Tuesday, January 31, 2006

Another Blow For Regal As It Loses Appeal Over Ukraine Licences

KIEV, Ukraine -- The Court of Appeal in Kiev has delivered the latest hammer blow to Regal Petroleum by refusing to rule in its favour over disputed production licences in the Ukraine.

Regal Petroleum Board of Directors

The decision, which is likely to mean the handing over of Regal's biggest gas producing assets, comes days after former executive chairman Frank Timis increased his holding in the firm. Shares in the trouble-prone group nosedived 60% to 43p after the court upheld an earlier judgment against Regal in favour of state-owned Chernihivaftogasgeologia (CNGG).

Regal was awarded two production licences in July 2004 by the Ministry of Environmental Protection but CNGG, a subsidiary of that ministry, challenged this saying the correct procedures were not followed. The two licences allow it to produce the equivalent of 2,000 barrels of oil per day while its only other output - 1,600 barrels - comes from a field in Greece.

The London-listed exploration and production group has appealed to the Supreme Administrative Court of Ukraine arguing Regal was awarded its licences "in accordance with applicable rules, standards and legislation".

A spokesman said last night that Regal had become "caught in the cross-fire" of political events in the Ukraine with an election looming and a gas row with Russia. "CNGG is a subsidiary of the ministry so this was an internal battle which Regal has become the victim of," said the spokesman.

The company has been through a torrid nine months after admitting a much-hyped well off the coast of Greece was "non-commercial" just three weeks after raising £45m in a share placing.

The news not only knocked 60% off the shares on that day, it also took 12% off the share price of its broker Evolution and led to questions about the valuation on many other small mining stocks.

Mr Timis was eventually forced to stand down from the company following the setback, but he remained as an important investor.

Only last week he appeared to have increased his holding in Regal with the company notifying the London stock exchange that the Timis Trust held 11.3m of the firm's ordinary shares, giving him 8.85% of the issued share capital. The trust had bought more shares last November.

Regal has claimed that the Kallirachi well, discovered this time two years ago, could contain a billion barrels of oil. In the event there was mainly water but Regal emphasised it also had decent producing assets in the Ukraine.

In an attempt to rebuild its damaged reputation, Regal appointed a former Shell geophysicist to be its new exploration director but within six days Christopher Green had quit.

By June it was revealed that Mr Timis had effectively sold off the main assets of the firm without the knowledge of fellow directors or shareholders.

Mr Timis, a 42-year-old Romanian who started off as chief executive and chairman, always cut an unusual figure even in the rough and tumble of the oil world, given he had a conviction for heroin possession.

Regal has exploration rights in Romania and Egypt.

Source: The Guardian

Kiev Approves Vital Section of Gas Deal

KIEV, Ukraine -- A Ukrainian government competition panel on Tuesday approved the creation of new joint venture to supply Russian and Central Asian natural gas to Ukrainian consumers, backing a key component in a deal aimed at ending a price dispute between Moscow and Kiev.

Ivan Plachkov, Ukraine's Fuel and Energy Minister, answers media questions in Kiev, Ukraine, Tuesday, Jan. 31, 2006. The Cabinet on Tuesday approved a gas deal aimed at keeping Russian and Central Asian gas flowing into Ukraine, paving the way for the agreement to be signed, a top gas company official said.

The deal is part of a complicated, face-saving agreement worked out earlier this month following a Russian cutoff of gas supplies to Ukraine, and the interruption of gas supplies to some European countries.

The Anti-Monopoly Committee's approval set the stage for the signing of the pricing dispute agreement, which sees the joint venture supplying gas to Ukrainian consumers at $95 per 1,000 cubic meters. The venture will be co-owned by Ukraine's state-owned Naftogaz and Rosukrenergo, an intermediary that is 50-50 owned by Gazprom and a group of unidentified investors.

Oleksiy Kostusyev, head of Ukraine's Anti-Monopoly Committee, said that the new venture, called Ukrgazenergo, will oversee sales of gas to industrial consumers together with Naftogaz; Naftogaz will still have sole responsibility for sales to residential consumers, a key victory that will allow it to buffer Ukraine's largely poor population from painful price increases.

"The existence of a new player in the market ... will spur competition," Kostusyev said. He added that the new venture would increase competition by weakening the position of the monopolist, Naftogaz.

The agreement between Russia and Ukraine, hammered out in tense negotiations on Jan. 4, had called for setting up this venture by Tuesday. That step was necessary before the overall agreement that ended the pricing dispute could be officially signed by Naftogaz and Gazprom.

The larger gas agreement has come under regular fire in Ukraine and abroad due to Rosukrenergo and its shady background. It has been accused of having links to Semyon Mogilevich, a Ukrainian-born Russian citizen and reputed organized crime figure who is wanted by the FBI.

Oleg Palchikov, a Rosukrenergo representative, said on Ukraine's Inter television Monday that the company had no connection with Mogilevich, and insisted that it was committed to openness and transparency.

But Rosukrenergo's refusal to release the names of all its investors has raised concerns among opposition lawmakers who united to sack Ukraine's President Viktor Yushchenko's cabinet earlier this month. Yushchenko has refused to recognize the vote.

Kostusyev said that committee knows who is behind Rosukrenergo but is prevented from making the information public. He cited the secretiveness as his one criticism of the company.

He said control of Ukraine lucrative gas pipelines will not be handed to the new venture. Russia depends on those pipelines to ship most of its supplies to European consumers, giving Ukraine some leverage in its deals with Moscow.

Yulia Tymoshenko, a former prime minister and now opposition lawmaker, called on the government to postpone signing the document, her party said in a statement. Her party has criticized the deal as a betrayal of Ukraine's national interests.

Under the deal, Ukraine will buy the mix of Russian and Central Asian gas from Rosukrenergo at the Russian-Ukrainian border. The price -- nearly double what Ukraine had been paying -- is set for the first six months of this year. Rosukrenergo has said the future price -- far less than what Russia is demanding for its gas -- will depend on how much the Central Asian nations wish to charge.

Source: AP

Crisis of Ukraine's State Institutions

KIEV, Ukraine -- The Kremlin's "gas attack" on Ukraine exploited an ongoing crisis of state institutions in that country and exacerbated the crisis almost to the point of meltdown.

Viktor Yushchenko (L) turns to Moscow to rescue his government

This situation undermines the country's and its president's capacity to resist Moscow's emerging strategy to recapture key economic and political positions in Ukraine, one year after the Orange Revolution.

The signing of the January 4 gas agreement with Russia illustrated the dangers stemming from the growing weakness of Ukraine's state institutions. Basically, just two individuals, Fuel and Energy Minister Ivan Plachkov and Naftohaz Ukrainy chairman Oleksiy Ivchenko, negotiated and signed a dubious agreement in complete secrecy in Moscow, without the support of experts from government agencies that are traditionally involved in such negotiations, without consultation with the cabinet of ministers, and without public accountability even after the highly controversial agreement had been signed.

Their briefings afterward to the media proved misleading, and they then declined to testify to the parliament, in effect setting up Prime Minister Yuriy Yekhanurov to take the fall. (Yekhanurov initially also dissembled on the gas agreement, but eventually distanced himself from it.) Meanwhile, President Viktor Yushchenko continues describing the gas agreement as an unqualified success even crediting Russian President Vladimir Putin for contributing to the purported success despite massive domestic and international criticism of key parts of the agreement.

The gas agreement provided the parliament with the political excuse to exercise its right to dismiss the government, although the parliament itself will only have the constitutional right to install another government after the March elections. Yushchenko disputes the legal validity of the parliament's no confidence vote and insists that the government has not been reduced to "acting" status, but that it continues to operate with full authority.

Nevertheless, the president and government are looking for legal avenues to establish that the government has the standing required for signing international agreements. A determination on that issue cannot be reached, however, because Ukraine does not have an operating Constitutional Court. The parliament and the president are accusing each other over failures to fill and swear in their respective quotas of seats on the Court. Each side fears that the other might use the Constitutional Court as a tool in the conflict between president and parliament over implementation of constitutional reforms.

By all accounts, the president is attempting to renege on his December 2004 agreements with parliament on constitutional reform that would transfer certain presidential powers to the parliament and government. Yushchenko now claims that the procedure of reaching those agreements was hidden from the public and that the substance of the constitutional reforms was not debated or understood prior to their adoption by parliament.

Such claims are factually unsustainable. The procedure was highly publicized at the time; the parliament held detailed debates before passing the constitutional reforms; and the pro-presidential bloc Our Ukraine voted for the reforms as well.

Because of his differences with the majority of deputies over the no confidence vote in the government and the constitutional reforms, Yushchenko has launched a war of words on the parliament. He has recently been describing the majorities that oppose him on those issues as "destabilizers," "anti-state," "destructive," "fifth column," "parasitical"; he describes their decisions as "illegal," "anti-people," and the parliament's composition itself as unrepresentative ("lost the people's ideological support").

The president warns that he would call a popular referendum (either before or after the upcoming parliamentary elections) in order to cancel the constitutional reforms. This course, if continued, would cause Yushchenko and his Our Ukraine bloc to lose their remaining or potential allies in this parliament and that to be elected in March. On a fundamental level, it reflects inadequate understanding of political and state institutions as such.

While that inadequacy seems common to a wide range of political forces and interest groups in Ukraine and beyond, it becomes all the more debilitating when it afflicts the top level of the executive branch.

