Saturday, May 31, 2008

Soccer: Ukraine President Accuses Officials Of Sabotage

KIEV, Ukraine -- President Viktor Yushchenko accused government officials today of sabotaging the reconstruction of the main stadium hosting Euro 2012 matches and told his prime minister to ensure the project went ahead.

Ukraine President Viktor Yushchenko

Yushchenko, in a letter to Prime Minister Yulia Tymoshenko, said no action had been taken to proceed with the renovation of Kiev's 84,000-seat Olympic stadium since a Taiwanese firm won a tender in April to carry out the job.

The stadium is to host the final of Euro 2012, being staged jointly with Poland.

A statement on the president's Web site said the agency overseeing Euro 2012 had information that ''delays and what amounts to sabtage by oficials at the Sports Ministry could disrupt the renovation schedule at Ukraine's main stadium''.

''I am asking you to intervene personally to immediately correct the situation, avoid an international scandal and ensure that preparations for Euro 2012 proceed in timely and reliable fashion,'' the president told Tymoshenko.

He said it was ''urgent to dismiss officials who are seeking to review the results of the tender and block the start of work, thereby causing considerable harm to the country's image''.

The reconstruction project, estimated by the government to cost 300 million dollar, involves dismantling a shopping centre adjacent to the stadium.

Construction of the centre and the consequent violation of crowd control norms had for a time threatened to disqualify the stadium for the championship.

The owner of Ukrainian premier league team Arsenal Kiev told Ukrainian media this week that ministry officials had said his side could use the Olympic stadium until October, an indication that there were no imminent plans to start work there.

UEFA President Michel Platini in February deplored the pace of preparations for 2012 and said the months to come would prove ''decisive'' in determining whether conditions could be met.

Platini is due to visit Ukraine again in July.

Rumours have periodically swept through the Ukrainian capital that European soccer authorities were making contingency plans to stage the championship elsewhere in the event that preparations did not proceed as planned.

Yushchenko's personal intervention during the final stages of the bidding played a key role in UEFA awarding the 2012 championship to the two ex-communist countries.

Both countries face colossal tasks in preparing for the event, including upgrading and modernisation of airport, rail networks and roads and hotels.

Source: Deepika Global

Ukraine Troops Considered For Georgia

KIEV, Ukraine -- The government of Georgia has asked the United Nations to replace Russian troops in the peacekeeping operations in Abkhazia with troops from other countries.

Ukrainian troops in Iraq

U.N. officials said Wednesday that security forces from Ukraine are under consideration to act as a security presence in the disputed region of Abkhazia, which is within the Georgian borders and not recognized internationally.

U.N. Resident Coordinator in Ukraine Francis O'Donnell said he has not ruled out participation of Ukrainian troops, the Ukraine government reported.

"Ukraine now influences the political and economic situation in various world countries," O'Donnell said in a statement. "To a great extent, this is due to the level of confidence in the Ukrainian peacekeepers among local population of conflict areas, and it is extremely high."

Russia recently has been actively pursuing formal ties with Abkhazia. Critics say the moves by Russia have raised concerns about the region's stability.

Additionally, a report out Tuesday from the United Nations said that Russia was responsible for the crash of an unmanned Georgian aircraft in Abkhazia in April.

Source: UPI

Navy Chief Says Russia Could Have 100 Warships In Ukraine

BISHKEK, Kyrgyzstan -- The Russian Navy commander said on Friday the Black Sea Fleet could increase the number of warships at its base in Sevastopol, in Ukraine's Crimea, to 100.

Russian Navy commander, Admiral Vladimir Vysotsky.

"The base agreement enables us to have up to 100 warships in the Black Sea Fleet, compared to the current figure of only 35; we may also have up to 25,000 personnel, while currently we only have 11,000," Admiral Vladimir Vysotsky told reporters in Bishkek, the capital of Kyrgyzstan.

He said Russia needs the Black Sea Fleet to protect its national interests.

"Russia has strategic interests in the world's oceans, and it will defend them. We will be enlarging our presence."

"The Black Sea Fleet will remain in any event. And it will not simply remain, but will develop," he said, adding that Russia does not intend to withdraw its fleet from Sevastopol before the base agreement expires in 2017.

The Black Sea Fleet currently uses a range of naval facilities on the Crimean peninsula under an agreement signed in 1997. Ukrainian President Viktor Yushchenko recently ruled not to extend the lease for Russia's Black Sea Fleet beyond May 28, 2017.

Frequent disputes have flared up between Russia and Ukraine over the lease of the naval facilities on the Crimean peninsula. In the latest row, Moscow Mayor Yury Luzhkov was barred from entering the former Soviet republic over his vociferous calls for the disputed ownership of a Russian naval base in Sevastopol to be transferred back to Russia.

Ukraine has been seeking NATO membership and EU integration ever since pro-Western President Yushchenko came to power on the back of the "orange revolution" in 2004.

Russia has repeatedly dismissed Ukraine's NATO bid as a violation of bilateral friendship agreements and said it will do all in its power to prevent Ukraine from joining NATO.

Admiral Vysotsky arrived in Kyrgyzstan on Thursday to discuss the expansion of military-technical cooperation and strengthening of regional security with Kyrgyz top military officials.

Russia currently has 41 intergovernmental agreements with Kyrgyzstan on security cooperation. Both countries are members of the two major regional security blocs in Central Asia - the Collective Security Treaty Organization (CSTO) and the Shanghai Cooperation Organization (SCO).

Source: RIA Novosti

Friday, May 30, 2008

Ukraine Foils Radioactive Cafe Plot

CHERNOBYL, Ukraine -- A plan to smuggle a highly radioactive helicopter from the Chernobyl disaster area and turn it into an eye-catching cafe has been foiled in Ukraine.

Chernobyl vehicle graveyard

Police said several people were detained after they were found transporting the scrap from the 18-miles exclusion zone around the Chernobyl nuclear power station, which exploded in 1986.

The helicopter, an Mi-8 "Hip", was found to emit up to 30 times the legal level of radiation.

According to a statement issued by the elite SBU special services, the criminals "tried to take an Mi-8 helicopter out of exclusion zone to use it as an original coffee shop in one of Ukraine's cities".

A workhorse of the Soviet armed forces, the Mi-8 helicopter is capable of carrying up to 28 people, although it was not made clear how many customers the gang had been hoping to seat.

Almost 2,000 helicopter sorties were ordered to douse the Chernobyl station after a reactor suffered melt down.

As a result, many of the helicopter pilots received lethal doses of radiation.

The Chernobyl disaster released at least 100 times more radiation than the atom bombs that were dropped on Nagasaki and Hiroshima.

Source: Telegraph UK

Russian, Ukrainian Leaders To Meet In June

MOSCOW, Russia -- Russian President Dmitry Medvedev agreed with his pro-Western Ukrainian opposite number Viktor Yushchenko on Thursday to hold their first meeting in early June and urged him to stand by earlier deals with Moscow.

Dmitry Medvedev (L) and Viktor Yushchenko

The Kremlin press office said in a statement that Medvedev, sworn in earlier this month, telephoned Yushchenko to 'give an assessment of a number of steps undertaken by the Ukrainian side affecting Russian interests.'

'(Yushchenko's) attention was drawn to the need to stick to the principles of partnership in Russian-Ukrainian relations, not to allow unilateral decisions and steps which violate earlier obligations and agreements,' it said.
The statement did not specify which of the many irritants in ties between the two Slav states Medvedev meant.

Russia has been alarmed by a powerful drive by Ukraine to depart from its traditional dependence on Moscow in favour of closer ties with the West.

Earlier this year Ukraine and Georgia, another pro-Western ex-Soviet state, won an promise from NATO they could eventually join, though without a firm timetable.

Russia considers Georgian and Ukrainian accession to NATO as a threat to its own security.

Moscow is also at odds with Kiev over the future of its military base in the Ukrainian Black Sea port of Sevastopol. Kiev wants the Russian navy to leave after a lease agreement expires in 2017, while Moscow is seeking to extend the deal.

Periodic clashes over gas prices and transit tariffs are also a major problem in relations as Ukraine receives most of its gas from Russia and hosts the biggest transit pipeline to Europe.

Gas rows have eased in the past few months after Kiev settled outstanding debts for gas shipments.

In 2004, Russia backed Yushchenko's pro-Moscow opponent in a presidential election eventually struck down as fraudulent after weeks of peaceful street protests which came to be known as the 'Orange Revolution'.

Many top Russian officials, however, have privately expressed sympathy for Yushchenko in his power struggle with Prime Minister Yulia Tymoshenko, viewed as a more radical pro-Western politician.

The Kremlin statement said Medvedev and Yushchenko agreed to discuss relations during a meeting in Russia's second city of St Petersburg, on the sidelines of an economic forum on June 6-8.

Source: Union-Tribune

Ukraine's New Ambassador To The European Union Sees Growing Support For Membership Bid

BRUSSELS, Belgium -- Ukraine's new ambassador to the European Union says there is growing support for his country's aims to draw closer to the EU, despite Russian opposition that dealt a setback to its NATO membership bid last month.

Ukraine's new ambassador to the European Union, Andri Veselovsky.

France in particular, which has previously expressed caution about future expansion of the EU, now had a "new vision" of Ukraine's place in Europe, Andri Veselovsky said Thursday after presenting his credentials to the European Commission.

"This vision of Ukraine's place in Europe is new, it is a clear difference and a new step in the understanding of a common European home in French political circles," he told reporters.

France takes over the EU's rotating presidency in the second half of this year and will play a key role in shaping the bloc's policy. French President Nicolas Sarkozy is also scheduled to host an EU-Ukraine summit in September.

