Thursday, February 28, 2008

Protect Gongadze’s Legacy

KIEV, Ukraine -- The last year hasn’t been kind to mainstream and new media journalists in Ukraine. Seven years after the murder of Georgiy Gongadze, Ukraine’s journalists are still the targets of opprobrious intimidation and assaults.

Murdered Ukrainian reporter Georgiy Gongadze.

Examples are abundant: the independent weekly Dzerzhinets was shut down and its property seized for libeling a local police chief accused of corruption; the car of the editor of Ostriv’s online version was burned; a photographer of Segodnya newspaper’s Odesa bureau was beaten while covering a Tymoshenko opposition bloc meeting, and its office was subsequently evacuated following several weeks of bomb threats.

This Monday, Olena Chuhunnikova, director of Segodnya’s Odesa bureau, found the side window of her car smashed in, apparently for running a story about a car accident caused by the governor’s son.

No wonder Ukraine sunk in Reporters Without Borders' 2008 press freedom ranking in February.

Article 19 of the 1948 Universal Declaration of Human Rights says, “everyone has the right to freedom of opinion and expression” and also the right to seek, receive and impart information and ideas. With freedom comes responsibility for what is said or written.

Ukrainian journalists have shown they’re up to the task of reporting corruption and abuses of power.

Certain politicians, law enforcement officials, and businessmen with political clout show their disregard for the law and basic freedoms, thereby contributing to a misbalanced, venal society.

Ukraine is a signatory of the aforementioned human rights declaration and its Constitution guarantees freedom of expression, as do its laws, which punish crimes against media representatives with a maximum seven-year sentence.

While the legal framework is in place, while the will of authorities is misplaced.

The Ministry of Internal Affairs must investigate these crimes as a top priority in ensuring civil society in Ukraine. Prosecutors must punish the guilty to the fullest extent.

And the media must continue to shed light on such incidents as a herald of the state of freedom of speech in Ukraine.

And so we await the first arrest.

Source: Kyiv Post

Russia Plays President, Premier Against Each Other In Gas Talks

KIEV, Ukraine -- The rivalry between Ukrainian President Viktor Yushchenko and Prime Minister Yulia Tymoshenko spilled into Ukraine’s sensitive natural gas relations with the Russian Federation.

Russian Federation President Vladimir Putin (R) greets Ukrainian Prime Minister Yulia Tymoshenko during their Feb. 20 meeting in the Novo-Ogaryovo presidential residence outside Moscow.

Not satisfied with the Feb. 12 deal struck between Yushchenko and Russian President Vladimir Putin, Tymoshenko flew to Moscow on Feb. 21 to eliminate any intermediaries and reach long-term agreements with Gazprom starting in the first quarter for Ukraine’s gas supply.

Putin and Yushchenko agreed to eliminate debt, set up two new intermediaries to replace RosUkrEnergo and UkrGazEnergo, and keep prices at $179.5 per thousand cubic meters.

While she first expressed tacit support for the Feb. 12 agreement, drawing accusations from the Kyiv press corps that she abandoned campaign pledges, Tymoshenko upheld her stalwart position that Ukrainian government officials must negotiate directly with Gazprom.

“Among the reasons Tymoshenko went to Moscow was to show the Russians that she’s the new boss on the block,” said Taras Kuzio, president of Kuzio Associates, an independent consultancy and government communications company based in Washington.

The Russians were not amused.

After spending about three hours negotiating with Putin and five hours with top gas executives, including representatives from RosUkrEnergo and UkrGasEnergo, Tymoshenko flew back to Kyiv without a new compact.

She wasn’t empty-handed, having been slapped with a debt of $1.1 billion and four billion cubic meters of gas, which Yushchenko and former Prime Minister Viktor Yanukovych were never confronted with.

“There’s no rational explanation for why the news of this debt came out a month after Tymoshenko took power,” said Ivan Lozowy, a Kyiv political insider. “The Kremlim is simply playing power politics by keeping pressure on Tymoshenko and playing nice with Yushchenko.”

Upset by her interference, Yushchenko accused Tymoshenko of sabotage in not paying the debt that was just revealed to her.

The conflict reached its peak on Feb. 26, the eve of a planned meeting between Yushchenko and Tymoshenko, when Gazprom once again threatened to cut Ukraine’s gas supply.

The next morning, Tymoshenko didn’t meet with Yushchenko because of a reported illness, instead sending her right hand man Oleksandr Turchynov with a written report.

After the meeting, Turchynov declared Naftogaz paid back all its debt inherited from the previous governments.

The debt amounted to about $1.1 billion, and was covered by costs and dividends obtained by Naftogaz in 2006 and 2007, he said.

“From this debt is a single figure not recognized by the Ukrainian side — $22.8 million which was deceitfully charged for gas consumed in 2006 at 2007 prices,” Turchynov said at the Cabinet of Ministers meeting.

“And the cheats who tried to rape the Ukrainian state will answer for this," he said.

Yushchenko cited similar numbers that afternoon: Naftogaz was given $440 million to cover debt, in addition to $760 million paid out of an approximate $1.1 billion debt.

Meanwhile, by favoring Yushchenko over Tymoshenko, the Kremlin succeeds in exacerbating the conflict between them.

“The Kremlin blocking her from going to Moscow, criticizing her for not upholding agreements, is all grist in the mill of the Yushchenko team to keep Tymoshenko down,” Lozowy said.

The leader who succeeds in gas negotiations with Russia will gain the most influence in determining relations between the two nations, experts said.

Source: Kyiv Post

Wednesday, February 27, 2008

US Election To Lift Ukraine’s Role

KIEV, Ukraine -- Ukraine seemed to slip off the US government’s radar during the presidency of George W. Bush, which was synonymous with the Iraq War, a conflict that has consumed the State Department and US foreign policy for five years.

Presidential contenders and US Senators Barack Obama, D-Ill., Hillary Clinton, D-N.Y., and John McCain, R-Ariz., all visited Ukraine since the Orange Revolution and expressed strong support for the nation's Western integration.

Washington insiders believe no matter who wins the November presidential election, Kyiv will likely recover some of its status as a foreign policy priority.

“The importance of Ukraine as a successful former Soviet state is a high priority as the war in Iraq dies down, as it will,” said William Green Miller, the US Ambassador to Ukraine from 1993 to 1998.

"Ukraine is more and more economically successful, so it is critical to give it political support instead of more financial aid or technical assistance."

Of the three presidential contenders remaining, observers said Sen. John McCain, R-Ariz., would be Ukraine’s biggest advocate, as his record demonstrates. The likely Republican nominee lent his support to Viktor Yushchenko and the Orange Revolution from the very start, before the smoke cleared and other US politicians felt safer to extend endorsements.

He chairs the International Republican Institute, a leading advocate of Ukraine’s Western integration.

McCain has also been the staunchest challenger to Russian Federation President Vladimir Putin, avidly criticizing his authoritarian politics and even urging Russia’s exclusion from the Group of Eight (G8), the world’s greatest economic powers.

All three presidential candidates visited Ukraine at least once. McCain visited numerous times, most notably in August 2004 when he met with government and opposition presidential candidates.

Sen. Hillary Clinton, D­NY, visited in 1995, 1997, and a third time in 2005, and Sen. Barack Obama, D­Ill., paid a visit in 2005.

Clinton accompanied her husband in the 1990’s and was already supporting partnerships between hospitals in the United States and Ukraine, and airlifts of pharmaceuticals and other medical supplies.

In her second trip, she visited the victims of Communist repressions memorial in Lviv, where Clinton told the people, “In your fight for freedom, your fight for democracy, the American will stand with you.”

“After hearing pleas from Ukrainian women in 1997 to help combat human trafficking, which had become a growing problem in Ukraine, I helped initiate an international effort to combat trafficking, including several programs specifically to help Ukraine,” Clinton said in a statement.

The New York senator was also the honorary chair of the 1996 Chornobyl Challenge and received the Children of Chornobyl Relief Fund’s Lifetime Humanitarian Achievement Award in 1999.

In her campaign statement on Ukraine, Clinton did not forget to court the potential one million Ukrainian­American voters.

“I applaud the fact that Ukraine aspires to anchor itself firmly in the trans­Atlantic community through membership in NATO and look forward to working with Ukrainians and Ukrainian­Americans to reach that goal,” she stated.

Although Obama is not recognized as a foreign policy expert, he accompanied then­chairman of the Senate Foreign Relations Committee Sen. Richard Lugar, R­Ind., to Ukraine in 2005 as a newly elected senator to inspect and tour destruction sites for nuclear weapons, which culminated in a joint agreement between the two governments to reduce the risk of biological weapons spreading.

Obama, whose state of Illinois is home to hundreds of thousands of Ukrainians, issued a succinct statement.

“NATO’s upcoming summit in Bucharest in April 2008 is a critical opportunity to continue to build the Europe ‘whole and free’ that has been the goal of all recent US presidents,” his statement said. “I call on President Bush and all of NATO’s leaders to seize that opportunity.”

All three presidential candidates’ campaigns also recently issued statements supporting the Ukrainian leadership’s bid to enter NATO’s Membership Action Plan (MAP) at the April Bucharest summit.

Though still in the primary stage, McCain is far ahead of his chief rival, Mike Huckabee, while Obama and Clinton are in a neck­and­neck battle for their party’s nomination in late August at the party convention in Denver.

McCain’s statement of support called NATO expansion the heart of creating a “Global League of Democracies.”

“Georgia and Ukraine have expressed their desire for a MAP and we should offer it to them at the Summit,” his Feb. 9 statement read.

Regarding their Ukraine policy, “the best litmus test is their top foreign policy advisors, who are all friends of Ukraine through their work,” said Anders Aslund, a senior fellow at the Peterson Institute for International Economics, a Washington think tank.

In fact, both Clinton and Obama have Ukraine­friendly foreign policy advisers.

Clinton’s team includes Richard Holbrooke, who was in Ukraine during the Orange Revolution, former deputy secretary of state and Yalta European Strategy participant Strobe Talbott, and Madeleine Albright, who visited Ukraine as a former secretary of state.

Meanwhile, Obama’s top foreign policy adviser is Zbigniew Brzezinski, a co­founder of the Trilateral Commission and strong advocate of Ukraine’s integration into Euro­Atlantic structures.

