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Crippling lack of consensus in his government was clear
By Yuras Karmanau, The Associated Press, Kiev, Ukraine, Thu, Feb 25, 2010

RIA Novosti, Kiev/Moscow, Thu, February 25, 2010

By Marcin Sobczyk, New Europe, Dispatches from Dow Jones writers across Eastern and Central
The Wall Street Journal Blog, New York, New York, Thu, February 25, 2010

By Daryna Krasnolutska and Kateryna Choursina, Bloomberg, Kiev, Ukraine, Thu, Feb 25, 2010

Editorial, Kyiv Post, Kyiv, Ukraine, Fri, Feb 26, 2010

Editorial, Financial Times, London, UK, Thu, Feb 25, 2010

By Sabina Zawadzki, Reuters, Kiev, Ukraine, Thu, Feb 25, 2010

A healthy balance of power is good for all.
Editorial, Kyiv Post, Kyiv, Ukraine, Fri, Feb 26, 2010

By Roman Olearchyk in Kiev, Financial Times, London, UK, Thu, Feb 25 2010

By William Mauldin, Dow Jones Newswires, Moscow, Russia., Thu, Feb 25, 2010

Nation has run out of heroes, but has not given up on democracy.
Analysis and Commentary: By Olena Tregub
Kyiv Post, Kyiv, Ukraine, Friday, Feb 26, 2010

By Kateryna Choursina and Daryna Krasnolutska, Bloomberg, NY, NY, Thu, Feb 25, 2010

The excitement of the presidential election faded as soon as the first exit poll results were announced on Feb. 7.
Analysis & Commentary: By Olesia Oleshko, Kyiv Post, Kyiv, Ukraine, Fri, Feb 26, 2010

Analysis & Commentary: Valery Kalnysh
Deputy editor-in-chief of the "Kommersant Ukraina" newspaper published in Kiev.
Open Democracy, London, UK, Tue, February 23, 2010

Here’s a snapshot of the new presidential administration team.
Kyiv Post, Kyiv, Ukraine, Thu, Feb 25, 2010

Ukraine has been offered no real prospect of joining Europe
Analysis & Commentary: By Fabrizio Tassinari, Head of Foreign Policy 
and EU studies at the Danish Institute for International Studies
Open Democracy, London, UK,  Wed, 3 February 2010 

EU has exacerbated the country's political problems
There is no alternative to Ukrainian integration in the EU
The conclusion for the EU: open up the prospect of membership
Analysis & Commentary: Andreas Umland
Open Democracy, London, UK, Sat, January 16, 2010

Visit the travel show this weekend in New York City
U.S.-Ukraine Foundation (USUF), Wash, D.C., Thu, Feb 25, 2010

Analysis & Commentary: George Weigel
Distinguished senior fellow of Washington’s Ethics and Public Policy Center. 
National Review, New York, New York, March 8, 2010 issue

16th-18th March 2010, InterContinental, Kyiv, Ukraine
Adam Smith Conferences, London, UK, Thu, Feb 25, 2010

Sanford Owens, Senior Commercial Officer
U.S. Commercial Service Business Liaison Office
European Bank for Reconstruction and Development (EBRD)
London, UK, Wednesday, February 24, 2010

Sponsored by the U.S.-Ukraine Business Council (USUBC)
By Jim Davis, Ukraine Business Online (UBO), Kyiv, Ukraine, Wed, 10 Feb 2010  
Crippling lack of consensus in his government was clear

By Yuras Karmanau, The Associated Press, Thu, Feb 25, 2010

KIEV, Ukraine -- New Ukrainian President Viktor Yanukovych vowed Thursday to create "a European state outside of any bloc," but the crippling lack of consensus in his government was clear in the half-empty hall during his inaugural address.

His short, unemotional speech showed a determination to save the economy and preserve ties with the West forged by the outgoing leadership. But his more specific pledges have suggested a turn back toward Russia in energy policy and military cooperation, policies that threaten to further polarize the nation.

Yanukovych took the oath of office in the Verkhovna Rada, the Ukrainian parliament, receiving a ceremonial scepter that he raised in triumph over the deputies in attendance.

But members of Prime Minister Yulia Tymoshenko's party snubbed the event. Their empty half of the chamber emphasized the kinds of divisions that have paralyzed Ukraine's government in recent years and continue to do so.

Since his victory in a Feb. 7 runoff vote, Yanukovych's Party of Regions has struggled to form a new coalition that could pass urgent reforms and oust Tymoshenko, his political nemesis.

This has proven a losing fight so far. Having defeated her by only 3.5 percentage points in the presidential contest, Yanukovych enters office with a shaky mandate. He also inherits an economy crippled by the global financial crisis and a nation whose political loyalties are deeply divided.

He has broad support in the Russian-speaking east of the country, but in the Ukrainian-speaking west, he lost in virtually every region to Tymoshenko.
But the new president, once considered a Kremlin lackey, promised to carve a unique geopolitical path for Ukraine and pull its economy back from the brink.

"I think that the state can not only be saved from a social-economic collapse, but can quickly be put on the path of accelerated development," Yanukovych said in his inaugural address.

Where his predecessor had railed against Russian bullying in the region, Yanukovych pledged a more balanced approach.
"People don't like it when you show them a fist. They have more trust in those who extend them a hand," he said, appearing eager to hold his composure.
Neither Tymoshenko nor outgoing President Viktor Yushchenko showed up for the inauguration. Both of them came to power on the back of mass street protests against Yanukovych in late 2004. 

Dubbed the Orange Revolution, those protests succeeded in getting the Supreme Court to overturn Yanukovych's rigged election victory and order a revote, which Yushchenko, a fierce Kremlin critic, won by a narrow margin.

But Yanukovych has since made a comeback, capitalizing on the Orange leadership's failure to deliver on promises of economic growth and European integration. Yushchenko, who has called Yanukovych's victory a "Kremlin project," did not make it past the first round of voting in January.

Tymoshenko alleges vote fraud, but she has dropped her court case on the issue, claiming the court is controlled by Yanukovych's supporters.
International observers called the 2010 vote free and fair.

Where his predecessor had offended Russia by seeking NATO membership, Yanukovych has scrapped the idea of joining the EU or NATO. He has instead pledged to focus on the country's endemic corruption and economic woes, issues that Yushchenko was accused of ignoring as he single-mindedly sought ties with the West.

Yanukovych, a native Russian-speaker, is expected to bring Ukraine closer to Moscow. He has said he will welcome Russia into a consortium that would jointly operate Ukraine's natural gas pipeline network, restoring influence that the Orange leaders had worked to revoke.

 He has also said he would extend Russia's lease on a naval base in the Ukrainian port city of Sevastopol that is due to expire in 2017. Russia's Black Sea fleet stirs emotions in Ukraine, and Yushchenko had fought to kick it out, calling the fleet a hostile presence on Ukrainian soil.

Yanukovych's first visit will be to Brussels next week, and immediately after he will travel to Moscow on March 5, his advisers said.

After his inauguration, Yanukovych met with seven foreign delegations, including ones from the European Union, the United States, Russia and China.
Kremlin Chief of Staff Sergei Naryshkin said the purpose of his visit Thursday was to "activate relations with Ukraine in a meaningful way, especially on the economic front."

James Jones, the U.S. National Security Adviser, congratulated Yanukovych on behalf of President Barack Obama, who "highly values the strategic partnership with Ukraine," Jones said after their meeting.

Analysts pointed to the need for Yanukovych to strike a balance between East and West and unite the country. "These statements (about the Black Sea fleet) are capable of very strongly pitting at least half the country against Yanukovych," said Viktor Nebozhenko, a sociologist at the Ukrainian Barometer, a think tank in Kiev.

"Yanukovych will need to change if he wants to become president of more than just the east and south of the country," said Vadim Karasyov, head of Ukraine's Global Strategies Institute.

[return to index] [Action Ukraine Report (AUR) Monitoring Service]

RIA Novosti, Kiev/Moscow, Thu, February 25, 2010

KIEV - The head of the Russian Orthodox Church on Thursday blessed the presidency of Viktor Yanukovych in an unusual demonstration of the new Ukrainian leader's close ties with Russia.

Yanukovych invited Patriarch Kirill of Moscow and all Russia to the inauguration ceremony, triggering criticism from the rival Ukrainian Orthodox Church - Kiev Patriarchate, which seeks to end the Moscow patriarchy's control of the church in the country.

Speaking after the prayer at the Kiev Laura, Kirill said Yanukovych would serve Ukraine by helping it "overcome political, historical, cultural and religious discords," and by rebuilding traditional ties with fellow Slavic neighbors.

Kirill appealed to the memory of the Kievan Rus - a medieval Slavonic kingdom seen as the precursor to the modern Russian, Ukrainian and Belarusian states.  He also said the three Slavic nations, "parts of a single Holy Rus," must be tied by bonds of friendship, peace and cooperation. "The Lord wanted the seeds sown here on Kiev's hills to grow into a giant tree of East European Orthodox civilization," the patriarch said.

Yanukovych, who attended the prayer before being sworn in at a ceremony in parliament, thanked the patriarch for the prayer and blessing. "I am positive the Ukrainian people will overcome all difficulties in their way, all challenges God has sent to us. We will overcome them and emerge unified," he said.

Yanukovych, the first Ukrainian president not to win half the vote, took the oath in a half empty hall of the Supreme Rada at a ceremony boycotted by his rival Prime Minister Yulia Tymoshenko and her bloc, who have contested the election and refused to recognize him as president.

Yanukovych, who narrowly won the February 7 runoff with 48.95% of the vote against Tymoshenko's 45.47%, faces a struggling economy and deep political divisions. Yanukovych enjoys support in the mainly Russian-speaking eastern regions, with Tymoshenko being popular in the country's west.

His inauguration is the culmination of a remarkable comeback after his victory over Viktor Yushchenko in 2004 was overturned amid fraud accusations by the pro-Western "orange revolution" protests led by his Yushchenko and Tymoshenko. Yanukovych, 59, is expected to restore ties with Russia strained under his predecessor, Yushchenko.

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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By Marcin Sobczyk, New Europe, Dispatches from Dow Jones writers across Eastern and Central
The Wall Street Journal Blog, New York, New York, Thu, February 25, 2010

KIEV - Ukraine’s President Viktor Yanukovych reviews an honor guard during his inauguration ceremony Thursday Polish President Lech Kaczynski and his political rival Foreign Minister Radoslaw Sikorski are together in the Ukrainian capital today for the inauguration of Ukraine’s new president Viktor Yanukovych.

That’s a welcome gesture of the Polish authorities after several years of Poland’s blind and unreciprocated love affair with the Orange former president Viktor Yushchenko.

It took several painful kicks from the outgoing president for much of the Polish elite to realize that it unnecessarily put all eggs in the Yushchenko basket years earlier during the Orange Revolution that made him president in 2005.

When white-and-red flags were waved in Kyiv during the street protests against the rigged elections of late 2004 and Polish politicians speaking at rallies on the Maidan were treated like saviors, it almost felt like a honeymoon between Poland and Ukraine.

All the conflicts of the past seemed like they were all forgotten — from the centuries of what some Ukrainians see as Polish oppression when much of present-day Ukraine belonged to the Polish Crown to the massacres of ethnic Poles in Volhynia during World War II.