Signs of French support follow an appeal Monday from Poland and Sweden for the EU to develop a new "eastern dimension" policy that would build ties with Ukraine, Moldova, Georgia and other former Soviet neighbors.

Moscow has opposed the efforts of Ukraine and other former Soviet nations to join Western organizations. NATO last month postponed a decision to grant Ukraine and Georgia a "membership action plan" after pressure from Moscow. However, the military alliance did say clearly for the first time that the two nations could one day join and offered to look again at the membership plan.

Ukraine hopes to join the EU by 2020. Veselovsky acknowledged the EU was unlikely to take any bold steps toward further enlargement until the new Lisbon Treaty underpinning the union's working rules is ratified. Fifteen of the 27 EU nations have so far ratified the treaty, most recently Luxembourg, which did so on Thursday.

Most are voting in parliaments, but Ireland has a June 12 referendum. Concerns over the entry of former communist bloc nations were seen as a factor in French and Dutch voters rejecting a previous treaty in 2005 in referendums that plunged the EU into crisis.

"There is a very difficult stage in the development of the European Union and the Lisbon Treaty is not yet in our pocket," Veselovsky said. "We wait and watch with interest."

He said Ukraine would cooperate with nations like Moldova, Georgia and Azerbaijan, but that Ukraine's bid for EU membership should be based on the country's own merits.

Source: International Herald Tribune

Thursday, May 29, 2008

Ukrainian President Campaigns For NATO Berth During Visit

TORONTO, Canada -- Viktor Yushchenko, the Ukrainian President, wound up a three-day state visit to Canada yesterday, telling Toronto businessmen it is only natural his country should become a member of the European Union and NATO.

Ukraine's President Victor Yushchenko speaks to the Economic Club in Toronto May 28, 2008.

"The strategic goal of Ukraine is Ukrainian accession to the European Union and North Atlantic Alliance," he said in a speech at the Economic Club of Toronto.

"I clearly understand it is not going to be easy, but for any state this is a big responsibility. There is a good deal of homework to do. But we will cover this ground successfully."

Three years ago, no one recognized Ukraine as a country with a market economy, he said. Now it has become the 152nd member of the World Trade Organization and is negotiating a free trade agreement with the EU.

He also expects Ukraine to reach a deal on associate membership of the EU within 12 to 14 months.

But economic integration must be accompanied by security guarantees only NATO can provide, Mr. Yushchenko argued.

"For me, as president of the country, integration of Ukraine to the North Atlantic bloc is essential," he said. "I'm convinced that this is a component that enhances our political presence, our economic weight in the world and most importantly it is the best response for ensuring the territorial integrity of the Ukrainian state."

The Ukrainian President said he does not want to create "a confrontation or misunderstanding towards some other countries" but is compelled by history to seek the protection of NATO.

"We need to have a security environment for the life and prosperity of the country. Look at our history. Has it not taught you anything? Over the last 90 years the Ukraine has declared independence six times and five out of six it lost it."

"What was it we were lacking?" he asked. "We lacked just one thing--international guarantees for the eternity of our sovereignty."

"The best response to assure our country's sovereignty and integrity is to join the process that is specific and characteristic of the whole of Europe and that is the collective model of security policy," he added.

"All the countries that were with us 20 years ago building communism, starting with the Baltic countries and going down to Yugoslavia and Bulgaria, when they became independent, they immediately decided upon their security issues. They all became members of the North Atlantic Treaty."

Ukraine should be no different.

"We don't have arguments about values. We want to live the way Europe does, within a system of democratic, social, financial and ethical values. Then one question arises. If we have a common system of values, then obviously we have to have a common way of defending them. We must have a common security policy. We can't just share values and not share the weight of defending them."

In December, NATO's member countries are expected to decide whether to allow Ukraine's application to its Membership Action Plan framework for aspiring members.

Russia is vehemently opposed to NATO expansion into what it regards as its traditional area of influence and some European countries, such as Germany, have been reluctant to upset Moscow.

Canada, which is home to 1.2 million Ukrainian-Canadians, is supporting Ukraine's bid for eventual NATO membership.

Source: National Post

Election Lessons

KIEV, Ukraine -- With the mayoral elections over, Kyivans will now be spared the campaign leaflets and newspapers thrust in their direction, and the billboards of handsome and not-so handsome candidates.

The early election of Kiev’s Mayor, which was called because the authorities believed Leonid Chernovetsky worked improperly, ended in his victory.

Mayor Leonid Chernovetskiy surpassed expectations, handily winning the mayoral seat and earning enough votes for his bloc to form a City Council coalition.

In all, the city government leadership won’t change much, which begs the question -- what did the elections accomplish?

Hopefully lawmakers will twice before calling snap elections again.

An overconfident Yulia Tymoshenko, expecting triumph, led the charge in parliament to unseat her nemesis. Instead, the elections humbled Tymoshenko, not only handing her bloc defeat but reducing its presence in the Kyiv City Council.

Ironically, Chernovetskiy won by taking a page out of Tymoshenko's political playbook by appealing to voters, particularly pensioners and civil servants, with promises of populist payouts. As a result, Chernovetskiy’s hold on the capital is reinforced. He won a solid victory that empowers him to pursue his political agenda for the next five years.

Most importantly, the elections brought Kyiv’s challenges to the forefront including its rapid growth and inadequate infrastructure.

Chernovetskiy demonstrated his awareness of the public’s transit concerns, introducing new city buses to run along marshrutka lines and even opening a new metro station (regardless of its reported leaks), timed just days before Election Day. The mayor should make improving public transit a foundation for his government and demonstrate his commitment beyond electioneering.

More than anything, Chernovetskiy’s enemies loathe him for his alleged corruption, particularly in illegally distributing land.

Unfortunately if the allegations are true, then the elections and his decisive victory merely served to embolden Chernovetskiy and his allegedly corrupt ways.

Those who led the Orange Revolution were unable to convince voters that they were the better alternative. Despite its heavy campaigning, the pro-presidential Our Ukraine People’s Union didn’t even qualify for the City Council.

What awaits Kyiv, with the mayoral team more confident than ever, is uncertain. But if suspicions of corruption re-surface, let’s go to the courts instead of the polls.

Source: Kyiv Post

Russia Accused Of Looking For A Fight Over Georgia And Ukraine

MOSCOW, Russia -- Russia was accused yesterday of stoking separatist tensions as part of a campaign to prevent the former Soviet republics of Georgia and Ukraine joining NATO.

Russian seamen in Sevastopol. Moscow is fiercely opposed to NATO replacing it in the Crimea after its lease to keep the Black Sea Fleet there expires.

Georgia said that Russia was arming rebels in the breakaway region of Abkhazia to provoke a war and scupper its bid to join the military alliance.

Vano Merabishvili, the country's Interior Minister, said that Russia was pushing Abkhazia into confrontation and providing the separatists with weapons worth millions of dollars.

“The Russians are forcing the Abkhaz to prepare for war,” he told the newspaper Kommersant, adding that the objective was “to guarantee Georgia does not get into NATO. If there is a war and there is a single shot from the Georgian side, Georgia will never become a member of NATO,” he added.

Sergei Lavrov, the Russian Foreign Minister, accused Georgia of seeking confrontation with Moscow. Speaking at an Arctic summit in Greenland, Mr Lavrov said: “I cannot understand what they are after except performing some kind of function of constantly provoking Russia.”

Abkhazia broke away from Georgia after a war in the 1990s and most of its residents now have Russian passports. Moscow infuriated Georgia last month by strengthening economic ties with the region.

Tensions have soared in recent weeks with both sides admitting that they have been close to war. A UN report concluded this week that a Russian fighter shot down a Georgian spy drone over Abkhazia in April.

Moscow also angered Ukraine by declaring that it wanted to keep a naval base in the Crimea despite an agreement to withdraw by May 28, 2017. The Ukrainian President, Viktor Yushchenko, insists that the Russian Black Sea Fleet must leave the port of Sevastopol on time.

Russia's naval base in Sevastopol was established in the 18th century by Catherine the Great. After the collapse of the Soviet Union Russia was allowed to retain its fleet at the port under a 20-year lease agreement with Ukraine that was signed in 1997.

Vladimir Dorokhin, Russia's special envoy on the Black Sea Fleet, said yesterday that Moscow did not want to leave. He told journalists: “We have never concealed our willingness to keep our presence in Sevastopol after 2017. We don't understand this haste. Why do they think we need nine years for the fleet's withdrawal? Why not fifteen years or five, or four? In the end, this is our fleet, yes? So this must be our headache.”

The issue is sensitive because most residents in Sevastopol are pro-Russian. Ukraine accused Yuri Luzhkov, the Mayor of Moscow, of undermining its sovereignty and barred him from the country after he declared that Russia had “a lawful right” to reclaim the port this month.

The bid for NATO membership by Ukraine has heightened tensions about the future of the port. Russia is opposed to the Western military alliance replacing it in the Crimea and the former President, Vladimir Putin, has threatened to aim nuclear missiles at Ukraine if it joins NATO.

“Ukraine has the legitimate right to adopt any decisions it deems important, but they should not run counter to our national interests or make us give them up,” Mr Dorokhin said.

Dmitri Rogozin, Russia's envoy to NATO, said that membership for Georgia and Ukraine was a “red line” issue. He added: “If NATO crosses this red line, relations will not only be spoilt but they will change drastically.”

Source: The Times

Poor Garbage Disposal Makes Kyiv Among Dirtiest Of Cities

KIEV, Ukraine -- When you think of Kyiv, do you think of glistening golden domes and chestnut-lined streets, or do you think of a city sprinkled with garbage, a dirty Dnipro River running through it and choking air pollution?

Garbage dumspter at a Kiev apartment house.