In fact, both the Republican and Democratic parties favor Ukraine’s integration into Euro­Atlantic structures, and all three candidates offer similar approaches, experts said.

“Their policy will be consistent, as it has been on both sides of the partisan aisle, among journalists, and among think tanks that focus on Ukraine,” Miller said.

During the Clinton Administration, when Congress was controlled by Republicans, Ukraine was the third­largest US foreign aid recipient. By 2006, Ukraine received $115 million and didn’t rank among the top 10.

Meanwhile, some of Ukraine’s closest observers foresee “no fundamental change” in US foreign policy towards Ukraine following the Nov. 4, 2008 election.

“I expect there will be a great deal of continuity in US­Ukrainian relations when the new president takes office in 2009, whether that is Clinton, McCain or Obama,” said former US Ambassador to Ukraine Steven Pifer.

Energy security concerns will ensure Ukraine's priority status.

The US has been absent in seeking alternative pipeline routes from Central Asia, which should’ve been on its agenda when Russia shut off the taps on Jan. 1, 2006, said Adrian Karatnyckyj, senior fellow at the Atlantic Council in Washington and founder of Orange Circle, a Ukraine think tank in Washington D.C.

All three candidates remaining should make this a priority as they take office,” Karatnycky said. “It is very important to have an ongoing high level of engagement with Ukraine’s leadership during this critical transitional period.”

While McCain is widely viewed as the Republican Party’s nominee, March 4 could prove pivotal in the Democratic contest, with primaries in Texas, Ohio, Rhode Island and Vermont.

Most experts believe that if Clinton cannot sweep delegate­rich Texas and Ohio, the Democratic Party’s nomination is Obama’s. After the March 4 primaries, eight remain, which together mathematically do not have enough delegates to make up for potential losses in Texas and Ohio.

Source: Kyiv Post

Middlemen Blamed For Missing Gas

KIEV, Ukraine -- Ukrainian Prime Minister Yulia Tymoshenko on Friday rebuffed Russian accusations over huge missing gas volumes and blamed Moscow-imposed middlemen in a sign of new frictions over gas supply terms with Russia.

Yulia Tymoshenko

On Thursday, Gazprom told Tymoshenko at talks in Moscow it believed that 4 billion cubic meters had gone missing and were now considered Ukrainian debt. Gazprom earlier this month threatened to reduce supplies to Ukraine over payment arrears of $1.5 billion.

But Tymoshenko told her Cabinet on Friday it was two intermediaries -- RosUkrEnergo, which supplies gas to Ukraine, and UkrGasEnergo, which distributes the gas on the Ukrainian domestic market -- which were responsible for the missing gas.

"It turns out that they had managed in previous years to use the gas coming this year from Central Asia. They bought gas in advance and what did they do with it? Exported it or sent it to some other unknown place," she told ministers.

"Today, they have handed us an imbalance of 4 billion cubic meters, now considered debt for Naftogaz," Tymoshenko said, referring to Ukraine's financially troubled national oil and gas company. "They ran up huge debts, and not just in terms of money."

Tymoshenko's talks in Moscow on Thursday failed to clarify details of a gas agreement struck earlier this month by the two countries' presidents.

Tymoshenko held more than four hours of talks at Gazprom's headquarters after meeting Prime Minister Viktor Zubkov. Both she and Zubkov said they would stick to the agreements reached by the presidents, despite fears Ukraine's premier could challenge the deal.

Earlier this month, Ukrainian President Viktor Yushchenko and President Vladimir Putin clinched a last-minute deal to settle payment of Ukrainian arrears for gas supplies and, over time, to eliminate both RosUkrEnergo and UkrGasEnergo.

But Gazprom later said RosUkrEnergo, which is half controlled by Gazprom and half by two Ukrainian businessmen, may survive in some form.

Source: The Moscow Times

Will Ukraine Have A New Constitution?

KIEV, Ukraine -- President Viktor Yushchenko has begun his drive to reverse the 2004 constitutional reform. His goals include boosting presidential powers and weakening the legislature.

President Viktor Yushchenko

On February 20 Yushchenko convened the first meeting of the National Constitution Council (NKS), consisting of 97 experts and politicians, to share with them his outline for a new constitution.

The Council should start to work on February 26. Yushchenko expects a new draft constitution to be ready within six months, in time for the 2010 presidential election in which he will probably run.

The current Ukrainian constitution was adopted in 1996. Initially, it created a very strong president who could fire the prime minister and government any time and who formed governments single-handedly.

The reform of 2004, which was enacted in 2006, weakened the president vis-à-vis the Cabinet of Ministers and parliament, so the prime minister and government are now picked by a majority in parliament, rather than the president, and the government subsequently works more or less independently of the president.

Yushchenko’s supporters argued that the 2004 reform was devised to weaken him, making it difficult for Yushchenko to replace the corrupt post-Soviet elite. Yushchenko has never concealed his dislike of the reform.

In August 2007, he made public the idea of forming the NKS in order to reverse it. Yushchenko maintains that the current constitution is too imperfect to be amended, so an entirely new constitution should be drafted. On December 27 he signed a decree authorizing the NKS to draft a new constitution.

Addressing the NKS on February 20, Yushchenko made it clear that he would bypass parliament if MPs fail to cooperate in drafting a new constitution.

He said that the constitution will not necessarily be passed by parliament, but it can be adopted by a national referendum “at the initiative of the people.”

Yushchenko’s skepticism about assistance from parliament for working on a new constitution is justified, as people’s deputies are unlikely to gladly accept cuts to their authority.

He said that the constitution should provide for a “comprehensive status” for the president as the guarantor of national sovereignty, territorial integrity, and the constitution, and that the president should play a key role in shaping foreign policy, and national security and defense.

Yushchenko said that the remits of the president and the government in this field currently overlap. The Ukrainian edition of the Russian business daily Kommersant summed it up by saying that Yushchenko wants to make the presidency a separate branch of power.

Simultaneously, Yushchenko wants the constitution to cancel MP immunity from prosecution and to increase the role of regional governments, thereby weakening the parliament-backed central government.

In order to ensure support for a new constitution in a popular referendum, Yushchenko proposed giving citizens the right to appeal directly to the Constitutional Court, the right to draft laws and submit them directly to parliament, and the right to cancel laws by referenda.

The pro-opposition commentator Mykhaylo Pohrebynsky told Glavred that Yushchenko would violate the law by offering a new draft constitution for a referendum, because the current constitution allows only amendment; it does not say anything about invalidating the constitution.

However, Ivan Tymchenko a former chairman of the Constitutional Court (CC), said that the current constitution does not forbid the president from calling a popular referendum to approve a new constitution. He added, however, that Yushchenko should secure approval of his draft constitution by the CC before calling a referendum.

Commentator Oleksy Taran expressed reservations about the composition of the NKS. He noted that the Council includes very few representatives of non-governmental organizations and that several prominent constitutional experts, such as a former deputy parliament speaker Viktor Musiaka, were not invited to participate.

Among the top politicians sitting on the commission are Prime Minister Yulia Tymoshenko; her predecessor, Viktor Yanukovych; presidential chief of staff Viktor Baloha and several of his deputies; National Security and Defense Council Secretary Raisa Bohatyryova; parliament speaker Arseny Yatsenyuk; his predecessors Volodymyr Lytvyn and Ivan Plyushch; and Communist leader Petro Symonenko. The NKS also includes scientists and people’s deputies representing both the coalition and the opposition.

People’s deputy Dmytro Tabachnyk, who is one of the representatives of the opposition Party of Regions (PRU) on the NKS, said that his party and the Yulia Tymoshenko Bloc (BYuT) are against rewriting the constitution altogether.

He said that the PRU and BYuT can only back new constitutional amendments. Another PRU deputy, Inna Bohoslovska, was more outspoken. She warned that Yushchenko wants to strengthen the presidency “in accordance with the all-power-no-responsibility model like it was under [Yushchenko’s predecessor] Kuchma.” Symonenko also strongly disagreed with Yushchenko’s plan.

Source: Eurasia Daily Monitor

Tuesday, February 26, 2008

Gazprom Restarts Row With Ukraine

MOSCOW, Russia -- Gazprom, Russia's gas monopoly, has threatened to cut supplies to Ukraine by 25% - just two weeks after the two sides had seemingly ended their row.


The state-run Russian company said supplies to Ukraine would be reduced from 3 March unless Ukraine agreed to pay the arrears it is said to owe.

A previous row between the two sides saw Russia cut gas to Ukraine in 2006, also hitting exports to western Europe.

Western commentators accuse Moscow of using Gazprom as a political tool.

They say the gas dispute is just a small sign of the Kremlin's continuing anger at the Ukrainian government's pro-Western stance.

Earlier this month, Russia said it might target its missiles at Ukraine if its neighbour joined Nato and accepted the deployment of the US missile defence shield.

'Urgent measures'

The Russian and Ukrainian governments had apparently resolved the gas dispute two weeks ago after talks between President Vladimir Putin and Ukraine's President, Viktor Yushchenko.

However, the two presidents had only secured an outline deal, and it appears their officials have since failed to reach agreement on the exact details.

President Yushchenko has now ordered his Prime Minister, Yulia Tymoshenko, to "take urgent and exhaustive measures to pay Ukraine's debt for gas consumed".

"The government must fulfil all the high-level agreements," he added.

Source: BBC News

"This Isn’t Slovakia"

KIEV, Ukraine -- In the bustle of the capital city’s largest outdoor market, merchants are hawking fake Adidas shoes, Rolexes, fur, and leather coats. The sellers are as eclectic as their goods; many come from Asia and Africa to mostly homogenous Ukraine.

Two Ukrainian women sell sunflower seeds at the increasingly diverse Troyeshchyna market.

Workers at the Troyeshchyna marketplace, located on the left bank of the Dnipro River, estimate that at least 50 percent of those renting the tiny booths are foreigners. Some came on student visas, others as political refugees. Some paid smugglers who told them they were destined for the European Union, only to discover they still had some distance to go.

Malik, a 28-year-old Pashtun from Pakistan, said he was among 10 people unloaded on the outskirts of Kyiv two years ago and told he was in Slovakia. Refusing to disclose any other details of his journey, Malik said he paid $5,000 to be smuggled into Europe. Today, he rents five booths at the market, has a Ukrainian wife who converted to Islam, and is legally registered to live in the country.