Immediately after the Orange victory, de facto parallel governments emerged in the National Security and Defense Council (NSDC) and the Presidential staff, in addition to the constitutionally empowered cabinet of ministers. One year later, laws have yet to be adopted on the functioning of those institutions. After NSDC's first head, Petro Poroshenko, had vastly exceeded his prerogatives, Poroshenko's successor, Anatoly Kinakh, does so selectively on key issues. During the gas crisis, for example, Kinakh publicly proposed entrusting the management of Ukraine's gas transit pipeline system to Russia.

Simultaneously he declared that Ukraine would no longer tolerate infringements of its national sovereignty, such as giving up lucrative contracts for its turbines (an allusion to Washington's earlier demand that Ukraine abandon the turbine contract for Iran's Bushehr nuclear power plant). Both of Yushchenko's appointees as NSDC heads have no background in national security, and both have played the Russia card while in that post. Despite such dysfunctionalities, the NSDC seized a number of portfolios from the Ministry of Foreign Affairs. Meanwhile, for a year after the Orange Revolution, Ukraine had no ambassador in Washington and other key capitals.

In sum, Ukraine is traversing an institutional and a constitutional crisis, as well as a deficit of competence at the top. Against this backdrop, Yushchenko's unofficial meeting with Russian President Vladimir Putin on January 11 in Astana initiated a potentially wide-ranging rapprochement. An embattled Yushchenko feels that he needs that relationship to shore up his presidency and improve his bloc's electoral prospects.

For their part, influential Kremlin advisers calculate that a weakened and isolated Ukrainian president might be used, particularly in the post-election period. Risky under any circumstances, a personal rapprochement with the Kremlin could prove especially dangerous for Yushchenko to undertake without the backing of effective democratic institutions and a functioning government.

Source: Eurasia Daily Monitor

Yushchenko Blames Officials For Week-Long Heating Outage

KIEV, Ukraine -- Ukrainian President Viktor Yushchenko yesterday blamed local officials in an eastern Ukrainian city for mismanagement that left tens of thousands of residents shivering in unheated apartments during last week's record-breaking cold spell.

Ukrainian President Victor Yushchenko inspects the remains of a shattered heating system in a school in Alchevsk, 750 km (466 miles) east of Kiev

"These people don't deserve respect, they deserve to be sacked," Yushchenko said, referring to local officials in Alchevsk in the Luhansky region. Some 60,000 people have been without heat for more than a week in the city.

The shutdown occurred on January 22 when one of the main pipes pumping hot water from a central boiler into apartment houses, schools and other municipal buildings froze and broke down. Yushchenko called for a criminal investigation, and pledged that his government would do whatever it took to get the heat flowing again.

"For a week already, Alchevsk ... resembles the frozen side of the moon," Ukraine's Gazeta Po-Kievskiy declared. Ukrainian media broadcast images of residents sitting around kitchen tables bundled up in winter hats, coats and gloves.


Ihor Krol, spokesman for the Emergency Situations Ministry, said that some 3,600 workers from across the country had been dispatched to Alchevsk to restore the heating supply. Gradually, buildings were being hooked up to the system.

A first allotment of 2.5 million hryvna (US$494,000; euro 409,000) was being sent to the city to fund repairs, Yushchenko's office said. He said that a special emergency headquarters was now in charge in the city, Ukraine's Unian news agency reported.

Last week's cold snap caused a record jump in gas consumption in Ukraine and led to the deaths of some 220 people as this country's ageing and inefficient heating systems struggled to cope. Most of the deaths occurred in the Luhansky region; the Health Ministry has said many were homeless and intoxicated people.

Temperatures have since risen to more normal winter levels in Ukraine, with many schools and other businesses that had closed last week reopening Monday.

Source: AP

Monday, January 30, 2006

Ukrainian Agriculture Minister Denounces Trade War Over Russian Ban

KIEV, Ukraine -- Ukraine's agriculture minister on Monday threatened to start a trade war with Russia over its refusal to lift a ban on Ukrainian meat and milk imports in the latest angry volley to be exchanged between the bickering neighbors.

Ukraine's Agriculture Minister Oleksandr Baranovsky

"We have enough levers," Agriculture Minister Oleksandr Baranovsky was quoted as saying by Ukrainian news agencies. "But all the same, we hope Russia will reconsider its decision".

Russia banned imports of Ukrainian meat and dairy products starting Jan. 20, citing violations of veterinary standards. Ukraine has called the move retaliation for its efforts to reclaim a number of disputed lighthouses on the Black Sea coast.

Ukrainian officials have tried for a week to have the ban lifted, so far to no avail. Baranovsky planned to travel to Moscow on Monday for talks, but canceled the visit after reportedly being told the Russians couldn't guarantee a meeting with his counterpart.

Prime Minister Yuriy Yekhanurov noted this Monday when asked about when he planned to visit Moscow. Yekhanurov said there were no plans, adding "you see, our veterinarians can't even manage to get in there."

The Russian ban has threatened to cause serious losses to Ukraine's agriculture sector, and further strain relations between the ex-Soviet republics.

Baranovsky said Monday that Ukraine bought some US$355 million (294 million euros) worth of agricultural products from Russia last year, and US$102 million (84 million euros) worth of animal products.
He noted trade wars never lead to anything positive, but said the option couldn't be ruled out.

Ukraine also planned to appeal to the World Trade Organization, the Agriculture Ministry said. Neither Ukraine nor Russia, however, are members of the WTO.

Russian-Ukrainian relations worsened after President Viktor Yushchenko defeated a Kremlin-backed candidate in the 2004 election and began a drive to reduce Russian influence. Ties were further strained during a bitter New Year's dispute over natural gas prices, and by Ukraine's complaints that Russia's Black Sea Fleet has usurped land that it isn't entitled to in a Ukrainian port, reports the AP.

Source: Pravda

Gazprom 3Q Net Profit Rises 68 Percent

MOSCOW - Russia's state-controlled natural gas monopoly OAO Gazprom said Monday its third-quarter net profit surged 68 percent from the same period a year earlier, boosted by an extraordinary gain from sales to Ukraine.

A Russian specialist checks pressure at Russian gas monopoly Gazprom gas storage facility near the town of Kasimov 330 km (198 miles) south of Moscow

Gazprom, the largest gas company in the world, said that third quarter net profits were 79.32 billion rubles ($2.82 billion) up from 47.124 billion rubles in the same period a year earlier, according to a statement on its Web site.

It said its net profit for the first nine months of 2005 was 232.13 billion rubles ($8.25 billion), up from 139.38 billion rubles for the first nine months of 2004.

Analysts were surprised by an extraordinary gain generated by the sale of more than 140 billion cubic feet of gas in storage in Ukraine, at prices three times higher than agreed contract prices.

Gazprom's contract price for deliveries to Ukraine last year was $50 per 1,000 cubic meters, although a large barter element in the agreement makes exact calculations difficult, Dow Jones Newswires reported.

Gazprom said Monday it had sold gas in Ukrainian storage to RosUkrEnergo, a joint venture in which it owns 50 percent with partners whose identities aren't public, at a price of $150 per 1,000 cubic meters.

Russia briefly cut off gas supplies to Ukraine at the start of the year over a bitter pricing dispute. The two sides struck a complicated compromise under which the former Soviet republic agreed to pay twice the price for a blend of Russian and cheaper Central Asian gas.

RosUkrEnergo emerged as the exclusive importer of natural gas to Ukraine under the deal.

The company's sales in the first nine months of 2005 rose 37 percent on the year to 291 billion rubles ($10.34 billion). Gazprom, which provides half of Europe's gas imports, controls 20 percent of world gas reserves.

Source: AP

Malevich Painting Allegedly Found In Ukraine

MOSCOW, Russia -- An artist from western Ukraine said he had found a painting by Ukrainian-born Kazimir Malevcih, a leading figure in the Russian Avant-Garde, or by one of his students.

Kazimir Malevich. Self-Portrait. 1933.

Anatoly Fedirko, known in his home town of Chernovtsy for his uncommon artistic enterprises, said experts had confirmed the picture could have been painted by Malevich, a pioneer of geometric abstract art and the founder of Suprematism in Russia, or one of his students.

The painting will not be less valuable if the latter version is confirmed. Experts said it dated back to the early 20th century and mimicked the artist's legendary style.

The finding is currently being kept in a Kiev bank. Fedirko said he would display the painting in Chernovtsy February 1.

Malevich is best known for his works 'Black Square' (1915) and 'Black Cross' (1916-1917), renowned for their previously unseen geometrical simplicity.

Malevich, who studied art in Kiev and Moscow and experimented with various modernist styles, including Cubism and Futurism, turned to teaching in 1922 in Petrograd (later Leningrad and now St. Petersburg).

Under Stalin, Malevich was sent to a prison camp because his work was in opposition to official ideology at the time. He died in poverty in Leningrad in 1935.

Source: RIA Novosti

Ukraine’s Unsanctioned Gas Taking Angers Russia

MOSCOW, Russia -- From January 19 to 25, Ukraine took 326 million cubic meters of Russian gas intended for European consumers, Gazprom’s press service said.

The figure was announced on Friday at a meeting of Gazprom managers who discussed measures to ensure Gazprom’s gas supplies to Europe in connection with the cold weather. The meeting was chaired by Gazprom’s Deputy CEO Alexander Ananenkov.

Ukraine is taking up to 80 million cubic meters of gas a day without Russia’s sanction. Gazprom managers decided to send another telegram to Ukraine’s national oil and gas company Neftegaz asking it to stop taking Russian gas without permission and to observe the Russian-Ukrainian contract on gas deliveries.