Kyiv is the 26th dirtiest city in the world among 215 surveyed, according to a Quality of Life report released in April by Mercer Human Resources Consulting, which ranked Ukraine’s capital just after Port Harcourt, Nigeria.

Distinguishing Kyiv from other cities was its insufficient garbage disposal system, which did not please local government officials.

Kyiv’s sanitation system, and its efficiency, “is positive,” said Mykhaylo Shparyk, director of the city’s Communal Management Administration (CMA).

About 3,670 tons of garbage are produced daily in the Ukrainian capital, amounting to more than 1.5 million tons annually, according to the CMA.

About 30 percent of waste goes to Landfill Number Five near the village of Pidhirka on the city outskirts, and 20 percent is taken to a waste­incinerator plant called Enerhiya.

The rest is hauled to other garbage dumps in the Kyiv oblast, said Shparyk.

But critics of Kyiv’s waste management system believe not enough is being done to solve the garbage problem.

“Everything that isn’t sent to either Landfill Number Five or the other dumps is somewhere on the streets,” said William Nosach, head of Ecoterm, an environmental management firm.

As a result of insufficient garbage disposal and waste storage policies, city dumps cover hundreds of hectares — they fume, smoke, and contaminate the earth, air and water.

A bouquet of the strongest poisons and toxins are fermented in the dumps, Nosach said, including dioxin.

The best way to solve the waste problem in Kyiv is to attract foreign companies to come in and put them completely in charge of the garbage business, said Oleh Soskin, head of the Institute of Society Transformation in Kyiv.

“It is necessary that there isn’t any misappropriation of funds, and for there to be a division between those in the City Administration who form the laws, and those who execute them,” he said.

The total cost of this garbage initiative would cost $1 billion, and it would take about two to three years to develop, Soskin said.

“But the most effective measure would be to invite strong teams from abroad to come in and manage the garbage,” he said. “If we do this, in three years time we’ll have a well­formed waste recycling system.”

So far, the only recycling effort has involved separating food waste from hard waste in an attempt to reduce garbage.

To accommodate that, the Kyiv City Administration said it bought 2,000 new dumpsters for 5 million hryvnia.

“This is an economically justified technology which enables not only recycling of waste, but also partly solves the garbage problem,” said Anatoliy Holubchenko, the first assistant chair of the Kyiv City Administration.

However, the effectiveness of these measures is doubtful, said Soskin. This garbage fight has to be consistent and changes have to take place on all levels, he said.

“This won’t bring good results immediately,” he said. “At first, there must be factories that process the garbage, and then a separate waste collection system should be promoted, including information campaigns at schools and kindergartens. The media should start teaching people how to dispose of their garbage correctly.”

Overall, the government’s attitude towards the garbage problems hasn’t changed, Nosach said, as it is still disposing of it in the least expensive way.

The Quality of Life Report released by Mercer Human Resources Consulting in April compared 215 cities based on air pollution, water, waste management, hospital services, medical supplies and existence of infectious disease.

The dirtiest city in the world is Baku, Azerbaijan, and the cleanest was the Canadian city of Calgary, the report said.

The second dirtiest city was Dhaka, Bangladesh, followed by Antananarivo, Madagascar. The fourth and fifth dirtiest cities were Port au Prince, Haiti and Mexico City, Mexico.

Source: Kyiv Post

Wednesday, May 28, 2008

Sarkozy To Seek Eventual EU Membership For Ukraine

WARSAW, Poland -- French President Nicolas Sarkozy said on Wednesday he would propose a European Union partnership with Ukraine that would lead to the ex-Soviet republic's eventual membership of the wealthy bloc.

French President Nicolas Sarkozy

It was the first time France, traditionally lukewarm on EU enlargement, has publicly mooted the possibility of Ukraine's membership. France takes over the EU's rotating six-month presidency on July 1.

"As head of the European Council I will want to propose a partnership for Ukraine so that it could finally join (the EU)," Sarkozy told a joint news conference with Polish President Lech Kaczynski during a one-day visit to Warsaw.

Sarkozy did not elaborate and it was not clear how soon he envisaged Ukraine, a poor, sprawling country wedged between Russia and Poland, qualifying for EU accession.

Poland is a strong supporter of Ukraine's inclusion in both the EU and NATO. Poland joined NATO in 1999 and the EU in 2004.

Earlier this week, at a meeting in Brussels, Poland and Sweden proposed that the EU build an Eastern Partnership to help former Soviet republics prepare for eventual membership.

Source: Hürriyet

U.S. Driller Falls Victim To Ukraine Political Rivalry

KIEV, Ukraine -- Yulia Tymoshenko, Ukraine's braid-wearing, populist prime minister, has been in a political tug-of-war with President Victor Yushchenko for the last four years.

Yulia Tymoshenko

Her latest shot across the bow: the cancellation of a Yushchenko-backed, 18-month-old production-sharing agreement with a small Houston oil company.

Vanco Energy, a closely held firm owned by wildcatter Gene Van Dyke, drills offshore in deepwater areas, mainly in African countries such as Gabon and Ivory Coast.

In October, after two years of negotiations with the Ukrainian government, Vanco signed the agreement with a deputy prime minister as Yushchenko looked on. Tymoshenko has since declared the agreement corrupt and invalid.

In 2005, the Houston company, which would not disclose its profits or revenues, had beaten out ExxonMobil (nyse: XOM - news - people ) and Hunt Oil in a government tender to negotiate rights to drill the potentially hydrocarbon-rich Prykerchenska shelf in the Black Sea.

The 30-year production agreement signed in October gives Vanco the right to survey and then drill Prykerchenska. The Ukrainians would receive a 65.0% share of the production, with the remainder going to Vanco. In return, Vanco agreed to pay royalties, corporate profit taxes and all of the expenses.

But Tymoshenko accuses Yushchenko of colluding with Vanco to deprive Ukraine of a more advantageous deal. “Everything that took place did so by the president's order and against Ukraine's national interests,” said Tymoshenko on her personal Web site.

Vanco, which says U.S. Ambassador William Taylor has provided assistance on the issue, disavows any illegal activity and says it's willing to go to arbitration to prove its right to survey and develop Prykerchenska.

Last week, it sued the Environment Ministry. "The ministries didn’t know anything about the oil industry," said Van Dyke. "The block we got is what the government said is available for bidding."

Some observers think Tymoshenko's opposition to the project has more to do with her animosity to Vanco's investors than the deal itself.

According to reports, the Houston company recently disclosed that it is backed by companies controlled by the pro-Yushchenko billionaire Rinat Akhmetov, Russian telecom magnate Yevgeny Novitsky and an Austrian firm whose controlling shareholders are undisclosed.

Tymoshenko has raised the possibility that the Austrian company may be controlled by Yushchenko or his allies.

Source: Forbes

Tuesday, May 27, 2008

Throng Welcomes Ukraine President In Winnipeg

WINNIPEG, Canada -- Throngs of spectators filled the grounds of the Manitoba legislature Tuesday to catch a glimpse of Ukrainian President Victor Yushchenko on his first stop of a daylong visit to Winnipeg.

University student Ira Vyshneskya (R) has her photo taken with Ukraine's President Viktor Yushchenko as he arrives at the University of Winnipeg to receive his Honorary Doctor of Laws degree May 28.

Hundreds of giddy fans and schoolchildren gathered around the statue of revered Ukrainian poet Taras Shevchenko, many waving Ukrainian flags.

One woman carried a huge sign reading, "Welcome to Canada, Dear President."

Other supporters filled the legislature steps, craning their necks to see the arriving motorcade.

"I just felt the need to see him and hear him," said Melody Calvo, whose grandfather came to Canada from Ukraine in the early 1920s.

Yushchenko chatted casually with Manitoba Premier Gary Doer as the pair walked through the grounds, and Doer praised Yushchenko as an "international hero for democracy."

Three hundred young schoolchildren introduced the president with the Ukrainian and Canadian national anthems, after which Yushchenko and Doer laid baskets of flowers at the monument to Shevchenko, and Yushchenko offered a lengthy address in Ukrainian.

"It's pretty exciting," said Bernice Tkachyk, who said coming out to see the president was a no-brainer.

"If he came all the way from there, I should be able to come from here to see him," said the 65-year-old.

Ukrainian priest Father Michael Skrumeda also showed up.

"I've read a lot about him, I've seen him on TV," said the Orthodox priest, whose relatives came to Canada from Ukraine in the late 1800s.

"I feel a bit excited, because he represents the land from where my great-grandparents come from."

Yushchenko was elected in the fall of 2004 after the results of an initial election were voided amid widespread cries of fraud and electoral abuse. Nearly two weeks of popular protests around the country became known as the Orange Revolution.

Yushchenko met with Prime Minister Stephen Harper in Ottawa on Monday. He thanked Canada for its support over the years - starting with quick recognition of the country's independence from the Soviet Union in 1991.

"Every Ukrainian will always remember that," Yushchenko said. He also thanked Canada for its impending recognition of the 1932-33 genocide, and for its historical role in welcoming Ukrainian immigrants.

"I'm filled with very tender feelings to your country and to this land. For me, as for millions of Ukrainians, this country and this land is sacred," Yushchenko said.

"It became a motherland for millions of Ukrainians for many generations of my native people who in different times came to seek for their destiny here in Canada.

"We are very grateful for the support that our country has always felt from Canada."

Harper expressed support for a private member's bill that would recognize the Ukrainian famine - orchestrated by Soviet dictator Josef Stalin in the 1930s - as an act of genocide. The prime minister made the pledge beside Yushchenko, who was granted the distinction of addressing a joint session of Canada's Senate and House of Commons.