But after Yushchenko was sworn in and Polish politicians and crowds returned home feeling fully satisfied, it turned out very quickly that the Orange camp, the Ukrainian political scene and in fact the entire Ukrainian nation is divided about where to go — east or west. In the end, the Orange camp disintegrated amid a power struggle, leaving Poland hanging on Yushchenko who in the meantime became deeply unpopular.

Taking Polish support for granted, Yushchenko also started making gestures toward the more nationalist voter base, with Poland finally erupting with outrage when the outgoing president made Stepan Bandera, a key anti-Polish figure, a Hero of Ukraine.

The pickle Poland found itself in with Ukrainian leadership, and also earlier with the Georgian leader, stemmed from Polish politicians’ long-running assumption that if someone’s against Russia, that person is automatically with Poland, or that if someone’s pro-Russian, he or she won’t even want to meet a Polish official.

Now the Polish government says “Poland is always ready to strengthen the strategic dimension of the Polish-Ukrainian relations,” which in plain English means it will talk to someone who’s seen as pro-Russian without assuming he’ll bite.

[return to index] [Action Ukraine Report (AUR) Monitoring Service]

By Daryna Krasnolutska and Kateryna Choursina, Bloomberg, Kiev, Ukraine, Thu, Feb 25, 2010

KIEV - Newly inaugurated Ukrainian President Viktor Yanukovych may be forced to share power with rival Yulia Tymoshenko for as long as six months as he searches for the votes to oust her as premier or calls new parliamentary elections.

The president’s lack of a ruling majority in the 450-seat parliament threatens to deprive the former Soviet republic of the stability needed to combat Europe’s deepest recession and revive investor confidence.

Ukraine, whose debt is the third-most expensive to insure in the world, can’t gain access to an international bailout and pay Russia for gas to Europe without a government capable of winning approval for this year’s budget.

“There is going to be a lot of uncertainty for some time,” said Nick Day, London-based chief executive officer of the security and intelligence research group Diligence Inc. “Clearly Yanukovych has not got an overwhelming majority and needs to get a lot of people on his side in order to push through any meaningful changes within the economy. People will swap sides and it will become a dysfunctional democracy.”

A prolonged battle may deepen Ukraine’s economic decay and delay the resumption of a $16.4 billion emergency loan from the International Monetary Fund that has been frozen since November.

The IMF is demanding spending cuts that narrow the budget deficit by about a third from its 2009 level of about 13 percent of output, a reduction of energy subsidies and a consolidated banking industry. Lawmakers have yet to approve a 2010 budget.

Tymoshenko has said she won’t leave her post voluntarily, setting Yanukovych, who took office yesterday, the challenge of overturning her majority in the parliament. She is supported by a coalition of 244 lawmakers that includes her party, former President Viktor Yushchenko’s group and parliamentary speaker Volodymyr Lytvyn’s supporters.

Yanukovych’s Party of Regions has 171 seats, and he needs to secure 27 seats from the Communists and lure 20 followers from Lytvyn’s party and at least eight from the Tymoshenko or Yushchenko ranks to oust her.

If he fails, early parliamentary elections can’t be held until autumn, according to Yuriy Yakymenko, head of legal and political studies at the Kiev-based Razumkov Center. “The situation is very difficult and hard to predict,” he said.

Olexiy Haran, a professor of comparative politics at the Kiev-Mohyla Academy, said elections may be possible in June “though the Party of Regions will try to avoid it” because of concern about potential election fatigue among the electorate and because of possible delays to the budget passage that would stall the disbursement of the next IMF loan installment.

It will take the new president “some time” to form a coalition, said Nigel Rendell, senior emerging-market economist at RBC Capital Markets in London, by telephone.

“There’s a lot of disagreement between the politicians, the economy is in a recession and the IMF loan is still up in the air,” he said. “To get a consensus that can govern is going to be quite difficult.”

And the stalemate could persist, leaving the IMF without a functioning government to negotiate with over the loan resumption, Rendell said. “It would be a very bad-case scenario,” he said. “But it’s possible.”

Day said Tymosheno’s “strong and dedicated following” will force Yanukovych to seek compromises on legislation that is important to him. “Everything is going to be a great struggle overshadowed by the horse-trading and political infighting,” said Day.

Yanukovych may be hampered in such maneuvering by his campaign promises to increase wages and social payments, said Yakymenko.

"They understand already that the state finances do not make it possible,” Yakymenko said. “It is going to work against Yanukovych.” Yanukovych defeated Tymoshenko in a Feb. 7 presidential election that was certified as legitimate by international observers. Tymoshenko has refused to concede defeat and tried to challenge the outcome in the courts.

Investors have lost patience. The hryvnia has lost 41 percent against the dollar since September 2008 and was the world’s second worst performer after the Venezuelan bolivar.

The yield on Ukraine’s 2016 Eurobond fell 18 basis points to 10.07 percent. The credit default swap spread on the country’s five-year debt narrowed to 936 basis points on Feb. 24 from 944 the previous day, Bloomberg data show. A narrower spread signals improved investor perceptions of credit risk.

“A country like Ukraine needs to put so many things right,” said Day. “They need to get some real fiscal discipline into their country to attract foreign investment and to do that they need to push through strong reform.”

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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Editorial, Kyiv Post, Kyiv, Ukraine, Fri, Feb 26, 2010

Ukraine’s new president should lead by example and make peace with his enemies, including Tymoshenko, as a start to changing the ugly political culture in the nation.

In his inaugural speech on Feb. 25, President Victor Yanukovych gave Ukrainians plenty of ways to hold him accountable during his five-year term.

Effective state governance was named as a first priority and, as the new president said, this largely lies in building up a stable parliamentary majority and an effective Cabinet willing to tackle the numerous challenges facing the nation, including creating a new judiciary, forming effective law enforcement, cutting the bureaucracy, battling corruption and modernizing the economy.

These promises sound dodgy from a man who did his best to sabotage Prime Minister Yulia Tymoshenko’s government over the years. But we’ll give him the benefit of the doubt at the start of his term.

He should lead by example and make peace with his enemies, including Tymoshenko, as a way to start to changing the ugly political culture.
Moving Ukraine to a modern, competitive economy and away from the crony capitalism that made Yanukovych’s inner circle of supporters rich is honorable. But it’s hard to imagine this ex-convict imposing justice, let alone preventing his rich patrons from grabbing more power and wealth while he is in power.

If he’s not up to solving the numerous unsolved crimes of the past, he should at least create a level playing field for all.

Many Ukrainians were relieved to hear Yanukovych’s promise to cut down on state interference in the private economy. But changing anything substantially would mean no more insider deals and attacks on monopolies that his supporters enjoy.

As far as foreign relations are concerned, Yanukovych promised that Ukraine would be a bridge between East and West, an integral part of Europe and the former Soviet Union at the same time. This sounds like a re-load of ex-President Leonid Kuchma’s unsatisfying policies from 1994-2005, but hopefully it will work to the nation’s benefit.

Ukraine should continue to seek European Union membership and keep Russia at bay by improving its qualifications for potential membership in the NATO military alliance should the need arise.

In the end, less populist rhetoric that serves as a smokescreen to protect the entrenched interests would be appreciated. Yanukovych said he knows what to do – let’s hope by that he means he knows how to govern responsibly.

[return to index] [Action Ukraine Report (AUR) Monitoring Service]

Editorial, Financial Times, London, UK, Thu, Feb 25, 2010

Viktor Yanukovich, who is due to be inaugurated today as Ukraine’s new president, is getting his priorities right by picking Brussels for his first foreign trip.
But next week’s brief visit will not make a policy. Mr Yanukovich will have his work cut out convincing the European Union he is really committed to co-operation.

The burly ex-bureaucrat takes power after a bruising election in which he beat the leaders of the Orange Revolution – Viktor Yushchenko, outgoing president, and Yulia Tymoshenko, prime minister.

Mr Yanukovich first made international headlines for his unsavoury role in the 2004 election when his campaign was widely condemned as fraudulent. In most European states he would rightly have been wiped from political life. Many Ukrainians see his election now as a national humiliation.

So Mr Yanukovich has much to prove, starting with his democratic credentials. He must also revive a stalled International Monetary Fund rescue vital to bringing Ukraine out of financial crisis.

In foreign policy, he should clarify his intentions. Mr Yushchenko was unusual among Ukrainian leaders in openly backing rapid integration with the west. Mr Yanukovich is returning to the Kiev norm of balancing the west with Russia.

Mr Yanukovich is more comfortable in Moscow than in Brussels. But he is not naively pro-Russian. Ukraine’s business oligarchs, his big backers, would hate to have the Kremlin breathing down their necks, like their Russian counterparts. But they do want favours from Moscow, notably cheap gas.

The EU must give Mr Yanukovich time to explain his plans. For example, he has pledged to join a Russia-led customs union as well as continuing talks with Brussels on a free trade agreement. But it is unclear if these aims are compatible.

He wants to bring Russia and the EU into a consortium to help run Ukraine’s vital gas pipelines. But on what terms? A genuine partnership that would stabilise the crisis-prone trade is one thing. A sell-out to Gazprom and/or shady businessmen quite another.

Ukraine missed chances after 2004 to accelerate integration with the EU. With Russia now stronger and the EU pre-occupied with other issues, a new rush to
the west is not feasible. Balancing Russia and the west is a reasonable choice.

But Mr Yanukovich must not forget most Ukrainians see their future in EU integration. Any short-term deal done with Moscow must not harm the long-term prospects. The EU should tell him so.

[return to index] [Action Ukraine Report (AUR) Monitoring Service]

By Sabina Zawadzki, Reuters, Kiev, Ukraine, Thu, Feb 25, 2010

KIEV - Ukrainian President Viktor Yanukovich sent positive signals to foreign investors in his inaugural speech on Thursday, but whether the ex-Soviet company manager succeeds in bringing them back remains to be seen.

Yanukovich was sworn in on Thursday after a bitter campaign against his election rival, Prime Minister Yulia Tymoshenko, and faces the tough task of consolidating his power to produce a stable government that can bring back vital IMF lending.

In his first speech as president, he said Ukraine faced "colossal debts, poverty, a collapsing economy, corruption", and vowed to win the trust of investors.

"What is needed for investors and international financial institutions to renew their trust in Ukraine is securing internal stability, overcoming corruption, restoring clear, and most importantly, constant rules of relations between the state and business," Yanukovich said.

He said his aim was not to strengthen the state's role in the economy "but the government's participation in the creation of effective market mechanisms".
"I am certain that direct interference by the state in the economy -- its manual control -- is a road to nowhere," he said.

Although managing the economy is not the remit of the president, investors hope Yanukovich's victory ushers in a period of political stability that would allow the government to focus on shoring up the state's finances and economic growth.

The International Monetary Fund suspended its $16.4 billion bailout at the end of last year in the wake of fierce political rows and broken spending promises. About $10.5 billion has been disbursed to date.

The finance ministry said a technical mission from the IMF is due to arrive in April 7. These missions are usually a prelude to a full-blown visit, after which a decision on resuming lending could be made. Yanukovich's Regions party instigated rises in the minimum wage, passed by parliament, that were the last straw for the IMF. The government had already reneged on a promise to raise domestic gas prices, which would have helped the state's finances.

