22.09.08. Ukraine: A region supports Russia's recognition of two areas

22.09.08. Russian passports as Moscow's geopolitical tool

22.09.08. Ukrainian coalition collapses, new coalition talks or early vote ahead

15.09.08. Ukrainians discuss how best to counter Russian threat to Crimea

15.09.08. Party of Regions splits over Georgia and NATO

15.09.08. Ukraine: Cheney IOU against Russia

15.09.08. An Orange divorce?

15.09.08. Who is Akhmetov?

15.09.08. Is Ukraine next?

15.09.08. EU to offer Ukraine deeper ties but no entry pledge

10.09.08. Jusjtjenko vil have Tymoshenko anklaget for landsforræderi

24.08.08. En hilsen til det ukrainske samfund i Kongeriget Danmark

13.08.08. Ukraine's Inflationary Crisis: Two Short-Term Scenarios

07.08.08. Former Yushchenko ally calls president's poisoning claims a myth

07.08.08. Crimea's port dispute

07.08.08. Yushchenko switches support from Our Ukraine to United Center

29.07.08. Associeringsaftale med EU stillet i udsigt (eng.)

29.07.08. Yushchenko, Tymoshenko lock horns over oil pipeline

21.07.08. Kyiv's capacity to confront Crimea challenge by Moscow being tested

21.07.08. Tymoshenko cabinet survives no-confidence vote

05.07.08. Russia, Ukraine discuss contentious energy, security issues

05.07.08. Black Sea fleet dispute intensifies

05.07.08. Oligarchs wield power in Ukrainian politics

05.07.08 Oligarchs wield power in Ukrainian politics

By Taras Kuzio

EURASIA DAILY MONITOR -- Volume 5 , Issue 125
July 01, 2008

The leading Ukrainian magazine Korrespondent (June 12) published its annual list of wealthy Ukrainians. The most surprising new information was the estimate of Donetsk oligarch Renat Akhmetov's wealth. Akhmetov, the head of Systems Capital Management, is worth $31.1 billion, making him the wealthiest person not only in the CIS but also in Europe.

This revelation comes on top of the highest real estate purchae ever recorded in Britain to Olena Franchuk, the wife of Ukrainian oligarch Viktor Pinchuk and daughter of former President Leonid Kuchma (London Evening Standard, February 26). The purchase was for 80 million pounds ($160million).

London is fast becoming a refuge not only for Russian but also Ukrainian oligarchs. Russian political exiles, such as Boris Berezovskiy, flee to London while Ukrainian exiles (Ruslan Bodelan) flee to Russia. This is testimony to the different approaches to money laundering and due diligence undertaken by the United States and the EU. In the U.S. former Prime Minister Pavlo Lazarenko was convicted and jailed in 2004 for money laundering $120 million into the United States, $40 million less than Franchuk paid for her new London home.

Four years of political instability in Ukraine have not damaged the ability of Ukraine's oligarchs to increase their capitalization during President Viktor Yushchenko's administration. Political instability has not affected the economy, which has continued robust growth; purchasing power is high and foreign direct investment is at record levels.

According to Korrespondent editor Vitaliy Sych, Akhmetov's estimated wealth has doubled in the past year because of three factors. First, he has publicly revealed for the first time the full extent of his wealth. Akhmetov's land in Donetsk alone is valued at $1 billion. Second, Ukrainian oligarchs with metallurgical assets experienced fast growth due to high world demand. Third, Metinvest, a key Akhmetov company, merged with the Smart Group providing it with access to iron ore.

The total worth of the wealthiest 50 Ukrainians is $112.7 billion, as much as two annual Ukrainian state budgets. Ukrainian oligarchs can be found in most factions, including the Socialists, in the 2006-2007 parliament.

The greatest concentration of wealth lies within the Party of Regions. This in itself is ironic, because the Party of Regions, like the Unified Russia party, has attracted a large proportion of former communist voters. Of the $112 billion total assets of Ukraine's 50 wealthiest, $35.4 billion or a third of the total is held by members of the Party of Regions.

The Party of Regions is uncomfortable about explaining why there is such a large concentration of oligarchic capital within its ranks. Akhmetov's wealth is $1.5 billion greater than that of Russia's wealthiest oligarch, even though Ukraine's population is a third of Russia's and it does not possess the strategic raw materials, such as oil, gas, diamonds and gold, which are abundant in Russia. Russia's wealthiest 50 oligarchs only account for 35% of the country's GDP, compared with 85% of Ukraine's.

When asked about Akhmetov's extraordinary wealth, Party of Regions leader Viktor Yanukovych said, "If God gave certain individuals business talents, then what is most important is that this talent goes toward the greater good of the country and the people who live there." Yanukovych believed that, "these people bring budgetary proceeds and promote the economic growth ofthe country" (Ukrayinska Pravda, June 13).

Akhmetov entered parliament in 2006 in the Party of Regions. In 2005 he fled to Monaco because of fear that the Tymoshenko government would bring criminal charges against him, but he returned after these were blocked by Yushchenko. Other oligarchs either fulfilled their promises of separating business and politics by not standing for re-election to parliament (Pinchuk) or never running for parliament at all (Igor Kolomoysky).

Russia's wealthiest 50 oligarchs only account for 35% of the country's GDP, compared with 85% of Ukraines.  


Yanukovych believes that the large number of wealthy Ukrainians in the Party of Regions is not mere coincidence. "They entered the party out of theirbeliefs," he said, a statement that is hard to accept since the party is ideologically amorphous. Immunity from prosecution, defensive protection against Tymoshenko and access to government funds are three likelier explanations for their interest in entering parliament.

Akhmetov is in the Tymoshenko government's line of fire. One major factor inthe government's cancellation of the October 2007 Vanco contract for Ukraine's Black Sea shelf oil exploration was the presence of an Akhmetov company as one of its four partners. The government also seeks to "re-privatize" Dniproenergo, which Akhmetov purchased at a knock down price in August 2007. (That would involve nationalizing the company back from Akhmetov and privatizing it again.)

Ukraine's oligarchs were never united as a group. Following Yushchenko's election, they openly supported the orange camp.

Pinchuk (Interpipe) and Kolomoysky (Pryvat) are Ukraine's second and third wealthiest citizens but with far less wealth than Akhmetov, at $8.8 and $6.6 billion, respectively. Both have continued to fund political projects externally: Pinchuk in Viche and Kolomoysky in Our Ukraine. Three Pryvat oligarchs in third, fourth and sixth places control $17.7 billion.

Other oligarchs also supported the orange camp. Petro Poroshenko ($1.12 billion [22nd place]) was an ally of Yushchenko from 2001 when Our Ukraine was formed, and his Channel 5 was one of only two television stations that gave coverage to the 2004 Yushchenko election campaign. Kyiv Mayor Leonid Chernovetsky ($750 million [28th place]) backed Yushchenko in 2004 and has remained an ally.

The former head of the 2004 Yanukovych campaign, Serhiy Tyhipko ($1.64 billion [17th place], who, like Pinchuk, left politics after the orange revolution, has returned as head of the Tymoshenko government's Council on Investors. Another Pinchuk protégé, Valeriy Khoroshkovskyi ($1.55 billion [18th place]), is head of the State Customs.

Meanwhile, Industrial Union of Donbas (ISD) oligarchs Serhiy Taruta and Vitaliy Haydiuk (worth $2.37 billion each [11th and 12th]) are aligned with the Tymoshenko government. Konstantyn Zhevago ($5.2 billion [fifth]), the first and only Ukrainian businessman to float shares on the London Stock Exchange for his Ferrexpo company, is a Tymoshenko bloc parliamentary deputy.

The separation of business and politics remains a long way off in Ukraine, even though it was one of the main aims of the orange revolution.

05.07.08. Black Sea fleet dispute intensifies

EVENT: On June 24, Ukraine 's Foreign Ministry reiterated its demand that the Russian Black Sea Fleet (BSF) leave the Crimea by 2017.

SIGNIFICANCE: Russian-Ukrainian relations have seriously deteriorated over the last several months, in part due to entrenched disagreements over the fleet's status. Although the BSF has little military value, its symbolic stationing in Sevastopol -- coupled with Ukrainian fears that Russia will incite separatism in Crimea -- give the issue strong resonance in both Moscow and Kyiv .

ANALYSIS: On May 21, Ukrainian President Viktor Yushchenko instructed the government to draft legislation outlining a phased timetable for the withdrawal of the Black Sea Fleet (BSF) over the next nine years. The decree was probably motivated by concerns over Russia 's willingness to abide by a 1997 treaty granting the BSF the right to stay in Sevastopol until 2017, Russian rhetoric in support of maintaining the BSF in Ukraine indefinitely and recent threats to annul the treaty, which also recognised Russia 's borders with Ukraine and granted Kyiv sovereignty over Crimea and Sevastopol .

Ukrainian concerns. Ukraine's current ruling elites would not support an extension of the 1997 agreement precisely because of perceived challenges to Ukraine's territorial integrity, Russian interference in Ukrainian domestic politics and foreign policy (as in the 2004 elections) and threats to incite separatism. Russia's use of the base has also irritated Kyiv, which has previously attempted to raise the annual rent for the fleet (fixed at 98 million dollars) to 'market prices' in response to Moscow's insistence that Ukraine pay 'market prices' for gas.

Russia has recently floated the idea of increasing its payment, in order to persuade Ukraine to extend the fleet's stay beyond 2017. Moscow and Kyiv have also been mired in legal battles over the BSF's use of Crimean facilities, and the BSF has repeatedly neglected to inform Kyiv of military exercises outside Sevastopol (see UKRAINE/RUSSIA: Fleet base is pawn in power play - February 2, 2007).

Russian strategy. Russia is using the dispute to play on deep divisions in Ukraine 's fractious ' Orange coalition', while also trying to delay or prevent Ukraine from acceding to NATO (see UKRAINE/NATO: Kyiv 's bid to join presents dilemma - January 28, 2008 ). Senior Russian officials, such as Dmitry Rogozin, Russia 's representative to NATO, have threatened to block Ukraine 's drive to join NATO by suggesting that Ukraine could only join the alliance if it gives up sovereignty over Crimea . Crimean Communists and Russian nationalists claim to have collected over a million signatures in support of giving the BSF a permanent base in Sevastopol .

Implications. The BSF dispute is linked to three other flashpoints in bilateral relations:

Borders. Russia 's recognition of its border with Ukraine has been enshrined in numerous bilateral and multilateral treaties. However, Moscow has challenged the legitimacy of these borders, notably in autumn 2003, when Russia began building a dam from the northern Caucasus to the Ukrainian island of Tuzla .

Crimean sovereignty. Russia has asserted that that Sevastopol was never included in the 1954 transfer of Crimea to the Ukrainian Soviet Socialist Republic . Controversial Moscow Mayor Yuri Luzhkov has raised the Sevastopol question on many occasions, most recently during a May visit to the city. On June 4, Luzhkov successfully lobbied the State Duma (lower house of Russian parliament) to adopt a resolution that supported Russia 's abrogation of the 1997 treaty if Ukraine joins NATO.

NATO opposition. Russian Foreign Minister Sergei Lavrov has said Moscow will do anything to prevent Georgia and Ukraine joining NATO. In addition to raising the prospects of separatism, Russia has suggested targeting nuclear weapons on Ukraine , cutting bilateral military-industrial ties, introducing a visa regime and warning that Ukrainian soldiers would be sent to participate in NATO combat operations.

Poor prospects. Four other challenges worsen the prospects that the two sides will find a mutually acceptable solution for the BSF:

Gas prices. Russia has announced it will double the price of gas charged to Ukraine in 2009 to 359 dollars per 1,000 cubic metres. Ukraine is threatening to retaliate 'asymmetrically' in the charges paid by Russia for transit and storage. Moscow and Kyiv will almost certainly engage in their annual round of energy brinksmanship later this year (see RUSSIA/UKRAINE: Internal rivalry could undo gas deal - February 19, 2008 ).