During his Winnipeg stop, Yushchenko will sign a memorandum of understanding to foster development of rural communities in both the Ukraine and Canada. He will also be presented with an honourary doctorate of laws from the University of Winnipeg.

Source: Winnipeg Free Press

Harper Sides With Ukraine Over NATO Bid

OTTAWA, Canada -- Prime Minister Stephen Harper issued a thinly veiled warning Monday to Russia to stop opposing Ukraine's NATO membership during a visit by Ukrainian President Victor Yushchenko.

Canada's Prime Minister Stephen Harper

Yushchenko, the father of Ukraine's Orange Revolution in 2004, affirmed his country's aspirations to NATO pose no threat "to any country of world." Russia views the 26-member military alliance as provocatively encroaching on its traditional sphere of influence by courting new members such as Ukraine. Yushchenko also made clear the pursuit of NATO membership is rooted in the almost a century of repression his country endured under the former Soviet Union.

That included the 1932-33 famine, at the hands of Soviet dictator Josef Stalin, known as the Holodomor that claimed the lives of seven to 10 million Ukrainians, he added.

Harper said he was optimistic Canada's Parliament would endorse a private member's bill that recognizes Holodomor as a genocide perpetrated by Stalin "in the pursuit of his evil ideology."

Harper said he hoped the move would spark further acknowledgments of the Ukrainian genocide, "and it's very consistent with positions that Canada's taken for some time on several occasions on this question."

The Harper government has also endorsed the Armenian genocide, which has angered its NATO ally, Turkey.

As Yushchenko basked in the adulation of standing ovations in a historic joint session of Parliament that included Canadian senators, the Chief Justice of the Supreme Court of Canada, foreign diplomats and a packed visitors' gallery, Harper reiterated Canada's glowing endorsement of Ukraine's NATO bid.

NATO, along with the former Soviet republic of Georgia, is expected to embark on the first phase of membership later this winter when a formal Membership Action Plan is issued.

NATO was unable to reach a consensus on starting the action plan at its leaders summit last month in Romania. Although the summit ended with general platitudes endorsing Ukraine's eventual membership, opposition by France and Germany - who do not want to further antagonize Russia - blocked the consensus needed to start the action plan.

Harper said he planned to discuss Ukraine's NATO bid with the leaders of France and Germany when he travelled to those countries this week.

Though Harper and Yushchenko carefully avoided mentioning Russia by name, the Kremlin's hostility towards NATO expansion sat like the proverbial elephant in the room.

"I pointed out to the other leaders of NATO it is a founding principle of NATO that outsiders do not make these decisions," Harper told reporters Monday as he recalled his discussions about the Ukraine bid at last month's summit.

Earlier, Harper sparked loud applause in the Commons when he raised the topic.

"Ukraine is the only non-NATO country supporting every NATO mission in some way or other," the prime minister said. "The decision to seek alliance with others is a decision for, and only for, the sovereign nation of Ukraine."

Yushchenko said his country's domination by the Soviet Union in the 20th century has forced it to look westward to seek the "collective security" of NATO.

"Ukrainians have to learn how to bring out lessons from history . . . Through the 20th century we've declared our independence six times, and five times we lost it," Yushchenko said. "Those are probably the facts that we are using to form our national policy."

But he also acknowledged that his government must do more to sell NATO membership to a skeptical Ukrainian public, pointing out that a little more than one-third of his population currently supports joining the Western military alliance that was founded half a century ago to oppose the Soviet Union during the Cold War.

Yushchenko said Ukraine's NATO membership would pose no threat to any other country because it will not permit military bases or nuclear weapons on its soil. "What is the threat that we make to any country of the world with our accession to NATO?"

Canada has 1.2 million people of Ukrainian descent, the second-largest diaspora after Russia itself, and was the first country to recognize Ukraine's independence in 1991.

Canada also led the world in sending election monitors to the hotly contested and historic 2004 election - a political battle that nearly cost Yushchenko his life when he was poisoned with dioxin that left his face scarred.

But it was the deep bonds between Canada and Ukraine that were celebrated during Yushchenko's speech. "The men in sheepskin coats, they were called, built the farms, families and fraternities" that helped shape Western Canada, Harper said.

For his part, Yushchenko did not shy away from the growing pains that plague his country's march to democracy, particularly corruption.

"The recent years have shown that the most complicated problems and challenges, including the social problems, we resolve them in a very democratic and civilized way. We are speaking frankly about our problems."

Yushchenko also was to attend a solemn ceremony on Parliament Hill late Monday to mark the 75th anniversary of the Holodomor before a state dinner hosted by Gov. Gen. Michaelle Jean.

On Tuesday, Yushchenko travels to Winnipeg.

Source: Ottawa Citizen

Ukraine: Confounding 'Orange' Hopes, Eccentric Incumbent Set To Win In Early Mayoral Vote

KIEV, Ukraine -- After an unusually long and heated campaign, Kiev residents have chosen a mayor from among about 70 candidates on a list so long that the ballot paper measured about a meter in length.

Incumbent Kiev Mayor Leonid Chernovetsky.

Preliminary results put incumbent Kiev Mayor Leonid Chernovetsky clearly in the lead with almost 37 percent of ballots. The Chernovetsky Bloc is also leading in the city council vote.

His re-election would be a blow to Prime Minister Yulia Tymoshenko, who secured a parliamentary vote in March to oust Chernovetsky in connection with what she alleged were illegal land deals.

The early results are also bad news for the fiery prime minister because her preferred candidate, Oleksandr Turchynov, trails Chernovetsky with under 19 percent in a vote largely seen as a dress rehearsal for the next presidential election in early 2010.

"The Kiev elections are a serious electoral, psychological, symbolic defeat for Yulia Tymoshenko and her bloc," says Vadym Karasiov, who heads the Kiev-based Global Strategic Institute, a think tank viewed as close to President Viktor Yushchenko.

"She initiated the elections; she thought that in these elections she would get the capital's resources, Chernovetsky would be removed, she would reformat the city council. As it turns out, having initiated the elections, she lost them and this means a lot of voters and many of the political elite will have doubts about the political possibilities of Yulia Tymoshenko."

Karasiov adds that "her charisma is now going to be doubted because, so far, that charisma has never been doubted and it has never let her down."

Other candidates linked to the democrats who swept to power during the 2005 Orange Revolution didn't fare much better, according to preliminary showings.

Former world boxing champion Vitaliy Klychko of the pro-Western PORA-PRP group garnered almost 18 percent of the vote, while Mykola Katerynchuk, an ally of Yushchenko, is credited so far with just over 4 percent.

The fact that Tymoshenko and Yushchenko backed different candidates highlights enduring divisions within the so-called Orange camp. The two former allies fell out shortly after coming to power, the dispute culminating with Yushchenko sacking Tymoshenko as prime minister in 2005.

The president reinstated her in December after their respective parties won a slim majority in parliamentary elections, but the governing coalition remains fragile. Tymoshenko recently accused Yushchenko of seeking to weaken her standing ahead of next year's presidential election.

Ihor Zhdanov, an independent political analyst, tells RFE/RL's Ukrainian Service that pro-Orange forces could have won the vote had they put differences aside and fielded a single candidate.

"The results of these elections simply confirmed Mr. Chernovetsky's mayoralty. At the same time, two candidates from the democratic camp, Oleksandr Turchynov and Vitaliy Klychko, together received more votes than Chernovetsky.

What does this mean?

It means that had the democratic camp had a single candidate, if people had been able to overcome their ambitions, then they would have had a victory and the mayor of Kiev would be a representative of the democratic forces.

This is the No. 1 conclusion of these elections: that politicians need to curb their ambitions, learn to agree and understand their responsibility to the voters."

But for now, pro-Western forces will have to put up with Chernovetsky for another mayoral term.

A billionaire and former lawmaker, Chernovetsky is known for his quirky behavior and often incoherent remarks.

"Who is the mayor today?" he once posed aloud. "Me, it's definitely me. And was there someone before me? I don't remember. I don't think there was anyone."

His political career is marked with controversy. Both he and his wife, for instance, avoided manslaughter convictions after killing two people in separate road accidents.

Chernovetsky has also raised eyebrows with proposals such as forcing subordinates to undergo lie-detector tests, or with his support for an evangelical church headed by a controversial African minister.

In January, Chernovetsky made the headlines with his scuffle with Interior Minister Yuriy Lutsenko, whom he accused of punching him in the face and groin after an argument. Lutsenko admitted slapping Chernovetsky's face but claimed the mayor initiated the fight by kicking him in the knee.

Source: Radio Free Europe

Sunday, May 25, 2008

Ukraine's Capital Kiev Electing Mayor, With Boxing Champion In Race

KIEV, Ukraine -- An exit poll indicated the mayor of Ukraine's capital won re-election Sunday, overcoming corruption allegations and leading a field of 70 candidates, including a former world boxing champion.

An exit poll put Mayor Leonid Chernovetsky (L) as winner with 32.8 percent of the vote, and former World Boxing Council heavyweight champion Vitaly Klitschko (R) in third place with 19.8 percent.

Lurking between the lines on Kiev's meter-long (yard-long) ballot was the simmering confrontation between President Viktor Yushchenko and Prime Minister Yulia Tymoshenko, who led the Orange Revolution together but are at odds two years before a presidential vote.

The exit poll put Mayor Leonid Chernovetsky ahead with 32.8 percent of the vote, followed by Tymoshenko ally Oleksandr Turchynov with 20.3 percent and former World Boxing Council heavyweight champion Vitaly Klitschko with 19.8.

Chernovetsky's re-election would be a blow for Tymoshenko.

Parliament called the early election after Tymoshenko accused the mayor of illegally selling highly profitable land and withholding revenue from the national budget. Chernovetsky denied it.