“With much of Europe gripped by cold weather, Ukraine is taking advantage of its position as the country through which Russia transports its gas to Europe, not only exceeding its consumption levels, but also taking Russia’s additional supplies to Europe. Of all the countries through which Russia transports its gas, Ukraine is the only one to blatantly violate international norms of gas business. In fact, this means there is no control at all in Ukraine’s energy sector,” Ananenkov stressed.

Gazprom increased its deliveries to European partners through the Yamal-Europe and Blue Stream pipeline networks, it was said at the meeting. From January 16 to 25, Gazprom increased gas supplies to Russian consumers by 2.2 billion cubic meters.

Meanwhile, some industrial consumers failed to observe their schedule for switching to alternative fuels. They were supposed to reduce their consumption of gas by 211.5 million cubic meters a day, but it was only 45 million cubic meters in reality.

Igor Ivanov, Secretary of Russia’s Security Council, said earlier on Friday that Russia had a long-term strategy for energy cooperation with European countries, including Ukraine. “Ukraine is no exception, it was included in our long-term strategy,” Ivanov said, noting that Russia planned to increase its energy exports to Europe.

Anatoly Kinakh, Secretary of Ukraine’s National Security and Defense Council, said the creation of a joint Russian-Ukrainian gas company was not discussed at his meeting with Ivanov on Friday.

“Ukraine is interested in successful negotiations, so that all gas companies operate within the law, based on transparent financial schemes and performing their obligations both on the transportation and delivery of energy, and this work is continuing,” Kinakh said. “Ukraine and the Russian Federation are proving to the whole world that they, as two friendly countries, can solve these problems without external arbiters,” he said.

Source: RBC

Sunday, January 29, 2006

Death And The Donetsk Miner

DONETSK, Ukraine -- When the drill reached the methane pocket more than 500 meters underground, a large flame lit up the pitch-dark coal mine, raising a cloud of steam and dust and coming within a whisker of the miners.

"The heat singed our faces, but fortunately it disappeared as quickly as it came," said Dmitry, 47, who works in one of Donetsk's state-owned coal mines. "I felt death caressing me, but for the first time in my life I welcomed the uncertainty. We looked at each other. We cried for joy, we were alive."

In the mines, methane is an ever-present danger, and Dmitry said that when he drill was switched off, miners heard the gas hissing. "The gas concentrates in air pockets, or between the fissures of the coal. As it's
lighter than air, it's extremely explosive," Dmitry said, looking at the bruises left by the explosion on his calloused hands.

Dmitry and the other miners with him escaped with just a few burns and a lot of stress, but said they were determined to keep working. They earn $200 per month.

"I thought that I was going to die -- or worse, that I would be injured and not be able to go to work again. I need the money to feed my family," Dmitry said.

Dmitry asked that his last name and the name of the mine where he works in Donetsk not be published, saying he was afraid he could lose his job.

The 450,000 miners who work in Ukraine's official coal industry have some safety protection, unlike their counterparts who work in the country's illegal mines, but it is still poor. Their lives depend on good ventilation systems that pump out the deadly methane, but numerous safety violations, negligence and worn-out equipment make the Ukrainian mining industry one of the world's most dangerous after China.

According to Mykhailo Volynets, the head of the country's Confederation of Trade Unions and a member of the parliament's energy committee, more than 75 percent of the country's 200 coal mines are classified as dangerous. Since 1991, about 4,300 miners have been killed in mining accidents in the country.

Ukraine's coal industry, which has been in a critical state since the Soviet collapse, survives mainly due to subsidies from Kiev, despite having reserves of 37 billion tons. Subsidies in 2003 and 2004 totaled $2 billion but were insufficient to maintain safety standards.

In November, President Viktor Yushchenko said some state-owned mines would be privatized this year as part of an $800 million rescue plan. The Donetsk miners, however, said the money would not be enough.

Dmitry, with dozens of others from his mine, went to a rally in Kiev in October to demand more investment in the industry. "We tried to make our voices heard, but Kiev doesn't care about what happens in our region," he said.

The industry suffers from extremely low productivity, according to the World Bank. Under a 1996 World Bank-funded program to reform the coal industry, many of the country's profitable mines were privatized, but the result was dozens of mine closures and mass unemployment in many areas.

“The program should have restored order in the industry and helped the country to privatize the mines, but more than 50 mines were closed and the money just disappeared in the pockets of our bureaucrats in charge of the restructuring," said Svetlana Samoilyuk, an expert with the Association of Donbass Mining Cities, a nonprofit lobby group.

According to the World Bank, the $14 million allocated for the creation of new jobs for former miners was misused.

"According to the program, Ukraine should have created stock companies and the miners should have been given shares in the industry, but this never happened," Samoilyuk said. "People were left with nothing." As a result, Volynets said, most mines are now outdated, and prospective private buyers are scarce.

"Reforming the mines is one of the main problems faced by Yushchenko. The government cannot close them, since unemployment would soar, but it cannot keep them all open, either," one government official said, on condition of anonymity. "The mines just keep swallowing money."

Dmitry said that he did not like his job, but that after 27 years of digging coal, he had few prospects in Donetsk.

"I know I put my life in danger every day I go down the mine, but I have no choice," he said. "I'd be very unlikely to find anything else."

Source: Unian News

Saturday, January 28, 2006

Cold Front Takes High Toll In Europe

WARSAW, Poland -- Europe’s Arctic cold front loosened its deadly grip Thursday, but not before claiming at least 60 more lives overnight in Ukraine, Poland and half a dozen other countries battered by a week of below-freezing temperatures.

In Ukraine alone 40 people died overnight as a result of extreme cold, bringing to at least 181 the number of deaths since temperatures plunged last week.

In Poland, the most recent 24-hour toll was 10, for an eight-day total of 63 dead. There were also deaths reported in Croatia, the Czech Republic and Romania, which registered 45 weather-related fatalities in six days.

The situation in Georgia remained critical Thursday due to massive electricity failures and a fifth day without natural gas supplies from Russia, which were abruptly cut when an explosion Sunday burst the main pipeline.

Most homes in the capital of this former Soviet republic were without gas as overnight temperatures fell as low as minus 10 degrees Celsius (14 degrees Fahrenheit).

The country’s problems were compounded by power cuts across the capital Tbilisi and the rest of eastern Georgia caused by snowstorms and excessive demand. Only key installations such as hospitals were being supplied with emergency electricity, a spokesman for the state-run power company told AFP.

Especially hard hit during the last eight days have been Eastern Europe’s homeless people, accounting for roughly half of all the freezing deaths reported. The dangers of exposure are often compounded by the consumption of alcohol.

The aged are also at risk, such as an 85-year-old man from a village near Dobrich, Bulgaria and an 84-year-old woman from another Bulgarian town, both found dead outside their homes Wednesday.

In Moscow, at least 500 homeless children are roaming the streets at any given time, according to Emma Bell of Doctors Without Borders, an organization that provides emergency medical care around the world.

There are no firm statistics, but officials estimate that just under half of the 100 or so people killed by cold weather in Moscow over the last eight days were living on the streets.

Across most of France, authorities stepped up their vigilance of the homeless. The city of Paris set up shelter for 300 more people on Thursday.

In Albania, where three people died overnight, a 37-year-old mentally disabled man who had gone missing on Monday was found frozen to death near his house in Durres, northwest of the capital Tirana. Two other people, in their late sixties, died of heart attacks provoked by the cold.

Even as the death toll for the weeklong deep freeze continued to climb, temperatures eased across most of eastern and central Europe, with normal winter weather forecast for Friday and the weekend.

Russia, where hundreds were estimated to have perished in the weeklong freeze, was relatively balmy as the thermometer climbed toward zero degrees C (32 degrees F).

Conditions also improved in Germany and Greece, where schools reopened and air and sea traffic slowly recovered some semblance of normalcy.

Road conditions, however, remained dangerous almost everywhere, with hundreds of accidents reported, some of them fatal.

Turkish authorities battled to open blocked roads on Thursday as snow continued to fall on the country’s biggest city Istanbul. Roads leading to several suburbs on the European side of the Bosphorus Strait remained blocked, the Anatolia news agency said.

But city authorities underlined that the main arteries were open as some 3,000 municipal employees worked round the clock to clean up the snow, which has disrupted already chaotic traffic.

Education Minister Huseyin Celik announced late Wednesday a one-week extension of the mid-term holiday for schools across the country.

The weather also continued to bedevil air and maritime traffic, with several domestic flights to the east of the country cancelled and ferry services across the Bosphorus in Istanbul disrupted.

Some 10,000 small villages have been cut off from road transport, and several hundred are without electricity or telephone service

Source: AFP

39 More Dead From Cold In Ukraine

KIEV, Ukraine -- Another 39 people have died of cold in Ukraine, bringing to at least 220 the number of deaths since temperatures plunged last week.

A Ukrainian woman with a puppy begs for money in the centre of Kiev. Ukraine is in the grip of extremely cold weather with temperatures in the capital Kiev plunging to about -23 degrees Celsius (-9.4 Fahrenheit).

In addition to the latest death toll -- recorded over a 24-hour period -- at least 292 people have been hospitalized as a result of the cold, the health ministry said Friday.

Most were suffering from frostbite and various stages of hypothermia.

According to the ministry's figures, 220 people died and 2,563 people have been hospitalized as a result of the cold since last Saturday, several days after temperatures first began to plunge in the east of the country.

