white angelic dresses. Also backed by millions in
Moscow cash, the modern-day Joan of Arc branded herself on a first-name
basis with Ukrainians. Today, young and old alike call her Yulia.

Popular and empowered, Yulia took every open shot at the president.
Finger-pointing supplanted governing. Fistfights broke out among Orange
forces in the parliament and the coalition collapsed, its goals unrealized.

The endless, miserable division forced Mr. Yushchenko to surrender last
summer, and he formed a government with the old-guard star, Mr.

Undaunted, Yulia used her seat in the Rada to increase her attacks. She made
the news daily, her popularity soared, and divisions among Orange allies
widened. And today, the Orange Revolution is dead, a casualty of her
ambition and Mr. Yushchenko's tepid responses to Mr. Yanukovych's
encroachments on the gains of the movement.

Yulia's party is now one of three mega-blocs and, as the parliament campaign
season kicked off, the going got weird. An anonymous advertisement touted an
age-old Nostradamus prediction that in 2007 a woman would come to power in
the East and bring order. Yulia denied responsibility, but it earned vital
national media coverage in a nation fond of the French soothsayer.

Then, in late August, Yulia announced she had secretly surveyed 30,000
Ukrainians. Her conclusion: the elections will certainly exclude all parties
except hers and those of her top two tormentors.

She refused to provide the polling research - perhaps the largest
pre-election survey in world history - expecting voters to take her claim as
an article of faith.

Some are balking, especially in western and northern regions where her
failure to back banking reform is blocking cash wired from family
expatriates working abroad.

With this, Yulia urged the electorate to choose among mega-blocks instead
of wasting votes on smaller parties. But contrary to her mythical survey,
reliable research shows other parties may pass the 3 percent minimum
threshold and join the Rada.

Among them are the communists and the party of democratic reformer
Volodymyr Lytvyn, former speaker of the Rada who kept the rowdy
legislature from devolving into anarchy during the Orange Revolution.
Rested and ready after losing re-election in 2006, he is a fresh face in a
tired crowd of self-interested politicians.

Ukrainians would do well to disregard the Siren's call to vote only for the
three large parties and head down the path toward an American-style
democracy. They're far better off with several parties and the resulting
European-style election diversity. In the parliament, these smaller parties
would decide close votes on Ukraine's future.

But if they take Saint Yulia's advice, the young democracy will just get
more of the same gridlock.
Michael R. Caputo, a Miami writer, lived in Russia from 1994 to 1999 as
an election adviser to Boris Yeltsin's administration and was a media
director of former President George H.W. Bush's 1992 re-election.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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return to index [Action Ukraine Report (AUR) Monitoring Service]