Tymoshenko has vied for power and popularity with Yushchenko since they led the 2004 protests that ushered him to power. Both are pro-Western and their parties formed a governing coalition last year, but confrontations have shown it to be fragile.

Tymoshenko recently accused Yushchenko of trying to undermine her before the 2010 presidential election.

She suffered a setback when Yushchenko blocked her initiative to hold a run-off between the two top mayoral candidates if no one received more than 50 percent of the vote.

Analysts said his intention was to ensure Tymoshenko would not have an ally as Kiev mayor. Opinion polls had indicated Chernovetsky, who is popular among pensioners, could win a plurality Sunday, but a run-off could have allowed opponents to unite behind his challenger.

The vote was a rematch for Klitschko, who lost to Chernovetsky in the 2006 mayoral election. A national hero who is scheduled to try to regain his boxing title this fall, he campaigned on promises to fight corruption and end chaotic development.

In a what was seen as a bid by Chernovetsky to hurt Klitschko's chances, a nonprofit organization arranged a three-day music festival outside the city to celebrate Kiev Day, which coincided with the vote. It promised free tickets for young people, who form the boxer's power base.

Turnout was reported to be 46 percent, compared to 70 percent in 2006.

A quirky billionaire banker and ex-lawmaker, Chernovetsky has raised eyebrows with initiatives to test subordinates' honesty using lie detectors and force migrant workers out of the capital to give more opportunity to local residents.

He was involved in a scrap in January with Interior Minister Yuriy Lutsenko, a candidate from Yushchenko's bloc whom the exit poll gave 2.1 percent.

Chernovetsky accused Lutsenko of punching him in the face and groin after an argument. Lutsenko said he slapped Chernovetsky's face but contends the mayor initiated the fight by publicly defaming him and kicking him in the knee.

The exit poll was commissioned by private ICTV and conducted by the Democratic Initiatives Fund and the Kiev International Institute for Sociology, which interviewed more than 10,000 voters. It said the margin of error was 2 to 3 percent.

Source: AP

'Dr Iron Fist' Seeks Election Knockout In Ukraine

KIEV, Ukraine -- Former world heavyweight boxing champion Vitaly Klitschko sought an upset victory in an election on Sunday for mayor of Kiev.

Heavyweight boxing champion Vitaly Klitschko

‘I have complete confidence in the residents of Kiev residents and am confident that the principles we are upholding correspond to their interests,’ Klitschko said after casting his ballot.

Klitschko, known as ‘Dr. Iron Fist’ because of his doctorate in sports and one of the few champions never to have been knocked down in his career, voted with his brother Vladimir, the current IBF and WBO boxing champion.

The 36-year-old has earned popularity with his image as a corruption fighter and has used his international celebrity status to boost his profile but current mayor Leonid Chernovetsky remains ahead of him in the polls.

Polling stations opened at 7:00 am (0400 GMT) and were to close at 10:00 pm (1900 GMT). The results of exit polls were expected soon after with the first official results early on Monday.

Seventy candidates were running for the mayoral election.

‘I have always achieved my goals. Now I'm fighting for my city. I want to turn it into an international metropolis,’ Klitschko said during a visit to New York where he recruited the support of former mayor Rudolph Giuliani.

In March, the Ukrainian parliament ordered early elections following corruption accusations against Chernovetsky, a former banker.

Chernovetsky, who defeated Klitschko in the 2006 mayoral vote, remains popular however, largely thanks to City Hall subsidies for the poor.

This time, Klitschko's main campaign promises have been to end the chaotic construction practices that have erased many of the city's green spaces, reduce traffic, fight corruption and improve social welfare.

‘Kiev used to be a museum city, a park city. Now it is being transformed into a cement jungle,’ Klitschko, a member of the city assembly, said in an interview last year with AFP.

Klitschko was born on July 19, 1971 in Kyrgyzstan, a Central Asian state that was then part of the Soviet Union, into a Soviet officer's family. They then moved to Ukraine.

He took his first steps on the Ukrainian political scene during the pro-democracy Orange Revolution of 2004, backing pro-Western opposition leader Viktor Yushchenko, who went on to become president.

Source: AFP

New Protective Tomb To Be Built At Chernobyl

CHERNOBYL, Ukraine -- Work is expected to start this year at Chernobyl on a new structure to entomb its shattered reactor and stop radiation leaks at the site of the world's largest nuclear disaster.

Outgoing EBRD President Jean Lemierre (R) stands beside Ukraine's Minister of Emergency Situations Volodymyr Shandra.

The European Bank for Reconstruction and Development (EBRD) pledged 135 million euros (107.5 million pounds) to make safe the nuclear power plant more than two decades after the explosion and fire that dumped radiation over much of Europe. But it will be 100 years before people can resettle the area.

The cash, about 10 percent of the bank's net profit in 2007, will go into a fund to build a new containment vessel at the plant, in thick woodland near Ukraine's border with Belarus.

Reactor four, which blew up on April 26, 1986, is to be crowned by a steel arch which will measure 257 metres across and 105 metres high and will lock in radioactive dust. A separate facility will house spent nuclear fuel now under grassy mounds.

Radiation levels near the plant still hit 300 microroentgens -- 30 times levels acceptable for humans.

The existing "sarcophagus" covering the reactor was hastily built in the weeks after the blast. Helicopters dumped sand and chemicals on the blaze and workers built a rail line to bring in concrete and steel for the construction.

EBRD governors, Ukrainian officials and journalists were kept several hundred metres from the reactor during a visit -- any closer is considered too dangerous without protection -- and later subjected to radiation checks.

But Chernobyl general director Nikolai Dmitruk plays down any suggestion of harmful radiation levels.

"It's not dangerous," he told visiting reporters. "Spending a day at the plant gives you the same amount of radiation as taking a transatlantic flight."

Around 1,500 workers, most Ukrainian, will be brought in to work on the projects and will be bussed in to the plant from outside a 30-km (19 mile) exclusion zone.

Around 300 people have illegally settled in the zone in defiance of a government ban.

Laundry hanging to dry and the occasional slow-moving Soviet-era car are stark reminders of the towns that once bustled while providing the plant with workers.

The main town of Pripyat, whose population of 49,000 was evacuated one day after the explosion, stands deserted. A looted hotel, restaurants and apartment buildings with trees poking out of their windows frame the main square, overgrown with shrubs.

FUNDING FIGHT

Funding for the arch was a long time in coming.

Ukraine first asked the West to help make Chernobyl safe in 1992 after Soviet rule collapsed.

Debate proceeded through the 1990s, with Ukraine accusing the West periodically of indifference and some Western countries balking at Kiev's repeated calls for more money.

The arch, to be built by the French-led Novarka consortium, should be complete in 2012. The work will cost around 1.05 billion euros in total, the EBRD says, and 975 million euros have been raised including this week's donation.

While the shortfall is easily achievable through donations from EBRD members, the bank still has worries.

"The main contributor to complications is currency exchange fluctuation," said Balthasar Lindauer, Deputy Director of Nuclear Safety at the bank. Ukrainian labour, he said, was becoming much more expensive.

The last working reactor at Chernobyl, which is 160 km north of the capital Kiev, was closed in 2000 under pressure from the international community, which helped complete two reactors elsewhere to make up for lost generating capacity.

The blast spilled radiation over most of Europe, with Belarus, downwind from the plant, affected most acutely.

Estimates of the number of deaths directly related to the accident vary. The World Health Organisation estimates the figure at 9,000 while the environmental group Greenpeace predicts an eventual death toll of 93,000.

Though highly radioactive, the lush surroundings around the plant are teeming with wildlife, which thrive after being unmolested by human encroachment for more than two decades.

Birch trees and bright meadows in the exclusion zone around the plant are home to boars, wolves and deer. Ecologists wonder at their ability to survive on a spot hit by several times more radiation than the bombed Japanese cities of Hiroshima and Nagasaki combined.

"After the accident the zone became a huge zoo. Without humans, they have multiplied," said Alexander Novikov, deputy director for technical safety at the plant.

The long-term health impact on people and animals is unknown.

Source: Yahoo UK News

Saturday, May 24, 2008

Champion Boxer Tipped For Victory In The Fight For Kiev

KIEV, Ukraine -- In the rough-and-tumble world of Ukrainian politics, contenders don't come much tougher than Vitali Klitschko, the former world heavyweight boxing champion who hopes to become mayor of Kiev today.

Vitali Klitschko has pledged to return to boxing if he wins the mayoral election in Kiev today.

Surveys suggest the 6ft 7in son of a Soviet air force colonel could win control of the city at his second time of asking. Having failed in a bid two years ago, he has enlisted the help of the former New York mayor Rudy Giuliani.

Dubbed Dr Iron Fist, Mr Klitschko, 36, turned to politics after injuries forced him from the ring in 2005, having lost only two of his 37 fights – one of them to the British world champion Lennox Lewis.

If he wins today, he has pledged to combine the two careers – making a boxing comeback while cleaning up Kiev. "We can't change the life in Kiev without breaking crime and corruption's rule," he said during the campaign.

When pro-Klitschko posters appeared around the city of 2.7 million people saying "Kiev needs a strong mayor", Oleksandr Turchynov, the candidate for the Prime Minister Yulia Tymoshenko's party, responded with his own billboards saying "Kiev needs a smart mayor".

Perhaps rattled by polls that put Mr Klitschko well ahead of Mr Turchynov and neck-and-neck with the incumbent mayor Leonid Chernovetsky, Ms Tymoshenko's party has changed tack and is now promising the boxer a top job if he falls in behind their man. "This way we may unite intellect and strength. They both have the strength and the intellect and it is necessary to unite the teams," said Ms Tymoshenko recently.