Friday's double-digit daily death toll came even though the extreme cold that gripped Ukraine for more than a week has let up across the country for two days.

Like neighboring Russia, Ukraine was gripped by severe temperatures starting last week, with the mercury dipping to minus 35 Celsius (minus 31 Fahrenheit) in some parts of the country.

Source: AFP

Chernobyl Overshadows Push For N-Power

KIEV, Ukraine -- As Ukraine looks to nuclear power to fuel its increasing energy needs, critics have warned that the lessons of the 1986 Chernobyl reactor meltdown may have gone unheeded.

Images of the town Pripyat, near Chernobyl

Ukraine's dispute with Russia over gas supplies in early January caused panic in Europe - and even the eventual defeat of the government in Kiev.

With high oil prices and increased demand continuing to dominate international markets, interest in nuclear power has resurged as securing energy sources becomes a key issue for many European countries.

Ukraine is planning to boost its nuclear sector, and Viktor Yushchenko, the president, has even floated the idea of using the old Chernobyl site as a new dump for nuclear waste

Paulius Kuncinas, a Kiev-based energy analyst, says: "In 2004, Ukraine commissioned two large new reactors.

"The government plans to build up to 11 new reactors by 2030. The rationale is that it is a cheap way to replace gas. Ukraine also has large uranium deposits."

But the move towards nuclear energy may be lingering in Chernobyl's shadow.

Fatal meltdown

The result of an experiment that went horribly wrong, the Chernobyl nuclear plant's reactor number four exploded on 26 April 1986, releasing large amounts of radioactivity into the atmosphere. A radioactive cloud affected people as far away as Scotland.

The nuclear sector in Europe took a plunge in the wake of the disaster.

Many countries moved to decommission existing nuclear power stations and - except in France and Finland - cancelled plans for new ones. Low oil prices and fears over nuclear safety were key factors in this loss of public trust.

Today, the reactor sits at the heart of a 30km exclusion zone, an area still dangerous for visitors.

"It's something of a wildlife sanctuary," says Maxime Orel of the Ukrainian Ministry of the Catastrophe, a special government unit set up to manage and monitor disaster relief at the site.

"The reason is that hunting is banned, because the animals are laced with Strontium 90, a deadly radioactive isotope. They get it from eating the plants, which are also radioactive."

Nobody knows how many people died in the disaster, particularly as effects such as cancers may not appear for years. Official estimates, which are widely disputed, from the three former Soviet countries affected - Ukraine, Belarus and Russia - say about 25,000 had died by the year 2005.

"At the time, no one wanted to believe this disaster had happened," explains Orel. The Soviet authorities covered up much of what had happened.

Ghost towns

We are walking in the abandoned city of Pripyat, 1km from the reactor and once a home to more than 40,000 people.

"The residents of Pripyat say they heard only a small noise when the reactor blew - a hand clap, nothing else - at about 2am," continues Orel. "The following morning, people, mothers with children, went about their daily business. No one told them what had happened, but the radiation level was already extremely high. There was radioactive dust in the air and it covered all the buildings and streets."

The entire town was evacuated some days later. Because residents were told they would return in three days, they left clothes, furniture and pets behind.

"When they came back, all the pets were dead," Orel told Aljazeera.net.

Now the town stands deserted, its miles of apartment blocks, shopping centres, wide boulevards and amusement parks too radioactive to be lived in again. With the wind and snow, followed by spring rains and summer heat, the concrete buildings will likely have long since cracked and eroded away before the radiation levels become safe.

Yet this natural process of decay is also a growing cause for alarm.

Growing alarm

"Chernobyl is one of the most complex sites, geologically, of any nuclear power station," says Jan Vande Putte, the nuclear campaigns coordinator for environmental activists Greenpeace International.

"Several million cubic metres of radioactive waste were dumped around the reactor in ditches, most of it in the 12 months after the disaster and in an emergency situation. They did this next to a river which regularly floods."

"Chernobyl is one of the most complex sites, geologically, of any nuclear power station"

The fear is that radioactive material could get into the water table and seep down river into the Kiev Reservoir, which lies north of Ukraine's capital. Kiev lies two hours' drive downstream from Chernobyl.

In the immediate aftermath of the 1986 explosion, thousands of soldiers, firemen and rescue workers - known as liquidators - also rushed to the site to pour thousands of tons of lead and sand around the reactor. Many of them died or received severe radiation burns in the process, but eventually they contained the reactor in what has since become known as "the sarcophagus".

Yet this structure too is now causing alarm.

"Inside the sarcophagus, in one second you can take a fatal dose of radiation," says Orel. "Yet its north wall is unstable. Ground water is undermining the cement and sand dropped by the helicopters during the emergency, it's a mess. Highly polluted and very unstable."

Containment hopes

French company Framatom is working fast onsite to build a new sarcophagus to contain the old one. Orel hopes it will be completed as soon as possible.

Nuclear sector companies have been busy recently elsewhere in Ukraine too. Reactor number four was just one of several at Chernobyl, yet all these have been closed since 2000.

To compensate for the loss, the Ukrainian government commissioned two new Russian designed reactors, Khmelnitsky 2 and Rivne 4, and received financial backing from a string of European, US and Russian authorities.

"There is pressure on the Ukrainian government to find new energy resources," Kuncinas told Aljazeera.net.

"Coal-fired power plants and nuclear plants are the two options being considered. Coal is not very popular as it enjoys little support outside Ukraine."

Cheap energy production

Tony Blair, the British prime minister, announced late last year that his government would be reviewing "the development of a new generation of nuclear power stations".

Elsewhere, countries from Lithuania to China have also announced nuclear plans.

Advocates argue that it is a way of producing cheap energy that does not harm the environment by producing greenhouse gases.

A return to nuclear power has also been welcomed by Western business groups. They fear that uncertainty over energy supplies - such as that recently shown in Russia's spat with Ukraine - coupled with rising gas and oil prices will have a major impact on their future competitiveness.

Yet back in the snows of Pripyat, such considerations seem a long way away.

"Once, they thought of this as a paradise," says Orel. "The people who lived and worked here at the reactor were all young - the average age was 25. They were paid much more than normal Soviet citizens and had everything they wanted. Now who knows how many are still alive."

Source: Aljazeera

Friday, January 27, 2006

Russians And Ukrainians Develop Mutual Hatred Because Of Gas Conflict

MOSCOW, Russia -- Opinion polls conducted in Russia and Ukraine showed that both Russians and Ukrainians changed their attitudes to each other because of the gas dispute.

Russian and Ukrainian sociologists say that the level of sympathy between the brotherly Slavic nations has reduced considerably lately. The number of those Russians who treat Ukraine positively has dropped in comparison with December 2005: from 60 to 54 percent. Consequently, the share of those who describe their attitude to Ukraine and Ukrainians as negative has raised from 29 to 34 percent.

This information was revealed by the Analytical Center of Yury Levada, specialists of which polled 1600 Russians all across Russia. The poll included questions about the recent gas dispute between Russia and Ukraine.

Forty percent of Russians believe that the gas crisis between the two countries took place because of Ukraine's fault. One-third of the polled said that both Ukrainian and Russian administrations were guilty of the crisis. Russians split in their opinions regarding the end of the gas conflict. Twenty percent of respondents said that Russia managed to win the fight, whereas 12 percent believe that the victory in the dispute belongs to Ukraine. Twenty percent said that no one won the natural gas war.

Ukrainian sociologists conducted a similar poll. The research also revealed a certain coolness in the relations between the two Slavic nations. Over 26 percent of the polled Ukrainians said that their attitude to Ukraine worsened after the gas conflict with Russia. The respondents acknowledged that they did not have any negative feelings about Russia before the scandal. More than 41 percent of the polled Ukrainians said that their attitude to Russia remained unchanged, positive that is.

Almost 30 percent of the polled believe that the gas conflict occurred because of Russia's wish to influence the results of the forthcoming parliamentarian elections in Ukraine. Others (25.4%) think that Russia simply wanted to earn more money on natural gas. Twenty-three percent of respondents believe that Russia wanted to punish Ukraine to its independent policies. Twenty-two percent of the polled Ukrainians acknowledged, however, that the gas crisis with Russia occurred because of the incorrect position of the Ukrainian administration during the talks.

The poll was conducted on January 15th across major Ukrainian cities.

Andrei Zorin, an Oxford University professor of Russian history, believes that the worsening of relations between the two brotherly nations is based on historical reasons. "It seems that the population of Russia and its administration start to realize that the state organization in Ukraine is inevitable. This painful process evokes certain complexes," the Kommersant newspaper quoted the professor as saying.

Source: Pravda

Official: Ukraine to Pay for Gas It Uses

DAVOS, Switzerland — Ukraine will pay for all the Russian natural gas it uses, the country's economy minister, Arsenii Yatsenkiuk, said Friday.

He also denied that the country was stealing from pipelines that cross the country, carrying about 25 percent of Europe's gas supplies.

"The situation has returned to normal," he told Dow Jones Newswires on the sidelines of the World Economic Forum's annual meeting in Davos. "Gas is flowing, and at the end of the month, Russia will calculate how much gas has traveled through Ukraine, and we will calculate how much gas we have used."

Russia's natural gas monopoly OAO Gazprom said Thursday that Ukraine had siphoned off 326 million cubic meters of natural gas over the past week.

Ukraine's Prime Minister Yuri Yekahanurov said earlier that the country had increased its gas consumption as a cold snap gripped eastern Europe.