'Orange Revolution' ripples. Moscow perceived Ukraine 's 2004 Orange Revolution as part of a US and NATO grand strategy to weaken Russia by surrounding it and reducing its sphere of influence in the CIS. Nearly four years afterwards, Yushchenko's victory and the subsequent flight of Ukraine 's former authorities to Moscow continue to colour Russia 's views of Ukraine .

Regional competition. Pro-Western leasers including Yuschenko have contributed to the increasing impotence of the CIS as an institution for extending Russian influence in the former Soviet Union . Russia , meanwhile, seeks to undermine the pro-NATO GUAM ( Georgia , Ukraine , Azerbaijan , Moldova ) group

'Ukrainianisation'. Russia has expressed concern over the status of the Russian language in Ukraine as well as Kyiv 's emphasis on creating a Ukrainian national historical narrative. Ukraine 's sometimes critical attitudes towards Soviet history have clashed with Russia 's increasingly positive portrayals, with the gulf especially large over views of Stalinism. Yushchenko's campaign to obtain international recognition of the 1932-33 artificial famine as 'genocide' has been condemned by Russia .

Outlook. Current discussions surrounding the BSF's withdrawal from Ukraine cannot foresee who will be in power in Kyiv in nine years. Russia 's strategy is to extend discussions in the hope that supposedly Moscow-friendly forces will control the Ukrainian government in 2017 and will agree to extend the basing agreement.

However, Russia may be overestimating the depth of its perceived Ukrainian allies' loyalty. The Party of Regions' opportunism is stronger than its pro-Russian leanings, and the lure of an EU-Ukraine free trade agreement is more tempting than the CIS Single Economic Space.

Ukraine 's constitution also forbids the stationing of any foreign bases on Ukrainian territory. Even assuming that Russian-leaning forces are in power in Kyiv in 2017, they would need to command a parliamentary supermajority if they wanted to change the constitution.

Russia may also be overestimating its ability to use energy to influence political decision-making, such as the status of the BSF, in Ukraine . Energy corruption does divide Ukrainian elites in their negotiations with Russia , and the presence of an opaque and controversial intermediary, RosUkrEnergo, has thus far increased Russia 's influence over Ukrainian power-brokers. RosUkrEnergo has allies in both Yushchenko's and former Prime Minister Viktor Yanukovych's camp, while current Prime Minister Yulia Tymoshenko has consistently opposed its intermediary role.

However, Ukraine 's pipeline system transports 80% of Russian gas to Europe and is an important source of leverage against Russia . Russia's long-term strategy of seeking control of Ukraine's pipelines by transferring them to a joint venture, as in Belarus, or through a multi-national venture, has been blocked by large parliamentary majority votes. No Ukrainian government is likely to transfer control of the pipelines to Russia , ensuring that a crucial bargaining chip remains in Kyiv 's control for the foreseeable future.

CONCLUSION: Ukrainian-Russian relations will probably continue to deteriorate, and the status of the BSF will be a key irritant in the bilateral relationship. Regardless of which party or coalition holds power in Kyiv , Russian and Ukrainian strategic interests will continue to diverge, and Russia will find itself with fewer levers of influence to maintain the BSF's presence in Sevastopol.

05.07.08. Russia, Ukraine discuss contentious energy, security issues

01 July 2008

By Emma Stickgold

Russian Prime Minister Vladimir Putin met with his Ukrainian counterpart Yulia Tymoshenko in Moscow on Saturday to discuss controversial economic and military issues that have raised tensions between their two countries. Mr. Putin warned that resolution of these issues could impose various costs on Ukraine, not only in terms of higher energy prices, but also the possible loss of lucrative contracts with Russia's security and space industries. But as Emma Stickgold reports for the VOA from Moscow, Kyiv is seeking to minimize those costs.

Prime Minister Vladimir Putin said Saturday that Russian leaders would like to slowly increase gas prices for Ukraine closer to the higher rate encountered by its European neighbors. But some Central Asian suppliers are encouraging Moscow to do so starting in January of 2009.

Mr. Putin says Turkmenistan and Uzbekistan, who deliver natural gas to Ukraine via pipelines through Russia, are to blame for the possible increase. The CEO of Gazprom, Alexei Miller, has said Ukraine will likely face more than double its current rates, going from the $179 per cubic meter to more than $400.

Ms. Tymoshenko told Ukrainian's One-plus-One television station that the two leaders agreed Russia would raise Ukraine's price to European levels over three-to-four years. There is no immediate confirmation of that from the Russian government.

Natural gas has been a contentious issue between the two countries, with Russia having reduced or cut off Ukraine's gas supply on a number of occasions in recent years.

The Russian head of government praised Ukraine for being debt free when it comes to current gas bills for the first time in many years.

Mr. Putin says Ukraine has debts from previous years, and both sides are still searching for a solution to this issue. However, there are no debts for the current bills, which he says is a good result of the work of the current Ukrainian government and a good condition for moving forward in resolving gas-related issues.

Turning his attention to Ukraine's possible membership in the North Atlantic Treaty Organization, Mr. Putin said Russia would terminate its military and other contracts with Ukrainian weapons and space facilities that depend on Moscow, if Ukraine joins the Western defense alliance.

Moscow opposes bids by Ukraine and Georgia to join NATO, and Mr. Putin says membership in the organization would be counter-productive for international security.

Independent Russian military analyst Pavel Felgenhauer told VOA that efforts to recreate Ukrainian productions lines may prove to be quite difficult.

"How successful will be these plans to create production lines - different equipment and components that are being made in Ukraine today on Russian territory - that is another question," he said. "Maybe partially they will be successful, maybe partially not. It is not an easy endeavor at all to simply cut off Ukraine - but the threats are there for sure."

Another contentious issue is the disposition of Russia's Black Sea fleet, which is stationed in Sevastopol on Ukraine's Crimean peninsula. Russia's representative to NATO, Dmitri Rogozin, recently said Russia would never leave Sevastopol, despite a lease agreement with Ukraine that stipulates a withdrawal in 2017.

Recently, Moscow has been seeking to extend the lease, but Ms. Tymoshenko indicates that is not likely to happen.

The Ukrainian prime minister says both sides have an agreement until 2017 and her country will observe it as it does all of its other international agreements - very accurately, and without any deviations.

Pavel Felgenhauer notes that much can happen between now and 2017.

"Right now, there are no real plans at all of actually moving the fleet from Crimea and its infrastructure and of course this entire issue right now is now of course immediate," he said. "The fleet can stay until 2017, which is quite some time away - there can be elections in Ukraine that may bring a more pro-Moscow government to power - many things other can happen."

Carnegie Moscow Center political analyst Sam Greene told VOA this weekend's Putin-Tymoshenko discussions indicate much work is needed to repair strained relations between Russia and Ukraine.

"I think it was clear through this weekend that these issues remain troublesome for both sides and that neither is quite ready to make the compromises that would be needed to really make progress in terms of moving past these issues or working through them in some way," he said.

But Greene notes there has been a change in the nature of the dialogue, noting that a cordial tone recognizes that neither country really wants or needs the relationship to be problematic.


21.07.08. Tymoshenko cabinet survives no-confidence vote

Eurasia Daily Monitor July 16, 2008
by Pavel Korduban

The opposition in Ukraine's parliament has failed to oust the government of Prime Minister Yulia Tymoshenko. Only 174 deputies in the 450-seat chamber voted in favor of a no-confidence motion against her on July 11, far short of the 226 needed. Summer vacation started for parliament on the same day. This means that Tymoshenko stays until at least September, when parliament will reconvene.

This was a victory against the odds for Tymoshenko. She no longer has the support of a majority in parliament after two deputies left the coalition of the Yulia Tymoshenko Bloc (BYT) and President Viktor Yushchenko's Our Ukraine-People's Self-Defense bloc (NUNS). Nor does she enjoy the backing of Yushchenko or those ministers who represent NUNS in her government. Yushchenko is unhappy with her economic policy, and he apparently views her as a probable rival in a presidential election campaign that should start in 2009. Nevertheless, the opposition turned out to be even weaker than the Tymoshenko government.

The Party of Regions (PRU), which is headed by erstwhile presidential contender and former Prime Minister Viktor Yanukovych, has been insisting on a no-confidence vote ever since the pro-government majority in parliament ceased to exist last month. Speaker Arseny Yatsenyuk, who belongs to NUNS, initially refused to proceed with the motion, but he backed down when the PRU threatened him with dismissal. On July 8 the BYT started to block the parliamentary rostrum physically in order to prevent the vote, holding a vigil in the session hall (Channel 5, July 8-10).

Yanukovych predicted that a no-confidence motion would be backed by more than 226 votes. He expected that the two smallest caucuses in parliament, the Communist Party and the Lytvyn Bloc (BL), and dissenters from NUNS would contribute to the PRU's initiative to oust Tymoshenko (UNIAN, July 10). Something went wrong for the PRU on July 10, however, when the BL suggested postponing the no-confidence vote until September or October. The Communists started to hesitate, and the BYT unexpectedly stopped its blockade of the rostrum (Segodnya, July 11).

PRU senior member Mykola Azarov, a former finance minister, explaining the reasons for the motion in a speech to parliament on July 11, criticized the Tymoshenko government mainly for record-high inflation. He said that Ukrainians had to pay 50% more for eggs and 80% more for vegetable oil in May 2008 than a year before (Ukrainska Pravda, July 12). Those figures left the majority of parliament unimpressed. The no-confidence motion was backed only by 172 deputies from PRU plus two dissenters from NUNS.

Leonid Hrach, one of the Communist leaders, said that his party refused to support the PRU because the PRU did not support the anti-NATO protests that the Communists launched several weeks ago in southern Ukraine, where the Sea Breeze international military exercise was under way (Segodnya, July 11). Several informed commentators, however, alleged that Tymoshenko had reached some kind of agreement with the Ukrainian-Russian businessman Konstantin Grigorishin, who is believed to be among the main sponsors of the Communists (Segodnya, July 11; Ukrainska Pravda, July 12).

Segodnya, a newspaper linked to Rinat Akhmetov, the richest man in the PRU, accused Yanukovych of undermining the effort to ouster Tymoshenko. According to Segodnya, Yanukovych torpedoed talks with the Communists when he learned that Yushchenko's team, which he viewed as a potential ally, would not back him for prime minister once Tymoshenko was out. Segodnya suggested that the PRU should stop "exchanging the principles that it declares for secret agreements with the Orange," apparently meaning Yushchenko (Segodnya, July 13).

Tymoshenko feels more than confident now, and she apparently holds Yushchenko at least partially responsible for the attempt to oust her. Commenting on the abortive no-confidence motion, she said that her opponents wanted to get rid of her government in order to set up a new ruling coalition on the basis of the PRU and NUNS. She suggested that neither the Communists nor the BL were interested in a new coalition "of the president and Yanukovych" (ICTV, July 13). She also blamed Yushchenko for parliament's failure to amend the state budget on July 11 (Channel 5, July 12).

Raisa Bohatyryova, the Secretary of the National Security and Defense Council, predicted a new attempt to dismiss Tymoshenko in the fall. She said that the no-confidence vote had not been thoroughly prepared by Tymoshenko's opponents, but she forecast that "in September there will be a trend toward finding some compromise among the parties that are not in the majority and organizing a vote of no-confidence again" (Interfax-Ukraine, July 11). Bohatyryova's prediction can be interpreted as a threat. She acts as a bridge between Yushchenko and the PRU, simultaneously being a member of Yushchenko's team and remaining one of the leaders of the PRU.