The English-language Kiev Post endorsed Mr Klitschko, citing his apparent determination to fight graft, his potential as a high-profile ambassador for the city, and his experience of life in the West during several years spent in Hamburg and Los Angeles. He also represents a striking alternative to the scandal-tainted Mr Chernovetsky, and Mr Turchynov, seen as Ms Tymoshenko's puppet.

Mr Klitschko burnished his crime-fighting credentials by touring Kiev with Mr Giuliani who, before his recent failed bid to become the Republican nominee for the US presidency, gained credit for making New York a safer city. "I will be advising Vitali Klitschko and his team on how to turn Kiev around by reforming government," he said. "He understands that reform and transparency are critical to attracting international business and sustainable economic development for his city. There will be no tolerance or room for corruption or secret dealings in a Klitschko administration."

Reflecting the striking contrasts of Mr Klitschko's world, the candidate also received a message of support from the president of the World Boxing Council (WBC), Jose Sulaiman.

"Vitali Klitschko would be the first fighting mayor in the 300-year history of boxing, and would have a great opportunity to once again become the heavyweight champion of the world," he said.

Mr Klitschko first ventured into politics by supporting the 2004 orange revolution, when protests ousted an old guard of former Communists and pro-Moscow politicians and swept into power the Western-backed liberals Ms Tymoshenko and President Viktor Yushchenko.

The leaders clashed soon afterwards, however, and a truce that helped their parties re-enter government last autumn has again given way to bitter rivalry, splitting their support in the mayoral race among several candidates.

Mr Klitschko qualified for the 1996 Olympic Games in Atlanta, but failed a drug test before the event and was withdrawn from the Ukrainian team. His younger brother, Wladimir, replaced him on the team and won a gold medal.

Vitali says he has been training for two hours each morning during the election campaign to prepare for a possible fight this autumn with the WBC champion Samuel Peter. But first he must contend with the political arena and Mr Chernovetsky – who allegedly exchanged blows with Ukraine's Interior Minister during a meeting earlier this year. "Sometimes I wish I could meet people inside the ring, where there are clear rules," lamented Mr Klitschko. "But physical power decides nothing in politics."

Source: The Independent

Ukraine FM Demands Full Withdrawal Of Russian Black Sea Fleet From Crimea

KIEV, Ukraine -- Ukraine is not considering the possibility of extending the period for the presence of the Russian Black Sea Fleet in the Crimea after May 28, 2017, the Foreign Ministry said on Saturday.

Sailors of the Russian Black Sea Fleet

It said the Russian Black Sea Fleet would have to be withdrawn from Ukraine completely by that time.

“The Russian side is well aware of Ukraine’s position on this issue that is based on the provisions of the Ukrainian Constitution. Under the Constitution, no military bases of other states may be deployed in the territory of Ukraine,” the ministry said.

“On April 14, a memorandum was delivered to the Russian Foreign Ministry, which provides for coordinating systemic comprehensive measures in order to properly ensure the timely withdrawal of the Russian fleet from Ukraine. In order to comply with the required legal procedures, the Ukrainian side has to pass a law that will terminate the operation of the relevant agreements on the status and terms of the presence of the Russian Black Sea Fleet in Ukraine from May 28, 2017,” the ministry said.

It expressed hope that “full compliance by the Russian side with the base agreements on the Russian Black Sea Fleet and its withdrawal from the Crimea will become an important step in the strengthening of regional stability and security”.

Meanwhile, the government of Ukraine has started implementing the president’s instructions to draft a law that will terminate all international agreements on the temporary deployment of the Russian Black Sea Fleet in Ukraine from 2017.

“The government will act in accordance with international agreements. We are not taking any steps that will either call these agreements into question or will provide for non-compliance with them,” Prime Minister Yulia Timoshenko said this week.

“If we are to adhere to international agreements, there are absolutely no reasons for any aggravation [of relations with Russia],” she said.

The prime minister stressed that all procedures that need to be undertaken with regard to the Russian Black Sea Fleet would be “within the system of agreements”.

Ukrainian President Viktor Yushchenko has instructed the government to prepare a draft law by June 20 that will terminate international agreements on the temporary deployment of the Russian Black Sea Fleet in Ukraine from 2017.

He also gave the government two months to assess the consequences of the fleet’s deployment in Ukraine.

However the Russian Foreign Ministry said it would be premature to discuss any deadlines for the presence of the Russian Black Sea Fleet in Ukraine.

“The adoption of the decree with hastiness that we find hard to understand cannot facilitate trust between Russia and Ukraine and can adversely affect the talks on the Black Sea Fleet,” the ministry said.

It pointed to the legal framework for the deployment of the Russian Black Sea Fleet in Ukraine. “The Black Sea Fleet, the 225th anniversary of which was recently celebrated by Russia and Ukraine, is based in the Crimea in accordance with the so-called base agreements on the fleet signed on May 28, 1997 and ratified by the parliaments of the two states,” the ministry said.

These include the Agreement on the Status and Terms of the Deployment of the Black Sea Fleet of the Russian Federation in Ukraine, the Agreement on the Parameters of the Division of the Black Sea Fleet, and the Agreement on Mutual Settlements Associated with the Division of the Black Sea Fleet and the Deployment of the Black Sea Fleet of the Russian Federation in Ukraine.

The first two agreements were signed for 20 years. They will be automatically extended for five years unless either party notifies the other party in writing of their end at least one year prior.

Under the latter agreement, Russia reduces Ukraine’s state debt by 97.75 million U.S. dollars every year.

“The Russian side proceeds from the assumption that the Black Sea Fleet of Russia will continue to be based in Ukraine in accordance with the agreements between Russia and Ukraine,” the ministry said. “However the Russian side believes that it is premature to discuss the timeframe for the deployment of the felt now. This issue should be the subject of a Russian-Ukrainian agreement later and considered in the context of the whole range of bilateral relations.”

Moscow believes it necessary to “concentrate on the resolution of practical issues relating to the creation of conditions for the full functioning of the Black Sea Fleet of the Russian Federation and its deployment in Ukraine”.

“Such work is underway within the framework of the relevant sub-commission of the Russian-Ukrainian Interstate Commission and its working groups. Preparations for a meeting of the sub-commission are in progress,” the ministry said.

“The presidential decree is all the more unexpected because under the Russia-Ukraine Action Plan up to 2009 approved by the presidents of Russia and Ukraine, the sides have agreed otherwise, specifically to continue the talks on the operation of the Black Sea Fleet of the Russian Federation and its deployment in Ukraine within the framework of the abovementioned base agreements in order to achieve concrete agreements regarding primarily the whole range of navigation and hydrographic support for navigation in the Black Sea and the Sea of Azov, a set of military-political aspects of the fleet’s operation, inventory of the land and real property occupied by the fleet in Ukraine, environmental protection, legal aspects of the operation of the fleet’s military units, the legal status of the servicemen and their dependents, including questions of citizenship,” the ministry said.

Source: ITAR-TASS

Russia Wins 2008 Eurovision Song Contest Beating Ukraine, Greece

BELGRADE, Serbia -- Dima Bilan has brought Russia its first Eurovision song title with a glitzy performance that included a famous ice skater.

Ukraine's Ani Lorak came in second place in Eurovision 2008.

Bilan beat Ukraine's Ani Lorak and Greece's Kalomira with an R&B ballad "Believe" before thousands of flag-waving fans of Europe's most glamorous pop song festival.

The Russian singer was joined on the stage by Hungarian violinist Edvin Marton and famous Russian Olympic skater Yevgeny Plyushchenko, who pirouetted on artificial ice to the tune.

Bilan has won the first-ever title for Russia in the competition, which has recently been dominated by Eastern European countries because of so-called bloc-voting among ex-Soviet republics and former Yugoslav states.

This year's competition was held in Belgrade, Serbia. Serbian songstress Marija Serifovic won last year's title with her ballad "Molitva" or "Prayer."

Bilan's appearance at the finals, which opened late Saturday at the Belgrade Arena hall, was his second in just two years. In 2006, he won second place.

Bilan had been tipped as the favourite going in, along with Ukraine and Sweden.

The Russian won 272 points from viewers from 43 countries who picked the winner by phone calls and text messages.

Ukraine's Lorak was second with 230 points, followed by Greece's Kalomira with 218.

The glitzy event was launched by Serifovic. Other guest stars include Bosnian ethno musician Goran Bregovic and Serbia's and L.A. Lakers' former NBA star, Vlade Divac.

Though criticized by many as a show of kitsch and an extravaganza, the Eurovision Song Contest, or Eurosong, is revered by its many followers. They often travel across the continent to support their favourite singers.

About 15,000 guests are believed to have arrived in Belgrade for the event, crowding the Serbian capital for the first time in years.

Serbia is taking advantage of the opportunity to present itself as part of Europe after years of pariah status in the 1990s under the late strongman Slobodan Milosevic.

Authorities have gone out of their way to throw a perfectly organized party. During the finals, a huge screen was put up in front of the Belgrade City Hall as thousands flocked to watch the show.

After the winner was announced, fireworks lit the Belgrade skies.

The finale included 20 contestants who made it through the two semifinals earlier this week.

In addition, performers from Britain, France, Germany and Spain, who are the biggest sponsors of the event, and Serbia, the host country, went straight into the final without having competed in preliminary rounds.

Serbia was represented by Jelena Tomasevic, who finished sixth.

Source: The Canadian Press

Thursday, May 22, 2008

Ukraine Wants Russian Navy Out Of Crimea

KIEV, Ukraine -- The Ukrainian President has signed a decree ordering the Cabinet to prepare by July 20 a draft law on terminating all international agreements on the presence of Russia's Black Sea Fleet in Ukraine.