Ukraine's state-owned oil and gas company Naftogaz earlier this week also acknowledged taking more gas than planned, but said that total January imports would be unchanged.

Accusations of gas theft follow a fight over pricing earlier this month that saw Russia cut off all gas deliveries to Ukraine for two days.

As result of that shut-off and current Ukrainian demands, western European countries have complained about falling import levels.

Source: AP

Europe Short Of Gas As Russia, Ukraine Wrangle

MOSCOW, Russia -- Much of Europe and parts of the former Soviet Union battled energy shortages on Friday as Russia failed to pump enough gas to meet demand that was boosted by unusually cold winter weather.

Russia supplies a quarter of the region's gas needs and, until this year, had been a dependable supplier.

But a pricing row with Ukraine, transit route for 80 percent of Russia's gas exports, and a cold snap persisting in major consuming nations, has hit supplies to industry and households across the continent.

Worst off was the ex-Soviet state of Georgia, where mystery explosions on gas export pipelines in southern Russia have cut supplies. Many people on Friday could not cook a hot meal or heat their homes.

Schools and factories closed, while high winds downed a power line serving the east of the Caucasian state, forcing people to hunt for fuel.

"I've spent several hours in a queue for kerosene and wood this morning. But I'm happy I've finally got it," said Maya Khubuluri, a 49-year-old resident of the capital Tbilisi.

Parts of Russia's war-torn southern region of Chechnya were cut off too. Many people there live in homes damaged during 11 years of civil conflict, leaving them exposed to temperatures as low as minus 15 Celsius (5 Fahrenheit).

Big consumer Italy turned down heating in offices, factories and apartment blocks to conserve supplies. People disregarding an order to save energy face an 800 euro ($975) fine.

Industry Minister Claudio Scajola rushed to Moscow for emergency talks on the energy crisis with Russian Energy Minister Viktor Khristenko.

Italy plans to present a paper on energy security at next month's meeting of finance ministers from the Group of Eight industrialised nations, being hosted by Russia in Moscow.

A top European Union official threw his weight behind that initiative. "It is crucial," the bloc's monetary affairs commissioner, Joaquin Almunia, told Reuters on the sidelines of the World Economic Forum in Davos.

Russia has made energy security a major theme of its first annual presidency of the G8, but the angry reaction of the West to the gas supply disruptions has turned the initiative into a political boomerang.


Russia stunned Europe by cutting gas supplies to Ukraine for two days over the New Year in its drive to get its former Soviet neighbour to pay nearly twice as much for gas imports.

But a deal struck on Jan. 4 triggered a constitutional crisis in Kiev, pitting parliament against President Viktor Yushchenko's government.

With political life in Ukraine paralysed, expert-level talks in Kiev on finalising a contract are making slow progress.

Meanwhile, temperatures remain below average for the time of year, with parts of eastern Europe gripped by a freeze which sent the mercury below minus 30 Celsius (minus 22 Fahrenheit).

Russia's gas monopoly Gazprom (GAZP.MM: Quote, Profile, Research) has accused Ukraine of "illegally taking" more gas than contractually allowed. Peak daily offtake by Ukraine has reached 80 million cubic metres in recent days -- equal to Italy's consumption.

The resulting shortages in transit supplies cut deliveries to Poland this week by as much as 38 percent this week. Polish distributor PGNiG (PGNI.WA: Quote, Profile, Research) said demand was still outstripping supply, forcing cuts in sales to industrial users.

Turkey on Thursday briefly limited the flow of gas to 21 factories in the northwest, including plants run by Ford Motor Co., Goodyear Tire & Rubber Co. and Hyundai Motor Co.


Russia's customers said on Friday that supplies could soon get back to normal, however, with the shortfall to Italy recovering to 2.7 percent from 5.4 percent on Thursday, according to oil and gas firm Eni (ENI.MI: Quote, Profile, Research).

In the Balkans, Serbia said supplies should be fully restored by Sunday after a 25 percent cut earlier this month.

Alexander Medvedev, head of Gazprom's export arm, told Serbian Deputy Prime Minister Miroljub Labus in Belgrade that supplies would return to the agreed levels of 10 million cubic metres a day by the end of the week.

"Medvedev gave assurances that the normalisation of supplies will start from today," Labus' office said in a statement.

Source: Reuters

Human Face

KIEV, Ukraine -- Amid the greater freedom of expression that Ukraine has been enjoying since President Viktor Yushchenko took office a year ago, another sign of progress has hardly been noticed in the country’s private sector. Corporate social responsibility is the newest fad among Ukraine’s business elite.

Ukraine's richest man, Rinat Akhmetov

As a Post article this week points out, Donetsk billionaire Rinat Akhmetov is offering workers at one of his metallurgical plants preferential mortgage loans. Fellow business peer Viktor Pinchuk is earning himself a reputation as a patron of the arts. These are but two examples.

It doesn’t, in a way, matter what the main motivation of these powerful tycoons is, be it improving the value of the public stocks they issue abroad, or bolstering their support among the masses in an attempt to feather their political nests. The main thing is that they keep doing it and inspire others like them to follow suit.

It might not be too naive to assume that Akhmetov, Pinchuk and a few others now better recognize that the next step after advertising and image making is really giving something back to the people on the backs of whom they make their money.

We highlight such developments as further evidence that Ukraine is moving toward greater civic responsibility, freer markets and more respect for the individual as opposed to the faceless state.

So far this trend has been tentative and isolated. These baby steps should be applauded in the hope that they will one day become giant strides toward creating a society in which the privileged feel an obligation toward those less so.

Source: Kyiv Post

Ukraine To Eliminate Last Strategic Backfire Bomber

KIEV, Ukraine -- Ukraine will eliminate on Friday the last strategic Backfire bomber Tu-22M3 and its X-22 cruise missiles.

Strategic Backfire bomber Tu-22M3

After the collapse of the Soviet Union Ukraine inherited 60 Tu-22 bombers (17 Tu-22M2 and 43 Tu-22M3) and 423 X-22 cruise missiles.

Their elimination began in 2002 according to the 1993 agreement with the United States on the elimination of strategic nuclear weapons and nuclear non-proliferation. The elimination program cost some 11 million dollars.

The elimination “confirms the course of Kiev at an unconditional fulfillment of international obligations, in particular, the voluntary refusal of nuclear weapons and the reduction of strategic offensive armaments”, the defense ministry told Tass.

The Tu-22M3 bomber has a range of 7,000 kilometers and can carry three air-to- surface cruise X-22 missiles

Source: Itar-Tass

Thursday, January 26, 2006

Ukraine Has No Gas Left

KIEV, Ukraine -- Gazprom said yesterday Ukraine had used by January 25 all the natural gas it was to receive this month. Gaz Ukrainy, a subsidiary of Naftogaz Ukrainy, is suspending the deliveries to insolvent enterprises.

Gazprom said yesterday morning that Ukraine had already consumed the Russian and Turkmen gas it was to receive in January.

Naftogaz Ukrainy is set to economize the gas as much as possible cutting off the supply to 500 companies. The contracts resuming the gas deliveries to Ukraine are not signed yet, therefore, formally, there is no one to provide the country with gas.

Sergey Kupriyanov, the spokesman for Gazprom, said yesterday morning Ukraine had already consumed the Russian and Turkmen gas it was to receive in January. “Ukraine has used the January quota for gas and keeps on siphoning off Russian gas that is intended to be exported to Europe,” Mr. Kupriyanov told Rossiya TV channel. Gazprom’s press service said, however, that they had no plan on further steps so far.

The record-high daily consumption of gas (407 million cu. meters compared to the usual 300 million cu. meters in wintertime) was registered on January following a severe frost. Italy, Hungary and Poland reported that they had not received their gas shares in full. Gazprom’s deputy chair of the board Alexander Medvedev claimed that “the gas is staying in Ukraine.”

Naftogaz Ukrainy admitted to removing the gas and came up with a few schemes to pay for it. However, the agreement between Naftogaz Ukrainy and Gazprom of January 4 has not been turned into contracts with RosUkrEnergo and a joint venture to sell the gas in Ukraine has not been set up yet. Nominally, no one is in charge for the gas supply of Ukraine now.

Gaz Ukrainy, a subsidiary of Naftogaz Ukrainy, circulated a statement yesterday announcing suspensions of the supply to more that 50 insolvent enterprises in Ukraine.

Source: Kommersant

Yushchenko Receives Telamone Prize in Italy for Development of Peace

KIEV, Ukraine -- Ukraine’s president has received the International Telamone Prize. The prize founded in the Italian city of Agrigento has been granted to Viktor Yushchenko for his role in favor of Europe.

Ukraine President Viktor Yushchenko

The statement made by the Ukrainian embassy to Italy quoted by Ukrainian media said the prize points to Yushchenko’s “inestimable role and significant endowment in the development of ideas in support of solidarity, cooperation and peace.”

The Telamone Prize was founded in 1977. It was granted to the Czech leader Vaclav Havel and to the lower house of the Russian parliament, the State Duma, the Ukrainian media pointed out.

Yushchenko has received several foreign awards. For instance, Britain’s Queen Elizabeth II granted him with a new award founded by the Chatham House (the Royal Institute of the International Affairs), for the endowment in the development of international relations. Earlier, Yushchenko received the John F. Kennedy Profile in Courage Award.