"(Yanukovich's) statements point clearly in the direction of more stability, obviously a positive, as this is something that foreign investors have lost sight of in the past years," said Simon Quijano-Evans of brokerage Chevreux.

The Regions party is now trying to form a new coalition to oust that of Tymoshenko. If it does, and succeeds in forming a new government, talks with the IMF could resume.

"He will have to make some difficult decisions early in his regime, in particular on gas price hikes and reining in pension/wage promises, to bring the IMF programme back on track," said Tim Ash, head of CEEMEA research at Royal Bank of Scotland. "This will be a key short-term test of his willingness to bite the bullet."


USUBC FOOTNOTE:  One of the largest concerns of the international business and investment community is the present high level of  'Crony Capitalism' found in Ukraine and whether this level will go up or down under the new President.  It is well known that the first priority for a high percentage of the politicians and government leaders at all levels over the past 19 years has always been to maximize their personal participation in and personal gains from the practice of 'Crony Capitalism," including private and government companies and programs, their assets and earnings.
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
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A healthy balance of power is good for all.

Editorial, Kyiv Post, Kyiv, Ukraine, Fri, Feb 26, 2010

Aside from the revolutionary rhetoric that has tired even the most politics-crazed observers in Ukraine, the latest address to the nation by Prime Minister Yulia Tymoshenko, on Feb. 22, carried a lot of common sense, and a reasonable assessment of the current situation in the country.

Tymoshenko hit the bull's-eye in her appraisal of what is wrong with the nation’s economy. “The oligarchy … need cheap labor, poor and disenfranchised people who can be forced to work at their factories for peanuts. And they also need Ukraine’s riches, which they have been ruthlessly stealing for the past 18 years. They’re not interested in your fate or the future of your children. They haven’t lived in Ukraine for a long time, they just exploit it.”

She then connected the sins of the oligarchs to the widespread lack of acceptance of their protege, President Victor Yanukovych. The new president’s proposed policies (Russian as a second state language, extended lease for the Russian Black Sea Fleet in Crimea, a gas consortium with Russia and putting loyal business backers in top positions where they can profit against the national interests) are repulsive.

As Tymoshenko points out, Yanukovych’s first moves show that he has a long way to go before he proves he will govern in the national interest.

Yanukovych’s Party of the Regions has attempted to destabilize the country by approving laws and spending that the nation can ill afford. His commitment to democracy is suspect, including his party’s last-minute changes to the election law this time around and his backers' 2004 attempt to steal the election for him.

After this election was challenged, the Higher Administrative Court, which is believed to be allied with the Party of Regions, refused to hear witnesses called by the Tymoshenko camp in an attempt to prove that she was defrauded of victory in the Feb. 7 vote. Before that, the live broadcast of its hearing was banned to the detriment of those interested in a fair, transparent proceeding.

If Yanukovych manages to form a ruling coalition in the 450-seat parliament, he will be close to taking all power in the nation – something that is dangerous.

Preserving the current coalition in parliament – effectively led by Tymoshenko – would serve as a nice counter-balance and an important democratic control. The trick for both Tymoshenko and Yanukovych would be to start working in the national interest for changes.

That may mean Tymoshenko stepping down and Yanukovych compromising on his choice of prime minister candidates, beyond the three he’s floated – the candidacies of Mykola Azarov, Sergiy Tigipko and Arseniy Yatseniuk.

A healthy balance of power is good for all.

[return to index] [Action Ukraine Report (AUR) Monitoring Service]

By Roman Olearchyk in Kiev, Financial Times, London, UK, Thu, Feb 25 2010

KIEV - Viktor Yanukovich vowed to steer Ukraine on a course between Russia and the west as he was sworn in as Ukraine’s president on Thursday. ”Ukraine will choose such a foreign policy that will allow the state to get the maximum results from the development of equal and mutually advantageous relations with Russia, the European Union, the US and other governments,” he said at his inauguration ceremony in the country’s parliament. 

Thursday’s inauguration completes Mr Yanukovich’s remarkable political comeback more than five years after the Orange Revolution overturned a fraud-marred presidential vote in his favour.

Backed by some of Ukraine’s wealthiest business oligarchs, the 59-year-old former mechanic takes over the strategically important country of 46m that borders the EU, where Russia and the west have jostled for influence.

Relations with Moscow soured under his predecessor Viktor Yushchenko, who pushed for Kiev to join Nato. To the satisfaction of Moscow, which strongly opposes Nato’s eastward expansion, Mr Yanukovich has pledged to keep Ukraine out of any military bloc. 

But the new president’s first foreign trip will be to Brussels on Monday, days ahead of a visit to Moscow.

Mr Yanukovich’s immediate task will be to calm Ukraine’s political infighting and stabilise the ailing economy, which saw gross domestic product plunge 15 per cent last year.

Despite a controversial background, which includes two stints in jail for petty crimes during his youth, Mr Yanukovich’s victory, in an election dubbed largely democratic, has been well-received by both Russia and the west. His inauguration was attended by senior officials from Brussels, Russia and former Soviet republics.

Mr Yanukovich’s political career seemed doomed after he lost the 2004 presidential contest as the Moscow-backed candidate. This time round he capitalised on bitter rivalries between the Orange Revolution leaders and narrowly beat Yulia Tymoshenko, prime minister, in a February 7 run-off vote.

Despite winning the presidency, Mr Yanukovich has yet to consolidate enough political power in Kiev to push through his agenda.  In the near term, he will seek to oust Ms Tymoshenko as prime minister, a position that holds more authority over domestic affairs than the presidency.

Backed by a fragile parliamentary majority, she continues to cling to power and accuses Mr Yanukovich of pandering to Moscow’s interests by pursuing “anti-Ukrainian and anti-European policies.”

Mr Yanukovich threatens to retaliate by calling snap parliamentary elections. Doing so could help him form a loyal governing coalition in the long term, but it could jeopardise short-term efforts to pull Ukraine out of recession.

The most controversial of Mr Yanukovich’s alleged plans include prolonging the stay of Russia’s Black Sea fleet at a Ukrainian port.

Another controversial plan could give Russia, Europe and Ukrainian businessmen loyal to him a management stake in Ukraine’s strategic natural gas pipeline via a consortium.

Granting Russian official state language status would be welcome in the heartland of his support in eastern Ukraine, but it would alienate western Ukraine, which speaks Ukrainian.

Meanwhile, Brussels has urged Kiev to put an end to political infighting and stabilise its economy by resuming cooperation with the International Monetary Fund. The IMF froze a $16.4bn bail-out package late last year due to lack of political consensus and reforms. Should Mr Yanukovich get caught up in bitter rivalries with opponents, as Mr Yushchenko did throughout his presidency, his ability to govern will suffer.

[return to index] [Action Ukraine Report (AUR) Monitoring Service]

By William Mauldin, Dow Jones Newswires, Moscow, Russia., Thu, Feb 25, 2010

MOSCOW - Investors will be watching closely as Ukrainian president Viktor Yanukovych seeks to pass a budget, pay about $6 billion in debt this year, and resume a lending program from the International Monetary Fund.

To do that, Yanukovych, who was inaugurated Thursday, will have to expand his own coalition in the parliament or reach out to the remaining supporters of outgoing president Viktor Yushchenko or even rival Yulia Tymoshenko, the runner-up in the presidential election who has resisted calls to resign as prime minister.

"Money matters, and there is an understanding that the IMF deal is crucial," said Marcus Svedberg, chief economist at East Capital Asset Management AB, which holds $5 billion in Eastern European equities. "They're going to work hard to actually fulfill the program."

Svedberg said that as Yanukovych works toward restarting the IMF program, requiring higher domestic gas prices and lower government wages and pensions, the country's financial markets will react positively, although some of that optimism is already priced in.

Ukraine's sovereign credit-default swap spreads--a key measure of credit risk--may fall to between 700 and 750 basis points in two or three months from 943 basis points currently, as the government works to restore IMF lending, said Timothy Ash, head of research for emerging Europe economies at the Royal Bank of Scotland Group PLC.

"They'll do a deal in the existing parliament, I think, either with the remnants of Yushchenko's party or with Tymoshenko," Ash said, adding that the IMF delegation could return to Kiev in late March or early April.

Meanwhile, Ukraine is planning to make an on-time payment of UAH5.1 billion ($639 million) for February deliveries of Russian gas, the country's acting finance minister told an official Russian newswire. Natural-gas bills will fall after the winter months.

A political agreement in parliament could help further reduce five-year CDS spreads on the country's sovereign debt, which stood at 943 basis points Thursday compared with a close last Friday of 988 basis points, according to CMA DataVision.

CDS are over-the-counter derivatives contracts that function like a default insurance for debt. If a borrower defaults, the protection buyer is paid compensation by the protection seller. Swap buyers may be protecting investments they own or simply making bearish bets against companies or countries.

Besides lowering the risk of holding Ukrainian bonds, a political rapprochement could also boost the stock market--which nearly doubled last year after ending 2008 as one of the world's worst performers--and lead the hryvnia to strengthen against the dollar.

"We're beginning to see people sniffing around the local foreign exchange market, seeing it as the next big trade if the politics get worked out," Ash said, pointing out that local-currency securities can yield 21%.

Even as market participants see the outlook for Ukraine's debt improving, it is still seen as one of the riskiest sovereign borrowers in the world after Argentina and Venezuela, and it may remain that way in the near term.

"I don't think investors expect radical changes," said Svedberg. "Investors in Ukraine don't have too-high expectations because we've had a lot of volatility for a long time."
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
U.S.-Ukraine Business Council (USUBC):
Promoting U.S.-Ukraine business relations & investment since 1995.
Nation has run out of heroes, but has not given up on democracy.

Analysis and Commentary: By Olena Tregub
Kyiv Post, Kyiv, Ukraine, Friday, Feb 26, 2010

The narrow victory of a Russian-leaning opposition leader, Victor Yanukovych, in the Ukrainian presidential election on Feb. 7 is less of his making, but rather the orange camp’s failure to unite and deliver on their promises. As the only alternative to the discredited incumbents, Yanukovych was destined to become a Ukrainian president “by default.”

Normally, the margin of 3.5 percent -- well above 800,000 votes - and no fraud reported by the international observers would be sufficient to crown a new ruler. But not in this case.

Many in Ukraine question the legitimacy of Yanukovych’s pyrrhic victory with his 48.95 percent of votes versus Tymoshenko’s 45.47 percent.
In fact, support for the leader of the Party of Regions did not increase. He lost hundreds of thousands of votes since the last presidential election in 2004.

Yanukovych did not manage to secure the absolute majority of votes in the runoff, unlike all previous Ukrainian presidents. More than a million votes were actually cast for the option “against all” that was available on the ballot just below Yanukovych and Tymoshenko’s names.

Ukrainians did not have their heroes in this election. Instead they knew precisely who to vote against. Those underdogs were the current president, Victor Yushchenko, and the prime minister Yulia Tymoshenko, former Orange Revolution allies and bitter enemies ever since.