21.07.08. Kyiv's capacity to confront Crimea challenge by Moscow being tested

By Miron Kryzhan-Iwskiy

It is no secret, the last April's NATO summit blew open the Ukraine-Russia Friendship Treaty for all to see the tenuously volatile nature of that relationship. The Treaty itself was ratified by the Russian Duma in 1999 under the deviously applied pressure by the Kremlin. During  the last Apil's NATO proceedings in Bucharest, the then President of FR Putin openly challenged Kyiv on its NATO bid intent by threatening to revoke the treaty.

Present day Russian revisionists -- official or not -- are relentless in their pursuit of Putin's position vis-a-vis Official Kyiv's aspirations to accede to the NATO alliance. The urgency of challenging Ukraine on the NATO front is clearly dictated by Moscow's growing Crimea-Sevastopol withdrawal pangs  In particular, the pain of imminently approaching departure from Sevastopol of the RFBSF by the year 2017 has brought Moscow to  the full realization of the gravity posed by the potential NATO membership of Ukraine. Belatedly or not, Kyiv is taking concrete steps for joining NATO precisely for the opposite reasons, and that is to gain a leverage in its attempt to rid  the Sevastopol Base off the RFBSF in a timely fashion.
The fiercely fanatic foe -- of Kyiv's anti-colonial expressions -- Moscow Mayor Yuri Luzhkov has authored a discussion on the legitimacy of Crimea-Sevastopol claims by Ukraine in the current issue of Izvestiya

http://www.izvestia.ru/politic/article3118305/ .

It will be recalled that the recent visit -- during the month of 225th Anniversary Celebrations of the RFBSF -- by Luzhkov to Sevastopol, Ukraine, turned him into a persona non grata following a rousing anti-Kyiv speech delivered there by him.

In the discussion, Luzhkov is condemning Kyiv's "recalcitrant defiance" of the hand of friendship outstretched by Moscow in the 1999 Russia-Ukraine Friendship Treaty ratified by the Duma in 1999 and sealed by the "thriving  mutual understanding" which "unfortunately" came to a halt with the arrival of Orange Revolution in 2004. Luzhkow is bemoaning the signs of lacking three ingredients -- a genuine brotherhood, earnest cooperation, and of a binding partnership. The prevailing situation leads Luzhkov to conclude that Kyiv should be put on an 80-day deadline notice -- i.e. by the date commemorating the October Revolution -- requiring to amend all pertinent troublesome issues. Short of meeting that deadline, the 1999 treaty would become null and void..

Per Luzhnov. the vital matters -- other than rejection of NATO -- overarched by the treaty include a blend of issues such as:

  1. Examining the validity of historic precedents dictating the Crimea-Sevastopol status
  2. Russian language recognition in Crimea and in  other dominantly Russian-populated regions, and the
  3. Orthodox Church unity under the canonical jurisdiction of Mocow Patriarchate.

It is significant to note that the former first presidenf of present Ukraine Leonid Kravchuk-- who heretofore was advocating non-alliance with any outside block -- is strongly urging the Official Kyiv to reinforce national security by seeking the NATO cover. Kravchuk's revised view is prompted by the threat to territorial integrity of Ukrainian state  posed by Russia's challenge with regard to the Crimea-Sevastopol status established in the wake of rhe 1991 breakup of the USSR. As is known -- based on the negotiated arrangement made in the early 90s among the three inheritor states: Belarus, Russia, and Ukraine --the Crimean Peninsula contitutes an autonomous entity within the borders of Sovereign Ukraine.

29.07.08. Yushchenko, Tymoshenko lock horns over oil pipeline

By Pavel Korduban

Eurasia Daily Monitor

Wednesday, July 23, 2008

Ukrainian Prime Minister Yulia Tymoshenko has refused to approve using the Odesaa-Brody pipeline for pumping Caspian oil to the Pryvat Group’s refineries. The pipeline, Odessa-Brody, is currently used by Russian oil companies in the reverse direction, Brody-Odessa. President Viktor Yushchenko’s team is accusing Tymoshenko of disregarding national interests and even treason. Tymoshenko accuses her opponents of corruption.

The pipeline Odessa-Brody was completed in 2001 to pump Caspian oil to Ukrainian and Polish refineries. It was part of plans devised under then- President Leonid Kuchma to diminish Ukraine’s dependence on Russian energy resources. Ukraine, however, could not obtain oil for it from Azerbaijan or Kazakhstan as it had hoped, although the European Union and the United States supported the project politically. Lacking Caspian oil, the Odessa-Brody pipeline since 2004 has been serving TNK-BP, LUKoil, and other Russian companies, pumping their oil in the reverse direction, to Odessa, where it is loaded onto tankers for export.

Kyiv never abandoned the original plan for Odessa-Brody. At the end of June, Yushchenko and Azerbaijani President Ilham Aliev agreed that a certain amount of oil would be transported to Odessa and pumped through the pipeline for testing (Interfax-Ukraine, June 30).

Tymoshenko forbade government officials to attend a meeting at the presidential secretariat on July 16, at which it was planned to agree on conditions for Caspian oil transportation via Odessa-Brody in the original north-western direction. UkrTransNafta – the state-controlled operator of Ukraine’s trunk pipelines – was supposed to sign at this meeting a contract with Milbert Ventures, which is registered in the British Virgin Islands and is linked to the Dnipropetrovsk-based Pryvat group (Kommersant Ukraine, July 18).

Yushchenko’s envoy for international energy projects, Bohdan Sokolovsky, announced on July 17 that agreements had been ready for signing at the preceding day’s meeting. Specifically, 5 million tons of Caspian oil were to be supplied to the Halychyna and Naftokhymyk Prykarpattya refineries in western Ukraine, and another 3 million tons to Central European countries, over the next two years. Pryvat controls those two Ukrainian refineries, which have been short of crude for processing during the past year or so.

Sokolovsky accused Tymoshenko of disrupting the agreements reached with suppliers in Azerbaijan and potential consumers in Central Europe. “This is shocking,” said Sokolovsky. “Those actions [by Tymoshenko] can be qualified as treason. I am sure that sooner rather than later, even if we have to gather at the National Security and Defense Council for that, we shall secure implementation of this project, which is in the national interest of Ukraine” (Liga.net, July 17). The head of Yushchenko’s secretariat, Viktor Baloha, warned Tymoshenko against interfering in energy security matters. “European energy policy and Ukraine’s role in it is at stake,” Baloha warned (Ukrainska Pravda, July 17)

Tymoshenko, however, dismissed the contracts proposed by Yushchenko’s secretariat to pump Caspian oil via Odessa-Brody as “another illegal scheme masterminded by the presidential secretariat”. She said that the contracts were to be signed with “off-shore companies” that had “nothing to do with international projects.” She also drew parallels between this project and the controversial deals of the presidential team with the RosUkrEnergo and Vanco companies (Interfax-Ukraine, July 17).

Earlier this year, Tymoshenko had unsuccessfully tried to banish RosUkrEnergo – the monopoly supplier of Gazprom’s gas to Ukraine since 2006 – from the Ukrainian market. Her government also withdrew from the contract to develop oil and gas resources in the Black Sea with a subsidiary of the US company Vanco. Tymoshenko insisted that the corrupt interests of previous Ukrainian governments were behind the two projects (see EDM, June 4, July 2).

Tymoshenko apparently believes that the contracts with Pryvat were intended to give that company full control over the Odessa-Brody pipeline for many years to come. According to parliamentary deputy Serhy Pashynsky from the Yulia Tymoshenko Bloc, who sits on the parliament’s energy committee, Pryvat would have taken Odessa-Brody under its control for a 14-year term, had the contracts with Milbert Ventures been signed. The Russians are also unhappy. Sources at LUKoil and TNK said that they had not been notified of Kyiv’s immediate intention to start pumping Caspian oil through the Odessa-Brody pipeline (Kommersant Ukraine, July 18). Russian Deputy Prime Minister Igor Sechin expressed concern over the plans, saying that the affected Russian companies would have to seek other routes for delivering their oil to EU countries (Interfax-Ukraine, July 21).

Pryvat was among Tymoshenko’s allies in 2005-2006, when rival Ukrainian tycoons such as Viktor Pinchuk and Konstantin Grygorishyn voiced suspicions that Tymoshenko was backing Privat in property disputes with them. Ihor Kolomoysky, the informal leader of Privat, admitted that his and Tymoshenko’s interests “coincided” at that time. Later on, however, Pryvat fell out with Tymoshenko, and she accused Pryvat of foul play on the energy market (Channel 5 TV, March 28). In one of his most recent interviews, Kolomoysky said that he would back Yushchenko’s re-election bid against Tymoshenko’s possible candidacy, and that he would consider leaving Ukraine if she became president (Ukrainska Pravda, March 28, April 2).
29.07.08. Associeringsaftale med EU stillet i udsigt (eng.)

By Deutsche Welle

In Ukraine for the first time on Monday, July 21, German Chancellor Angela Merkel dampened the country`s hopes for a quick path to EU membership. She did express support for an association agreement, however.


The deal is expected to top the agenda of an EU-Ukraine summit taking place in September.


During her day of talks with President Viktor Yushchenko and Prime Minister Yulia Tymoshenko, Merkel said that Ukraine was an important partner for Germany and that Germany would offer Kyiv support in pursuing its reform plans.

Merkel keeps quiet on NATO

Ukraine`s Sehodnia newspaper had reported ahead of Monday`s talks that the German leader was likely to leave the issue of NATO-membership on the back burner, which indeed she did, calling it "a matter between Ukraine and the NATO member states."

However, at a NATO summit in April, Merkel and French President Nicolas Sarkozy had opposed efforts by Poland and the Baltic states to set a specific timetable for eventual Ukrainian membership in the alliance.


Russia has been outspoken in its opposition to the NATO aspirations of Ukraine`s government, and threatened military and economic retaliation were Ukraine ever to join the alliance.

Merkel on Monday made an indirect reference to the Kremlin, saying that "other countries that are not NATO members, and who do not have any relationship to this question (of Ukrainian membership) should not discuss or consider it."

In December, NATO is slated to discuss possible first steps toward Ukraine`s membership in the alliance.


President Yushchenko promised to fulfill Ukraine`s commitment to reliably deliver gas from Russia, but also warned of "political blackmail" from Russia and others in light of upcoming price negotiations.

In past years, Kyiv and Moscow have disagreed repeatedly on gas and oil shipment terms, leading to a two-day cut-off of Russian gas to Europe in January 2006.

Complete article:

Any European state that wants to sign an Association Agreement with the EU must firstly comply with the Copenhagen Criterion No.1

Political commentary by Victor Chirila

[...] If all the EU member states back this proposal, the Agreement could be signed at the EU-Ukraine Summit set to take place in the French town of Evian on September 9, 2008 . For the time being, it is not yet clear if the EU reached a consensus about this. However, Germany 's support for France 's proposal makes the signing of the EU-Ukraine Association Agreement more probable.

[...] Angela Merkel was very explicit, saying that the future Agreement with Ukraine will mean not only a consolidated partnership with the EU, but could also be regarded as an Association Agreement. Victor Yushchenko stressed that the discussions about the name of the future Agreement with the EU have produced significant results. As the Ukrainian authorities permanently insisted that the new Agreement with the EU should envision Ukraine 's entering into partnership with the EU, we can say that the results achieved by the Ukrainian negotiators brought Kyiv rather closely to the achievement of its objective.

Certainly, the September EU-Ukraine Summit could clarify the situation. If Kyiv manages to negotiate an Association Agreement with the EU, this will be an important accomplishment not only for Ukraine , but for Moldova as well because it is rather probable that the EU would propose the same type of Agreement to the other Eastern European states that are its neighbours.