Ukrainian President Viktor Yushchenko wants Russian navy out of Crimea.

Russia's navy currently uses a range of naval facilities in the Crimea under an agreement signed in 1997, under which Ukraine agreed to lease naval facilities to Russia until 2017.

The May 16 resolution on measures to ensure Ukraine's status as a naval power, enacted by Viktor Yushchenko on May 20, was posted on his official website Wednesday.

Disputes between Russia and Ukraine over the lease of the base are frequent. Russia currently pays $93 million per year to lease the base from its ex-Soviet neighbor, which is paid for with Russian energy supplies.

Ukraine's intelligence services barred Moscow Mayor Yuri Luzhkov on May 12 from entering the former Soviet republic over his "provocative" statements regarding the ownership of the Black Sea city of Sevastopol.

Moscow's mayor made strong calls for the disputed ownership of a Russian naval base in Sevastopol to be transferred back to Russia.

The head of the State Duma committee on CIS affairs, Alexei Ostrovsky, said in April that Russia could reclaim the Crimea if Ukraine was admitted to NATO.

Media reported that President Vladimir Putin issued a similar threat at a closed-door speech to NATO leaders at the Bucharest summit earlier this month.

Ukraine's Foreign Ministry confirmed last month that Russia had been invited to start talks in June on the withdrawal of its fleet from the Crimea, but said Moscow had yet to reply to the proposal.

Source: Moscow News

EBRD Pledges More Investment

KIEV, Ukraine -- More than 4,100 top European bankers and investors gathered in Ukraine’s capital on May 18 and 19 for the European Bank for Reconstruction and Development’s (EBRD) annual Board of Governors meeting, a decade after its first Kyiv meeting.

European Bank for Reconstruction and Development President Jean Lemierre (R), and Ukrainian Prime Minister Yulia Tymoshenko, speak during the bank annual meeting in Kiev, Ukraine, Sunday, May 18, 2008. Rising inflation is severely hurting Ukraine and other Eastern European nations, while the global credit crunch will slow growth in those countries dramatically in coming months, the European Bank for Reconstruction and Development said Sunday.

Among the EBRD’s decisions included a 135 million euro grant to fund the shelter and waste storage at the site, as well as a pledge to invest at least 1 billion euro into the Ukrainian economy annually.

While investors and bankers celebrated the decade since they last met in Kyiv, during which Ukraine made enormous strides in economic progress, they also expressed concern for Ukraine’s future, given its inflation rate, government corruption and lack of political consensus.

“There was probably $100 million of investment 10 years ago, and it was coming from Cyprus and going back,” Olivier Descamps, an EBRD business group director, said at the May 19 Ukraine country presentation and discussion. “I think in the last three years, we had 50 percent of the total foreign direct investment of the last 10 years coming to Ukraine.”

Bankers and investors spent the two days networking, attending country presentations and discussions on topics such as corporate social responsibility and EURO 2012, as well as attending receptions, including an extravagant closing ceremony hosted by President Viktor Yushchenko.

Some of Ukraine’s biggest businessmen and investors attended the weekend meeting and business forum, including mega­millionaire banker Serhiy Tyhypko, billionaire industrial magnate Kostiantyn Zhevago, and equity investment fund manager Michael Bleyzer.

The Ukraine country presentation was among the two­day meeting’s highlights, at which Ukraine’s most successful investors discussed Ukraine’s challenges and potential.

Bureaucratic interference, a holdover of the Soviet system, is still preventing Ukraine from reaching its full economic potential, said Narenda Chaudhary, chief executive officer for Arcelor Mittal S.A. in Ukraine, which acquired the Kryvorizhstal steel plant in 2005.

“I have never seen so much bureaucratic intervention in any country,” Chaudhary said, pointing out that he worked in five different countries on three continents.

He recalled enduring 457 inspections in the first half of 2006.

“You can imagine the waste of human resources,” he said.

Nevertheless, Arcelor Mittal made a “wise investment” in Ukraine, he said.

Tycoon Kostiantyn Zhevago, who made his fortune in Ukraine, offered an optimistic perspective on the country.

Unstable politics make investing difficult, but not impossible, Zhevago said, adding that he didn’t see many hurdles in doing business in Ukraine.

Zhevago controls Ferrexpo, which controls iron ore reserves in the Poltava region and was the first Ukrainian company listed on the London Stock Exchange.

“The quality of democracy is the most immediate problem that can be improved if there is political will,” Zhevago said. “We need more stability, but there is no doubt that it will happen. It is just a matter of when.”

Another Ukraine success story is Michael Bleyzer, founder and president of SigmaBleyzer, the largest private equity investment firm in Ukraine.

“If you understand the difficulties of investing in Ukraine, it is a wonderful country to invest in,” said Bleyzer, who was born in Kharkiv, raised in the US and launched his first Ukraine growth fund in 1996.

To succeed, Ukraine needs to broaden beyond strategic investors and those who carry out infrastructure investment, he said.

“Ukraine desperately needs broad­based foreign direct investment in all sectors,” Bleyzer said.

With regard to infrastructure investment, the EBRD will remain Ukraine’s most active player.

The 135 million euro investment announced May 19 will go towards constructing the New Safe Confinement, the structure to be built over Chornobyl’s fourth reactor, which exploded.

The funds will also be invested in completing the second interim storage facility to handle spent fuel from the other three reactors.

Contractors are currently working on the design and technical details of both the New Safe Confinement and the storage facility, and final designs are expected in spring 2009.

The New Safe Confinement will be built on­site and eventually slid over the reactor on rails. It will be 257 meters wide, 105 meters high and 150 meters in length.

At the meeting’s opening ceremony, Prime Minister Yulia Tymoshenko said much of Ukraine’s economic growth was the result of the EBRD’s commitment to Ukraine. “The EBRD is the most powerful investor in the country and we are one of its most desirable clients,” she said.

Striking a similar tone and pointing to Ukraine’s recent WTO accession and rise in foreign direct investment, Ukrainian President Viktor Yushchenko said “progress is irreversible” and thanked the EBRD for organizing their annual meeting in the city.

“Its decision to hold a meeting in Kyiv for a second time is a validation of the reforms and democratic changes, and the progress of the judiciary in Ukraine,” he said.

Source: Kyiv Post

Wednesday, May 21, 2008

Ukraine Central Bank Ups Hryvnia To 4.85/$, Policy Unclear

KIEV, Ukraine -- Ukraine's central bank has strengthened the official rate of the hryvnia to 4.85 to the dollar from 5.05, according to the bank's Web site on Wednesday, but no details about future policy were given.

Ukraine's 1 hryvnia banknote

The bank has been under pressure to revalue or liberalise the hryvnia after inflation began rising last year, hitting 30 percent annually. Ratings agency Standard & Poor's immediately called the bank's move a step towards curbing price rises.

"Liberalising the exchange rate regime should help to curb inflation of tradeables, and in particular commodities such as gas and food, which are priced in dollars," the agency said in a statement. It has a rating of BB- for Ukraine.

"It is more or less what the market has been trading the past few days. It's a first step," BNP Paribas currency strategist Elisabeth Gruie said.

"It's clearly not going to be enough. I would say they would need another five to 10 percent to tackle inflation," she said.

The bank had kept the hryvnia in a tight range of 5.00-5.06 since 2005, within a wider target of 4.95-5.25 but traders said it stopped intervening in February-March.

The hryvnia had been hovering around 4.7-4.8 since then, but soared further in recent days to 4.6 to the dollar after comments from various central bank officials indicating a revaluation soon. On Wednesday, the hryvnia traded at 4.54/$.

The bank had said that a news conference was due on Thursday at 1400 GMT after a meeting of the policy council.

UNCLEAR POLICY

Dealers in Kiev have been critical of the lack of clarity from the bank since it appeared at odds in April when Chairman Volodymyr Stelmakh said "a move" would be made on the hryvnia, only for the bank's council to reject widening the band.

One dealer said despite expectations that the bank would make a decision soon, it was still unclear whether the currency band would be kept or whether the bank would allow the hryvnia to float freely.

"If this is going to be a floating rate, I don't see any reasons why (the dollar) won't continue to drop, if the bank refrains from entering the market," the dealer said.

"They must begin market interventions, otherwise neither clients nor banks will have any targets (of where the rate should be)," he said, mentioning the example or Russia who's central bank said last week it would begin daily interventions.

Markets had been betting on neighbouring Russia revaluing the rouble against its dollar/euro basket to rein in its inflation running at over 14 percent annually.

But its move last week has made the market more volatile and making it more difficult for dealers to guess the regulator's policies.

BLEAK PICTURE

In its comments after the bank's move, Standard & Poor's painted a bleak picture for Ukraine, saying inflation was boosted by non-monetary factors and that a stronger hryvnia would harm exporters, raising the current account deficit.

"In the first quarter of 2008, nominal government expenditures increased just under 50 percent, pushing up public sector wages and sending a highly inflationary signal to the private sector," it said.

"Loose income policy continues to affect goods prices via second-round effects."

The agency lambasted the government of Prime Minister Yulia Tymoshenko in January, calling its fiscal policies "populist" after it began paying compensation to people who's Soviet-era savings were wiped out by hyperinflation during the 1990s.

Tymoshenko has repeatedly said that the government would be able to bring inflation under control in a few months, and some officials had even predicted deflation during the summer months due to bumper food harvests.

The government has not yet changed its 2008 inflation forecast of 9.6 percent after accumulated price rises in the first four months of the year, at 13.1 percent, exceeded the target. In 2007, inflation reached 16.6 percent.

Analysts have forecast inflation at around 20 percent for this year, while the central bank said it could hit 18-19 percent.