Yushchenko was humiliated, ending up with just over 5 percent of votes, nowhere near the 52 percent he garnered in 2004. Tymoshenko’s disappointing result in the first round of election, 10 percentage points behind the opposition leader, left her with little hope of winning the runoff.

While Orange leaders were rejected by Ukrainians, the Orange Revolution was not. Yanukovych did not convince the majority of Ukrainians to turn to Russia or to give up democracy. In the presidential campaign, the issue of geopolitical choice between Russia and the West was actually overshadowed by much more burning economic problems.

After the Orange camp dashed people’s hopes for a “Ukrainian miracle” - Ukraine’s integration with the European Union, elimination of corruption and putting all “bandits behind bars”- now, all that Yanukovych is expected to deliver is “a stable Ukraine,” his main campaign promise.

“At least Yanukovych does not lie and does not promise anything, unlike Tymoshenko,” says Tetyana Melnychenko, a child psychologist from Kyiv. “People around him have him under control unlike Yushchenko who was running amok and no one could say anything.”

Yanukovych did not offer any new solutions for Ukraine’s problems that would attract new supporters. In the past five years, he criticized the squabbling Orange government, except for a brief time when he was prime minister himself.

He nurtured his traditional electorate from the east and south of Ukraine, many of whom believed that his presidency was stolen in 2004 and viewed the 2010 election as a chance for a pay back. Yanukovych’s strategy in this election was not to scare off voters. He appeared composed and benign, while Tymoshenko’s aggressive and nervous behavior worked against her.

Despite the fact that the election campaign was competitive, the choice was always between two front-runners: Tymoshenko and Yanukovych. And these two were too familiar personages to hold any illusions about. The voters were choosing the lesser evil out of two.

An anecdote reflected the voters’ gloomy mood : “There is good and bad news: the good news is that Yulia Tymoshenko didn’t become a president, the bad news is that Viktor Yanukovych did.”

This election was deprived of such positive emotions as hope and faith. People voted against rather than for. This was exploited by Tymoshenko, particularly in western and central Ukraine known for its anti-Yanukovych stance. Her campaign ads like: “Voting against all, you vote for Yanukovych,” “Staying at home – you vote for Yanukovych” helped to increase the turnout in her favor.

Mykola Smereka, a university professor from Tymoshenko’s heartland in Kyiv region, might no longer be an ardent supporter of Ukraine’s Eva Peron. But his negative views about Yanukovych are just what Tymoshenko needs in her post-election struggle.

“How can we allow ‘the boor’ to become a president now if we have already rejected him once. Is he not the same person who defrauded the elections in 2004? Is he not the same former convict, illiterate clown, Russia’s pawn, who will embarrass us in the world?” Smereka laments.

Indeed, if Donetsk oligarchic clans had not put forward Yanukovych in 2004, seen by many Ukrainians as a fusion of mafia-connected Silvio Berlusconi and gaffe-prone George W. Bush, but a less controversial candidate, the revolution would most likely have never happened.

And Leonid Kuchma, the outgoing president of Ukraine, would have smoothly transferred power to his chosen successor. Yanukovych with his two convictions for violent crime were strong mobilizing factors. One of the slogans of the Orange Revolution was: “We won’t let a convict into power.”

Since then, American political consultants generously paid by steel magnate Rinat Akhmetov gave Yanukovych an image makeover. Upgraded Yanukovych began speaking literary Ukrainian, and left aside his criminal jargon.

Yanukovych is still a pro-Russian candidate. He promised official status to the Russian language. He also reassured Russia that her fleet will be allowed to stay after the lease on the Ukrainian Black Sea bases expires in 2017. He spoke in favor of the independence of South Ossetia and Abkhazia and put off membership in NATO.

At the same time, Yanukovych tried to soften his “pro-Russianism.” He became interested in advancing Ukrainian interests in the European Union, sensing the economic benefits that might come from the West. Yanukovych also proposed to Moscow a new deal on the gas transit pipelines that would divide its ownership equally between Ukraine, Russia and the EU instead, as many fear giving Russians a major stake in the venture.

Yanukovych’s progress in understanding the Ukrainian national interest (or at least the appearance of it) prevented Tymoshenko from recreating a clear-cut cleavage from 2004, when a pro-Western democrat was fighting a pro-Russian autocrat. If she had done it, she would have won the election.

Instead, Tymoshenko was too smart for her own good. By trying to flirt with Russia she lost voters in western Ukraine. She also burnt down her image as a democratic figure. In summer 2009, she allied herself with Yanukovych in an attempt to usurp power through a constitutional amendment that would have abolished popular election of the president and postponed parliamentary elections until 2014. Yanukovych was the one who pulled out at the last moment.

Tymoshenko built her campaign around the claim that she would not run from responsibility and continue working as a prime minster despite unfavorable conditions. The critics accused her of using her government position and state money to wield political pressure in the election.

Others, however, hold a more favorable view of her. “She is a much more charismatic politician than Yanukovych,” notes Sergiy Kysselyov, a Kyiv-based political analyst from the School for Policy Analysis at the Kyiv-Mohyla Academy. “She scored an unexpectedly good result in this race, given the fact that she was viewed as the incumbent and held responsible for Ukraine’s downfall during the global economic crisis. Had she been in opposition she would have easily won over Yanukovych.”

The Ukrainian “iron lady,” by not accepting the results of the vote, might drag Ukraine into a deeper political and economic crisis.

In a historic turnaround, Yanukovych defended his victory with the backing of the international community that lauded the election as free and fair. Hopefully, now that he is sworn into office, Yanukovych will remember that the Orange democracy propelled him into power and that the majority of Ukrainians do not want to become a Russian satellite.

NOTE: Olena Tregub is a Ukrainian journalist working as a foreign correspondent in the United States for the UNIAN news agency in Ukraine. Her article appeared first on

[return to index] [Action Ukraine Report (AUR) Monitoring Service]

By Kateryna Choursina and Daryna Krasnolutska, Bloomberg, NY, NY, Thu, Feb 25, 2010

KIEV - Ukraine President Viktor Yanukovych, who has signaled he wants closer ties with Russia, used his first inauguration speech to promise a non-aligned relationship with the European Union.

“Ukraine needs the EU in a global dimension, as a power to guarantee a peaceful coexistence of different civilizations and safety in the spheres of energy, environment and food,” Yanukovych said in Kiev today. “We are prepared to take part in such processes as a non-aligned state.”

Yanukovych’s election campaign promises to balance ties with neighboring Russia and the EU are under scrutiny after he asked for Russian help to ease gas flows into Europe and signaled he may allow Russia’s Black Sea naval fleet to remain based in Ukrainian waters. Former President Viktor Yushchenko, who defeated Yanukovych in 2004, targeted NATO membership and joining the EU to help free Ukraine from Russian influence.

“It’s a rebalancing act,” said Iana Dreyer, an analyst at the European Centre for International Political Economy in Brussels, by telephone. “The country has been divided into two for a long time between a western-orientated government and a Russian speaking, Russia-oriented east. I’m not surprised Yanukovych is seeking to restore the balance a bit. He doesn’t want to alienate Russia more.”

The ousted Yushchenko’s ambitions had contributed to a souring of relations between Moscow and Washington. Former Presidents George W. Bush and Vladimir Putin used Ukraine’s NATO goals as an excuse to ramp up antagonism between the two former Cold War adversaries and prompted fears of a military clash in the region.

The Kremlin curbed natural-gas deliveries to Ukraine in 2006 and 2009, withheld a new ambassador to Kiev and accused Yushchenko of supplying arms to Georgia during Russia’s war with its southern neighbor in August 2008.

Yanukovych, who was backed by Russia in the 2004 presidential election that sparked the Orange Revolution, wrote in a Feb. 17 article in the Wall St. Journal that Ukraine is “a nation with a European identity but we have historic cultural and economic ties to Russia as well. We will rebuild relations with Moscow as a strategic economic partner.”

“This is about Ukraine choosing a foreign policy that will allow it to get the maximum result out of its cooperation with Russia, the EU and the U.S.,” said Mykhaylo Pashkov, head of the international programs at the Razumkov Center for Political and Economic Studies.

Russia, which traces its statehood to medieval Kiev, shares close economic, linguistic and religious ties to its neighbor. Without Ukraine, Russia stops being an empire with a foothold in Europe, former U.S. national security adviser Zbigniew Brzezinski wrote in his 1997 book “The Grand Chessboard.”

Even so, Ukraine may benefit equally if the EU stops delaying a so-called Association Agreement, which includes a trade pact, as the country’s political stalemate hampered fiscal, economic and legal reforms.

“It’s a signal that Yanukovych chose to make his first foreign trip to the EU” on March 1, Dreyer said. “In the minds of Ukrainian politicians it’s clear that joining the EU is not an option in the foreseeable future. The EU hasn’t been very keen to offer enlargement. But the Ukrainians do want a free trade agreement.”

Yanukovych will also visit Moscow on March 6, deputy head of his office Hanna Herman said today. She added that the president spoke to the U.S. delegation after his inauguration and discussed a visit to Kiev by Secretary of State Hillary Clinton, which may take place in the next three months.

Ukraine’s economic collapse, which has left it relying on a $16.4 billion International Monetary Fund loan that has been frozen since the autumn has been exacerbated by political wrangling and the election campaign.

Yanukovych has pledged to set up a stable government to combat the deepest economic recession since 1994 and restore investor confidence. The hryvnia lost 41 percent against the dollar since September 2008 and was the world’s second worst performer after the Venezuelan bolivar.

The yield on Ukraine’s 2016 Eurobond fell 18 basis points to 10.07 percent at 1:25 p.m. in Kiev. The credit default swap spread on the country’s five-year debt narrowed to 936 basis points yesterday from 944 the previous day, according to Bloomberg data. A narrower CDS spread signals improved investor perceptions of credit risk.

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
The excitement of the presidential election faded as soon as the first exit poll results were announced on Feb. 7.

Analysis & Commentary: By Olesia Oleshko, Kyiv Post, Kyiv, Ukraine, Fri, Feb 26, 2010

The excitement of the presidential election faded as soon as the first exit-poll results were announced on Feb 7. A week later, the Central Election Commission sealed the victory of opposition candidate Victor Yanukovych by publishing the official results: he had beaten his rival, incumbent Prime Minister Yulia Tymoshenko, by 3.5 percent.

“C’mon guys, it was pretty much expected,” said Borys Kolesnikov one of Yanukovych’s closet allies. “The sky hasn’t fallen in!”

It’s true, it hasn’t. It just dropped a vast quantity of snow, as it did in the winter of 2004, on the occasion of Ukraine’s decisive presidential election. Then, I was working with Ukraine’s biggest election monitoring organization, the Committee of Voters of Ukraine. I was also doing a lot of freelancing for European print and online media.

Every day I was getting dozens of phone calls from fellow journalists and friends living abroad. They were all asking – so how are things in Ukraine? What’s going to happen if Yanukovych wins?

He won’t win, I would answer: the Ukrainian people have had enough of corrupt government, it can’t take any more. But what if they (Yanukovych and ex-president Leonid Kuchma) simply steal the victory from Victor Yushchenko, they kept asking. We won’t let them, I said. I don’t know why I was so sure.