The Moldovan authoritie's strategic objective is to negotiate an Association Agreement that would envision signing a wider Free Trade Agreement and the gradual liberalization of the visa regime between Moldova and the EU. For this objective to be not only listened to, but also heard by the EU officials so that they mandate the European Commission to initiate talks over a wider Partnership Agreement with Moldova, the Moldova authorities should make a concerted effort to implement democratic reforms in the European spirit in such areas as the electoral process, freedom of expression, pluralism and independence of mass media, free access to objective, diverse and impartial information, or improvement of interaction with the Opposition parties. All these fields arouse concerns in the EU. [...]

In fact, this statement points out that Moldova does not fully satisfy one of the fundamental principles of the Copenhagen Criteria: stability of the institutions guaranteeing democracy. The experience of the EU member states from Central and Eastern Europe shows that any European state than wants to sign an Association Agreement with the EU must first of all comply with the Copenhagen Criterion No.1. The examples of Meciar Slovakia and Tudjman Croatia are relevant in this case. Do we need some other examples? Certainly NO.

Victor Chirila is Programme Director at the Association for Foreign Policy in Moldova. In 2001 he was the Chancellor at the Embassy of the Republic of Moldova in Washington.

07.08.08. Yushchenko switches support from Our Ukraine to United Center

Eurasia Daily Monitor
July 28, 2008

Taras Kuzio

On July 12 Ukrainian President Viktor Yushchenko's fourth party of power United Center held its inaugural congress in pompous style at the Ukrayina Palace, broadcast live on state television Channel 1. Although presidential secretariat head Viktor Baloga was touted by the Ukrainian media as the most likely candidate, because of the use of administrative resources in the party's construction, Ihor Kryl was re-elected as leader (edc.org.ua).

United Center's inability to find a charismatic and well known leader is endemic to the party's crisis from its inception. The merger of United Center with the People's Democratic Party (NDP) failed to materialize prior to the congress (Ukrayinska Pravda, June 27). United Center was established on March 27 after five deputies resigned from Our Ukraine-People's Self Defense (NU-NS) but opted to remain in the orange coalition. At a maximum United Center may grow to number 15 out of the72 NU-NS deputies, still far short of the necessary majority of 37 required to vote for NU-NS's withdrawal from the coalition.

United Center supports a grand coalition of NU-NS and the Party of Regions. United Center is a "constructive alternative," Baloga said, a code word for pragmatists in Regions and NU-NS to unite. "We are of one mind with the president, our aims are the same" (Ukrayinska Pravda, July8).

The new party of power is being established administratively through regional governors, with three joining (Ukrayinska Pravda, March 27). In Dnipropetrovsk a large proportion of the governor's office have joined.

United Center is being established "from above, using the advantages of administrative offices, reminiscent of Kuchma-era methods," Zerkalo Nedeli (June 28) bemoaned. Officials employed in regional governments refusing to join United Center have been released from employment (Ukrayinska Pravda, July 1). In half of Ukraine's 27 regions, United Center is headed by the governor or his deputies.

United Center has two major pitfalls. First, under constitutional reforms supported by parliament's two largest factions, Regions and theYulia Tymoshenko bloc, governors would be placed under government control, leaving the president with few "administrative resources." The NDP halted unification talks with United Center after NP leader Ludmilla Suprun was not offered the post of Zaporizhzhia governor.

Second, United Center's choice of allies is marginal. The NDP, Democratic Party and the Republican Christian Party stood in the 2007 elections in the Ludmilla Suprun-Ukrainian Regional Active bloc that obtained 0.34 percent (10th place). Two other marginal allies are the Agrarians and the Party of Industrialists and Entrepreneurs (PPPE). An alliance with these five marginal parties would not boost United Center's popularity (Ukrayinska Pravda, April 24).

These five allies are former pro-Kuchma centrist parties, and four supported Viktor Yanukovych in the 2004 elections. The PPPE supported Yushchenko in the second round of the 2004 elections but the defection of its members from Our Ukraine to the Anti-Crisis coalition in March 2007 spurred the president's April 2 decree to disband parliament.

Kyiv Mayor Leonid Chernovetsky--who was backed by Yushchenko in the May 26 pre-term Kyiv elections--is to join United Center. The Chernovetsky bloc came first in the Kyiv elections with 30 percent while NU-NS failed to reach the 3 percent threshold. Kyiv City Council Secretary Oles Dovhyi remains the link between Chernovetsky and United Center and could become the head of its Kyiv branch (Ukrayinska Pravda, March 18).

There is growing antagonism inside NU-NS at United Center for poaching its regional members, so pre-term elections would unravel the bloc.United Center could have potentially gained some support if it had successfully attracted the business wing of NU-NS, which has always been inclined toward a grand coalition and lukewarm toward Tymoshenko. United Center placed high hopes on attracting parliamentary speaker Arseniy Yatseniuk as its leader, a young and respected business leader loyal to Yushchenko, but he has repeatedly declined the offer.

Other businessmen in NU-NS told EDM that while they remained loyal to Yushchenko, they did not want to participate in a political project promoted by Baloga, who has poor relations with both the majority pro-Tymoshenko and minority pro-Yushchenko wings of NU-NS. NS is financed by Davyd Zhvannia, subject of an investigation to have his Ukrainian citizenship annulled. The investigation is being orchestrated--according to NS leader and Interior Minister YuriyLutsenko--by the presidential secretariat (see EDM, June 2; Ukrayinska Pravda, July 9).

It is unlikely that Ukraine will have a successful party of power for four reasons. First, Ukraine's regional diversity makes it impossible to have a single party that is pan-national. Second, a party of power requires an over-arching nationalism, as in Russia under Vladimir Putin. United Center's amorphous ideology of "patriotism, truth and pragmatism" has already failed in Kuchma-era centrist parties (Ukrayinska Pravda,June 9). Third, successful parties of power require a popular president who can lead them, as is the case in Russia. Fourth, parties of power succeed in autocratic--not democratic--systems where elites and businessmen can be cajoled into joining them.

Ukraine has attempted to build two parties of power under Kuchma and two under Yushchenko; all four have failed, or probably will.

The NDP was Kuchma's new party of power headed by Prime Minister Valeriy Pustovoitenko in the 1998 elections when, despite administrative resources, the NDP received only 5 percent of the vote. Following the replacement of Pustovoitenko by Yushchenko as prime minister in 1999, the NDP faction began to disintegrate. Suprun opposed "administrative methods" to establish new parties "because we have experienced this already and learnt our lessons" (Zerkalo Nedeli, June 28).

For a United Ukraine (ZYU) was established for the 2002 elections consisting of five pro-Kuchma centrist parties, but it obtained only 11 percent despite administrative resources. The ZYU disintegrated a month after the elections into constantly fluctuating factions.

In 2005 the People's Union-Our Ukraine was established as Yushchenko's first party of power but it failed to fulfill its main objective of merging disparate national democratic parties within Our Ukraine. Three years later United Center is the second attempt.

United Center will likely become Ukraine's fourth failed party of power and will therefore be unable to win Yushchenko a second term.

07.08.08. Crimea's port dispute

By Svitlana Korenovska

[...] At issue is whether there is enough room, good will or both for naval fleets from NATO and Russia to share the Black Sea. Russia wants its fleet to remain headquartered in Sevastopol beyond May 2017, when its $93-million-a-year lease from Ukraine is set to expire. Ukraine, which hopes to join NATO within the next decade - a move adamantly opposed by Moscow - wants the Russian navy out of its country before the lease expires.

[â?¦]"The start of negotiations on the removal of Russia's Black Sea fleetfrom Ukrainian territory should be included in the agenda of our relations," he [Viktor Yushchenko] said during a press conference last week. The fleet issue has lately roiled a contentious relationship between the two neighbors that goes back centuries.

Russia's Catherine the Great annexed Crimea from Ukraine in 1783. In the mid-19th century, Crimea served as the battlefield for Britain, France and other allies to fight Russia. Soviet leader Nikita S. Khrushchev gave Crimea back to Ukraine in 1954.

During the chaos that followed the collapse of the Soviet Union, Russia and Ukraine divvied up the Black Sea fleet. According to the 1997 Treaty of Friendship, Cooperation and Partnership, Ukraine leased the Sevastopol base to Russia. The rent was applied toward Ukraine's debt to Russia, which supplies the country with natural gas.

Inevitable tensions over Crimea have been exacerbated by Ukraine's attempts to join NATO. [...] Russian objections kept Ukraine from being offered a Membership ActionPlan (MAP) - a key step to NATO membership - at the alliance's April summit in Bucharest, Romania. The decision is expected to be reviewed in December.

During a visit to Ukraine last month, NATO Secretary General Jaap deHoop Scheffer sought to defuse tensions over the possible presence of the alliance in Crimea.

[...] However, many analysts consider the basing of Russia's fleet a key issue determining whether Ukraine's bid for NATO membership will ever succeed.

[...] Markian Bilynskyj, vice president of the U.S.-Ukraine Foundation, says Russia's naval presence in Ukraine is potentially more divisive than U.S. plans to set up a missile defense in Poland and the Czech Republic, both NATO members.

"The Black Sea fleet issue is a much more pertinent, much more substantial challenge for the Russians, since it would require a large Russian investment to relocate the fleet," Mr. Bilynskyj said. [â?¦] Oleksandr Sushko, a director of the Center for Peace, Conversion and Foreign Policy of Ukraine, warns against underestimating the symbolic importance of Crimea to the Russian navy. "There are 46 warships of different classes, including submarines. Most of them are quite old and outdated. ... For Russia, it is more symbolic issue than military one."

Still, he said, it would be hard for Russia to find an alternative to Sevastopol with its well-developed infrastructure.

Complete article:

07.08.08. Former Yushchenko ally calls president's poisoning claims a myth

http://www.jamestown.org/edm/article.php?article_id=2373271July 30, 2008

By Pavel Korduban

Ukrainian President Viktor Yushchenko has made it clear that he holds Davyd Zhvania, the sponsor of the populist People's Self-Defense bloc(NS), responsible for his mysterious poisoning at the height of the presidential election race in 2004-Zhvania denies this. Zhvania also insists that Yushchenko's was a case of ordinary food poisoning, and that his poisoning with dioxin was nothing more than a myth created in order to help Yushchenko win the election.

[...] Zhvania's troubles began this past May, when the Prosecutor-General's Office (PGO) opened a criminal case suspecting that he illegally obtained Ukrainian citizenship. In return, Zhvania claimed that Yushchenko's wife had illegally kept her U.S. citizenship, and that the criminal case against him was in revenge for his disobeying Yushchenko's orders regarding the recent mayoral election in Kyiv (see EDM, May 29).Yushchenko's team denied Zhvania's allegations.

Speaking in an interview on May 30, Zhvania sensationally claimed that Yushchenko was not poisoned with dioxin in 2004 (RFE/RL, May 30). [...] Asked why he did not reveal this earlier, Zhvania said that he did not want the spirit of the pro-Yushchenko Orange Revolution in November-December 2004 to be curbed. Zhvania said that the tests which showed the presence of dioxin in Yushchenko's body were fake (BBC, June3). An international group of doctors who treated Yushchenko after 2004 denied this allegation. They said that 90 percent of the dioxin has been removed from his body since then (Channel 5, June 11). Zhvania also denied the widespread belief that Yushchenko was poisoned at a dinner with the then head of the Security Service of Ukraine (SBU),Ihor Smeshko, and his deputy Volodymyr Satsyuk on September 5, 2004. [...]

Yushchenko, speaking in an interview with an Austrian daily, insisted that he was poisoned at the dinner. He said that three individuals were involved who later fled to Russia and obtained Russian citizenship (DerStandard, July 10). The PGO indirectly confirmed that Satsyuk was one of the three, reporting shortly after Yushchenko's interview that Russia refused to extradite him. However, officially Ukraine wants Satsyuk extradited on charges unrelated to the poisoning (Kommersant Ukraine,July 17).