“For now, I’m content,” said Malik, who asked that his real name not be used, fearing retaliation from smugglers who duped him into thinking he was in an EU country. “Managing five booths keeps me busy, and I have a wife and newborn daughter to come home to.”

On Fridays, Malik prays at a nearby mosque with other compatriots who work at the market and watches Pakistani television broadcasts via satellite at a nearby café. On this day, there was a larger than normal crowd, he said. Malik was happy to escape the frigid temperature and sip a cup of hot tea inside the café, while he and other customers watched a breaking news event in Pakistan.

Troyeshchyna is a microcosm of migration in Ukraine. A country that forms a land bridge between two vast markets – Russia and the EU – is witnessing a rise in both legal and illegal migration. According to the Ministry of Internal Affairs and the Border Guard Service, more than 60,000 migrants were detained at Ukrainian borders between 2003 and 2006. Other figures maintain the actual figure is many times higher.

The World Bank has listed Ukraine as the fourth largest migrant-harboring country, with more than 150,000 migrants officially registered and countless others residing illegally. The International Organization for Migration in Kyiv says the number of migrants entering the country is rising annually, but statistics can be sketchy because of the nefarious nature of the illegal trade. Ukraine is also a lure for asylum-seekers from its authoritarian northern neighbor, Belarus.

TOUGHER CROSSING

The pressure on Ukraine’s borders grew as neighboring EU countries prepared to join the Schengen visa-free travel zone at the end of 2007. Ukraine shares borders with Poland, Hungary, Slovakia, and Romania, and all but Romania are now part of the Schengen zone.

The 97-kilometer border with Slovakia sees much of the illegal traffic, because the thick forest and mountainous terrain make the area difficult to police.

Before Schengen, Ukrainian nationals had easier access to these countries, as did foreigners using the country as a transit to the West. Border issues were a topic on Prime Minister Yulia Tymoshenko’s recent visit to Brussels.

IOM says Ukraine’s proximity to the EU has “created new management challenges for Ukraine’s already strained system,” including the country’s health care and social services, as immigrants and asylum-seekers arrive hoping for quick transit to an EU country.

But migration is a two-way street in Ukraine. While the country has been a destination for Asians and Africans as well as citizens of other members of the Commonwealth of Independent States like Armenia and Georgia, there has also been a steady march west. The government puts the number of Ukrainian nationals living outside the country at 2.5 million. More than 1 million of them are in Russia.

Driven by economic hardship at home and the lure of higher wages, Ukrainian workers have sought jobs in Western Europe and more economically vibrant nations that joined the EU in 2004. More than 300,000 Ukrainians live in Poland, and 176,000 live in the Czech Republic.

There is also a darker side of this outflow – the IOM identifies Ukraine as a major point of origin for human trafficking in prostitution and domestic servitude.

Emigration from Ukraine has been a major concern for the EU. Slovak border police recorded 2,308 illegal crossings from Ukraine in 2006, nearly 10 times the number of illegal crossings from Slovakia’s four other bordering countries combined. The EU and national governments spent millions of euros on high-tech border crossings and detection equipment in preparation for the extension of the Schengen area.

NOT ALWAYS PARADISE

But for the newcomers to Ukraine, language barriers and cultural differences can make the integration process difficult from the start in this huge country of 47.5 million, where more than three in four people are ethnic Ukrainian and the rest are mostly Russian. Most of the migrants interviewed at Troyeshchyna didn’t speak either Russian or Ukrainian beyond numbers and a few simple words to describe apparel and footwear.

Evelyn Chong, a young girl from the Hunan Province of China, said she was visiting her brother, a worker at Troyeshchyna. She held a copy of a Chinese-language newspaper, one of two in Kyiv. Chong had only been in Ukraine for two months on a tourist visa. She declined to offer more than cryptic suggestions about her long-term plans. Chong preferred to answer questions about the women’s shoes she was selling.

Chinese comprised the fourth largest group of migrants detained by border police in 2003-2006.

The ethnic communities represented at Troyeshchyna have formed informal social support networks in the vicinity of the market. “Every Friday I visit a small Muslim temple not far from here,” said Barry Abdoul Karim of the West African nation of Guinea, pointing over his shoulder to emphasize the proximity of the makeshift mosque.

Karim is here on a student visa and is taking mandatory preparatory courses in Ukrainian language prior to applying for entry to Shevchenko University where he plans to study art. “I was an artist back home, but times were tough,” he explained. “A Ukrainian businessman who liked my work arranged a student visa for me.” Karim said Africans sharing a common language regularly gather for social picnics on weekends.

Some at the market declined to speak. A Nigerian who had been living in Ukraine for more 10 years refused to give his name but said the Ukrainian press that often interviews people at the market never portrays them in a positive light or quotes them in the proper context.

LIFE ON THE FRINGE

Despite their public presence in this bustling marketplace, many foreigners remain on the fringes of Ukrainian society, confronting prejudices and police harassment on a regular basis.

Maksym Butkevych, a board member of Amnesty International in Ukraine and a top television journalist, said the number of racially motivated attacks reported to the human rights organization began growing in 2006. He attributed the higher reporting rate to more publicity about immigrant abuses.

According to Butkevych, 35 incidents were reported in 2006. That number was surpassed in the first five months of 2007 alone. Recent incidents included the fatal beating of a 42-year-old Iraqi in Kyiv and the murder of 34-year-old Georgian Moris Yugashvili.

Butkevych said the list was incomplete, since many cases, particularly those in the regions, either go unreported or cannot be tracked because of inadequate statistics.

Migrants often fear reporting incidents to the authorities. “I have been living in Ukraine for eight years and have experienced xenophobia more than once, as have other members of the African community in Kyiv, which counts about 2,000 people,” said Charles Afante Yeboa, head of the Kyiv-based African Center. “But in most cases [victims] don’t go to the police, as they are often disposed toward us with hostility as well.”

Walich Harfouch, who is of Lebanese origin and publishes a paparazzi magazine, said Ukraine should learn from its European neighbors and enact anti-bias laws and rigorously prosecute racist actions.

On 12 February, the Council of Europe urged Ukraine to strengthen its legislation against racially motivated crimes and to adopt comprehensive anti-discrimination laws, citing a lack of prosecutions against such offenses.

“What we need is more statistical information and a systematic approach to the issue,” Butkevych said. “The second step is to stamp out ‘hidden racism,’ which takes place even in the Ministry of Internal Affairs.”

Immigrant advocates are concerned about the threat posed by skinheads in Ukraine after a Kuwaiti man reported being attacked by 10 people with a “skinhead appearance” in Odessa last July. The man was hospitalized with head injuries.

Skinhead movements are known to exist in Kyiv and most other large cities, including Kharkiv, Dnipropetrovsk, Lviv, and Odessa.

Government authorities insist there has been no systematic rise in racially motivated violence, but several rabbis and other critics have decried a lack of state and local policies promoting tolerance and countering discrimination. In the meantime, foreigners aren’t taking any chances. “We keep to ourselves,” Karim explained.

Source: Transitions OnLine

Gazprom Hits Ukraine With New Demands

MOSCOW, Russia -- It is reported that Russian gas giant Gazprom last week made new demands against Ukraine, insisting the country must return 4 billion cubic meters of natural gas, posing a major challenge to Ukraine which may deplete its natural gas reserves.


Ms Yulia Tymoshenko prime minister of Ukraine, who spent five hours in talks with Mr Alexei Miller CEO of Gazprom last week at Boryspil airport after arriving from Moscow, said the new demands had surprised her government.

She said “It appears that the problems are significantly worse than has been assumed by the government.

Ukraine, besides cash, also owes billions of cubic meters of gas that must be returned in kind.”

Ms Tymoshenko said that Ukraine will clear USD 1 billion debt that had been owed by Naftogaz Ukrayiny, the national oil and gas company, for gas supplies delivered in November and December 2007.

Naftogaz already paid a total of USD 284 million against the debt over the past seven days in two installments of USD 178 million and USD 106 million.

Gazprom has been earlier estimating the overall debt at USD 1.5 billion, which included USD 1 billion for gas supplied in 2007 and USD 500 million for gas supplied so far this year.

Source: SteelGuru

Monday, February 25, 2008

Texas Oilman Takes On Gazprom Over Giant Contract Claim

BERLIN, Germany -- In a court case closely watched by investors, a Texas company is accusing Gazprom of refusing to honor an investment and property agreement in one of the biggest natural gas fields in Russia.

Richard W. Moncrief

Richard Moncrief, chairman of Moncrief Oil International, said he had decided to use the German courts to establish what he said was a 40 percent stake worth $12 billion, in the vast Yuzhno-Russkoye field in western Siberia.

The field is intended to supply the underwater Nord Stream pipeline, through which Russia will be able to supply natural gas directly to Germany and Western Europe, bypassing Ukraine, Belarus and Poland.

Gazprom, owned by the Russian state, is the world's largest natural gas company, with a vast network of fields in the Arctic and Siberia.

Moncrief obtained the stake in the Yuzhno-Russkoye field a decade ago, with a Gazprom subsidiary holding the remainder, according to documents filed in court in connection with the lawsuit and reviewed by the International Herald Tribune. Moncrief insists that his claim is still valid, while Gazprom has neither rejected nor accepted it.

His hopes, he said, were now pinned on the Landgericht Berlin, a regional court that will decide within a few weeks whether Moncrief can begin proceedings against Gazprom in the German capital.

If so, it could cause Gazprom "just a little embarrassment," according to Anders Aslund, a Russia specialist at the Peterson Institute for International Economics in Washington.

"Taking over gas fields one by one has been a standard way of doing business by Gazprom," he said. "Few companies which have dared challenge Russia in the courts have won."

Klaus Nieding, the lawyer representing Moncrief in Germany, said he was "cautiously optimistic that the German courts will say 'yes' to German jurisdiction."

Under German law, if a foreign company has a subsidiary in the country, which in this case Gazprom has through its subsidiary Gazprom Germania, the courts may choose to exercise jurisdiction.

"If the court says yes, we will have an interesting situation, insofar as a Russian party is being sued in a German court," added Nieding. "Justice is not being sought in Russia. We do not have any illusions concerning Russian justice."