I clearly remember the runoff taking place in that cold late November of 2004: that evening, after sending tons of press releases and posted news on our site, my colleague Oksana Kuzenko and I went for coffee to a famous Kyiv bar, Baraban (the Drum), a hangout for local and international intellectual bohemia.

We ended up at a table full of journalists, political pundits, writers and artsy types. The guys sitting around were fiercely discussing the worst-case scenario – what to do and where to go if Yanukovych won.

One TV reporter had got hold of long-term Schengen visas for himself and his wife and was ready to take off at any moment. Another was taking Polish language classes to prepare for his future in the land of our neighbor to the west. The rest were just saying “well, we’ll stay here and do whatever’s needed to defend our choice.”

We finished our drinks and walked back to the office. There we heard the first alarming news – the early count at the Central Election Commission suggested that Yanukovych was going to win. This didn’t tally with the result of the parallel count and exit polls conducted by non-partisan non-governmental organizations. Domestic observers kept reporting on the unprecedented number of violations. International observers later confirmed these findings.

The Committee of Voters of Ukraine stayed awake all night receiving and processing information from its field missions. Oksana invented a great energy drink – a mix of cheap instant coffee, Coca-Cola and cognac. I turned into a press release-producing/translating machine. At 6 a.m., Oksana and I got the chance to take a short break, so we curled up like a pretzel on two tiny sofas in our office.

Two hours later we woke to find ourselves in another country: outraged by the massive falsification of the election results, people had crowded into Independence Square in downtown Kyiv. They stayed there until the repeat runoff took place. They weren’t deterred by cold weather, or rumors that they were going to be beaten up. They just wanted their voice to be heard - and, of course, they wanted to live in a free, democratic, European country.

Five years later, Yanukovych, the loser of 2004, took his revenge. The euphoria taking place at his election press center at Intercontinental Hotel was in dramatic contrast to the gloomy mood of Yulia Tymoshenko’s team, holed up across the street in the Hyatt’s conference hall.

Yanukovych’s speech was short and not aggressive. Following the advice of his election strategists, he told Tymoshenko’s supporters not to despair, as he would do his utmost to ensure the development and welfare of Ukraine.

Yulia Tymoshenko didn’t admit defeat. She made a short press statement in which she called on her campaign team “to fight for every vote”. I’ve never seen her so confused and pale. Usually an eloquent speaker and media darling, on this occasion she kept quiet.

I don’t know what was going on in her mind, but I think she really understood that this time Ukrainians weren’t behind her. People weren’t going to be shouting her name and supporting whatever she said. And her demand for a recount would just fizzle out.

That night I got a call from a friend who had monitored the elections in 2004. This time he had just come back from observing an election abroad. I am so sorry, he said. It looks like you’ve lost everything you won in the Orange Revolution. We didn’t lose it overnight, I told him. We’ve been losing them for a long time, little by little.

We lost a big chunk of the “orange legacy” when the opposition came to power and started fighting with their erstwhile allies for portfolios, assets and influence.

We lost a lot when the new team that had promised changes started playing by the old rules, seeing politics as a tool for personal enrichment and never as a tool for serving the people who elected them. We lost more when corporate interests won over national ones. We lost it when those who took power promised fair rules to foreign investors, then kept on playing dirty.

We lost it when we failed to live up to our commitments to the European community, above all when we failed to fight corruption and reform the judiciary.

We lost it when some of Ukraine’s media, having managed to hold out against political pressure five years ago, became totally corrupt and forgot all about fair and unbiased reporting standards. The only rule they stick by now is that of money.

As I talked to him on the phone, I was walking down to Independence Square to catch a taxi to get home. The city was empty, silent and covered with snow. The next day I woke up in a country that looked so much like Ukraine 2004.

NOTE: Olesia Oleshko is a journalist in Kyiv. Her article first appeared on

[return to index] [Action Ukraine Report (AUR) Monitoring Service]

Analysis & Commentary: Valery Kalnysh
Deputy editor-in-chief of the "Kommersant Ukraina" newspaper published in Kiev.
Open Democracy, London, UK, Tue, February 23, 2010

Russian-Ukrainian ties may have deteriorated during Yushchenko's presidency, but his successor Yanukovych is determined to redress that balance. It is crucial that Ukrainians continue to feel they are a sovereign nation, maintains Valery Kalnysh.

On 27 January this year, a convoy of several cars crossed the border of Ukraine from the unrecognized Pridnestrovian Moldovan republic. For the people in the cars the journey had only one purpose: they were going to meet someone they all knew. They arrived at a previously arranged spot and the Ukrainian visitors behaved rather strangely ­ three cars drove off in different directions and one remained where it was.

After the usual handshake and a few meaningless phrases the Ukrainian, Ruslan Pilipenko ­ the person the visitors from the Pridnestrovian republic had come to see ­ gave his acquaintances a USB storage device, and they gave him an envelope containing $2,000.

Several minutes later all five of them were being handcuffed by soldiers from the special division of the Ukrainian Security Service Alfa, whose task it is to oppose and disarm terrorists. This was how Russian spies were detained in Ukraine.

Valentin Nalivaichenko, Security Service chairman, later revealed that three of the five were employees of the Russian Federal Security Service (FSB), and one was a soldier from the Operational Group of Russian Forces in Moldova.  Ruslan himself turned out to be not just a good lad, but an officer of the Ukrainian Defence Ministry Intelligence Department working undercover.

"One of the proofs that the operation was carried out by FSB officers is the fact that the USB storage device contained the memory of a mobile phone confiscated from senior lieutenant Andrei Alexeevich Khort, and photocopies of secret regulations governing Russian FSB agency activities," said Nalivaichenko. Striking though this story is, it is far from the most significant aspect of the question as to how Russia influences Ukraine.

Pure calculation

Relations between Ukraine and Russia run much deeper than any spy story. In the Soviet period Ukraine was considered the "sister" and Russia the "brother" ­ usually the elder brother - in the USSR family of nations. For the majority of the cultural intelligentsia, success in the capital of Ukraine was only important from the standpoint of how strongly it affected subsequent success in the capital of Russia (USSR).

Since Ukraine became independent, relations between the two nations have acquired an element of consumerism: we began to evaluate our liking for each other in rubles, then in dollars, and then in euros. So the economy is one of the main methods by which Russia influences Ukraine.

Ukraine is a country rich in two things ­ fertile black earth and steel plants.  In the 19th century Nikolai Gogol, an outstanding writer of Ukrainian origin, wrote that the earth in Ukraine was fertile: "Put a stick in the ground and it will grow". The steel plants make it possible for  businessmen on the Forbes rich list to grow their capital: Lakshmi Mittal, who owns ArcelorMittal Krivoy Rog in Ukraine, is in second place on this list; Rinat Akhmetov, who is 397th on the list, has the second largest capital in Ukraine.

So far, Russia has not tried to interfere in issues concerning mining and metals production.  There are two exceptions:  Russian companies Rusal (which controls the Nikolaev Alumina Refinery and the Zaporozhye Aluminium Complex) and Evraz (the Petrovsky iron and steel works in Dnepropetrovsk).

At the same time Russian businessmen control virtually the whole oil and gas business in the country, and almost half  the chemical industry. Gas is delivered to Ukraine by Gazprom, and oil is processed at Lukoil refineries in Odessa and Ivano-Frankovsk, TNK-BP enterprises in Lisichansk and Lugansk.

A cultural past...

But I would still not call the economy the main link between our two nations. Language, culture, a common history and relatives ­ this is what connects Ukraine and Russia. These invisible ties are much closer and stronger than economic dependence. If one looks at the history, the east of Ukraine and Crimea were settled mainly in the 1930s by people from Russia.

At that time Poland and Hungary formed the western part of present-day Ukraine, and Romania the southern. Unlike Poland or Romania, however, Russia, and subsequently the USSR, became empires, which would never give up territories they had even once taken under their control.

No language is as widespread in Ukraine as Russian, even though the authorities try to control Russian television broadcasts inside Ukraine ­ in Kiev only four Russian channels are accessible on cable TV.  In this Ukraine is acting quite correctly in its own interests. The impressions gained of Ukraine from watching Russian television channels are very similar to those gained of the USSR during the cold war from watching American news.

But instead of bears holding balalaikas roaming an eternally snowy Red Square, you will see a Ukrainian nationalist praying to a portrait of Stepan Bandera, eating borshch and salo [bacon fat ed] and proclaiming his hatred of the Russians.

Media influence is another method the Russians use to ensure we don't stray too far. Ukraine lost the "gas war" to Russia in 2009 as a result of a colossal media campaign.  All the channels portrayed Ukraine as an unreliable partner, while Russia played the innocent victim of Ukrainian lawlessness and, of course, high-handed nationalists.

Secret service activities, the economy, culture, language... This list of the points of contact with Russia could be continued for a long time. Take, for instance, the military sphere and, above all, the issue of the Russian Black Sea Fleet (BSF) being stationed in Ukraine.

It's not even a question of influence here ­ the Russians feel at home in Sevastopol and the city itself is a "city of Russian glory". Last summer Ukrainian authorities recorded several cases of unsanctioned transportation of cruise missiles by the BSF.

On 8 July officers of the State Vehicle Inspection Service detained a column of BSF trucks. It included three rocket transporters on KrAZ vehicles, accompanied by an armed guard and a fire safety vehicle. The vehicles were transporting a bulky cargo covered by a tarpaulin through the region.

It was later discovered that this cargo consisted of "Malakhit" cruise missiles, which were being taken by road to the BSF missile base, located in the village of Sakharnaya Golovka. The route was over 30 km, and passed through Sevastopol.

...And an uncertain future

All the above are, of course, isolated facts, but they go to make up the politics of intergovernmental relations. As the saying goes, "life is like a chain, and the little things in it are the links ­ you can't ignore the importance of the links."  It is no secret that relations between Ukraine and Russia deteriorated significantly during Viktor Yushchenko's presidency.

Russia made a point of refusing to send its ambassador Mikhail Zurabov to Kiev until the results of the first round of the 2010 presidential elections had been declared and it was clear that Viktor Yushchenko had not received enough votes to qualify for the second round.

To be quite honest, I personally actually quite like this type of Ukrainian-Russian relations. Yushchenko tried to instil a general respect for Ukrainian culture and language. Perhaps he did it the wrong way. As I mentioned above, half the population of Kiev speaks Russian. But the other half speaks Ukrainian!

Which is a good start. At his last press conference as head of state, Yushchenko declared that Russia was not yet able to accept an independent president of an independent Ukraine.

"Russia still needs time for a generation of politicians to grow up who will be guided by the fairly simple truths of international relations. More time is needed," he said. "While there is a Ukrainian president, there will be a similar attitude (a negative one ­ V.K), whoever it is. Our obligation is to have good relations between Ukraine and Russia. But not to neglect national priorities or the national choice".

It would seem that the new Ukrainian president, Viktor Yanukovych, will not adhere to this policy. Even before he took office, he promised Russia that he would make Russian the second official language, review the conditions and terms for the stationing of the Black Sea Fleet in Crimea, and create a gas transport consortium, which means losing the opportunity to influence gas pricing policy...