Zhvania was for the first time openly accused of involvement in Yushchenko's poisoning on July 23, when Yushchenko's legal advisor Ihor Pukshyn claimed that "Zhvania, directly or indirectly, 'helped' Yushchenko eat poison" (Ukrainska Pravda, July 23). [...]

Zhvania threatened to sue both Pukshyn and Yushchenko for the accusations against him. He also threatened Yushchenko with impeachment (Interfax-Ukraine, July 24). Zhvania may find supporters for an impeachment motion outside his NS. Pukshyn accused Tymoshenko of supporting Zhvania and using his allegations in her rivalry with Yushchenko. "As she has never concealed her presidential ambitions, itis very convenient for her to cast a shadow over Yushchenko," he said (Ukrainska Pravda, July 23). Viktor Baloha, the chief of Yushchenko's secretariat, also issued a statement accusing Tymoshenko of supporting Zhvania. He claimed that she was conspiring against Yushchenko in order to split NUNS and forge a new coalition in parliament with his rivals (www.president.gov.ua, July 28).

Complete article:

13.08.08. Ukraine's Inflationary Crisis: Two Short-Term Scenarios


July 15, 2008
Anders Aslund (Peterson Institute for International Economics)

In May 2008, Ukraine's inflation hit 31.1 percent compared with May 2007, the third highest inflation in the world after Zimbabwe and Venezuela. Thanks to a revaluation of the exchange rate of the hryvnia, inflation declined to 29.3 percent in June, but this is still very high. Worse, producer prices exploded by 43.7 percent in the last year, and Ukraine's average wages surged by 39 percent in May over May 2007. Increases in producer prices and wages are usually passed on to consumer prices with a delay, which suggests that inflation is likely to rise if Ukraine does not undertake drastic policy changes.

Rising inflation, mainly in food and energy prices, is a global phenomenon, but average inflation is currently 4 percent a year in the Western world and 8 percent a year in the emerging economies.

Ukraine's monetary policy is not sustainable. To cure it, the dynamics must be understood. Ukraine suffers from a massive monetary expansion. Its money supply (M3) increased by 54.3 percent in June over June 2007. The money supply is fed by foreign banks lending to banks in Ukraine. These banks might finance their loans with 6 percent in Europe, but consumer loans in Ukraine yield up to 55 percent. This lucrative interest gap attracts huge speculative credit inflows that are used for purchases of consumer goods, real estate, and imported goods. They drive inflation and imports, boosting the trade and current account deficits. In the first five months of 2008, Ukraine's imports skyrocketed by 52 percent and the trade deficit broadened to 12.7 percent of GDP. As a consequence, the private foreign debt is growing fast.

[ ... ]
The first and right approach would be to immediately abandon the dollar peg and let the hryvnia float. Initially, the hryvnia exchange rate might temporarily rise modestly, but not much because the foreign banks will stop their speculative currency inflows, when they no longer know the future hryvnia exchange rate. Since the National Bank no longer endeavours to keep the hryvnia stable, it will stop buying foreign currency, and the money supply will no longer increase. Then, inflation will decline, as will import purchases, and the trade and current account balances will start improving. Some of the hot bank money is likely to float out, and then the hryvnia will begin falling. The National Bank should opt for inflation targeting, that is, keep the exchange rate floating and try to keep inflation down with tighter monetary policy, notably positive real interest rates. Poland and Turkey have done so in similar situations in recent years, and the NBU can learn from their experiences. Considering how suddenly the hryvnia has surged, a depreciation in the order of 20 percent would be possible. Thus, Ukraine would re-establish its competitiveness and defeat inflation. Exports will increase and imports be compressed. Economic growth might suffer, if the domestic tightening has greater impact than the expansion of exports, though the proportions are difficult to predict.

The second scenario is catastrophic. The dollar peg is being maintained in one way or the other. The bank inflows continue and boost the money supply, since the National Bank continues to purchase hard currency and thus expand the supply of hryvnia. As a consequence, inflation increases ever more, making the speculative bank loans even more lucrative. The imports increase so fast that Ukraine as a country loses its creditworthiness. Meanwhile, exports are reduced by excessive production costs. Relatively soon, Ukraine would end up in a financial crisis. It becomes forced to devalue and let the exchange rate float, as Russia in August 1998, and then the exchange rate may fall by as much as 50 percent. Because of currency misalignment, real estate prices would plummet by at least half, and half the banks may go bankrupt. GDP would fall and it would take years for Ukraine to recover its creditworthiness, although its international competitiveness would be restored.

A financial catastrophe can and must be avoided, but only if the hryvnia is swiftly allowed to float.

Complete article: http://www.usubc.org/keyissues/ukraine_inflation_aslund071608.php

24.08.08. En hilsen til det ukrainske samfund i Kongeriget Danmark i anledning af 17-års dagen for Ukraines uafhængighed (den 24 august 2008)

 Kære landsmænd!

 Ukraine, som allerede i Kiev-Ruslands tidsalder havde spillet en vigtig rolle i udviklingen og etableringen af Europa samt udformningen af europæiske værdier, blev selvstændigt for 17 år siden. Efter århundreders kamp og afsavn, som vort folk måtte gennemleve, lykkedes det endelig at opnå uafhængigheden.

 Det var en mindeværdig sandhedens stund, en demokratiets triumf og en opvisning i et folks enhed, som blev vendepunktet i den ukrainske stats historie og en mægtig opmuntring for en frugtbar og inspireret indsats til fordel for fred og velstand i vort fælles hus.

Denne glædens dag vil jeg gerne have lov til at lykønske alle dem, for hvem Ukraine var og forbliver en del af sjælen og en hjemstavn, med vores fælles helligdag!

En opløftet stemning opfylder i dag millioner af vore landsmænds hjerter, som kan være stolte af de landvindinger, som vort land i løbet af denne historisk korte periode har opnået i udenrigspolitisk og i indenrigspolitisk henseende, såvel som i forhold til væksten i landets internationale autoritet og befæstelsen af markedsøkonomien, samt i relation til en styrkelse af demokratiet og respekten for menneskerettighederne.

Ikke alene ændrede Ukraines uafhængighed for 17 år siden det politiske verdenskort, men den åbnede også op for muligheden for, at det ukrainske folk kunne vende tilbage til sine rødder og træde ind i det forenede Europa.

Men for at kunne træde ind i det fælles europæiske rum af fred, demokrati, velstand, vækst og social sikkerhed, bør vi ved fælles anstrengelser bevæge Ukraine fremad og stimulere reformprocesserne. Der er heller ikke noget alternativ til dette, fordi vi står til ansvar overfor vore efterkommere for det historiske valg, vi foretog.

Med konkrete sager og handlinger skal vi skabe et Europa på vor fædrene jord og befæste opfattelsen af Ukraine som en integreret del af Europa, uden hvilken Europa ikke kan være hel, i de europæiske politikeres bevidsthed. Det er særlig vigtigt i dag, hvor vi er i gang med en ny og styrket aftale mellem Ukraine og Den europæiske Union, som vil danne grundlag for vores etapevise integration i EU.

Vi værdsætter meget udviklingen af de bilaterale partnerskabsforbindelser mellem Ukraine og Danmark, som er konsekvent i ord og handling, når det gælder vort lands europæiske og euroatlantiske integration.

Vi takker vore landsmænd og medlemmer af Dansk-Ukrainsk Selskab, som medvirker til at styrke samarbejdet og venskabet mellem vore folk.

På denne festdag vil jeg ønske alle landsmænd og alle medlemmerne af Dansk-Ukrainsk Selskab al mulig held og lykke i jeres gerninger.

Desuden ønsker jer Dem fred og hygge i familien, velfærd, et godt helbred og velstand, og fred og opblomstring for Ukraines og det venskabelige Danmarks folk!

Jeg er sikker på, at den erfaring, som I har opnået i et land, der med rette anses for at være et mønstereksempel på demokrati og en socialt ansvarlig økonomi, vil I udnytte til fordel for udviklingen af den fædrene jord, som forener os!

De bedste hilsner,

 Ambassadør                        N.M. Zarudna


10.09.08. Jusjtjenko vil have Tymoshenko anklaget for landsforræderi

Ukraines øverste anklagemyndighed har ikke rejst sigtelse efter straffeloven mod premierminister Julia Tymoshenko for landsforræderi.

Det oplyser vice-chefanklager ved Ukraines øverste anklagemyndighed Tetjana Kornjakova i dag onsdag til journalisterne i regeringens hovedbygning i Kiev.

"Der har ikke været nogen sag. Vi fik et brev fra sikkerhedstjenesten (SBU) med kendsgerninger og antagelser, og hvori man beder os om at nedsætte en efterforskningsgruppe. Men en sådan gruppe bliver kun nedsat indenfor rammerne af en straffesag, som kræver fælles efterforskning", sagde Kornjakova ifølge UNIAN.

Den ukrainske vice-chefanklager understregede, at eftersom der ikke er nogen straffesag, så er der heller ikke behov for at nedsætte en efterforskningsgruppe.

Desuden har Kornjakova heller ikke nogen informationer om Tymoshenkos henvendelse til den øverste anklagemyndighed vedrørende hendes påstande om 24-timers overvågning af premierministeren og aflytningen af hendes telefonsamtaler.

"Jeg ved ikke noget om det, og jeg har ikke modtaget nogen henvendelse", tilføjede hun.

Den ukrainske vice-chefanklager fremhævede, at hun ikke har kendskab til eksempler på pres mod sine kolleger, som hævdet af Tymoshenko på en pressekonference den 8. september.

"Jeg træffer beslutninger på egen hånd efter afstemning med den øverste anklager, da det er ham, der leder den øverste anklagemyndighed. Jeg har ikke oplevet noget personligt pres. Jeg har ingen kontakter til præsidentens sekretariat. Det siger jeg åbent og ærligt. Jeg kommer der aldrig, og jeg har ikke været udsat for noget som helst pres", fremhævede Kornjakova.

Den 8. september meddelte Tymoshenko, at hun havde modtaget en indkaldelse fra den øverste anklagemyndighed til den 11. september.

"I dag er der som følge af disse handlinger (SBU's henvendelse til den øverste anklagemyndighed i anledning af premierministerens landsforræderi) indledt alle efterforskningsmæssige skridt mod lederen af mit sekretariat, imod premierministeren og mod en lang række personer, som arbejder i regeringen", sagde hun.

Desuden oplyste hun, at hun har oplysninger om, at vice-chefanklagerne bliver udsat for pres, som skal få dem til at rejse en sigtelse efter straffeloven mod premierministeren.

"Reelt bliver der i dag udøvet pression mod visse vice-chefanklagere med løfter om, at hvis de rejser sigtelse mod premierministeren, så vil præsidenten indstille dem til posten som øverste anklager", fremhævede Tymoshenko. UP

15.09.08. EU to offer Ukraine deeper ties but no entry pledge

September 9, 2008
By David Brunnstrom and Francois Murphy

ARIS (Reuters) - European Union leaders met Ukraine's President Viktor Yushchenko for talks in Paris on Tuesday where the bloc was set to offer Kyiv closer ties but stop short of a firm membership pledge.

Despite concern about Russian moves to roll back Western influence after intervening in Georgia, many EU states are unwilling to offer such a pledge, given waning public support for EU expansion, Ukraine's poor record on reform and a desire to avoid further straining ties with Moscow.

A political crisis in Ukraine that saw the collapse last week of a shaky coalition between President Viktor Yushchenko and Prime Minister Yulia Tymoshenko has reinforced such caution.

[...] Russia agreed with Sarkozy on Monday to withdraw its troops from Georgia proper within a month, but there was no commitment to cut its military presence in two Georgian separatist regions.