The case also raises important questions about the validity of contracts, property rights and the treatment of investors in Russia, issues that have been vexing ever since the collapse of the Soviet Union in 1991, legal experts said.

Big multinational companies have been venturing into Russia, with varying degrees of success, since the early 1990s. Royal Dutch Shell and BP recently ran into problems with the Russian authorities over the terms of investments and property rights. Those disputes were settled outside court, as the Russians tend to prefer.

However, the Kremlin has used the courts when doing so suited its purpose. It took Yukos, the Russian energy company owned by Mikhail Khodorkovsky, to court on charges of corruption and tax fraud. Khodorkovsky, once considered a potential presidential candidate, was sentenced in May 2005 to nine years in a Siberian prison. Yukos was broken up and most of its assets were taken over by Gazprom.

Moncrief, 65, a Texan whose private oil and natural gas business was established by his grandfather in 1935, said he did not intend to give up attempts to enforce his company's right to the field.

"This is about bringing out the facts about our claim," Moncrief said during an interview. "We do not view our agreement with Gazprom as a memorandum of understanding. We view it as a binding contract."

Moncrief was referring to the original contracts signed for a stake in the Yuzhno-Russkoye gas field in 1997 and 1998. He claims his counterpart was Vladimir Nikiforom, then the general director of a Gazprom subsidiary, Zapsibgazprom. Moncrief, however, has been unable to contact Nikiforom, who could be a crucial witness in court.

Gazprom declined to answer any questions related to the contracts.

"We prefer not to comment on the Moncrief situation," Dennis Ignatiev, a Gazprom spokesman, said in an e-mail.

The fate of the Yuzhno-Russkoye field is linked with the Nord Stream pipeline, which was supposed to begin operations in 2010, but which is facing delays in obtaining construction permits. The German-Russian joint venture includes a subsidiary of the German chemical group BASF called Wintershall, and E.ON Ruhrgas, another German company.

The deal for the pipeline was signed Sept. 9, 2005, by President Vladimir Putin of Russia and Gerhard Schröder, then the chancellor of Germany. Soon after losing his bid for re-election that same month, Schröder, a friend of Putin, was appointed chairman of Nord Stream, the company overseeing the construction of the pipeline.

Wintershall, in addition, became directly involved in Yuzhno-Russkoye. Gazprom offered it a 35 percent stake in 2004 in a deal that was concluded a year later - a deal that came as a surprise to Moncrief and his lawyers.

"In 2004, Gazprom silently began to search for new partners for Yuzhno-Russkoye," Nieding said. "It did not tell Moncrief."

During this time, Gazprom was doing little drilling in the fields, which the International Energy Agency estimates contains reserves of more than 700 billion cubic meters, or 25 trillion cubic feet, of natural gas.

Under the terms of the Moncrief contracts, reviewed by the International Herald Tribune, the Texas company first agreed on Sept. 17, 1997, to provide Zapsibgazprom, the Gazprom subsidiary, with technical know-how and business plans, as well as equity and debt financing from Western financial institutions in return for a stake in the gas field.

"It was agreed that Moncrief Oil International provide $1 billion financing for exploration of the field and all other technical support needed, versus a respective interest in the gas field," Nieding said.

The documents involving the financing arrangements show that Moncrief lined up Credit Suisse First Boston. By Nov. 12, 1997, the financing was arranged, the documents show.

A year later, Moncrief said, his stake was doubled to 40 percent. According to the documents signed at the time, on May 8, 1998, there was a meeting of the Gazprom board at which the deal was approved.

"A new company, JSC, was formed for the purpose of holding the license for Yuzhno-Russkoye," Nieding said. The documents stated that Moncrief Oil International was granted 40 percent of the shares in JSC. The deal was never implemented. Moncrief claims the field became the target of corrupt deals and was illegally split from Gazprom.

Foreign investors doing business in the late 1990s in Russia had to take enormous risks. Property rights, tenders and legally binding contracts were new concepts. Corruption was rife and a massive transfer of state property to the private sector took place, in many cases under highly dubious circumstances.

After being elected president in 1999, Putin started to bring Gazprom under the Kremlin's direct control. "To his credit, Gazprom got the gas field back," Moncrief said.

But Moncrief did not get back his stake, even though Gazprom "has never denied or terminated, or attempted to terminate the agreement," he said.

When Putin met President George W. Bush in 2002 in the United States, Moncrief said, there was a sense that the tide might turn in his favor. Bush and Putin referred specifically to his company, saying it could serve as a model for future cooperation in the energy sector. But nothing came of it.

The Kremlin, asked recently about that meeting, would not comment.

"This is a corporate issue," Dmitri Peskov, Putin's spokesman, said. "It has nothing to do with the Kremlin."

Moncrief attempted to sue Gazprom in a U.S. court in 2005. The court declined jurisdiction.

He sought to sue BASF in a German court two years ago, claiming the company had made a deal with Gazprom over stolen goods. But the Frankenthal district court said that Moncrief had failed to prove that BASF actively persuaded Gazprom to breach its contract.

Despite the legal setbacks, Moncrief said he remained determined to establish the title rights over Yuzhno-Russkoye. "We are going to stay in court and pursue this," he said.

Source: International Herald Tribune

Inexact Science

KIEV, Ukraine -- Bismarck called politics an inexact science – a very exact definition. This science, as old as sin, has no oracles or unchangeable rules. It is world of lasting interests, not friends. The prime interest is power – the only and absolute constant. Power is an end in itself.

Viktor Baloha

The secession of Viktor Baloha [Presidential Secretariat Chief] and six other members of the Our Ukraine – People’s Self-Defense from the pro-presidential bloc, the parliament’s continued blockade, the tongue-lashing that the Prime Minister received in public from the President, and another sweeping wave of dismissals in the Interior Ministry stem from the same root and clearly indicate the top leadership’s incompetence.

“For the first time in the country’s independent history, the president, the government, and the parliamentary majority are like-minded and united leaders who share common democratic values. For the first time, the three centers of power have the same views, goals, and approaches. For the first time, the legislative, executive, and judicial branches will interact organically and non-violently for essential reforms.” This is what the Orange leaders said when allying in the coalition. They promised to learn the lessons of their past mistakes.

Today the highest echelons demonstrate anything but unity. Contradictions between the President and the Prime Minister get deeper and more acute from day to day; the parliament ignores both; neither can lean on the coalition's majority. The camp of Orange companions is again plagued and pestered by intrigues, suspicion, jealousy, and rivalry. Their loud declarations of legislative and economic reforms are drowning in the bog of wrangles and mutual accusations.

This is the most nonsensical power structure in all Ukraine's years of independence: the opposition has no power de jure but wants to regain it; the ruling coalition has no power de facto but does not want to give up the last remainders of it. The blocked parliament is not the cause but the symbol of this political paralysis.

There is an interesting and very plausible version: it is Baloha who put parliament out of operation. Allegedly, it was his idea to send the notorious letter to the NATO Secretary General [requesting support for Ukraine’s bid to join the Membership Action Plan at the Bucharest summit in April]. Allegedly, it was Baloha who talked Parliament Speaker Arseniy Yatsenyuk into signing that letter. And it was Baloha who kept it all under wraps until the last minute.

Why? He knew how the opposition would react. He knew that the pro-NATO majority would stand its ground. He knew that parliament would be automatically paralyzed. He needed a disabled parliament, with scuffles at the rostrum, as an ideal background for any provocative presumptions.

The presumption of inconsistency of parliamentarianism in general and this parliament in particular would be a good pretext for raising the question of enhancing the presidential powers, dissolving parliament, or forming a grand coalition.

Whether these allegations are true or not, the reality is that parliament is paralyzed. Even if the opposition lifts the blockade tomorrow, it may well resort to this means again and again. Does the coalition have any effective “anti-jamming” tools? No. Will its members vote as one for bills initiated by Bankova (on abolishing MP immunity, on the imperative mandate, on the Cabinet of Ministers, on national referenda, on the National Guards, etc.)? No.

Ridiculous as it may sound, the parliament’s blockade plays into the hand of the coalition majority. This “timeout” delays the moment when they have to make hard decisions and conceals their disarray. The Orange coalition exists only on paper. The latest and brightest example was the long-awaited and much debated bill on purchases for the State Reserve: the Yulia Tymoshenko Bloc and the Regions Party voted for it as one while the OU-PSD faction demonstratively rejected it.

If you look at the list of bills on the parliament’s agenda, you can easily see quite a few issues on which the OU-PSD and the RP are likely to be unanimous. There are also quite a few points of friction between the RP and the Tymoshenko Bloc. However, there is hardly a bill in this list for which the OU-PSD and the Tymoshenko factions would vote unanimously.

This situation suits everyone partly and no one in principle. That is why each political force is trying to make the best and most of this pause in the lawmaking work. Negotiations among potential allies are in full swing. They may utterly dislike one another, but if they have to violate their personal views for power, it is worth all the candles and burnt bridges.

The fact that Baloha and his six comrades have seceded from OU-PSD proves once again the coalition’s deep stratification. The Tymoshenko Bloc and the OU-PSD have too different views on policy and economy – both domestic and foreign.

These teams regard each other as rivals in the next possible early parliamentary election. Their leaders regard each other as rivals in the possible early presidential election. They have done nothing to bridge their differences or at least try not to show their dislikes.

That is why it no longer matters on which side this or that member of the coalition is. The key question is whose. Any member of the OU-PSD who does not demonstrate loyalty to Viktor Yushchenko is automatically counted among Tymoshenko’s “secret agents”. His personal opinion does not count.

It is this approach (not Tymoshenko’s “subversive moves”) that has aggravated the conflict within the OU-PSD. Some members of the coalition object to Tymoshenko’s authoritarian style. At the same time, they hate to be silent lambs herded by Yushchenko’s follies or dummies in Baloha’s deal. They are supposed to cement the shaky coalition, but they are coerced into making a choice they don’t have.

In Baloha’s departure, many analysts see an attempt to build a new political platform for Yushchenko in view of a possible early parliamentary election. Others suspect him of stripping the stage for a grand coalition. There is a more logical explanation: firstly, Bankova wants to audit its loyal ranks; secondly, it wants to head off the process of inevitable “schism”. In this game, the first mover forces the opponent to respond.