Time will show to what extent Viktor Yanukovych becomes a Ukrainian president. What is important is that Ukrainians should in future be able to identify themselves as representatives of a sovereign nation. Presidents are like the seasons, after all ­ they come and they go.

[return to index] [Action Ukraine Report (AUR) Monitoring Service]
Ukraine Macroeconomic Report From SigmaBleyzer: 
Here’s a snapshot of the new presidential administration team

Kyiv Post, Kyiv, Ukraine, Thu, Feb 25, 2010

KYIV  - Victor Yanukovych issued seven decrees on Feb. 25, the first day of his presidency. He renamed the president’s office from the “secretariat” to “administration,” the way it was called under President Leonid Kuchma. He also ordered for his staff to be cut by 20 percent, and appointed seven key officials.

[1]  Serhiy Lyovochkin
Appointed head of the president’s administration, Lyovochkin is former President Leonid Kuchma’s top assistant from 2002-05 and one of Yanukovych’s closest confidants. Fluent in English, the 39-year old is the son of Volodymyr Lyovochkin, who ran the country’s prison system under Kuchma. The younger Lyovochkin reportedly played a leading role in promoting two intermediary companies in the lucrative business of supplying natural gas to Ukraine from Russia and Central Asian producers. His new job puts him in charge of planning all presidential activities and policies.

[2]  Iryna Akimova
Appointed first deputy head of the president’s administration, Akimova, a Party of Regions lawmaker, is considered a leading economist in Yanukovych’s team. The 40-year old Kharkiv native holds academic degrees in economic sciences with international experience, having worked as a senior fellow at Warsaw University’s Center for Economic Research, and at the economics department of Magdeburg University. Prior to snap parliamentary elections in 2007, Akimova was the General Director of the Kyiv-based Bureau of Economic and Social Technologies. She is expected to lead economic policy in Yanukovych’s administration.

[3]  Stanislav Skub
Appointed deputy head of the presidential administration, Skubshevskiy will manage regional affairs and human resources. A Party of Regions deputy, the 60-year old is no stranger to the workings of central and local government, having held government posts during former President Leonid Kuchma’s presidency, and as chief of several oblast state administrations. A native of Khmelnytsky oblast, Skubshevskiy is a graduate of the Donetsk Polytechnical Institute and held a number of political posts in Donetsk oblast during the 1970-80s. He worked as deputy head of the Donetsk Oblast Administration when Yanukovych was governor (1995-1996) and was chief of staff for the Cabinet of Ministers when Yanukovych became prime minister in 2002.

[4]  Hanna Herman
Appointed deputy head of the president’s administration, the 50-year old Herman was a career journalist until 2004. She received a job offer to become Yanukovych’s spokesperson in 2004 after interviewing him for Radio Free Europe/Radio Liberty. She accepted the offer and moved on to politics, serving as an adviser to Yanukovych and then becoming a lawmaker on the Regions ticket. She became deputy head of Regions’ faction, as well as deputy head of parliament’s freedom of speech committee. She speaks English, German, Polish and is known for her sharp tongue.

[5]  Yuriy Ladniy
Appointed deputy head of the president’s administration in charge of protocol and ceremonies, Ladniy worked for the Foreign Ministry and served in Ukraine’s embassy in Washington, where he arranged former President Leonid Kuchma’s visit to the United States in 1999. He worked with Yanukovych for the last four years as head of his protocol department.

[6]  Oleh Rafalsky
Appointed deputy head of the president’s administration, the 50-year old Rafalsky is not a novice in the president’s office: he served as head of its department on domestic affairs in President Leonid Kuchma’s administration. He had an academic career before joining Kuchma’s staff, serving as dean of a history faculty in Kirovohrad region. According to his biography, he published more than 100 academic works, including four books, in many countries, including Germany and Poland. He is a member of the National Academy of Sciences.

[7]  Andriy Kravets
Appointed head of the State Department of Management of Affairs, often referred to as DUSYA for its Ukrainian acronym, the 35-year-old Kravets is a lawmaker on the Party of Regions ticket, and a member of the committee on rules of procedure for deputies’ ethics. A former businessman, he was director of Zoryany cinema in 2004, where Yanukovych’s election headquarters were located, and where the results of the rigged November 21, 2004 vote were allegedly doctored. The department Kravets is to chair manages the real estate, buildings, cars and other properties on behalf of the president and government. shevskiy

LINK with photographs:
[return to index] [Action Ukraine Report (AUR) Monitoring Service]
Ukraine has been offered no real prospect of joining Europe

Analysis & Commentary: By Fabrizio Tassinari, Head of Foreign Policy 
and EU studies at the Danish Institute for International Studies
Open Democracy, London, UK,  Wed, 3 February 2010 

On the eve of the crucial run-off in Ukraine's presidential election, Fabrizio Tassinari argues that enlargement fatigue in the EU has meant that since the Orange Revolution Ukraine has been offered no real prospect of joining Europe

”It’s so good that you hold free elections now. But why so often?” The joke, making the rounds these days in Kiev, encapsulates the past five years of western disenchantment towards Ukraine. However, closer scrutiny has much to tell us about what has gone so badly wrong in Europe's policy towards its large neighbour, with its population of 46 million.

There is a reason why the “Orange revolution” that spectacularly swept President Viktor Yushchenko to power has faded away. It is because Ukraine has proved to be ungovernable. The presidential elections that ushered in the revolution took place in 2004-2005; parliamentary elections were called in 2006; then early parliamentary elections were held in 2007. This plethora of elections is telling.

On Sunday 7 February, the run-off presidential election will tell us whether Prime Minister Yulia Tymoshenko or former Prime Minister Viktor Yanukovic will make it to the highest post. We can only hope for a clear outcome. The alternative will be further chaos.

 Either way, Kiev is still marred by what British scholar Andrew Wilson calls “virtual politics:” Free and fair election do take place regularly now, and this is by no means a small feat. Yet, from the ability of the government to implement policies, to the quality of the public services and the level of corruption, Ukraine’s record remains disappointing. According to the World Bank’s Governance Indicators, Kiev’s performance on these issues has been worse than that of some North African autocracies.

As it happens, improving Ukraine’s governance standards was supposed to be the paramount objective of European policy.

At the time of the Orange Revolution, EU High Representative Javier Solana and the then presidents of Poland and Lithuania proved highly reactive when it came to defusing the brewing crisis. Their engagement helped broker an agreement that led to the presidential election being re-run, and then to the highpoint of this bloodless upheaval.

 The troubles for Brussels came after those outstanding events. All that the EU was able to offer in the immediate aftermath of the revolution was a ten-point update to a technical “Action Plan” that had been negotiated by Yushchenko’s predecessor. Since then, the EU has stepped up its assistance; it has launched new initiatives and offered more money. But it has not properly accounted for the fact that the Orange revolutionaries have plunged the country into utter disarray.

Part of the problem is that the EU watered down its conditions. Europe's principal mechanism by way of supporting a partner country’s domestic transformation has been a rigorous set of penalties and incentives. However, in the case of Ukraine, the EU has not suspended agreements or cut off funding when Kiev strayed from its commitments.

On the other hand, Brussels has been vague about what Ukraine can aspire to if it complies with EU rules. Crucially, the EU has always stopped short of offering the one thing most Ukrainians yearn for: the prospect of membership in the EU.

Make no mistake about it: the squabbling of its politicians and the cosy relationship between business and government are problems of Ukraine’s own making. Brussels cannot be blamed. Yet the two most significant reasons behind Europe's ambiguous policy on Ukraine have remarkably little to do with that country.

[1] The first concerns Europe’s enlargement “fatigue”. The 2004 expansion of the EU into Central Europe generated worries about the Union’s decision-making processes and its legitimacy. In 2010 we may no longer hear European policy makers claiming that bringing Ukraine into the EU would be like the United States taking in Mexico, as then Commissioner Günther Verheugen put it. Even so, the EU has not moved away from its vague formulas, which basically tell Kiev that the door is neither open nor shut.

[2] The second reason, which is not unrelated, is Russia, of course. European engagement has never really been about replacing Russia, whose ties to Ukraine are historical and cultural, as much as they are economic and political. However, some European countries have been concerned by the aftershocks of Ukraine’s European aspirations.

The 2008 war between Russia and Georgia provided the most blatant example of possible aftershocks. In Ukraine’s case, the consequences have most notably concerned energy politics. The disruption of gas deliveries from Russia first hit news in January 2006, when supplies to Europe plunged by a third in one day. Ever since then, Ukraine—through which about 80% of Russian gas exports to Europe pass—has been at the centre of endless squabbles with Moscow over energy transit.

Between pipeline geopolitics and obscure middlemen, energy has never been an easy target for reform in Eastern Europe. But Europe has moved slowly and without much coordination over such a strategically crucial issue.

Above all, Europe’s failure has been tangible for those in Ukraine who most deserve to benefit from closer ties to the EU: the men and women in the street.

European angst about the economy and immigration has undermined the millions of Euros thrown at improving the welfare of this and other large neighbours.

The point is illustrated by a little story that appeared in the European media a couple of years ago. It was about twenty kids from the Ukrainian countryside who braved the freezing winter and travelled 500 kilometers to Kiev at their own expense to apply for EU visas. There they were asked to sing outside the consulate buildings in order to prove that they really were a folk choir invited to a European festival, as they claimed.

 The episode may be crude, but only as crude as the moral of these past five years: As long as Europeans continue to look inward, as long as those just outside it feel as if they have been left behind, whatever the EU does beyond its borders risks being pointless. Worse still, it may end up being counterproductive.

NOTE: Fabrizio Tassinari, is Head of Foreign Policy and EU studies at the Danish Institute for International Studies and author of Why Europe Fears Its Neighbors, Praeger,2009
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EU has exacerbated the country's political problems
There is no alternative to Ukrainian integration in the EU
The conclusion for the EU: open up the prospect of membership

Analysis & Commentary: Andreas Umland
Open Democracy, London, UK, Sat, January 16, 2010

On the eve of Ukraine’s election, Andreas Umland rebukes Europe for its indecisive policy towards Ukraine. By refusing to offer Ukraine a clear prospect of eventual EU membership, the EU has exacerbated the country’s political problems in ways which could prove disastrous.

At the beginning of November 2009 the Pew Global Attitudes Project published the results of their survey in post-Soviet countries.  The findings on Ukraine were sobering.

Across the board they showed rising Ukrainian disappointment at the democratic path of development which had been so resoundingly taken in 2004, at the Orange Revolution. The popularity of democracy had fallen in Ukraine by 42% between 1991-2009, the sharpest fall in all the post-Soviet countries where surveys had been carried out.  The 30% who still supported democracy in 2009 was the lowest figure of all the countries in the study.

Two contributory factors for this growing discontent with their political system have been underestimated both in Ukraine and in the West.  The first is the semi-presidential structure of Ukrainian democracy.  The second are recent EU policies towards Ukraine.

Although these appear to relate solely to the country’s foreign relations, they relate indirectly to the domestic crisis and particularly to the ongoing divisions among Ukraine’s elite.  If these are not addressed, they will continue to affect politics domestically, as well as Ukraine’s attitudes towards the West and Russia .  Prospects for 2010 and thereafter will remain unclear.