Ferrero-Waldner said it was too early to say whether the agreement would be sufficient unfreeze the next round of talks on a broad cooperation pact with Russia due next Monday but blocked by Brussels to press Moscow to withdraw its troops.

She said the issue would have to be discussed by EU foreign ministers meeting in Brussels on Monday and would also depend on how EU monitors could be deployed.

Sarkozy said on Monday he saw no reason why, if the deal with Russia was implemented, partnership talks with Moscow could not resume in October.

Complete article:

15.09.08. Is Ukraine next?

Andrew Wilson
September 05 2008

The war in Georgia has clearly exposed the security vacuum in the surrounding region, as well as a lot of raw nerves. Russia's hasty decision to recognise the "independence" of South Ossetia and Abkhazia was a shot across the bows for every former Soviet country, and has intensified speculation about who might be "next" ­ and how to prevent Russia from multiplying the supposed Kosovo "precedent" in other ex-Soviet countries.

[...] The most effective way of dealing with a newly-assertive Russia will be for Europe to issue a collective refusal to accept a bipolar Europe of distinct Russian and EU spheres of influence.

The place to start is Ukraine. Fortunately, the EU-Ukraine summit on September 9 in Evian, France, provides the perfect opportunity.

Many Ukrainians now hear domestic echoes of the lead-up to war in Georgia. Ukraine has its own potentially separatist region in Crimea, and the country's Russian minority numbers some 8.3 million. Half of Ukraine's population is Russian-speaking in various degrees. Although the Ukrainian constitution bans dual citizenship, the government has had to launch an inquiry into alleged covert Russian passport-holding in the Crimean city of Sevastopol. Ukrainians note that Russia justified its invasion of Georgia,as the Nazis justified their dismemberment of Czechoslovakia, as being necessary to "protect" a minority to whom they had just given citizenship.

Russia has begun a war of words over Ukraine's supply of arms to Georgia. And the conflict itself has shown that the Russian Black Sea Fleet, based in Sevastopol, can operate with impunity, whether Ukraine likes it or not.

[...] The European Neighborhood Policy is worthy enough, but it does not address the pressing concerns about maintaining and securing Ukraine's independence. [...] The EU has more scope for short-term measures, and should develop a multi-dimensional solidarity strategy as a signal to both Ukraine and Russia. [...] The EU should also launch a comprehensive study of all aspects of Europe's reliance on Russian energy supplies, including transit, energy security and conservation, supply diversification, and the impact of "bypass" pipelines like Nord Stream and South Stream. [...] The EU could even play a part in keeping the 2012 European Championship football finals on track. The decision to appoint Ukraine and Poland as co-hosts was a powerful symbol of European unity across the current EU border (Poland is a member, Ukraine is not). UEFA is unhappy with Ukraine's progress in building the necessary infrastructure, but Ukraine should be given time to get its act together.

Where appropriate, the EU should extend these measures to Moldova, which is now calling Ukraine a "strategic shelter."

Ukraine faces a crucial presidential election in 2009 or 2010 (and Moldova will hold elections in March 2009). After getting its fingers badly burned at the last election in 2004, Russia is clearly tempted to intervene again.The "Russian factor" will strongly influence the campaign. Greater Western engagement is needed to ensure that the "Europe factor" is equally prominent.

15.09.08. Who is Akhmetov?

Editorial , Kyiv Post
August 20, 2008

Where exactly do Rinat Akhmetov's interests lie?

[...] As the richest man in Ukraine, worth an estimated $33 billion, and a prime backer of the Moscow-leaning Regions Party headed by Victor Yanukovych, Akhmetov has more than his fair share of influence in Ukraine. We have been told many times that he is a pragmatic businessman who cares deeply for Ukraine and actively helps the country through charity. We have been told that he is a close friend and ally of Ukraine's pro-Western president, Victor Yushchenko, and supports Western integration.

Yet the facts tell a different story.

On August 15, in the heat of bloody Russian-Georgian military standoff, the Donetsk City Council controlled by the Regions Party took sides with Russia by adopting a resolution condemning the "aggression of Georgia's leadership" against South Ossetia.

While Akhmetov has himself been silent on this issue, the party he exerts so much influence over is taking sides with the Kremlin. Such a position is not helpful to Ukraine, which, in Crimea, might be the next target of Moscow's attempts to stir up secessionist sentiment.

Could the Regions Party once again, as in Orange Revolution days, fuel separatist tensions in Ukraine? Are these politicians playing to their electorate or acting as part of a Kremlin plan? Does Akhmetov support this? Will his television channel again be used as a mouthpiece for separatist movements in Ukraine? These are valid questions, since Akhmetov has yet to show he is acting in Ukraine's best interests.

Akhmetov must make his position clear. If his position on such a crucial issue differs from that of the Regions Party, then he has no place in this party. He should stay out of politics or join a pro-Ukrainian party. If not, then he is exacerbating Ukraine's problems. Finally, Yushchenko should reconsider his relations with Akhmetov and end the fighting with Tymoshenko, whom he has accused in recent days of siding with the Kremlin. The threat does not appear to be Tymoshenko, who has -- contrary to claims by Yushchenko's administration -- expressed solidarity with Georgia. From our vantage point, the greater danger is posed by Akhmetov.

Complete article: http://www.kyivpost.com/opinion/editorial/29444/


15.09.08. An Orange divorce?

http://www.economist.com/agenda/displaystory.cfm?story_id=12070335September 4th, 2008

From The Economist Intelligence Unit Views Wire

Ukraine's government, comprising the allies from the Orange Revolution, is poised to collapse after the prime minister, Yuliya Tymoshenko, allied with the opposition to strip the presidency of its powers. It isnot clear whether Ms Tymoshenko has done this to pressure the president to back her policies, to boost her power as an alternative to seeking the presidency herself, or to trigger her departure from government ahead of tough economic times-and with an eye on the 2010 presidential election. The coalition could yet be saved, or a new one established; failing that, a parliamentary election must be held. With politic altensions high in the wake of Russia's attack on Georgia, the timing could hardly be worse.

Falling out

On September 2nd the pro-presidential Our Ukraine-People's Self-Defence (OU-PSD) voted to leave its coalition with the Yuliya Tymoshenko Bloc (YTB), bringing the "Orange" government, which was only formed in late 2007 following an early parliamentary election, to the verge of collapse.

Amid an increasingly acrimonious conflict between the president, Viktor Yushchenko, and the prime minister, Yuliya Tymoshenko, the break-up of the coalition government has long been on the cards, especially after the loss of its slim two-seat majority in June. [...] Then, on September 1st, the YTB formed an ad hoc alliance with the main opposition party, the Party of Regions (PoR), to push through parliament a number of measures that weaken the president. These include measures that limit the president's influence over the government and facilitate the process of impeachment. Mr. Yushchenko has denounced the move as amounting to a "constitutional coup d'etat".

Although the coalition's latest troubles are not unexpected, the trigger for them-the YTB's temporary alliance with the PoR on weakening the presidency-was. Ms Tymoshenko's attempt to weaken the presidency puts into question the widespread assumption that she is preparing to contest the presidential election due in early 2010. If the post of prime minister becomes the pre-eminent one in Ukrainian politics, Ms Tymoshenko would presumably want to keep her current job rather than seek the presidency.

Ms Tymoshenko's move can be interpreted in one of three ways. First, she is indeed seeking to make the prime minister Ukraine's most powerful political figure in order to advance her political ambitions. This, however, would surely bring to an end the Orange coalition, and she has no guarantees that she would be able to continue as prime minister either by forming a coalition with the PoR or as a result of fresh elections.

Second, Ms Tymoshenko has supported the legislation as a tactic in her power struggle with Mr Yushchenko, presumably on the calculation that this will force the president to back government policies he has until now opposed, for instance on the acceleration of privatisation--that initiative is crucial if Ms Tymoshenko is to pay for some of her populist spending programmes. Once a deal is done on policy co-operation, the YTB would not seek to override a presidential veto of the legislation to weaken the presidency.

Third, the prime minister has provoked a crisis in order to move into opposition, to help her prepare for the 2010 presidential election.Ukraine's economy is slowing dramatically, inflation remains very highat 26.9% year on year in July, and it is probable that gas import prices will double from the start of 2009; if so, this would amount to aneight-fold increase since 2005. [...]

Awful timing

Ukraine's latest political turmoil comes at a crucial time for thecountry. In the wake of the Georgia-Russia conflict, Ukraine's perception of insecurity is at the highest level in at least a decade. Relations with Russia are fraught and there are fears that Ukraine's territorial integrity might come into question. Continued political uncertainty in Ukraine will make it more difficult for the US and its allies to support Ukraine through closer NATO ties; already this was looking very difficult, given the reservations of Germany and other European states about the risk of closer NATO-Ukraine ties provoking Russia. Efforts to boost stability in Ukraine via EU engagement could also be stymied.

On the economic front, investor sentiment has worsened on fears that Russia might seek to stoke separatist sentiment in the Crimea. Very high inflation and a widening current-account deficit already present key risks to macro economic stability. These will increase substantially if Ukraine is unable to negotiate a staged transition towards the gas price paid by EU customers, and must instead pay the full rate from the start of 2009. Its chances of success, already fairly slim, will probably narrow further if Ukraine is without a government, or rather is being run by a caretaker administration, when negotiations are held.

Ways out

There are several possible outcomes to the current turmoil. First, the coalition could regroup. The OU-PSD has 10 days in which to reverse its decision to leave the coalition, leaving scope for intensive behind-the-scenes negotiations. Publicly, the YTB has said that it seesno alternative to the current coalition. Any such agreement on continuing with the coalition would be likely to require concessions from both sides: the presidential administration has demanded that the coalition adopt a unified position on the Georgia crisis, and that the YTB not side once again with the PoR to override Mr Yushchenko's anticipated veto of the legislation to weaken the presidency. The YTBfor its part is demanding backing for its key policies and has accused the presidential administration of systematically sabotaging the government's activities.

Alternatively, if the Orange parties do not manage to save their coalition, Ukraine's political parties will have 30 days in which to form an alternative coalition. Until recently, the only viable alternative coalition had appeared to be one between the OU-PSD and the PoR--an outcome that is believed to be favoured both by the presidential administration and the liberal wing of the PoR led by Rinat Akhmetov, Ukraine's richest businessman. However, the recent co-operation between the YTB and the PoR has raised the possibility of a more formal alliance between these two parties. On balance, the Economist Intelligence Unit continues to believe that a formal alliance between the YTB and the PoRis unlikely, even though their positions on Russia appear to be moving closer. In particular, it would be a risky venture for Ms Tymoshenko politically, given that she has based much of her appeal on her strident opposition to the PoR and its links with big business. A coalition between OU-PSD and the PoR, meanwhile, still looks doubtful: Mr Yushchenko could lose at least half of his party if he did a deal with the PoR leader, Viktor Yanukovych.

The final possibility is another early election, which Mr Yushchenko will have the right to call should an alternative coalition not emerge within 30 days of the official break-up of the existing coalition. Giventhe economic and political challenges now facing Ukraine, the distraction of an election would be the worst outcome. And the election itself could take an unexpected turn, given the highly sensitive state of relations with Russia.

Complete article:


15.09.08. Ukraine: Cheney IOU against Russia


September 08, 2008
By Diane Francis

Another pre-emptive threat by Washington

Last week as McCain made his speech to the Republican faithful, Vice President Dick Cheney visited Ukraine and unconditionally pledged America's support against any attempt by Moscow to corrupt, much less invade, that giant.

This is hardly popular stuff in a war-embattled America where billions are spent each month in an unnecessary occupation of Iraq.