What Are the Allies After?

Tymoshenko has huge plans, but limited resources. Her initiatives are blocked by the President and she cannot lean on the majority. Paradoxically, her main “reserve” is in the opposition camp and her prime “target” is Viktor Yanukovych. The poor man is gradually losing control of his faction (more and more members of which prefer to work for Rinat Akhmetov rather than their formal leader).

Besides, Akhmetov is now far more welcome than Yanukovych at the presidential headquarters. Tymoshenko, so much disliked by Yanukovych, is his easiest and shortest way back into the top office.

There is one problem: neither Tymoshenko nor Yanukovych can strike a formal deal. But there is a simple way out: their factions could vote together for the law on the opposition, granting it the right to hold the posts of first vice-Prime Minister and parliament speaker (or first vice speaker). Their factions combined have 331 votes – more than enough to override Yushchenko’s veto.

Then all formalities would be observed, Tymoshenko and Yanukovych would save their reputation, the coalition’s solidity would remain beyond doubt, and the RP would de facto remain in opposition. Both Tymoshenko and Yanukovych would easily substantiate the need to adopt the law.

Thus Yanukovych would get real opportunities to influence the government through his men in top executive posts and Tymoshenko would get a real majority (albeit not formalized) and secure adoption of any bills in defiance of Yushchenko’s vetoes.

This is just one of the possible scenarios which the two opponent forces are scoping out. This process is their natural reaction to the collusion between Bankova and Akhmetov.

Tymoshenko and Yanukovych are also looking for points of contact vis-à-vis Yushchenko’s plan to remake the Constitution, which both dislike. Both are for a strong presidency but are ready to revise their views and draft a common version (which would abolish the presidency or introduce a presidential election by parliament).

If Tymoshenko and Yanukovych struck that deal, they could have the new Constitution adopted by parliament and thus frustrate Yushchenko’s plan to adopt it via national referendum.

Besides, both Tymoshenko and Yanukovych would be able to achieve their tactical goals with minimal electoral losses as they would neither have to stop criticizing each other nor start demonstrating brotherly love.

Many doubt that Tymoshenko would risk an open confrontation with Yushchenko and give up on the idea of a strong presidency, but politics is a science in which anything can be revised. The same concerns Tymoshenko and the Constitution. Being an ardent advocate of the presidency, Tymoshenko changed her views when she was dismissed from the post of Prime Minister.

This is what she said in an interview during the 2006 election campaign: “During the election race in 2002, I campaigned for Our Ukraine not less than for my own party… We won, but you know what a raw deal we got then… I was the only political leader who sacrificed my personal ambitions and sided with Yushchenko in 2004. He won thanks to our support, too… And you know what a raw deal we got…‘I’m not going to step on the same rake again. This time I won’t entrust the fate of the nation to anyone…”

Two years ago, Tymoshenko tried to dissuade Yushchenko from calling a referendum on political reform [the amendments to the Constitution that enhanced the parliament’s and government’s powers at the expense of the president’s]. She said that he would surely lose because “80 percent of Ukrainians would support the political reform”.

Now that the political circumstances have changed, Tymoshenko is again speaking out against the political reform and for stronger presidential powers. Who knows if she might turn the tables again?

Does this mean that the Tymoshenko-Yanukovych alliance is inevitable? – Not at all, considering that politics is an inexact science.

Do Tymoshenko and Yanukovych deserve reprehension for such “separatism”? – Not more than Yushchenko who has long been negotiating with the RP. Yushchenko needs a majority in parliament no less than Tymoshenko. He knows that sooner or later, the OU-PSD will break up and some members of its faction will go over to Tymoshenko's camp.

But he also believes that its majority will remain loyal to him and will support any version of the Constitution and any format of the coalition (even an alliance with the RP) that he proposes. There is a question: is his confidence based only on Baloha’s promises?

Baloha must have convinced Yushchenko that the departure of the seven “dissenters” would speed up the process and help him form a grand coalition.

Meanwhile, OU-PSD is already showing early signs of an imminent breakup. Some members protest against Baloha’s intrigues, against the connivance of Yushchenko’s hare-brained projects, and against Yanukovych’s comeback.

Others prefer to keep dirty linen in the house, believing that it is better to have apparent powers than none. And there are those who will stop at nothing to get their ticket to the bounty land called Power.

The sad fact is that their number is growing day by day.

Source: Zerkalo Nedeli

Deja Vu Yulia?

KIEV, Ukraine -- It’s certainly an interesting approach to economics. Engage in politically destructive behavior, promise sweeping social payments in the subsequent elections, and then deal with the consequences later.

Yulia Tymoshenko

The direct effect of last year’s political crisis is inflation unacceptable for a country aspiring towards European standards.

Economists attributed last year’s 16.6 percent surge, the largest in seven years, directly to the political crisis that plagued the country the whole year.

Whenever elections roll around, producers and sellers raise prices in anticipation of campaign promises of generous social payments, whether it’s $5,000 for every second child or $200 for every citizen who lost bank deposits.

To keep bread prices down, last year’s government of Viktor Yanukovych tried something hardly innovative, imposing grain export quotas.

Now the government Yulia Tymoshenko, returning as prime minister under the premise of abandoning her 2005 market manipulation attempts, is aping the Party of Regions quotas, blocking exports on sunflower seed oil.

Prices for sunflower oil were among those to rise the steepest, more than doubling last year, long before Tymoshenko declared she would return $4 billion in bank deposits lost in the Soivet break-up.

Economists differ over whether these payments caused inflation to skyrocket 2.9 percent in January, but just the perception that more money is flooding the Ukrainian market is enough to do so, and the Tymoshenko government should have been better prepared.

Moreover, the Tymoshenko government should forewarn the business community whenever it thinks non-market approaches are necessary.

Export quotas are a tool of most countries, but they should be applied in a timely, transparent manner that allows market players to brace for the repercussions. They should also be within reasonable proportions, so as not to cause bigger problems than originally anticipated.

Advanced preparation, and even consultation, would also allow for the affected industry players to offer suggestions in dealing with an economic situation to avert non-market measures.

Safeguarding against inflation should be a consistent part of government policy. Putting out fires with export quotas offers no long-term solution.

Source: Kyiv Post

TeliaSonera Expands Its IP Network In Ukraine

STOCKHOLM, Sweden -- TeliaSonera International Carrier expands its extensive international backbone into Eastern Europe and sets up its first point of presence in Kiev.

TeliaSonera Senior Vice President Malin Frenning

Customers will benefit from the availability of high quality IP services and the ability to connect locally to Europe’s largest and fastest growing IP-backbone.

The expansion into Eastern Europe is an important strategic step in our ambition to become one of the three largest global IP carriers” said Malin Frenning Senior Vice President of TeliaSonera and Head of TeliaSonera International Carrier.

”Our Kiev POP is a tangible sign of our belief in the Eastern European market. Developing Eastern Europe presence and delivering high quality IP services locally and globally is the future for TeliaSonera International Carrier.”

Ukraine is one of Europe’s fastest growing countries in terms of economic growth.

The need for IP solutions is increasing as a result of heavily increased Internet usage.

Already today TeliaSonera International Carrier is providing services to telecom operators, Cable TV companies and Internet Service Providers in Ukraine.

TeliaSonera International Carrier provides wholesale international IP, Capacity and Voice services to major destinations in Europe and across the Atlantic.

The services are based on TeliaSonera International Carrier’s wholly owned European and trans-Atlantic networks.

As well as owning one of the largest network footprints in Europe, TeliaSonera International Carrier also has peering points in the US.

TeliaSonera International Carrier is the leading carrier of IP and Voice traffic in Europe.

Source: Business Wire

Sunday, February 24, 2008

The More Things Change, The More They Stay The Same

KIEV, Ukraine -- Just into his fourth year as president of Ukraine, Viktor Yushchenko is beginning to act a lot like the man he replaced during the country's Orange Revolution.

Leonid Kuchma (L) and Viktor Yushchenko

Former Ukrainian President Leonid Kuchma is often remembered for waffling on Western integration, crushing freedom of speech and overseeing a state apparatus steeped in corruption.

Orange Revolution hero Yushchenko can genuinely take credit for his unwavering support of Ukraine's bids to join the EU and NATO, and for allowing a diversity of views to flourish in the media and society as a whole. As for corruption, Yushchenko has made an effort to tackle it, but expectations are high and the problem deeply rooted.

Nevertheless, what both men have shared, like most politicians, is a desire to stay in power. That's why it may not come as a great surprise to see Yushchenko engaging in many of the same tactics of his predecessor as presidential elections approach.

For example, one of the great political achievements of Leonid Kuchma was to bridge the country's east-west divide by creating a sort of amorphous center-right status quo in parliament. To deflect mounting criticism of this self-feeding mass of lawmakers, Kuchma built the Communists up as the nation's boogieman from the Soviet past.

When a real opposition started to take shape behind fiery femme fatale Yulia Tymoshenko and the self-effacing technocrat Yushchenko, Kuchma became increasingly defensive, authoritative and oppressive.

A string of murdered journalists led to sometimes violent street protests and ultimately the Orange Revolution that swept Yushchenko and Tymoshenko into power.

Now Tymoshenko continues to play the champion of the people, the fighter against corruption, the western wind of change.

Naturally, this puts her at odds with Mr. Yushchenko, despite the fact that Tymoshenko is currently in charge of Yushchenko's government.

Yushchenko also served as premier - under Kuchma. Then after Kuchma fired him, the mild-mannered banker began a slow but sure rise to the presidency.

Kuchma always tried to depict the Western reformers of his time as whiners and opportunists, while using the reactionary Communists as a foil for his own dubious democratic image.

Yushchenko appears to be creating his own foil, or boogieman, to marginalize the ambitious and increasingly popular Tymoshenko.

Viktor Yanukovych, the villain of the Orange Revolution who has fumbled his brief hold on the presidency, the government and, more recently, the parliament’s largest faction, doesn’t need to be created – he already exists.

All Yushchenko needs to do is lure the powerful business wing of Yanukovych’s Regions faction into a new amorphous center-right faction that will also include Orange lawmakers still loyal to the president in the majority.

The more radical elements of the Donetsk-based party and their Communist allies will lose all semblance of a viable alternative to Yushchenko, who will then be free to concentrate his enriched resource on marginalizing Tymoshenko.