The semi-presidential cul de sac
 One of the main problems of the political system since the Orange Revolution are the destructive repercussions of the hasty constitutional reforms carried out at the end of 2004.

At the height of the uprising a political compromise between pro- and anti-Orange groupings was arrived at in an extremely short period of time. As a result, from early 2006 the semi-presidential balance between the president and the prime minister became set in concrete, rather than just nominal, as it had been under Leonid Kuchma. 

This semi-presidential form of government is problematic for societies in transition, not least for Eastern European countries, as has been amply demonstrated (see for example Semi-Presidentialism in Central and Eastern Europe ed. Robert Elgie, Sophia Moestrup, Manchester University Press 2008). 

Ukrainian attitudes to democracy and the international reputations of their politicans have been negatively affected by the conflict inherent in a divided executive.  The new division of power between government leaders and the state and the parliamentary-presidential system which came into force on 1 January 2006 were important, if not the chief, conditions which resulted in the prolonged standoffs between President Yushchenko and Prime Minister(s) Yanukovych or Tymoshenko.

The failure to understand these reasons and the nature of the political crisis has not only distorted Ukrainian attitudes to their young democracy in recent years, but also the opinion of some foreign commentators, not familiar with recent political research.  The effects of semi-presidentialism on this post-totalitarian, state has compelled many people to question the suitability of democracy for Ukraine or Ukrainians for democracy.

While Ukraine’s current semi-presidential system may be relatively democratic, government powers within this system are fractured. Since the semi-presidency in Weimar fell in 1930-31, many comparative studies have shown that a divided executive is ineffectual, especially in countries in transition. 
But outside the narrow circle of international political analysts, this thesis is rarely recognised as being a problem relating to Ukraine not specific to this post-Soviet country.

Widespread dissatisfaction with Ukraine’s government at home and abroad has bred fatalism.  The strange political spectacles in Kyiv during the past few years are seen as reflecting the political immaturity of the Ukrainian elite, or even the whole population.  What is often ignored is that from 1991 to 2004 Ukraine has achieved one of the most impressive processes of democratisation in recent European history, and done so in the teeth of tremendous difficulties. 

It was only in 1998, for instance, that the Germans removed a leader, Chancellor Kohl, for the first time in a general election. (In 1969 Chancellor Kiesinger also stood down after Bundestag elections, but his party CDU/CSU had actually won these election, unlike in 1998.) 

In 1994 the Ukrainians removed their first president,  Kravchuk, who had been elected in 1991.  In doing this they met the criterion which is so important for political scientists in determining the maturity of a democracy.

EU membership unlikely and the disintegration of the Ukrainian political class
Another factor seriously underestimated by the West is the EU’s own role in the ongoing political confusion in Ukraine.

 Zbigniew Brzezinski’s dictum that without Ukraine Russia is no longer an empire is well-known in Europe.  But its political relevance for international security today is less often given serious consideration.  While the EU cannot directly influence relations between Russia and Ukraine, any more than it can solve her problems, its Ukrainian policy does none the less affect these relations indirectly.

The EU has an important influence on the whole process of Ukraine’s post-Soviet transformation, whether it likes or not.  The successful Central European transformations of the 90s sometimes led pro-European observers to overestimate the relative weight of EU membership conditions.

But for Ukraine today the Brussels-Kyiv relationship and the policies of the EU Delegation in Kyiv have an impact that goes far beyond mere foreign relations. While the EU is supporting current Ukrainian reforms with various programmes and agreements, Kyiv is still being denied any official hope of membership.

For EU politicians and officials the difference between intensive cooperation and targeted preparation for joining may seem semantic. But for Kyiv’s elite, as for many Ukrainians, the difference between an official “yes” and “no” is considerable.  It is also very relevant for the preservation of Ukrainian statehood, as it is for the security of Eastern Europe as a whole.

For aspiration to full EU membership is one of the few goals which still unites almost all Ukrainian politicians at a national level, as indeed it does large sectors of the population in the east and west of the country. Issues like NATO membership, Russian as a second national language or interpretations of the history of World War II may deeply divide the country.

But the goal of EU membership enjoys wide support, not only in western Ukraine, but in the east too (though less in the south).  Recently, however, the enthusiasm of Ukrainians who were once outspokenly pro-European has started to wane, presumably because of the EU’s restrictive visa policy, and the way it has continued to distance itself (see Elena Gnedina: EU running on empty in Ukraine in Euobserver 16.11.2009,

But the prospect of EU membership could still serve to link up the main political camps in Kyiv, which are at loggerheads on all other issues. However,  while this aspiration to unity still obtains, it could fade if the EU remains vague about its intentions in Ukraine.  The results could, in the worst case scenario have a negative impact not only on Ukraine, but on Europe’s security too.

There is no alternative to Ukrainian integration in the EU
In the long term, Ukraine is too weak economically, militarily and politically to exist as a neutral state in the buffer zone between the West and Russia. 

Given the country's geographical location and the growing ideological differences between the West and Russia, the «Swiss model» which is discussed from time to time in Kyiv, seems ever less relevant for Ukraine today.  

Sooner or later Ukraine will have choose one of the politico-economic blocs.  Kyiv will be unable to carry on for very long with its current many-vector policies, although the EU is pressing it to do just that.  NATO in its turn cannot in the short term offer Kyiv an alternative integration model:  for several years the possibility of NATO membership has, unlike EU membership, been refused by more than half the population. 

In the immediate future the question of NATO membership will clearly provoke such heated argument that any participation in the Membership Action Plan is more likely to decrease, than increase, Ukraine's security.

There is unfortunately some danger of this in respect of EU membership too.  If the EU continues to lose favour in Ukraine, part of the population, especially the political and economic elites of the east and south, might start supporting a new alliance with Russia.  This might seem acceptable, even desirable, to some Western observers and EU officials, but it could be a risky development, and not only for Ukraine.

Scepticism, if not antipathy, towards the current Russian government is deeply rooted in many important western Ukrainians and Kyivans active in political and cultural life, because of the two countries' controversial history.  More and more Ukrainians, especially the young, also see a resumption of the Russian connection as being unacceptable, and not just for national and historical reasons. 

These people have become socialised under democratic conditions:  they have pluralistic views and recognise that the current authoritarian Russian model of development has no future and that Russia as a long-term partner is not reliable. 

The potential pro-Russian re-orientation of the leaders of eastern and southern Ukraine would find no support with a significant part of both the elite and the population, even if Brussels continues to equivocate.  Thus the rapprochement between eastern and southern Ukraine and Russia would deepen the split in the country and could threaten the state with disintegration.

Some Western observers, who regard themselves as "realists", along with a few self-styled “pragmatic” Ukrainian commentators consider that in such circumstances Ukraine could and should formally divide.  This is, of course, a scenario much discussed in Moscow.

But such a "two state solution" only appears realistic at first glance, because in the event of a split, the question would arise as to where the border between the two new states should lie. This would be insoluble. It would be impossible to determine clearly where the «pro-Western» and «pro-Russian» parts of the country began and ended.

Western commentators often forget that the main protagonists of the Orange Revolution – Yushchenko and Tymoshenko – were not born in western or even central Ukraine.  They both come from the east.  It is difficult to imagine that these two politicians, or other pro-Western political leaders with east Ukrainian origins, would agree to any deal where their native regions would once more fall into the sphere of influence of an increasingly anti-Western Russia. 

So the idea of dividing up the country is not just absurd, but  dangerous.  Any such scenario could lead to civil war.  Russia would probably become involved and the consequences for the continent of Europe as a whole would be unpredictable.

Worrying though this sounds, such a development cannot be completely ruled out. The deepening crisis in Ukraine combined with continued EU uncertainty could lead more and more Ukrainians to question their country's ability, in isolation, to continue operating as an effective state. 

This would encourage separatist tendences in places like Crimea, for example, where most of the population is of Russian extraction and feels ambivalent about their peninsula being part of the Ukrainian state.  Were tensions to escalate, ethnic Russians, not to mention Russian citizens, could be drawn in and this could lead to Kremlin intervention along the lines of the Georgian conflict of August 2008. 

Why Russia might precipitate this ‘Anschluss’
This catastrophic scenario is, of course, by no means inevitable.  Mainstream Russian politicians sometimes play with the idea that Crimea, or at the very least Sevastopol, “actually belongs to Russia”. 

But for the time being the Kremlin gives no evidence of seriously considering reuniting Crimea with Russia – not least because the price of such an Anschluss would be so enormous that it would do more harm than good to the Russian state.  There are not many democrats in the current Russian leadership, but it can still be classified as a corporation that functions more or less rationally.

On the other hand, it should not be forgotten that the Russian political landscape contains ultra-nationalist groupings with connections in the State Duma, the government and the presidential administration. 

Two of the most significant – though by no means the only ones– are Zhirinovsky’s Liberal Democratic Party of Russia and Alexander Dugin’s International “Eurasian Movement”.  It is safe to assume that even these ultra-nationalist Russians recognise that military confrontation with Ukraine, over Crimea for example, would be pointless. 

However, they and their ilk would derive political benefit from escalating tension in eastern and southern Ukraine, from Russia’s subsequent military intervention and the resulting massive confrontation with the West.  The logic of political competition between the ideological camps in Moscow might tempt Russian right-wing extremists to inflame national differences in Ukraine with the help of its supporter organisations and political allies in Crimea or Donbass.

The conclusion for the EU:  open up the prospect of membership
Hence, for the EU the question of Ukraine’s future is more than a question of foreign policy. The threat to its own security has been insufficiently recognised.  The continuing lack of clarity in policies towards Ukraine  - “the door isn’t open, but it’s not shut either” -  is not just unwelcome in Kyiv.  

The risks of pursuing this strategy run counter to the basic interests of the EU and its member states. The simple reduction of the complicated controversy around EU membership for Ukraine to a confrontation between “Ukrainophiles” and “Ukrainosceptics” is based on an imperfect understanding of this country’s significance for Europe as a whole.

Given how uncomfortable the alternatives are to offering Ukraine the prospect of EU membership, current EU policy seems short-sighted.  Neutrality, a new liaison with Russia, division of the country: none of these are acceptable futures for the second biggest state in Europe. 

Were Ukraine to disintegrate, this would probably ignite Russian irredentism and at worst it would lead to the resurrection of the Russian Empire as prophesied by Brzezinski.  The consequences for European, and probably world, security would be far-reaching.

For these reasons the EU has no alternative but officially to «take Ukraine under its wing». It should do so sooner, rather than later.  The prospect of joining the EU in the not too distant future could unite the opposing camps of the Ukrainian elite and rally the culturally divided people of Ukraine under one banner.  

The carrot of future membership would also allow the EU to apply the stick of demands for more active constitutional, administrative, economic and educational reforms. The EU could, for instance, make it a condition of Ukraine's candidacy for membership that the existing presidential system be replaced by a parliamentary republic.  In this way the EU would both render service to its member states and extend the reach of its system of values.

NOTE: Dr Andreas Umland is general editor of the book series “Soviet and Post-Soviet Politics and Society” (

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Visit the travel show this weekend in New York City

U.S.-Ukraine Foundation (USUF), Wash, D.C., Thu, Feb 25, 2010

WASHINGTON, D.C. - The Discover Ukraine exhibit (booth #275), organized by the U.S.-Ukraine Foundation and the #1 Travel Ukraine website,,  will be appearing at The New York Times Travel Show.