But another entanglement may loom. The United States (under Clinton) signed an iron-clad agreement in 1994 with Ukraine, Britain (under John Major) and Russia (Boris Yeltsin). The Ukrainians back then got these three to guarantee its sovereignty as the quid pro quo for Ukraine's agreement to dismantle and hand over its entire arsenal of nuclear weapons and missiles to Russia.

The United States is on the hook for Ukraine

In essence, Washington is guarantor to Ukraine's sovereignty, unlike Georgia's, which was punished by Russia for an incursion, invaded temporarily and two of its breakaway provinces acquired.

Cheney's visit was important given concerns that Moscow-style shenanigans are underway in Crimea, a Ukrainian province with a large Russian population and some oil. Separatism is being seeded there among Russian ethnics as was the case with Georgia's two breakaway provinces.

Canadian lawyer Bob Onyschuk of Gowling Lafleur Henderson LLP advised Ukraine at the time of the landmark agreement in 1994. (He is shown here on the right and is also a founder of the Canadian-Ukrainian Chamber of Commerce board of which I'm a director.)

"I was closely involved as an advisor and this was the first thing [former Ukrainian President Leonid] Kuchma did after the elections in 1994," said Onyschuk, who established the world's first law office in Kyiv shortly after Ukraine declared its independence in 1991.

The background

"Ukraine, as the 3rd largest nuclear power in the world, came out of the Soviet Union and had ICBM missiles and big SS24s, the most deadly of the Soviet arsenal of weapons and they were all aimed at Europe's capital cities and other targets," he said. "The debate among Ukrainians, after 1991, was whether Ukraine should give them up or what else they would want to do with them."

But immediately after independence in 1991, Ukraine took the precautionary action of changing the "codes" to these missiles so that none of the western capitals were targeted.

Even so, the debate lingered amid fears that the nuclear weapons -- and Ukraine's large standing army -- were needed as a last line of defense should Russia ever before aggressive again.

"That's why we kept them. Kuchma brokered a deal with the US, UK and got Russia to go along with it. The deal was we will unilaterally disarm ourselves, give all the nuclear weapons back to Russia but the only basis upon which we were doing that is if we got guarantees from the three major nuclear powers -- Russia, U.S. and Great Britain," he said. "We were only worried about Russia."

"The fact that the agreement has the signatures of four presidents, including UK's John Major, Bill Clinton, Boris Yeltsin and Kuchma -- was good enough. Ukraine knew that if Russia didn't keep up its part of the bargain, which they knew they might not after Yeltsin left because they never keep their word to anything, that they would have the backstop of the U.S. and Britain. That was and is what Ukraine relies on," he said.

Cheney's visit underscored Washington's commitment as guarantor to the agreement and the Vice President said so.

The deal is far-reaching

Onyschuk said that this agreement is also written, and should, protect Ukraine from the kind of economic, energy and political harassment that Moscow has undertaken in recent years. This has included stopping the flow of gas, to exacting high payments and to electoral fraud which sparked the Orange Revolution.

"Russia can't even pressure Ukraine economically and Ukraine should play this card," added Onyschuk.

The slippage in Russia into a KGB-controlled nation-state is worrisome to all its neighbors.

"Brandishing this agreement is one thing but what will the Russians do? Will they honor their word?"

The agreement welcomes Ukraine into the Treaty on the Non-Proliferation of Nuclear Weapons as a non-nuclear-weapon state. It was signed in Budapest on December 5, 1994 and here are some excerpts:

  1. the three guarantors "reaffirm their commitment to Ukraine, to respect the Independence and Sovereignty and the existing borders of Ukraine."
  2. "reaffirm their obligation to refrain from the threat or use of force against the territorial integrity or political independence of Ukraine, and that none of their weapons will ever be used against Ukraine except in self-defense"
  3. "reaffirm their commitment to refrain from economic coercion designed to subordinate to their own interest the exercise by Ukraine of the rights inherent in its sovereignty and thus to secure advantages of any kind."

15.09.08. Party of Regions splits over Georgia and NATO

2 September 2008
Eurasia Daily Monitor

by Taras Kuzio

The Party of Regions expelled National Security and Defense Council (NRBO) Secretary Raisa Bohatyryova from the party's senior decision-making body, the Political Council, and from the party itself on September 1. Until being appointed NRBO secretary in December 2007, Bohatyryova had been the leader of the Regions parliamentary faction.

The surprise decision quickly followed Bohatyryova's support for Georgian territorial integrity and NATO membership during a luncheon held three days before at Washington's Metropolitan Club by the U.S.-Ukraine Business Council (USUBC). Bohatyryova was on an official visit to the United States from August 24 to 30.

Bohatyryova's remarks were in response to two questions posed by Jamestown and by Arieh Cohen of the Heritage Foundation. Asked whether she supported President Viktor Yushchenko's support for Georgia's territorial integrity or that of Regions leader Viktor Yanukovych in support of South Ossetian and Abkhaz independence, she answered that Yanukovych's position did not reflect the party's position and gave her strong support to Yushchenko.

Bohatyryova praised Yushchenko for attempting to unite politicians and Ukraine and criticized other political leaders for putting their personal interests above national ones. She added, "they frequently use foreign challenges for their party and electoral plans despite the risks of a threat to national security," an oblique reference to Yanukovych and his stance on NATO (Ukrainian News Agency, August 31).

Bohatyryova ridiculed Regions' official view on NATO as one that was in favor of NATO membership when the party was in power and against it when it was in opposition. She never raised the question of a referendum on NATO, a persistent Regions demand.

Citing the Kosovo precedent, Yanukovych has supported the independence of South Ossetia and Abkhazia. Two days after Bohatyryova�s remarks the Crimean branch of Regions appealed to the parliamentary faction to do the same (www.partyofregions.org.ua, August 26; www.prava.com.ua, August 28). The Ukrainian Ministry of Foreign Affairs (MZS) described Yanukovych's call as "harming the national interests of Ukraine," "provocative," "irresponsible," and "unpleasant" (www.mfa.gov.ua, August 29).

In a statement issued by the Regions faction, it did not support Yanukovych and the Crimean branch�s call for Ukraine to recognize the independence of South Ossetia and Abkhazia. Instead, the statement blamed the authorities for not staying neutral and dragging Ukraine into the conflict by supporting Georgia and unleashing a "massive anti-Russian propaganda campaign" (www.rada.kiev.ua, August 26).

The Regions faction demanded a return to good relations with Russia, constitutional changes that would transform Ukraine into a non-bloc (neutral) country, and a referendum on NATO membership. Regions� call for the creation of a temporary parliamentary commission to investigative the delivery of weapons to Georgia and the participation of Ukrainians on the Georgian side echoed claims made by Russia about Ukraine�s alleged involvement in the conflict.

Ukrainian politicians and the media have pointed out that arms deliveries to Georgia began under Presidents Leonid Kuchma and Eduard Shevardnadze, not under Yushchenko and Mikheil Saakashvili. Ukraine also supplied arms to Georgia during Yanukovych's government from 2002 to 2004.

Bohatyryova�s expulsion from Regions was propelled by Yanukovych's anger that she had belittled his position as leader. Bohatyryova cited senior Regions leaders who condemned Russia's occupation of Georgian territory and said that Yanukovych's call for recognizing the independence of South Ossetia and Abkhazia was a "personal viewpoint" that did not reflect the collective leadership of the party.

Deputy Regions faction leader Oleksandr Yefremov disagreed, claiming that Yanukovych�s position was the outcome of a "consolidated point of view of the Political Council of Regions. It was not the viewpoint of one person" (www.pravda.com.ua, September 1).

Asked during the USUBC luncheon whether she would be advising her U.S. contacts of Ukraine�s support for a NATO MAP, she said, "There is a need to state loudly not only [its] importance but a rise of a threatening situation if a Membership Action Plan is not given to Ukraine" (www.pravda.com.ua, September 1). Bohatyryova�s backing for Yushchenko's strong support for a NATO MAP is at odds with Yanukovych's opposition to a MAP.

Since the crisis Ukrainian polls have shown a reversal of the downward trend in support for NATO membership that arose following the invasion of Iraq and anti-NATO media campaigns during Yanukovych's 2002-2004 government and the 2004 elections (www.pravda.com.ua, September 1). Support for NATO membership has risen back to a pre-Iraqi invasion level of one third, while opposition to it has declined.

Bohatyryova stated unequivocally that the Black Sea Fleet would have to withdraw by 2017 and that the constitution forbade foreign bases, whether Russian or otherwise (a pointed reference to NATO or American bases). Supporting Russia's stance, Regions has raised the question of extending the lease beyond 2017, even though this flatly contradicts Regions' support for Ukraine's neutrality, a status that rules out foreign bases.

Regions has split over the Georgian crisis and indirectly over NATO. Crimean Communist Party of Ukraine (KPU) leader Leonid Grach, an ally of the pro-Yanukovych faction in the Crimean parliament, has criticized Regions for its lack of a consolidated position on Georgia (Ukrainian News Agency, September 1).

Yanukovych's support for the independence of South Ossetia and Abkhazia is unpopular as support for the country's territorial integrity is as high in eastern as it is in western Ukraine. With many Ukrainians and Western observers looking to the Crimea as Russia's possible next target, the pro-independence stance of Yanukovych and Regions will be unpopular and will be used, as it already has been by the MZS, to question their patriotism (see EDM, August 12).

The Georgian conflict has exposed long simmering divisions in Regions between its virulent anti-orange ideological wing headed by Yanukovych, to which many former KPU voters defected, and a pragmatic wing dominated by big business with which Bohatyryova is aligned. The split may significantly harm Yanukovych's chances ahead of the January 2010 presidential elections and open up eastern Ukraine to further advances by the Yulia Tymoshenko bloc in the 2007 pre-term elections. Bohatyryova's expulsion from Regions could be followed by Regions defectors to the president's newly created United Center party (see EDM, July 28).

15.09.08. Ukrainians discuss how best to counter Russian threat to Crimea

August 21, 2008

By Paul Goble

Having watched Moscow's moves in Georgia and listened to various Russians suggest that the Crimea, where Russia's Black Sea Fleet is based, is or should be Moscow's next target, Ukrainian politicians, diplomats, and foreign policy analysts are discussing the nature and dimensions of the Russian threat and what Kyiv should do to parry it.

In addition to Russian actions and threats, this issue has heated up in recent days because of calls by senior Ukrainian officials for Russia to begin preparing to move its fleet out of Sevastopol by or possibly even before 2017, statements that most Russian politicians have refused to take seriously and most military analysts say would be very difficult.

Today, Ukrainian Foreign Minister Volodomyr Ogryzko said that Moscow must begin thinking about moving both men and materiel from Sevastopol now because regardless of what some may think, Kyiv will honor its agreement with Moscow but "in any case after 2017, the Russian fleet will not be on our territory (news.mail.ru/politics/1960873).

[...] And if Ukraine makes the decision not to have such bases, the foreign minister continued, "no one, including Russia can influence our decision. "If in Moscow, they do not yet understand this, that governments live according to such rules throughout the world, then this is Russia's problem" and not Ukraine's.

But recent Russian behavior in Georgia and Moscow's reactions to Kyiv's positions on this and other issues has convinced many Ukrainians that Russia's problem in this regard is becoming a problem for their country because of the danger that Moscow will try to destabilize its neighbor to ensure its continued control of Sevastopol or even seek to seize Crimea.

Those concerns have been exacerbated by three new developments: suggestions by some officials that Timoshenko should be charged with treason, a statement by a Crimean Tatar leader and Ukrainian parliamentarian that Moscow has many levers to use in Crimea, and an assessment by Ukrainian military analysts of what Moscow is already doing.

The first of these, charges that opposition leader Yuliya Timoshenko should be investigated for possible treason on behalf of Russia, has already been extensively discussed, with some analysts arguing that this scandal by itself represents an effort by Moscow to destabilize and discredit the Ukrainian government.