A first, tentative step toward achieving this goal, has already been taken. Last week, five lawmakers from the Orange majority (which includes Tymoshenko’s bloc and the smaller, nominally pro-presidential faction) quit the party behind the faction, but not the faction itself.

Unlike many lawmakers in the Our Ukraine party, which once served as Yushchenko’s flagship, all five are considered loyal to the president.

At the same time, Yushchenko appears to be improving relations with the moneybags behind Yanukovych’s Regions Party, billionaire Rinat Akhmetov.

For example, Regions lawmaker Raisa Bogatyreva, who is considered an Akhmetov loyalist, was appointed by Yushchenko to head the National Security and Defense Council (NSDC).

Yushchenko has long tried to develop the NSDC as an alternative to the Cabinet of Ministers.

And since taking office, Bogatyreva has played her role well, criticizing Tymoshenko’s government at every turn.

In this, the former head of the Regions faction has been assisted by Yushchenko’s Presidential Secretariat: Having been in the job only a couple of months, the braided premier has been rebuked for inflation, for not taking into account the president's proposals on the 2008 budget; and for the latest gas standoff with Moscow.

Interesting, Tymoshenko also fell afoul of Leonid Kuchma over her campaign to clean up the shady gas import business while serving as first deputy prime minister in the Yushchenko government.

Also like Kuchma, Yushchenko has done most of his shooting from his Secretariat, which both presidents entrusted to modern-day grand viziers.

Kuchma was served by Viktor Medvedchuk, the all-time bad boy of Ukrainian politics, while Yushchenko’s behind-the-scenes man is Viktor Baloha.

Just as Medvedchuk served as Kuchma’s lightning rod to opposition criticism, so is Baloha increasingly on the front line.

While Yushchenko spent a year and a half of his presidency keeping Yanukovych from assuming his executive power, Tymoshenko enjoyed the safety of the sidelines.

But if the president manages to create a new faction full of business heavyweights (drawing them from the current opposition as well as the Regions) he can neutralize both of his opponents to gain control over the parliament and, more importantly, hold on to the presidency.

Having failed in his fraud-marred bid for the presidency in 2004 and relinquished his hold on the government last September, Yanukovych has lost the confidence of Moscow and the powerful Donetsk industrialists.

Like his parliamentary ally top Communist Petro Symonenko, Yanukovych’s political support might soon be limited to the country’s shrinking population of angry Soviet vintage pensioners.

As its stands now, in a desperate attempt to keep from being ignored, the Regions faction has been reduced to blocking sessions of parliament on the pretext of Yushchenko’s NATO bid, which faction leaders themselves endorsed at one time.

Filling part of the gap left by Yanukovych will be his arch foe Yushchenko, who can offer Regions businessmen all kinds of support in the next expected wave of privatizations and land sales.

When Tymoshenko tried to fire privatization chief Valentina Semenyuk, Yushchenko blocked the order to show her who’s boss.

Unlike Tymoshenko, the president has also proven to be a friend of Moscow, allowing Russian gas giant Gazprom to get a nice foothold on Ukraine’s domestic gas market.

Like Kuchma, Yushchenko has figured out that to stay in power it’s not enough to be popular with the people and friendly with the West – especially when people like Tymoshenko are challenging him for this support.

Like Kuchma, Yushchenko realizes that support from Moscow and powerful Ukrainian industrialists is also important – especially considering that he has a better chance courting these interests than his populist and unpredictable lady premier.

To improve his chances of reclaiming the near absolute power enjoyed by Kuchma, Yushchenko has even set about changing the country’s constitution. Many of the president’s proposed changes, such as creating a bilateral parliament, in fact were first tabled by Kuchma.

Yushchenko isn’t Kuchma, and Ukraine isn’t the country it was four years ago. But, then again, the more things change the more they stay the same.

Source: Eurasian Home

Saturday, February 23, 2008

Klitschko Wins Unanimous Decision vs. Ibragimov

NEW YORK, NY -- Wladimir Klitschko is one belt closer to being the undisputed heavyweight champion after an indisputably dominant victory.

Ukrainian Klitschko celebrates defeating Russian Ibragimov in their boxing match after their IBF/WBO Heavyweight Championship fight in New York.

Far too strong and much too long, Klitschko barely took a punch while winning a unanimous decision over Sultan Ibragimov on Saturday night, defending his IBF title and claiming Ibragimov's WBO belt in the first heavyweight unification fight in nearly nine years.

"I'm happy to have three belts," said Klitschko, who also holds the IBO title. "I'm happy to get the WBO belt back. That was the first title I had."

Klitschko, the chess-playing Ph.D. from a famed Ukrainian fighting family, used physics and simple geometry to remove nearly all risk from his meeting with Ibragimov, the previously unbeaten Russian underdog. The 6-foot-7 Klitschko is at least a half-foot taller and 20 pounds heavier than Ibragimov, who constantly appeared to be flailing against a mean-spirited older brother.

With little more than an insistent jab, Klitschko (50-3, 44 KOs) slapped and herded Ibragimov around the ring in front of a Madison Square Garden crowd of 14,011 filled with Russians who whistled and booed during the frequent stretches of inaction.

"He was very difficult to fight," Klitschko said. "He kept backing off. He's very careful, but the result counts."

Ibragimov (22-1-1) constantly strained to launch punches too small and slow to find their mark, and Klitschko appeared fresh and mostly unmarked at the final bell -- even ready to go another 12 rounds with WBA champion Ruslan Chagaev, WBC champ Oleg Maskaev or contender Samuel Peter, the next opponents on his quest for heavyweight unity.

Klitschko is determined to bring order to boxing's fractured former glamour division by winning every major title. He appeared capable of the task in the most significant heavyweight fight in several years, winning his eighth straight bout and asserting his pre-eminence atop a division that has lacked an eminent champion since Lennox Lewis' retirement.

From the opening round, Klitschko used his long left arm to slap down Ibragimov's jabs with a patronizing ease. Klitschko also repeatedly stepped on Ibragimov's lead foot, further nullifying the smaller fighter's hopes of getting inside Klitschko's incredible reach.

Klitschko dominated nearly every round but did little significant damage until the eighth, when he staggered Ibragimov with a big left hook. Ibragimov slipped to the canvas later in the round, and Klitschko battered Ibragimov into the ropes early in the ninth.

"I thought he was a lot faster than he was in his last few fights," Ibragimov said. "My plan was to work on being more active and come straight forward, but of course it was tough. This guy held a lot."

Don Ackerman scored it 119-110 for Klitschko, while Chuck Giampa saw the fight 117-111 and Steve Weisfeld favored Klitschko 118-110. The Associated Press also scored it for Klitschko, 119-109.

Klitschko landed 44 percent of his 245 jabs, according to punch statistics that improbably credited Ibragimov with 81 power punches. Ibragimov landed just 97 total punches, while Klitschko averaged just 29 punches per round.

Boxing hasn't had an undisputed heavyweight champion since Lewis beat Evander Holyfield in November 1999 to gain the distinction he held for all but seven months until his final fight, a win over Klitschko's older brother, Vitali, in June 2003. Lewis, still quite comfortable in retirement, watched the fight from ringside as an HBO broadcaster.

As he showed even before toying with Ibragimov, Klitschko is serious about his plan to become a household name as the unified face of the heavyweight division. He took a pay cut to entice Ibragimov into the bout, and he already has said he'll next set his sights on Chagaev, who attended the fight, or the winner of Maskaev's WBC title bout with Peter in Cancun in two weeks.

The division has been divided ever since Lewis' retirement, with four largely unknown fighters from the former Soviet Union holding the four significant belts in recent months. Though the overall heavyweight talent level is thought to be better than in recent years, none of boxing's biggest bruisers are well known to casual fight fans.

But Americans still might warm to Klitschko, who's a major celebrity in Europe along with his older brother, Vitali, the former heavyweight who hasn't fought since December 2004. The younger Klitschko, who has a home in Beverly Hills and a penchant for fine suits, should win admirers for an engaging personality along with his fearsome physique and jaw-breaking punches.

Ibragimov has made marked improvements in his 18 months under trainer Jeff Mayweather, transforming from an undersized brawler into a fairly clever left-handed strategist. He won his title last year by outpointing Shannon Briggs, whose size advantages weren't worth much against Ibragimov's precision punches.

Source: Sports Illustrated

Ukraine On Language Lockdown

MOSCOW, Russia -- With a population of almost 50 million, Ukraine has long looked like the next rapidly developing film distribution market in Central Europe, set to follow the dramatic leaps that Russia has shown in the past five years.

Bilingual movie posters - Ukrainian (L) and Russian (R).

But despite an improving economic environment, there's a big problem in the works -- local legislation that has restricted distribution of international product if it comes with a Russian-language dub, even if it has Ukrainian-language subtitles. Major studios still largely treat territory as if it is controlled by Moscow.

First casualty was local release of "Asterix at the Olympic Games," which was due to go out on a 50-print subtitled release earlier this month, but did not receive a distribution license. The same fate hit release plans for "I Am Legend."

These linguistic complications are angering local exhibs. Ukraine is an effectively bilingual country with Russian-language speakers concentrated in the most prosperous Eastern regions, and in Crimea in the south, while Ukrainian speakers are largely in the poorer western regions. Capital Kiev is perceived as a largely bilingual city, with a slight preference for Russian.

Legislation stated that beginning 2008 all prints in territory must be in Ukrainian, but doesn't clarify why recent decisions from licenser the Ministry of Culture reject subtitled versions over a Russian-language dub. Apparently only subtitles dubbed over an original-language original will be accepted -- which means extra internegative costs for international players, though apparently licenses for major Russian-language product will be passed.

Heading up opposition to new legal measures, originated in early 2006 but only now coming into force, is Anton Pugach, director of major exhibber Multiplex Holding.

Pugach is aiming to collect 100,000 signatures against the measures to present to Ukrainian president Viktor Yushchenko. If that doesn't bring results, he's calling on fellow exhibitors to close down theaters for an indefinite period starting Feb. 27.