Source: MosNews

Bitter Cold Kills 181 In Ukraine

KIEV, Ukraine -- A bitter cold wave has killed 181 people in Ukraine over last five days, the Health Ministry said Thursday. Another 3,000 people have been treated in hospital as temperatures plunged to minus 25 C (minus 13 F), the ministry said in a statement.

Women walk in the street in Kiev. The fierce cold gripping Ukraine for the past week has killed 181 people, left thousands of others shivering and in the dark, sparked yet another row between Kiev and Moscow

The majority of those who died were homeless and intoxicated people, it said.

Temperatures were warming in Ukraine on Wednesday.

The toll came one day after Ukraine's prime minister threatened to turn off gas supplies to industry and temporarily halt industrial production in an effort to limit consumption.

At the same time, Russia mounted pressure on Ukraine to stop siphoning gas intended for a freezing Europe.

Ukrainian Prime Minister Yuriy Yekhanurov said such a move, which could cripple Ukraine's already fragile economy, might be necessary to ensure that residential and other consumers are fully supplied if the cold continues.

"The population must receive gas at a full level," Yekhanurov said. If industry "will not hear normal people's voices, we will have to use administrative measures. The government has the tap in its hands."

Russia's state-controlled monopoly OAO Gazprom complained that Ukraine was tapping into transit pipelines pumping gas to Europe, which is also suffering from a cold snap. Russia warned Ukraine on Wednesday that it would be charged for its extra usage and said it was to blame for reported shortfalls in Europe.

"We are increasing gas supplies to the Russian-Ukrainian border on practically a daily basis, but the shortfall in supplies to Europe is increasing daily and correspondingly the removal of gas in Ukraine is increasing," Gazprom's chief Alexei Miller said in televised remarks.

Ukraine's Kommersant newspaper also reported Wednesday that the European Union had called on Ukraine to stop using more than its fair share of gas. Some 80 percent of Gazprom's gas supplies to Europe go through Ukraine.

The Ukrainian government first called for a reduction in consumption on Tuesday, but Gazprom said it hadn't seen any change.

Meanwhile in Georgia, strong winds and heavy snows have downed power lines in the western part of the country, cutting power to millions of Georgians already suffering a heating outage due to a natural gas shortage.

Snow was falling in the capital, Tbilisi, as residents stood in long lines to fill kerosene canisters for portable heaters.

Some brought jewelry and other valuables to pawn shops to scrape together enough money to buy heaters and fuel.

With temperature hovering just below freezing in Tbilisi -- and markedly colder in mountainous regions -- Georgia is suffering through its worst energy crisis in years.

Source: CNN

Hard Choices in Kiev

LONDON, UK -- Despite the recent parliamentary tribulations in Kiev following the vote of no confidence in Yuri Yekhuranov's administration inspired by his predecessor, Yulia Tymoshenko, there are ways in which the reformers could move head - if they see clearly the future of Ukraine's troubled revolution.

Prime Minister Yuri Yekhuranov

The fractiousness that has been the hallmark of relations between the triumphant Orange revolutionaries has allowed Viktor Yanukovych's Party of the Regions back into the electoral frame barely a year after its leader appeared to be politically buried.

Now his group party is leading in the most recent polls with 25 per cent voter support. So Yanukovych appears set fair to head the largest party in parliament, the Rada, following parliamentary elections on 26 March.


This would not bode well for further reforms. The Donetsk based party is backed by oligarchs, such as the Chief of Staff of the old Kuchma regime, Viktor Medvedchuk, and the ex-President's son-in-law, Viktor Pinchuk.

Rinat Akhmetov, owner of System Capital Management and reportedly Ukraine's richest man, will join the party as a prospective member of the Rada.

Backers such as these will ensure that the line between business and politics remains blurred.

The stable and predictable business environment these oligarchs claim they wish to see restored is most probably the baleful cronyism of the Kuchma era. Meanwhile The Party of the Regions is far closer to Moscow than Yushchenko's beleaguered reformers.

Vladimir Putin will feel he has regained Ukraine after losing to the Orange coalition.


Tymoshenko's Motherland party is at 13.6 per cent in the polls while Yushchenko's Our Ukraine party trails in third place with 11 per cent. These figures are unlikely to change dramatically. That would leave no party with an overall majority capable of forming an administration in March.

On these figures, the Party of the Regions will gain some 175 seats in the Rada while Tymoshenko will receive 95 seats and Our Ukraine 79. Socialists, the ultra left Vitrenko bloc, the Popular Party and the Communists should receive some 25 or so seats apiece should they poll over the 3 per cent threshold to obtain Rada seats.

So coalition games will be the score.


There is little likelihood of Yanukovych and Tymoshenko joining forces.

Her party would not support such a move. Ideological differences aside, neither leader would be satisfied with anything less than the Prime Minister slot. Their recent unity on the No Confidence vote was a short lived marriage of convenience.

From Tymoshenko's point of view it was a chance to remind Yushchenko that he needs her to push through his policies. For Yanukovych it was a splendid chance to further embarrass Yushchenko ahead of the March elections.

It is unlikely that Our Ukraine would seek an alliance with Yanukovych.

Many of its members would defect to an opposition led by Tymoshenko. Our Ukraine could team up with the Socialists who supported Yushchenko during the Orange Revolution and possibly Rada Speaker Lytvyn's Popular Party.

However, to obtain some form of political legitimacy and muscle Yushchenko's party must seek out reconciliation with Tymoshenko.

One Orange

This is not impossible. Tymoshenko was wounded by her dismissal in September 2005, but will feel honour was satisfied by her dismissal of the Yekhuranov government.

There were solid alliance talks at the end of 2005 - and the parties' positions do not seriously diverge. Both believe broadly in the direction of reforms. Tymoshenko has said she will regard the Party of the Regions as her main opponents. She still regards herself as being on Yushchenko's side.

The sticking point will be whether Yushchenko will show similar political nous. This has not been a feature of his administration so far.

He approached reform as a technocrat, not a politician. He needs advisers with better political instincts to translate his plans into lasting and successful change. So far, he has achieved little, save the squandering of much of the goodwill bred by the Orange Revolution.

Constitutional Power

The dismissal of Tymoshenko in September ended by weakening the President's position - there than clearing of the air he had envisaged.

Tymoshenko had a valid point when she claimed that the recent gas deal with Russia that sparked the no confidence vote would only be valid for six months, and in no way represented a long term solution to this vexed issue.

No one knows better than Tymoshenko, a former energy billionaire, the temptations and potential corruption inherent to the barter capitalism represented by gas agreements with Russia.

Simply, Yushchenko must swallow his pride in March and ensure that his Our Ukraine party works with Motherland under Tymoshenko as Prime Ministership.

His choices are limited, but, if he fails to form such a coalition, there is little chance of a reform government.

Moment of Truth

Should the parties fail to reach agreement in the spring, the country's new constitution holds Damoclean sword for Yushchenko to wield.

If there is no majority within a month of elections then they face disbandment by the President and thus repeat elections and more uncertainty that will be damaging both politically and economically.

Source: Early Warning

OSCE Opens Election Observation Mission in Ukraine

KIEV, Ukraine -- The Organization for Security and Cooperation in Europe (OSCE) has opened an election observation mission in Ukraine for the upcoming parliamentary vote.

OSCE headquarters in Vienna, Austria

OSCE Ambassador Lubomir Kopaj of Slovakia is heading the mission, which consists of 12 members in Kiev and 50 others deployed across Ukraine. They will observe the electoral process and campaigns for compliance with OSCE standards for a democratic vote.

The OSCE has also requested another 600 observers for election day to monitor the opening of polling stations, the voting, and ballot counting.

Ukraine's parliamentary elections are scheduled for March 26.

Source: Voice of America

Wednesday, January 25, 2006

Ukraine Threatens To Turn Off Gas

KIEV, Ukraine -- Ukraine's prime minister threatened on Wednesday to turn off gas supplies to industry and temporarily halt industrial production in an effort to limit consumption, as Russia increased pressure on Ukraine to stop siphoning gas intended for a freezing Europe.

A Ukrainian man gets into his car in the centre of Kiev. Ukraine is in the grip of extremely cold weather with temperatures in the capital Kiev plunging to about -23 degrees Celsius (-9.4 Fahrenheit).

Prime Minister Yuriy Yekhanurov said such a move, which could cripple Ukraine's already fragile economy, might be necessary to ensure that residential and other consumers are fully supplied if the cold continues.

"The population must receive gas at a full level," Yekhanurov said. If industry "will not hear normal people's voices, we will have to use administrative measures. The government has the tap in its hands."

But, Volodymyr Shandra, minister for industrial politics, dismissed the idea of halting industrial production.

"We are not talking about stopping enterprises," he said, adding that industry might, however, be asked to rely on reserves and energy-saving technology.

Ukraine has been consuming record amounts of gas as temperatures have plunged to minus 25 Celsius (minus 13 Fahreheit).

Russia's state-controlled monopoly OAO Gazprom complained that Ukraine was tapping into transit pipelines pumping gas to Europe, which is also suffering from a cold snap. Russia warned Ukraine on Wednesday that it would be charged for its extra usage and said it was to blame for reported shortfalls in Europe.

"We are increasing gas supplies to the Russian-Ukrainian border on practically a daily basis, but the shortfall in supplies to Europe is increasing daily and correspondingly the removal of gas in Ukraine is increasing," Gazprom's chief Alexei Miller said in televised remarks.