But the second and third deserve more attention. Today, Mustafa Dzhemilyev, who is both the leader of the Crimean Tatars and a deputy in the Ukrainian parliament, said that he is convinced that the large number of Crimeans who have dual citizenship with Russia by itself points to a possible South Ossetian scenario for that peninsula (www.vlasti.net/news/20236).

[...] Moreover, Ukrainian officials must focus on the activities of pro-Russian organizations whose statements and activities are exacerbating interethnic tensions and creating the conditions for a Russian move. And Dzhemilyev said, Kyiv should insist that the Black Sea Fleet leave Sevastopol long before the 2017 date established by agreement.

The third event was the release, also today, of a report by the Kyiv Center for Research on the Army, Conversion and Disarmament, which argued that "Russia has created in the Crimea all the preconditions" for a military operation to keep control of Sevastopol, detach Crimea from Ukraine, and weaken the rest of the country as well (www.nr2.ru/kiev/192334.html).

"For the achievement of these goals, Russia doesn't need a major military conflict with Ukraine," the center's analysts said. Instead, "it is sufficient to destabilize the situation in a single Crimean region" through the use of precisely targeted operations using "the forces of the Russian special services and particular units of the Black Sea Fleet."

Moreover, they continued, Moscow will build on "to the maximum extent possible" the pro-Russian segments of the population and the pro-Russian social and political organizations that Moscow and its friends in Ukraine have been promoting ever since Ukraine gained its independence in 1991.

The center's analysts suggested that the first stage of such a conflict might consist of "actions directed at the sharpening of relations between personnel of the Black Sea Fleet and representatives of Ukrainian authority in nearby areas," possibly by means of "a provocation" taking the form of a supposed Ukrainian attack on the fleet.

After that happens, according to the center's scenario, "the pro-Russian population will rise to the defense of the Russian personnel" and then there "will begin clashes with the law enforcement bodies of Ukraine." That in turn will lead both countries to increase their military presence in Crimea, at which time Moscow will raise the issue of Ukraine's right to Crimea.

Kyiv would then appeal to the West, the center said, but its analysts argued that Ukraine would not be any more successful in attracting anything more from Western countries than verbal support. And consequently, Russia could then "swallow" Crimea at its leisure, confident that Ukraine by itself would not be able to block its moves.

The center's director added that he does not believe that Moscow is likely to follow such a scenario, but he added that "Russia has already created all the necessary conditions for its realization," including official statements questioning Ukraine's right to control Crimea, ramping up anti-Ukrainian feelings among Russians, and "also dominating Ukraine's information space."

[...] Political scientist Viktor Nebozhenko said that Ukraine was entering a dangerous period because both Russian and Georgian "hawks" might seek to stage provocations in Sevastopol in order to achieve their goals elsewhere, a view echoed by the Ukrainian Diplomatic Academy's Aleksandr Paliy, who said Russia has constantly been staging provocations in Ukraine.

But Vadim Karasev, a political scientist, said that Ukraine is in fact in a good position to counter any Russian moves of this kind. If it blocks the formation of "unrecognized formations" and "separatist groups" prepared to help Russia and if it adopts "a new regional policy" to ensure that Crimea develops, then Moscow will have a much harder time in pursuing its goals.

But "the main thing," Karasev said, is for Ukraine "not to do anything stupid" that Moscow would then exploit.

Complete article:

22.09.08. Ukrainian coalition collapses, new coalition talks or early vote ahead


The nine-month-old alliance composed of parties loyal to Ukrainian President Viktor Yushchenko and his 2004 Orange Revolution partner, Prime Minister Yulia Tymoshenko, fell apart following months of infighting between the two leaders. They have become fierce rivals ahead of a presidential election scheduled for 2010.

[...] "I officially announce the termination of the democratic coalition in the Verkhovna Rada," parliament speaker Arseniy Yatsenyuk told lawmakers, referring to the Ukrainian legislature. "It is yet another democratic challenge, but I hope that together we will overcome this challenge."

The parliament now has 30 days to form a new coalition; if it fails, a new election will be called. That would be the third parliamentary vote in as many years and another blow to hopes for quick reforms in Ukraine and its integration with the West, which both leaders campaigned for.

The two leaders have engaged in a political tug-of-war since Tymoshenko regained the premiership in December, accusing each other of corruption and incompetence and blocking each other's policies.

The final straw came when Yushchenko accused Tymoshenko of acting in the Kremlin's interests by failing to condemn Russia's war with Georgia. Tymoshenko fired back that Yushchenko's overwhelming support of Georgia was dragging Ukraine into the conflict.

Tymoshenko then teamed up with the Russia-friendly opposition to pass a law that trims presidential powers and boosts her own. Yushchenko called that a coup attempt, and his party pulled out of the coalition.

The infighting dealt a devastating blow to Yushchenko's popularity and that of his party.

[...] Some analysts predict that if a new coalition can be formed to avoidelections, it may involve the Party of Regions, making the new government more friendly toward the Kremlin.
Complete article:

22.09.08. Russian passports as Moscow's geopolitical tool


Eurasia Daily Monitor -- Volume 5, Issue 176
September 15, 2008 -- Volume 5, Issue 176

Taras Kuzio

The official protest by the Russian Ministry of Foreign Affairs (MFA) on September 11 over the allegedly "unfriendly" attitudes of the Ukrainian authorities to Russia was met by a stern response on the same day by Ukraine's Foreign Ministry (www.mfa.gov.ua). Russia's MFA protested about President Viktor Yushchenko's support for Georgia, including supplying "heavy military hardware"; Ukraine's drive to join NATO "against the will of the Ukrainian people"; "attempts by the Ukrainian authorities to reconsider our common history in an anti-Russian spirit"; and the standard complaint about official hostility to the Russian language.

Ukraine's response pointed to Russia's inability, despite nearly two decades of Ukrainian independence, to accept Ukraine as an "independent state." Ukraine's MFA also described Ukraine as "under no circumstances belonging to the so-called 'privileged interests' of any country."

The Russian protest also complained about the "practice of banning Russian deputies and eminent politicians from entering Ukraine." The following day Russian Duma deputy Viktor Vodolatsky was refused entry into Ukraine to attend a coordinating council meeting of Cossack Hetmans (leaders) from Ukraine, Russia, Belarus, and Moldova's Trans-Dniestr region. The week before, Russian political technologist Sergei Markov was refused entry into Ukraine.

Russia has retaliated by creating a long list of Ukrainian politicians and businessmen banned from entering Russia. It includes the head of NUNS Vyacheslav Kyrylenko, Petro Yushchenko (the president's brother and a NUNS deputy), the governors of Kyiv and Kharkiv, BYuT head of the parliamentary committee on foreign affairs, heads of the armaments company Ukrspetsexport, and others (www.korrespondent.com.ua, September 15).

Ukraine's MFA warned 'that attempts by Russia to destabilize the situation in Ukraine through fifth columnists who for some reason position themselves as the 'healthy political forces of the country' have no prospects." The accusations and the very tone of the exchange are at odds with Prime Minister Vladimir Putin's assurances that "Crimea is not disputable territory" (German ARD television, August 29).

Leon Aron of the Washington-based American Enterprise Institute warned in The Wall Street Journal (September 10) that "Russia's Next Target Could Be Ukraine." The Moscow city council is providing $34 million in support of "compatriots" abroad.

Aron warns of a scenario in which Russia takes control over-night of the port of Sevastopol, which might be "impossible to reverse without a large-scale war." The EU's unwillingness to deal with Russia's new assertiveness since August 8 has demonstrated the vacuous nature of its European Common Foreign and Security Policy. If the EU has permitted Russia to get away with de facto annexation of South Ossetia and Abkhazia, why would it react any differently to a Russian annexation of the Crimea?

The September 9 EU-Ukraine summit threw "away a golden opportunity to stabilize [Ukraine's] eastern frontier and encourage political and economic reform in Kyiv" (Financial Times, September 10). The EU "foolishly ducked a chance to throw the country a political and economic lifeline" (The Economist, September 11).

Two arguments why West European states, such as Germany, Italy, and France, have not supported NATO or EU enlargement to Ukraine and Georgia do not stand up. First, Germany, Italy, and France do not support either NATO or EU enlargement, although it is only the former that is usually considered likely to "antagonize" Russia. Second, energy links to Russia are not a factor in appeasing Russia. France, Italy, and Germany are only reliant for 26 percent, 30 percent, and 39 percent, respectively, of their gas imports from Russia. Poland, Lithuania, Bulgaria, and Slovakia, which support NATO and EU enlargement to Ukraine, import respectively 61 percent, 84 percent, 94 percent, and 100 percent of their gas from Russia.

Ukrainian authorities have become highly sensitive to the threat of a Russian policy of destabilization since the Kremlin invasion of Georgia. One particular area of concern is the issuing of Russian passports to Ukrainian citizens in the light of Russia's pretext of coming to the "defense" of Russian citizens in the two frozen conflicts where Russia had illegally distributed passports.

Ukraine's Minister of Foreign Affairs Volodymyr Ohryzko said that Ukraine's repeated protests to the Russian consulate in Simferopol over its distributing of passports continue to be ignored. Ohryzko announced that the Security Service, prosecutor�s office, Interior Ministry, and MFA were now investigating the problem (www.mfa.gov.ua, September 6). Ukraine's Ambassador to Slovakia Inna Ohnivets, who previously worked on this issue, told of repeated Ukrainian demands to the Russian Consulate in the Crimea to halt the practice (www.bbc.co.uk/Ukrainian, August 28).

A week after Ohryzko's comments, 34 inhabitants of Sevastopol who maintain dual citizenship had their Ukrainian citizenship withdrawn. Further investigations have located 1,595 inhabitants of Sevastopol, primarily serving on the Black Sea Fleet, who have dual citizenship, which is banned by Ukrainian law (www.pravda.com.ua, September 13).

Both political forces in the Orange coalition have raised the issue of the distribution of Russian passports as a threat to Ukrainian security. Our Ukraine-Self Defense deputy Volodymyr Stretovych warned that increasing the number of Russian citizens in the Crimea would give Russia, as in Georgia, a pretext to come to the "defense" of its citizens (www.nuns.com.ua, August 13, 15). Deputy Nuns faction leader Borys Tarasiuk described the distribution of passports as Russia's "secret aggression against Ukrainian citizens." Yulia Tymoshenko Bloc deputies have drawn up a draft law making the obtaining of dual citizenship a criminal offence (www.pravda.com.ua, September 9).

The problem Ukrainian authorities are faced with is that they do not have concrete data on the number of Russian passports distributed in the Crimea. During Leonid Kuchma's decade in office from 1994 to 2004 the Ukrainian authorities turned a blind eye to the illegal practice. Estimates of the number of Russian passport holders in the Crimea range from a low of 6,000 (Newsweek, August 23) to 100,000 (Los Angeles Times, August 25).

Consequently, the EU is ignoring the fact that the consequences for European security of Russian destabilization in the Crimea would be far more severe than that of Russia's invasion of Georgia.

22.09.08. Ukraine: A region supports Russia's recognition of two areas

September 17, 2008

Local lawmakers in the Crimean Peninsula, which is mostly Russian-speaking, called for the Ukrainian Parliament to recognize the independence of Abkhazia and South Ossetia, the two Georgian separatist provinces that are supported by Russia. Many European officials are concerned that the Crimea could be the next flash point for tension with Russia because of the large proportion of Russians who live there and because Russia's Black Sea Fleet is based in the southern Ukrainian port of Sevastopol. The resolution by the local Crimean assembly, which was approved by 79 of the body's 90 deputies, came amid a political crisis in Ukraine that was provoked by the conflict in Georgia and by tensions within Ukraine's pro-Western coalition government.