Pugach told Variety that players are against the move for three reasons. One, it's against the country's constitution, and goes against local court decisions of the past year. Second, it's against commercial logic, given that main B.O. in territory comes from the country's Eastern regions, where in centers like Donetsk protesters have been coming out on the streets in recent days. Effectively it's an ultimatum to force the studios to reconsider their regional partners, he says. And that will only drive potential viewers toward the Russian-language pirate DVD market.

Most importantly, however, the facilities for local dubbing just aren't in place, meaning that only major studio titles will be released, likely dubbed in Russia or elsewhere in Eastern Europe, where Ukrainian language talent is distinctly lacking.

"We just don't have the resources, human or financial, to do the job properly," Pugach says. That means that an annual release of around 200 films last year could likely drop to around only 30. Prime casualties will be mid-range studio product, as well as international indies, particularly from Europe. Concessions for arthouse fare may be on the Culture Ministry's books, but no details are yet forthcoming.

"What would be my preferred method of resolving this conflict? Through the courts, the president, the prime minister, or that the Culture Minister revised the legislation -- that's obvious," Pugach says.

Ukrainian culture minister Vasyl Vovkun says the language law was designed to support the home distribution market.

"The move to Ukrainian language films is part of a government project to develop a home-grown Ukrainian distribution industry," Vovkun says.

Pugach argues that Ukraine's best-known director, veteran auteur Kira Muratova, has for decades made her pics in the southern city of Odessa, always in the Russian language, and frequently as co-productions with Russia.

"How do we treat our prime director -- by country, by the language she shoots in, or by what?" he says.

If the majority of territory's screens indeed go dark this week, that's a question that may look all too irrelevant.

Source: Variety

Polish Vodka Producer Grupa Sobieski Buys Vodka Plant In Ukraine

WARSAW, Poland -- Vodka producer and distributor Grupa Sobieski, which is part of the French Belvedere group, bought a vodka and liqueur production plant Cherkassky LWZ in Ukraine, the company announced in a statement.


"In February 2008 the group bought the Cherkassky LWZ plant in Ukraine," the statement reads. The company didn't disclose the acquisition price.

Grupa Sobieski's financial director Dariusz Jamiola said that the Ukrainian acquisition is of strategic importance to the group.

"The acquisition in Ukraine is strategic for us," he was quoted as saying. "Now our brands[...]will be available also in Ukraine."

The company plans to produce its flagship Sobieski vodka brand in the Ukrainian plant. The company will also sell other products in Ukraine like Danzka vodka, Gautier cognac and Bulgarian Therga wine.

The company also hopes that the Ukrainian market, which is two times larger than the Polish alcohol market, will help increase Sobieski's revenues and position.

According to the statement, Ukraine is the second largest alcohol market in the world, behind Russia.

The Ukrainian plant will be the Polish vodka producer's second foreign production unit as it already owns a plant in Lithuania.

Grupa Sobieski has a 28% market share in the Polish spirits market.

In 2007 its revenue in Poland came to PLN 2.2 billion ($914 million).

The group's owner Belvedere Group, listed in Paris, plans to debut on the Warsaw Stock Exchange. Press reports say the debut on the Warsaw bourse could take place even this quarter.

Source: Interfax

Friday, February 22, 2008

Georgia, Ukraine Not In Running For NATO

MOSCOW, Russia -- The former Soviet states Georgia and Ukraine are not being considered for admittance to NATO, Russia's envoy to that body said.

Dmitry Rogozin

Both countries have asked to join the North Atlantic Treaty Organization, but the issue remains hotly debated.

Russia has asked both countries not to join, fearing their membership in NATO could harm Russia's security, RIA Novosti reported Friday.

"NATO is currently considering the admission of only one country, which is Croatia," said Dmitry Rogozin, the Russian representative to NATO.

"My partners are skeptical about the admission of Macedonia and Albania. There are no discussions at all about Ukraine and Georgia."

Russia is wary about NATO's ongoing expansion. At his last annual press conference in the Kremlin, President Vladimir Putin warned that Russia could re-target its missiles on Ukraine if that country joined NATO.

Source: UPI

Opposition Uses Ukraine-NATO Issue When Politically Expedient

KIEV, Ukraine -- For over a month, the Ukrainian parliament has been in a forced recess as the opposition blocked the legislature to protest a joint letter to NATO signed by President Viktor Yushchenko, Prime Minister Yulia Tymoshenko, and Parliamentary Speaker Arseny Yatsenyuk.

Head of opposition, pro-Russia Viktor Yanukovych

The January 15 letter asked NATO to consider offering Ukraine a Membership Action Plan (MAP) at its April summit in Bucharest.

Under the 2006 constitution, Yushchenko can dissolve parliament if it does not function for 30 working days. However, he exercised that power in April 2007 and doing so again in less than a year would be an unpopular move with unknown consequences.

Of parliament’s three largest factions, only the Tymoshenko bloc (BYuT) would likely gain from pre-term elections. Based on current polls, the Party of Regions and the president’s Our Ukraine-People’s Self Defense (NUNS) bloc would poll even less than they did last year.

In the September 2007 elections, BYuT increased its support by 8% over the 2006 election, finishing only 3% behind Regions. BYuT would likely become the largest parliamentary faction after a 2008 vote, because of a combination of declining support for Regions and NUNS and the rising popularity of the Tymoshenko government following the re-payment of lost Soviet savings to Ukrainian citizens.

In addition, NUNS’s relationship with the president is increasingly tenuous. Presidential chief of staff Viktor Baloha resigned from NUNS on February 15, after its nine disparate parties failed to unite as a pro-presidential party of power (see EDM, February 20).

Given these factors, odds are that political leaders will find a way to compromise and avoid early elections. Yushchenko and Baloha would not want to head into the 2009 presidential elections with an even larger BYuT parliamentary faction, which already is double the size of NUNS.

Yatsenyuk has proposed a compromise to unblock parliament; specifically, asking all factions to refrain from using this tactic in the future. Yatsenyuk has also called upon all factions to recognize the legality of legislation on NATO that was adopted under former president Leonid Kuchma and that Regions and other pro-Kuchma centrist forces endorsed.

The Ukrainian media has recently published Kuchma-era official documents that outline Ukraine’s goal of NATO membership. In 2002-2004 Kuchma and then-prime minister Viktor Yanukovych, head of Regions, initiated and fully supported Ukraine’s drive to NATO membership.

In November 2002 NATO initiated annual NATO-Ukraine “Action Plans,” and the 2002-2004 Yanukovych government fulfilled the first two.

Former U.S. ambassador to Ukraine Steven Pifer, now a senior adviser at the Center for Strategic and International Studies, told Jamestown that the Ukrainian leadership and NATO understood that there was little difference between “Action Plans” and “Membership Action Plans.”

Both require Ukraine to undertake a wide range of military, political, and economic reforms. According to Minister of Foreign Affairs Volodymyr Ohryzko, Kyiv is now seeking a MAP because Ukraine’s cooperation with NATO has outgrown the five Action Plans.

In 2004 the Yanukovych government signed on to a strategy for Ukraine’s drive to NATO drawn up by the president’s think tank, the National Institute for Strategic Studies. The plan has four stages:

2002-2003: prepare the legislative basis for Ukraine’s NATO membership;

2004: Ukraine enters into a MAP;

2007: NATO invites Ukraine to join the alliance;

2008: Ukraine joins NATO.

This month Prime Minister Tymoshenko publicly apologized for not succeeding in reaching the Yanukovych government’s 2008 NATO membership goal.

Importantly, the four-stage strategy never included a referendum on NATO membership. This demand emerged during the latter stages of the bitter 2004 president election, together with elevating Russian to a state language. Both issues were introduced by Russian political advisers working for the Yanukovych campaign.

Regions has raised the demand for a referendum on NATO whenever it has been in the opposition – in 2005-2006 and again since the 2007 elections.

This duplicitous strategy of being radically opposed to NATO only when in opposition could be seen further in documents adopted by Yanukovych governments on July 17, 2003, and October 5, 2006, that gave Ukraine’s wholehearted support to NATO military operations in peacetime, during crises, and in military conflicts.

Yushchenko and Yatsenyuk see no need for a referendum ahead of a MAP, and the president has described the call for a referendum as “political adventurism.”

While acknowledging the need for an eventual referendum, Yushchenko has promised this would be many years away, only when Ukraine was on the verge of joining NATO, as occurred with other NATO candidates.

Regions seeks to hold a referendum in April. In a February 12 statement, Yanukovych said, “We are against any steps that would take our state to the North Atlantic Alliance without the agreement of the Ukrainian people.”

NATO is publicly receptive to Ukrainian membership, but some large Western European members, such as Germany, oppose a Ukrainian MAP. Such opposition within NATO can only be overcome if the Ukrainian leadership is united on the question of seeking a MAP. Herein lies the crux of the problem.

Following the Orange Revolution NATO was more receptive toward Ukraine joining, and a MAP for Kyiv was a serious prospect at the November 2006 Riga summit. However, this step depended on Ukraine creating an orange coalition after the 2006 elections, a strategy that failed because of Yushchenko’s unwillingness to see Tymoshenko return as prime minister.

However, Tymoshenko did just that after the 2007 elections. But her approach to NATO membership, as seen during her January 28-29 visit to Brussels and her cancellation of a presentation to the February 8-10 Munich security conference, is more lukewarm than that of Yushchenko and NUNS.

Source: Eurasia Daily Monitor

Ukrainian Traffic Police Scandal

KIEV, Ukraine -- Ukrainian President Viktor Yushchenko has told all top officials of the nation's traffic police to submit their resignation after a scandal emerged when the speaker of the Ukrainian parliament said that a traffic police commander cut off his car on a roadway and gave him an indecent gesture.

Arseniy Yatsenyuk

The speaker of the State Rada, Arseniy Yatsenyuk unexpectedly appeared at the session of the Interior Ministry's collegium devoted to planned increase of traffic fines and said that he wanted to tell about a recent accident.

Yatsenyuk said that a short time before he had been roughly cut off on the highway by a Porsche Cayenne SUV. The Porsche paid no attention to his siren and flashing lights and refused to give way to parliamentarian's car.

He also said the driver rolled down his window and showed Yatsenyuk his middle finger.

The outraged speaker tried to establish who the arrogant driver was but, in his words, the leaders of the Ukrainian traffic police refused to answer his questions.