Ukraine's Kommersant newspaper also reported Wednesday that the European Union had called on Ukraine to stop using more than its fair share of gas. Some 80 percent of Gazprom's gas supplies to Europe go through Ukraine.

The Ukrainian government first called for a reduction in consumption on Tuesday, but Gazprom said it hadn't seen any change.

Russia's Industry and Energy Minister Viktor Khristenko called on Ukraine to take urgent action.

"One should not be resolving one's own problems at the expense of neighbors, especially near and dear Poland, which is freezing," Khristenko said, according to Russian news wires.

Ukrainian factory heads insisted that they had already reduced consumption as much as possible.

Andrei Syomich, deputy chief executive at Dniproazot, a large producer of nitrate fertilizers, said the plant had already reduced consumption, but couldn't go much lower.

"We can't run the plant at a much lower rate of capacity utilization without damaging the equipment," he told Dow Jones Newswires. "It's beyond our possibilities."

Ukraine's factories are hugely energy inefficient, as are its power stations, which use 66 percent more gas than in Western Europe to generate the same amount of power. All stations have been working overtime in recent days to cope with the cold.

The dispute between Ukraine and Russia over gas echoes a spat earlier this year over the price of supplies. After Russia temporarily cut supplies to Ukraine, sparking outrage in Europe, the two sides agreed to a complicated, face-saving scheme whereby Ukraine would buy a blend of Russian and Central Asian gas at double the previous price via an intermediary.

Source: AP

Yushchenko's Referendum Threats Ring Hollow

KIEV, Ukraine -- President Viktor Yushchenko used the dual anniversary of Ukraine's unification into an independent state in 1919 and his own inauguration in January 2005 to provide concrete suggestions to escape the political crisis resulting from parliament's January 10 vote of no confidence in his government.

Ukrainian President Yushchenko addressing the nation

In an address to the country Yushchenko outlined a long list of achievements made in his administration's first year in office, such as media freedom, reducing the shadow economy, and improving social welfare and pensions.

Yushchenko also claimed, "Together we have proved that the Ukrainian nation is capable of building a modern, independent, and democratic state." He continued, "Today we say: Yes, I am a citizen of Ukraine and I am proud of it. This is the main achievement of the first year of my presidency."

Yushchenko also stressed Ukraine's democratic breakthrough under his watch. The New York-based Freedom House upgraded Ukraine from "partly free" to "free" in 2006. Yushchenko declared, "The year of 2005 was, first of all, the year when our community revised its values. And this is its historical significance. We have taken a new look at ourselves and our country, its history and its future."

On the day of his address, Yushchenko also issued a long decree outlining steps to ensure that the March 26 parliamentary elections will be free and fair. He called upon Ukraine's political forces to sign a memorandum in support of free and fair elections.

Ukraine has not held free and fair elections since 1994, before the reign of former president Leonid Kuchma. The 1998 and 2002 parliamentary elections used a mix of proportional and majoritarian voting, and the contests for the 250 majoritarian seats saw abuse of "state-administrative resources" that helped propel pro-Kuchma officials and businessmen to victory. The 2006 elections will be held using a fully proportional law that reduces the opportunities for such abuse.

Yushchenko's address heeded the call of many politicians to accept the legitimacy of the constitutional reforms that went into effect on January 1. "But, I do not regard them as ideal." Yushchenko reiterated that the amendments had been made without the input of Ukraine's citizens and therefore, "society should give its views regarding constitutional changes".

Earlier Yushchenko had said that the changes "were an anti-constitutional action, hidden from the people". Since spring 2005 there have been periodic threats by Yushchenko, his staff, and then-prime minister Yulia Tymoshenko to hold a referendum about the reforms.

Over the summer threats to hold a referendum faded, and Interior Minister Yuriy Lutsenko told Kommersant-Daily that Yushchenko had come around to accepting constitutional reforms.

This apparent shift of presidential opinion failed to reduce fears that Yushchenko would call a referendum. Parliament has deliberately stalled the swearing in of Constitutional Court judges for this very reason. Currently the Court does not have the quorum necessary to function, thus Yushchenko is unable to appeal to the Constitutional Court over the legality of the December 2004 constitutional changes.

Yushchenko's threats to hold a referendum are unlikely to materialize for at least five reasons.

First, Yushchenko did not agree to the constitutional reforms under duress. The changes were proposed during the December 2004 roundtable negotiations, a time when over a million Orange supporters had filled the streets of Kyiv. During those days, Yushchenko also had the support of the military, the intelligence services, and elements of the Interior Ministry, while both Kuchma and then-prime minister Viktor Yanukovych were increasingly powerless.

Second, unlike the Yulia Tymoshenko bloc, Yushchenko's Our Ukraine bloc always supported constitutional reforms. Our Ukraine differed from the centrist Kuchma camp and the political left (Communists, Socialists) only on timing. Our Ukraine insisted they should come into effect after the March 2006 elections, while the Kuchma camp and the left supported their introduction after the 2004 elections.

Third, Yushchenko did not avail himself of the president's extensive powers contained in the constitution that was in effect through until 2005. Why call a referendum to restore powers he had squandered?

Fourth, if Yushchenko had agreed on the constitutional reforms merely a tactical ruse to overcome the December 2004 presidential crisis, he could have scheduled a referendum immediately after coming to power in January 2005. Tymoshenko, then prime minister, would have wholeheartedly supported such a move at a time when the opposition was still in disarray. But since being removed as prime minister in September 2005, Tymoshenko has moved towards support for constitutional reforms.

Fifth, Yushchenko cannot risk alienating the Socialists by calling a referendum, as he will need them in any coalition in the 2006 parliament. The Socialists will abandon Yushchenko if he goes ahead with a constitutional referendum.

These five arguments suggest that a constitutional referendum would only be called if the March elections go badly for Yushchenko. Like Kuchma in 1996, Yushchenko would seek a referendum because he did not like the political configuration of the new parliament.

By threatening to hold a referendum on constitutional reforms, Yushchenko is misplacing his energy. Instead, he needs to focus on winning the 2006 elections, re-uniting the Orange camp (that he himself divided by firing Tymoshenko in September 2005), and creating a pro-reform and pro-presidential parliamentary majority in the newly elected parliament.

Source: Eurasia Daily Monitor

Signature Of Ukraine-Russia Gas Deal Put Off Again

KIEV, Ukraine -- The signature of agreements sealing a deal on supplying Russian gas to Ukraine at sharply increased prices has been postponed again pending further study, Ukraine's Prime Minister Yuri Yekhanurov said on Wednesday.

Gazprom's headquarters seen in Moscow

Russian gas giant Gazprom briefly cut supplies to Ukraine in the New Year during a tense contract dispute, affecting shipments to anxious customers throughout Europe.

"It looks today as if the agreements will not be signed. Experts are continuing to work on this, Russian experts are here and working," Yekhanurov, who had suggested the deal might be signed on Wednesday, told a cabinet meeting.

"Unfortunately, we are not yet going ahead with the signature. Consultations with Gazprom are proceeding."

The Kremlin makes no secret of its dislike of the West-leaning stand of Ukraine's President Viktor Yushchenko who rose to power a year ago after mass protests forced a rerun of an election initially won by a Moscow-backed candidate.

In Moscow, a Gazprom official linked the postponement to differences over the future activity of a new joint venture agreed under the January 4 deal to supply the gas.

Officials had originally hoped to sign documents last Saturday pertaining to the agreement, hotly debated as Ukraine gears up for a March 26 parliamentary election.

The deal, which prompted Ukraine's parliament to dismiss the liberal government of Yushchenko, provides for gas to be supplied at $95 per 1,000 cubic metres instead of the previous price of $50.

Yekhanurov told the cabinet efforts were being made to cut record gas consumption amid a prolonged cold snap and allegations by Gazprom that Ukraine was exceeding agreed levels.

He said if the weather persisted, he would urge industrial users to cut levels "even if it means suspending their main production".

Last weekend Yekhanurov said Ukraine wanted clarification on pricing mechanisms and on how long prices would remain valid.

The premier also said questions had been raised over whether ministers who had been formally dismissed were empowered to sign the deal.

The dismissal of the government, on grounds that the gas deal betrayed Ukraine's national interest, has plunged Ukraine into a constitutional crisis ahead of the March 26 election. Yushchenko refuses to recognise the government's dismissal.

Source: Reuters

Tuesday, January 24, 2006

Ukraine Admits Withholding Russian Gas Meant for Europe

KIEV, Ukraine -- A Ukrainian Naftogaz official has admitted Kiev has been withholding some Russian natural gas exports meant for customers in Europe, where several countries have reported falls in gas supplies amid a severe cold weather snap.

A worker checks gas pipelines in the Transit Divison Velke Kapusany by the Slovakia-Ukraine border

“We have in fact allowed the withholding of gas in excess of the contract during the past day,” an official with Ukraine’s state-owned energy company, who wished to remain anonymous, told AFP.

However, he declined to say how much gas Ukraine — which transports the vast majority of Russian gas exports to Europe — was using over and above its agreed contract with Moscow.

“But we are certain that according to monthly totals, Ukraine will withhold exactly the volume agreed with Gazprom,” the official said.

Earlier, a spokesman for Ukraine’s Prime Minister Yury Yekhanurov denied charges by Russia’s state-owned Gazprom giant that Kiev was withholding European supplies.

Although gas consumption in Ukraine has risen to record levels because of a severe cold snap gripping the country, “the increase of gas use in Ukraine has not at all affected the carrying out of our transport obligations,” spokesman Valentin Mondrievsky told AFP.