The U.S.-Ukraine Business Council (, Washington, D.C., and its over 100 members is our sponsoring organization for The New York Times Travel Show.

Come and visit us this weekend at the Jacob Javits Convention Center! Join us at The New York Times Travel Show for a spectacular international celebration. Pick up a Discover Ukraine - the unexpected Travel Guide!

At The New York Times Travel Show is the only place where you can:
       [1]  Explore more than 500 destinations, cruises, tours, adventures and travel services
       [2]  Receive exclusive deals and giveaways
       [3]  Enjoy live cultural performances, tastings, travel seminars and more
       [4]  Learn about the best tours and locations for your schedule, travel style and budget
       [5]  Book your adventure!

WHEN: Saturday, February 26, 2010, 10 am - 6 pm
Saturday, February 27 at 2:30 pm - we are proud to have the Veselka Restaurant ( of NYC providing a culinary and tasting exhibition! (Europe Stage)
Sunday February 28, 2010, 10 am - 4 pm
Sunday, February 28 at 1 pm - dancing performance by Iskra (Europe Stage)

WHERE: Jacob K. Javits Convention Center, 644 West 34th Street, New York, NY 10001-1188
Exhibition is located in Halls 3D & E., Seminars are located in Hall 1E,

FOR MORE DETAILS: Please e-mail at  or call (202) 223-2228
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AUR ARCHIVE, 2003-2009:

Analysis & Commentary: George Weigel
Distinguished senior fellow of Washington’s Ethics and Public Policy Center. 
National Review, New York, New York, March 8, 2010 issue

The Olympics, having become Big Business, rarely open a window into the political cultures of the countries whose teams are competing. Few athletes (not to mention their sponsors, both the corporate sponsors and the national Olympic committees) are willing to do anything that upsets the international bonhomie — that “we are the world” spirit — that presumably drives up the TV ratings and gets the customers to buy the “gear” (or the Chicken McNuggets, or whatever). So ego, raw ambition, and national character tend to be kept rather firmly under control.

An exception to this Olympic Rule of Vanilla was on full display, however, after American Evan Lysacek narrowly beat the 2006 gold-medal winner, Russia’s Evgeni Plushenko, to take the gold in men’s figure skating at the current Vancouver Games. Plushenko, who has made a career out of being boisterous (some would say, out of being a jackass), was not pleased.

He, after all, had executed a quadruple jump (albeit landing somewhat clumsily), while Lysacek had, in the Russian’s view, gamed the scoring by skating a perfect if less technically demanding program featuring triple jumps. “You can’t be considered a true men’s champion without a quad,” the silver-medal-winning Plushenko told Russian state television. “Just doing nice transitions and being artistic is not enough, because figure skating is a sport, not a show.”

Russian prime minister Vladimir Putin was not to be outdone in the whining competition. He sent Plushenko a telegram — A telegram? No wonder they lost the Cold War — in which Putin, in his new, self-appointed role as Supreme Olympian, informed his soured countryman that his silver medal was “as good as gold” because Plushenko had “performed the most accomplished program on the Vancouver ice.” Russian state media joined the parade, in tones that during the Andropov period had been reserved for denunciations of the warmongering arch-fiend Ronald Reagan.

Here, I suggest, is that rarity: an Olympic window into a national political culture. Everything about the Russian whining over Plushenko’s silver neatly matches the dominant themes of much of Russian public life since the implosion of the Soviet Union in 1991: the paranoia (some enemy did this to us); the bullying (you’re a wuss, Evan Lysacek, because you didn’t do a quad); the distortion of reality (silver is as good as gold); and the misrepresentation of history (the new scoring system for men’s figure skating was installed, according to the Washington Post’s Tracee Hamilton, precisely because of previous Russian cheating).

Isn’t this all of a piece with Russian bullying (and worse) in Georgia and Ukraine, Russian threats to the energy supply of central and western Europe, Russian obstreperousness in the matter of Iran’s nuclear program, Russian crowds’ burning in effigy a Latvian filmmaker who dared to make a documentary that told the truth about Communism (The Soviet Story)?

It is difficult to avoid the conclusion that this boorish behavior — to put it gently — has a lot to do with the fact that, as a political culture, Russia has never begun to come to grips with the legacy of 74 years of Communism. Lenin’s mummy — the ghastly relic of one of the 20th century’s greatest mass murderers — remains on display for the veneration of the obtuse and the confused in Red Square. Parades celebrating the birthday of Stalin, whose homicidal record topped Lenin’s, are not uncommon.

The NKVD/KGB archives, briefly opened under Boris Yeltsin, are closed to researchers. Opposition journalists are murdered with impunity, while the state dominates the mass media. History is rewritten in order to mask, even deny, the horrors of the Gulag system (which, as Anne Applebaum demonstrated in her Pulitzer Prize–winning book, was not an accidental feature of Stalinism but an essential component of Stalinist “economics”).

Vladimir Putin has made it clear that he is not satisfied with a Russia shrunk to the country’s size at the time of Peter the Great. Yet neither Putin nor his successor as president, Dmitry Medvedev, seems much interested in dealing with Russia’s colossal demographic and public-health problems, which include a rapidly shriveling native population (thanks to catastrophically low birth rates and declining life expectancy, both exacerbated by environmental degradation and rampant alcoholism).

Meanwhile, Russia’s economy (the seamiest side of which is brilliantly described in two Daniel Silva novels, Moscow Rules and The Defector) resembles a Slavic Mafia operation more than a true market system. Perhaps whining about Olympic figure-skating judges is deemed, in the Kremlin, a useful distraction from the hard facts of contemporary Russian life.

It shouldn’t distract the West in general, and the United States in particular, from two other hard facts, however: Russia’s imperialist impulse has not been blunted by its catastrophic experience of Communism, and Russian political culture is sick.

The reaction from the Kremlin to Evgeni Plushenko’s whining over his silver medal displayed enough of the cast of mind dominating Russian public life these days to cause the Obama administration, and other western governments, to reach for that famous “reset” button again: this time, with the aim of devising means of blunting further Russian aggression in venues where a lot more is at stake than in an ice rink in British Columbia.

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16th-18th March 2010, InterContinental, Kyiv, Ukraine

Adam Smith Conferences, London, UK, Thu, Feb 25, 2010

LONDON - The Adam Smith Conferences' 2nd Forum on "Agribusiness in Ukraine" will be held in Kyiv on 16-18 (Tuesday, Wednesday, Thursday) March 2010 at the InterContinental Hotel.  "Agribusiness in Ukraine" forum is the only event attended by the decision makers of ALL the leading players in the
Ukrainain agrarian industry, from both key international and Ukrainian companies. You will get to meet and talk with all the key movers in one place, at one time.

More than 40 high-level speakers, all recognised leaders and experts in the domestic and international agrarian industry will present at the forum.  For
full details on the programme, speaker line up and to register, visit

If you have any questions, Adam Smith Conferences staff will be happy to help.  Please contact Lyudmyla Durneva on +44 207 0177339/7444 or write to
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Sanford Owens, Senior Commercial Officer
U.S. Commercial Service Business Liaison Office
European Bank for Reconstruction and Development (EBRD)
London, UK, Wednesday, February 24, 2010

LONDON - Dear U.S. Company Representative: Please find below a link to our CS EBRD website listing recent procurement and consultancy opportunities, open to U.S. companies, available with the EBRD. We will send these to you periodically as appropriate.

You can find a complete history of EBRD opportunities at:; under procurements, and additionally view completed project summary documents (PSD) at:

To access these opportunities, please click on the link below: Please do not hesitate to contact our U.S. Business Liaison office for assistance in pursuing these opportunities.

Regards, Sanford Owens, Senior Commercial Officer
U.S. Commercial Service Business Liaison Office
European Bank for Reconstruction and Development
One Exchange Square, London, U.K. EC2A 2Jn
Tel: (+44) 20 7338 7493,
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Sponsored by the U.S.-Ukraine Business Council (USUBC)

By Jim Davis, Ukraine Business Online (UBO), Kyiv, Ukraine, Wed, 10 Feb 2010  

KYIV - After years of efforts finally brought success in reopening the services of the U.S. Overseas Private Investment Corporation (OPIC) for Ukraine, the U.S.-Ukraine Business Council (USUBC) began implementing a series of programs to better inform current and potential investors on best methods to access the wide range of OPIC programs.
As a part of the In honor of OPIC being open for business in Ukraine, USUBC, Broad Street Capital Group (creators of the "Fluent in Foreign" book and workshop series), New York, NY, in cooperation with OPIC, the Government of Ukraine, the U.S. Commercial Service, with support from Marks Sokolov & Burd, SigmaBleyzer, Chadbourne & Park and other sponsors, is holding three workshops with the title, “Fluent in OPIC.”
Today’s workshop drew a large audience of interested business men and women to the corporate headquarters of SigmaBleyzer in Kyiv’s Mandarin Plaza in Kyiv. SigmaBleyzer is a major contributor to USUBC and helped sponsored today’s event. A third workshop will be held in New York City on a date to be announced soon, most likely in March.
The first workshop was held in Washington, D.C. on Wednesday, January 20, with over 80 persons attending. Those who attended described the event as very professional, informative, and helpful.  Ukraine's Ambassador to the United States Oleh Shamshur; the former U.S. Ambassador to Ukraine, William Taylor;  and William Klein, former senior member of the Economic Team at the U.S. Embassy in Kyiv, who worked on the OPIC settlement, attended the reception along with several high level representatives of OPIC.
Both of the workshops have presented a comprehensive "beyond the website" practical, hands-on, look at how to effectively utilize OPIC to finance and/or insure business transactions for Ukraine.  The workshops have addressed the application process, deal structures, sponsor requirements and commitments, approval procedure, realistic time frame estimates, costs, fees and legal and developmental issues.

OPIC has worldwide scope and offers unique opportunities for developing countries
OPIC’s mission is to mobilize and facilitate the participation of United States private capital and skills in the economic and social development of less developed countries and areas, and countries in transition from nonmarket to market economies. There are predictions from experts that the impact of OPIC programs on Ukraine could result in financing and other benefits totaling over $500 million in the short run and could even be much greater in the long run.
OPIC’s political risk insurance and financing have helped U.S. businesses of all sizes invest in more than 150 emerging markets and developing nations worldwide. Over the agency's 38-year history, OPIC has supported $188 billion worth of investments that have helped developing countries to generate over 830,000 host-country jobs. OPIC projects have also generated $72 billion in U.S. exports and supported more than 273,000 American jobs.
Several top level OPIC experts were in Kyiv as participants in today’s workshop. However, OPIC operates its programs only through its Washington headquarters, operating at a practical level through United States embassies around the world. Persons in Ukraine interested in seeking information about accessing the potential benefits of OPIC programs should contact the U.S. Foreign Commercial Service, 4 Hlybochyts'ka St., 4th floor, in Kyiv. 044-490-4018.
To learn more about OPIC, link below:

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Working to Secure & Enhance Ukraine's Independent,  
Strong, Democratic, and Prosperous Future
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