Then, the politician did some research and learned that the car belonged to Lieutenant Colonel Alexei Kozha, deputy commander of the Kobra squad - the special unit of the Ukrainian traffic police.

Yatsenyuk told the assembly that according to his information Kozha had three cars registered in his name - a $200,000 Porsche Cayenne, a $100,000 Toyota Land Cruiser and a Mitsubishi.

The cars were parked at the Kobra unit parking lot and the officer used the Porsche for his daily commute to work.

President Yushchenko immediately reacted to the report by saying that the head of the state traffic police, his deputy in charge of the Kobra unit, Kobra commander and the officer in question must at once submit their resignations.

"No one gave you rights to behave like this," the president said. Traffic police chief Sergei Kolomiyets walked out of the room without saying a word.

By the end of the day, Kolomiyets and his deputies were relieved of their duties.

The scandal is still developing, but there are already some comments from other participants. The traffic police said that Alexsei Kozha had been dismissed from their ranks before the incident with the speaker and they do not bear any responsibility for his behavior.

Kozha himself told reporters in a televised interview that he made no obscene gestures but just waved his hand signaling the car behind him to move along.

Source: The Moscow Times

Thursday, February 21, 2008

Ukraine Reaches Accord With Gazprom: Tymoshenko

MOSCOW, Russia -- Ukrainian Prime Minister Yulia Tymoshenko said Thursday she had reached a deal with Russian gas monopoly Gazprom over debts owed by Kiev for Russian natural gas, Interfax news agency reported.

Yulia Tymoshenko

"The debt for gas provided in 2007 is settled," the pro-Western prime minister told journalists upon her return to Kiev after a visit to Moscow.

Earlier in the day, Gazprom had said the two sides had failed to reach a deal, but that talks were to continue.

Tymoshenko said the Ukrainian government would endorse paying off the debt for the October-December 2007 gas supplies at a meeting on Friday, with payment to be made in a matter of days.

She also said she expected a deal to soon be reached on 2008 debt.

The deal reached involves Ukraine paying off the debt at a price of 130 dollars (88 euros) per 1,000 cubic metres, she said.

On February 12, President Vladimir Putin and his Ukrainian counterpart Viktor Yushchenko announced a deal in principle to avert a threatened gas cut-off over Kiev's debts, but the agreement had yet to be finalised.

Tymoshenko visited Moscow to settle the matter.

Yushchenko had accused Tymoshenko's government of failing to fulfil the agreement he reached with Putin, saying only a fraction of the 1.5-billion dollar (one-billion euro) debt had been paid back.

The dispute raised concern in European capitals as it echoes a gas pricing row in 2006 that led to gas disruptions across Europe after Gazprom cut supplies to Ukraine, the main transit route to the European Union.

Tymoshenko, who came to power in December last year, has vowed to root out what she regards as corruption in the two countries' gas relationship and wants to stop the practice of using intermediaries in gas deals.

Ukraine relies on Turkmenistan and other former Soviet republics in Central Asia for around three-quarters of its gas supplies, with the rest coming from Russia.

Source: AFP

Jessica Simpson Rules The Box Office – In Ukraine

NEW YORK, NY -- Is Jessica Simpson the David Hasselhoff of Ukraine? The blond starlet seems to be the toast of the Eastern European nation.


Her latest film, Blonde Ambition, hit No. 1 in Ukraine, grossing $253,008 for the weekend of Feb. 14-17, Box Office Mojo reports.

It's a huge reversal of fortune for the film, which bombed back home. In December, Blonde Ambition had a run in eight Texas theaters, grossing just $1,771 in its opening weekend.

How to explain the comedy's success abroad? One word: escapism.

"The former Soviet nations have a sweet tooth for straight-up comedies," Conor Bresnan, editor in chief of Box Office Mojo International, tells PEOPLE.

"When these comedies have big name celebrities like Jessica Simpson's, that's all that's needed to sell the movie. Russian and Ukrainian audiences have an even bigger urge for escapism than Americans. So, films like Blonde Ambition will gross more than No Country for Old Men."

And this may only be the beginning for Blonde Ambition.

Next stop: Bulgaria.

Source: People Magazine

Wednesday, February 20, 2008

Demand For Mobile Services Rises As Market Saturates

KIEV, Ukraine -- Just two years ago, a company offering mobile phone services in Ukraine’s dynamic, burgeoning telecommunications market stayed competitive simply by offering low rates and cheap services, easily expanding its customer base as the market gained 25 million new subscribers in the past two years.

The BlackBerry is in high demand among Ukraine's corporate clients.

Now however, as growth slows and Ukraine’s mobile telecommunications market reaches complete saturation, companies are shifting to new strategies based on offering quality services, and retention policies aimed at keeping subscribers loyal, rather than attracting new ones, industry players said.

“High mobile penetration means that years of rapid double-digit growth on the mobile market is in the past already,” said Alyona Horodetska, spokeswoman for MTS-Ukraine, a leading mobile operator in Ukraine with a subscriber base of about 20 million customers.

“The Ukrainian market still has potential for growth, but this growth will be achieved thanks to an upsurge in mobile services use.”

Mobile telecom services penetration in Ukraine was 64.5 percent at the start of 2006, leaping to 105 percent at the start of 2007, but then slowing to 119 percent as of January 2008, according to iKS-Consulting, a consulting agency providing research and analysis of telecommunication markets in CIS countries.

The number of mobile telecom subscribers in Ukraine was 30.4 million in 2005, 49.2 million in 2006 and 55.6 million in 2007, reported iKS-Consulting.

In Ukraine, whose population is just over 46 million, market penetration in excess of 100 percent means that many people are simultaneously using two or even three different mobile operators, according to Horodetska. About 25 percent of all subscribers use multiple operators, she said – which would also imply that there are still potential subscribers on the market who aren’t using any mobile telecom services yet.

UMC, which became MTS-Ukraine less than two years ago, was the first mobile operator in Ukraine when it entered the market 15 years ago. MTS is the largest mobile operator in Russia and the CIS.

The share of value-added services accounts for some 15 percent of all total mobile telecom revenues, according to Horodetska, but will rise to about 20 percent in the near future.

Value-added services include SMS and MMS messaging, Internet access, voice mail, access to various mobile content including media news and entertainment features, conference calling, and others.

Access to mobile Internet is becoming increasingly popular and an everyday necessity for a growing number of people, especially professionals.

“Currently, one of the particularly strong trends on the market is growth in demand for mobile Internet access, caused by the quickening pace of Ukraine’s business life,” Horodetska said.

“More and more people want to remain online 100 percent of the time.”

MTS­Ukraine was the first CIS operator to offer BlackBerry services in Ukraine, which provides wireless e­mail and Internet access to mobile professionals.

BlackBerry’s main advantage is that it allows subscribers to send and receive encrypted emails by phone, which cannot be monitored by a third party.

BlackBerry services, according to Horodetska, are now offered by MTS only to corporate clients and demand is high.

Demand for faster and more diverse mobile data transfer is also growing, industry insiders said.

In 2005, the Ukrainian government issued its first and only 3G license to Ukrtelecom, the country’s principle provider of fixed­line services in Ukraine.

Kyivstar, MTS and Astelit (the Life brand), which together control around 95 percent of the market, were refused 3G licenses by the Ukrainian government in 2006.

Leading market players have persistently expressed interest and readiness to launch their own product using 3G technology, as soon as state regulators grant telecom operators the appropriate licensing.

Third­generation (3G) technology has been available in the West and economically advanced Asian countries for a decade, but its launch in Ukraine has been blocked by regulators.

However, while the use of 3G high­speed technology remains a priority for the state­owned monopoly Ukrtelekom. Mobile telecom providers compete by making the most of the second­generation data transfer technology GPRS (General Packet Radio Service).

In particular, they reinforced it with EDGE (Enhanced Data rates for Global System for Mobile Communications (GSM) Evolution) technology, which provides some 3G services, but slower and with smaller data volume.

GSM operators significantly improved the quality of data transfer services through a wide scale launch of EDGE technology, which quickens GPRS by four times, transferring data at a speed of 473.6 kilobytes per second, according to Anton Volodkin, marketing director of Ukrainian Radio Systems (URS), better known as the Beeline brand. URS is a subsidiary of Russia­based Vimpelcom Group, which operates in seven CIS countries.

Launched in April 2006, URS serves about 2.7 million subscribers in Ukraine.

The level of competition on the Ukrainian mobile telecom market is among the fiercest in Eastern Europe, industry insiders agreed.

Now that almost every Ukrainian is using a mobile phone, firms are investing into new services, such as Internet access, audio­visual information and other content.

Although basic voice communication services will remain a key driver for telecom revenue growth, the share of value­added services will grow quickly, industry insiders say.

In the short term, service providers predict market players will concentrate on retaining existing subscribers by enhancing quality and diversifying services.

“We are not expecting any price wars,” said Volodkin, adding that the dumping era is over for market penetration.

Another important trend is that clients today pay more attention to the so­called “usability factor,” which means that people are seeking simpler settings and more easily understandable services for their mobile phones, Volodkin said.

“One­button push services will be increasingly popular," he said.

Smaller market players will struggle to increase their subscriber bases, while market leaders will focus on retaining existing clientele, Volodkin said.

For example, while market leaders Kyivstar and MTS service as much as 78 percent of Ukraine’s mobile phone users, Astelit raised its subscriber base by 58.9 percent and URS by 41 percent in 2007 year­over­year, according to iKS­Consulting.

Marketing strategies will increasingly target the interests of those not using mobile phones as much, such as children and the elderly, Volodkin said.

Marketers will also move from the big cities to small towns, where the chances to attract new subscribers are higher, Volodkin said.

“In comparison to previous years, our clients are becoming more and more interested in using non­voice services, such as mobile Internet, different content services, but SMS still is the biggest part of non­voice services,” said Victor Gotsulenko, head of media relations sector at Kyivstar.

Ukraine’s leading mobile communications provider, Kyivstar, was founded in 1994 and has provided mobile communication services since 1997.

More than 23.8 million subscribers selected Kyivstar as of February, the company reported.

“In 2008, our strategy will be concentrated on retaining existing subscribers,” Gotsulenko said, adding that “different loyalty programs will be implemented, new useful services launched, and much attention will be given to high­speed data transfer service.”

Source: Kyiv Post