Russia’s state-owned Gazprom monopoly on Monday admitted for the first time that it was not entirely fulfilling its contractual obligations to clients abroad because Ukraine was retaining some of the exports.

“You can call it withholding or taking, legal or illegal — call it whatever you like,” Gazprom’s deputy chief Alexander Medvedev said.

“But what is happening is that gas is remaining in Ukraine at higher volumes than envisioned. This prevents us from fully fulfilling our obligations to our foreign customers,” he said.

Around 80 percent of Gazprom’s exports to Europe pass through a pipeline network located on Ukrainian territory.

Temperatures in some parts of the country have plunged to lower than minus 30 C (minus 22 F), placing the country’s energy systems under enormous strain.

The Ukrainian premier said Ukraine had consumed a record 407 million cubic meters of gas in the past day, some 43 percent more than during an average winter day when temperatures hover around 0 C (32 F).

Tensions between Russia and Ukraine have persisted over a new gas pricing deal signed by the two sides on Jan. 4 that resulted in the near-doubling of the price Ukraine pays for natural gas.

European countries including Italy, Austria, Poland, Hungary, Croatia, Slovakia and Romania have recently reported drops in supplies of gas shipped to them by Gazprom.

Bosnia said Monday its supplies had been curtailed by one-fourth for the past five days.

Gazprom’s travails were compounded Sunday when explosions on a section of pipeline in southern Russia halted gas supplies to another ex-Soviet republic, Georgia, where President Mikhail Saakashvili accused Moscow of deliberate disruption to his country’s energy supply.

The company used an alternative pipeline route through neighboring Azerbaijan to restore some supplies to Georgia on Monday.

Gazprom had previously stated that it was fulfilling all of its basic gas delivery obligations to clients in Europe but was not in a position to meet their demands over and above those obligations, due to severe cold weather gripping Russia and soaring demand at home.

Source: MosNews

Yanukovych Blasts Yushchenko Speech

KIEV, Ukraine -- Ukraine's Regions Party leader Viktor Yanukovych said President Viktor Yushchenko's recent televised speech did not give an in-depth analysis of the 2005 developments in Ukraine or present an effective plan for overcoming the consequences of the economic and political crisis.

Viktor Yanukovych

"Being extremely concerned over the general decline of the situation in the country, the public expected to hear an in-depth analysis of what happened over the last year, and, primarily, a real plan of actions to overcome the consequences of the crisis in the political and economic spheres," says Yanukovych's statement distributed by the Regions Party's press service.

Yanukovych accused the Ukrainian authorities of worsening relations with Russia, which, he said, led to the gas crisis.

"The president claims that Ukraine is seen as a predictable partner. I do not think so. The concerns of Europe's Russians gas consumers that arose as a result of the decline in the Russian-Ukrainian relations indicate the opposite.

The ill-considered steps of the Ukrainian authorities in the foreign policy area led to serious complications developing in the gas transit area for the first time since Russia began shipping gas through Ukraine," the statement says.

Yanukovych's party does not approve Russia's decision to raise gas prices for Ukraine.

Yanukovych also expressed doubt over Yushchenko's claims that upcoming Ukrainian parliamentary elections will be fair.

Source: Interfax

Yushchenko's First Year Reviewed

KIEV, Ukraine -- Ukrainian President Viktor Yushchenko receives mixed reviews from the country's press on the first anniversary of his inauguration.

President Yushchenko talking to reporters

Newspapers that generally support the president look kindly on his first year in office, but others express views ranging from disappointment to outright rejection.

The pro-presidential Ukraina Moloda praises Mr Yushchenko's leadership style.

"It is the style of a free person, a free politician, not tied to corporate interests as his predecessor Leonid Kuchma was, but one who is tied exclusively to the national interest," it says.

It also pays tribute to the president's "openness, honesty and self-critique".

"No other statesman in Ukraine", it goes on, "has even one per cent of Viktor Yushchenko's sincerity with the people".

It also perceives a balanced political approach "which unites two things organically: a high level of social security for citizens and a civilized market economy for Ukrainian business".

Culture change

The government paper Uryadovyy Kuryer welcomes what it sees as a culture change since Mr Yushchenko came to power.

In a front-page article headed "A year of democratic choice", it observes that "the majority of our citizens support the democratic order, and thus Ukraine's European vector".

"What is important from the point of view of the unity of the country and the nation is a refusal to support extreme radical political forces," it continues.

"In the Ukrainian system of values first place is gradually being taken by people's ability to live in new social conditions, their knowledge of legislation and independence in resolving day-to-day problems," it adds.


But other sources are less positive about the past year.

Oleksandr Levtsun, writing on the independent Ukrayinska Pravda website, recalls that "right after the Orange Revolution there were a lot of expectations and a lot of public trust in the new government".

However, he adds, "after just six months, the situation changed dramatically".

"The level of expectations crashed, and the public mood is now predominantly one of disappointment," he concludes.

A similar mood of regret is expressed in Gazeta po-Kiyevski, a newspaper that supports Mr Yushchenko's rival and dismissed prime minister, Yulia Tymoshenko.

"I have always sympathised with Yushchenko and have not changed my view," says Kiev historian Stanislav Kulchytskyy:

However, he goes on, "Mr Yushchenko has failed to get tougher on his opponents".

"His mistakes", Mr Kulchytskyy believes, "stem perhaps from the fact that he trusts people too much".

"He adheres to democratic principles, but his opponents often abuse democracy."

Russia unforgiving

Writing in its own voice, the newspaper believes Mr Yushchenko has little to show for his foreign policy efforts.

"Yushchenko started by looking for 'comrades' abroad," it says, "but Russia has not forgiven such demonstrative attention even to Poland and Georgia, let alone to the US, France and Britain."

"The 'elder sister' has not tired of sending signals that one shouldn't behave like that and that things should change," it warns.

The most hostile assessment comes, predictably, from Kiyevskiye Vedomosti, a daily controlled by businessmen close to the anti-Yushchenko and pro-Russian United Social Democratic Party.

"Everything has changed" in the past year, it believes.

"There are no more smiling people in the metro, united by trust in a better future, and the colour orange is seen only in fruit shops," it observes, concluding:

"The illusion which warmed the people during the events that went down in history as the 'orange revolution' has burst like a bubble."

Source: BBC News

Ukraine Takes Extra Russian Gas

KIEV, Ukraine -- Ukraine has admitted withholding some Russian gas intended for other European countries, but said it will still meet its contractual obligations.

A spokesman for Ukraine's state-owned energy firm Naftogaz said the excess gas was needed to cope with the especially cold January weather.

Earlier Russia's gas monopoly Gazprom said Ukraine was preventing Russia from meeting its international obligations.

Gazprom supplies a quarter of Europe's gas - most of it via Ukraine.

Supplies have been stretched in recent days amid plummeting temperatures in parts of Europe and Asia.

Ukraine's deep freeze

On Monday the Ukrainian Prime Minister, Yuri Yekhanurov, said his country's consumption of gas had exceeded 400 million cubic metres in the past 24 hours - a record level.

It amounts to about 43% more than during an average winter day.

Temperatures have fallen lower than minus 30C in Ukraine, severely straining its energy infrastructure.

Gazprom said it was compensating for the missing volumes by using underground storage facilities in European countries.

The energy giant said it was extracting nearly 85 million cubic metres of gas above-plan daily to meet the demand.

Tensions persist between Russia and Ukraine over a new gas pricing deal which doubles the amount Kiev has to pay for its gas.

They have postponed the signing of the deal, which was reached on 4 January.

Under the five-year deal, Ukraine will buy Russian and Central Asian gas for $95 per 1,000 cubic metres on average.

The gas dispute - which involved Gazprom temporarily turning off Ukraine's supply - disrupted supplies to a swathe of European countries.

Source: BBC News

Monday, January 23, 2006

Gazprom Reignites Dispute With Ukraine

MOSCOW, Russia -- Russia reopened its natural gas dispute with Ukraine on Monday as the Russian state monopoly Gazprom all but accused Kiev of stealing gas and reducing onward supplies to Europe amid an intense cold wave across Eastern Europe.

Gazprom deputy chairman of the board Alexander Medvedev

"We can call it gas shrinkage, offtake, legal or illegal, whatever," Gazprom's export chief, Alexander Medvedev, said during a sharp attack on Ukraine broadcast on Russian state television.

"But what is happening in reality is that gas is being held by Ukraine above agreed levels, which is not allowing us to fully meet our obligations with international buyers," he said. "We can't work like that."

Ukraine, a critical transit route for Russia's huge supplies to Europe, said that it was meeting its obligations.

But Prime Minister Yuri Yekhanurov of Ukraine also acknowledged the country was burning more domestic gas because of the cold weather in which temperatures in Kiev alone slumped to minus 25 Celsius, or minus 13 Fahrenheit, on Monday.

If Ukraine is consuming more natural gas, European importers might find supplies stretched further later this week since it will take several days before they feel the impact.

Gazprom supplies one quarter of Europe's gas needs and several of its customers, including in Italy and Hungary, have complained about reduced supplies over the past week.

"We will do everything to cut our domestic consumption," Yekhanurov said.

"Yesterday, Ukraine consumed 407 million cubic meters of gas and our Russian partners are nervous because of it," he told reporters, referring to consumption on Sunday.

Ukraine was using around 280 million cubic meters, or 9,900 cubic feet, a day at the start of the year, when temperatures were much milder.

Source: International Herald Tribune