Source: Guardian UK

Democratic Coalition In Ukraine Exists Only On Paper - Tymoshenko

KIEV, Ukraine -- The so-called "democratic coalition" in Ukraine in fact exists only on paper, Ukrainian Prime Minister Yulia Tymoshenko said.

Premier Yulia Tymoshenko

"It is a big question whether a democratic coalition exists in Ukraine today. In legal terms, it does exist and is functioning in the parliament. But in fact there is another coalition comprising all oligarchic groups, the Party of Regions, and part of our democratic sector," Tymoshenko said speaking to residents of the Minsk district of Kyiv on Tuesday.

"The president has ordered opening criminal cases against the managers of the State Treasury and the acting head of the State Property Fund appointed by the government," she said.

"The Prosecutor General's Office is not only turning a blind eye to corruption but, along with other government bodies, they also provide protection to this," she said.

The Prosecutor General's Office has also barred the government from depriving the Vanco company of a license to develop Black Sea offshore resources, Tymoshenko said. "This company is owned by members of the Party of Regions and a Russian company," she said.

"Now the democratic president together with the Prosecutor General's Office, which they own fifty-fifty with the Party of Regions, have opened a criminal case against me," she said.

Tymoshenko also accused the presidential secretariat of corruption. "How can I keep silent when I take documents and see that the Yanukovych government handed 350 hectares of land and 300 hectares of forests to presidential secretariat chief [Viktor] Baloha?" she said.

"I have only one way to go, forward, and ignore any obstacles" in the current situation, she said.

"We will not surrender and will go until the president, the Prosecutor General's Office, the Verkhovna Rada and courts serve you [the Ukrainian public] rather than each other," Tymoshenko said.

Source: Interfax

President Meets With Central Bank Governor

KIEV, Ukraine -- President Viktor Yushchenko, who has been opposing the rapid appreciation of the hryvnia as a means of fighting inflation, met the governor of the National Bank of Ukraine for a “conversation.”

Volodymyr Stelmakh

The meeting with Volodymyr Stelmakh comes a day after a senior official at the NBU had disclosed plans to allow the hryvnia within days to gain value against the dollar.

The plans caused nervousness on the forex market on Monday, with the hryvnia rising sharply against the dollar in trading between commercial banks.

“The president had the conversation with the governor of the National Bank,” Oleksandr Shlapak, the first deputy chief-of-staff at the Yushchenko office, said at a press conference. “There must be clarity of how we should behave.”

Yushchenko, himself a former long time governor of the NBU, is known as an advocate of conservative monetary policy calling for the stability of the hryvnia.

Yushchenko is the architect of the current policy, first introduced in September 1997, allowing the hryvnia to trade only within a specified band. The policy a reaction to the Russian financial meltdown that year and helped to prevent similar turbulence in Ukraine.

Shlapak, Yushchenko’s key economic advisor and a former deputy governor at the NBU, said the appreciation of the hryvnia is not the proper response to Ukraine’s inflation challenge.

Prime Minister Yulia Tymoshenko has been pushing for the hryvnia to appreciate against the dollar as a measure to fight the country’s skyrocketing inflation.

The inflation, helped by rising costs of energy and food, rose to more than 30% if measured between April and April 2007, caused by Tymoshenko’s controversial social spending policy.

Yushchenko has persistently called for launching market-oriented measures in response to the inflation challenge, such as liberalization of trade in grain and natural gas.

Oleksandr Savchenko, a deputy governor of the NBU, said Monday that the hryvnia will “very soon,” perhaps within “one, two, or three days” be allowed to have great volatility in trading against the dollar.

The comment led the hryvnia rising 2.3% against the dollar to close at 4.66 hryvnias to the dollar on Monday.

Source: Ukrainian Journal

Tuesday, May 20, 2008

US To Deport Accused Nazi Guard

CINCINNATI, OH -- Accused Nazi death camp guard John Demjanjuk has lost a United States Supreme Court appeal that sought to block his deportation to his native Ukraine.

Accused John Demjanjuk

Without comment, the high court refused to hear an appeal by the 88-year-old retired Ohio auto worker that argued the nation's chief immigration judge lacked the authority to order his deportation.

The rejection of the appeal on Monday marked the latest development in a battle between Demjanjuk and the US Justice Department that began in 1977.

The deportation order, issued in 2005, says that Demjanjuk can be sent to Germany or Poland, as an alternative, if Ukraine refuses to accept him.

A Justice Department spokeswoman said Demjanjuk has exhausted all legal avenues for reversing his deportation order and that the department remains committed to deporting him.

But it appears that no country is willing to take Demjanjuk, either by granting him a visa or to prosecute him for war crimes, according to a former prosecutor in the case.

"I haven't heard any indication that any country ... is willing to accept a war criminal of John Demjanjuk's notoriety," Jonathan Drimmer, who is now in private practice, said in a telephone interview.

"He will remain free, pending whatever removal occurs," Drimmer said. "At this point, any country can accept him."

Demjanjuk was once convicted of being the sadistic guard "Ivan the Terrible" and sentenced to death in Israel. But the Israeli Supreme Court overturned the conviction when new evidence showed another man was probably "Ivan" at the Treblinka camp in Poland where 870,000 people died.

Demjanjuk was twice stripped of his US citizenship, the second time in 2002, when a federal judge ruled he had been a guard at three other Nazi death camps in Poland and Germany.

Demjanjuk has argued that Chief US Immigration Judge Michael Creppy did not have the authority to order his deportation. Judge Creppy can only do administrative duties, Demjanjuk's lawyers said.

But a Board of Immigration Appeals and a US appeals court based in Cincinnati rejected his arguments, prompting his appeal to the Supreme Court.

Demjanjuk's lawyers have said he could be prosecuted and face harsh prison conditions or even torture if he is sent back to Ukraine. But Judge Creppy and then the Board of Immigration Appeals said there was no evidence to support those claims.

Demjanjuk was first stripped of his US citizenship in 1981 and extradited to Israel, where he was sentenced to death in 1988 on eyewitness testimony from Holocaust survivors that he was Ivan of the Treblinka camp.

The Israeli Supreme Court overturned his death sentence in 1993 and freed him after newly released records from the former Soviet Union showed Ivan Marchenko was probably the Treblinka guard.

The US restored Demjanjuk's citizenship in 1998, but the following year the US Justice Department refiled its case against him on the grounds that he had been a Nazi guard at three other death camps.

Demjanjuk, said by his former son-in-law to be in ill health, lives in the Cleveland suburb of Seven Hills. He immigrated to the US in 1952 and became a naturalised citizen in 1958.

Demjanjuk has said he was drafted into the Soviet army and was captured by the Germans. He has denied that he ever helped the Nazis.

Source: The Sydney Morning Herald

Monday, May 19, 2008

Fiddling While Ukraine Burns

KIEV, Ukraine -- Ukrainian politicians have been squabbling over the economy for months, but so far all they've achieved is a refined talent for making each other look the fool.

The foolish rivalry between the former 'Orange' allies has led to policymaking paralysis while inflation soars.

The political buffoonery peaked on 13 May, when legislators loyal to Prime Minister Yulia Tymoshenko thwarted President Viktor Yushchenko's state-of-the-nation address before parliament by physically blocking the speaker's chair. Yushchenko had to cancel the speech.

Tymoshenko loyalists called the confrontation retaliation for the president's efforts to block votes on legislation designed to treat a Ukrainian economy infected with rocketing inflation. For his part, Yushchenko blames the premier's office for inaction on inflation.

Central figures in the 2004 Orange Revolution, Tymoshenko and Yushchenko have since seen their relationship deteriorate. The parliament episode demonstrates the fragility of their coalition at a moment when they should be cooperating to fix, not bickering over, the economy.

Instead, they're racing to blame the other for Ukraine's woes before elections in 2010, when Tymoshenko is expected to vie for the presidency.

But the leaders had better start putting as much energy into reconciling as they have into humiliating each other. "Galloping inflation," as Tymoshenko calls it, threatens to become a millstone around the economy's neck.

It has reached unsustainable levels and will remain high if neglected—and 46 million Ukrainians, some of them voters, will be the ones to suffer.

GET SERIOUS

"[Inflation] breached the 30 percent mark in April, again above consensus and clearly something that policymakers have to tackle immediately," analyst Simon Quijano-Evans of UniCredit told Reuters recently.

That annual figure, the highest in the Commonwealth of Independent States, is largely due to rising global food prices. Today, bread is reportedly 20 percent more expensive than a year ago in Ukraine, and the price of eggs is up 70 percent.

Increasing energy costs, growing consumption driven by rising incomes and the dollar's decline against the euro are also fueling price growth. The cratering dollar is significant because the Ukrainian hryvnia is de facto pegged to the U.S. currency.

This means Ukraine imports the inflation of rising food and energy costs through its dollar peg.

The National Bank of Ukraine has intervened to strengthen the hryvnia by allowing its peg to fluctuate over a wider range against the dollar.

This appears to have helped: monthly inflation fell to 3.1 percent in April from 3.8 percent in March.

Tymoshenko, who's publicly committed to reducing price growth, has made much of this. She said the April figure proves the economy is righting itself, a flimsy assertion that makes the Ukrainian premier Hillary Clinton's top rival for the honor of the world's most skilled politician at recasting modest gains as resounding triumphs.

In reality, the best-case scenario is 20 percent inflation by year-end, so much more needs to be done.

The International Monetary Fund has recommended fiscal tightening, since Ukraine can do little about food or energy prices. The government should run a balanced budget in 2008 and reorient spending from social benefits to things like infrastructure, according to the IMF.

Fiscal discipline, however, has not seemed like either Tymoshenko or Yushchenko's priority recently. Since retaking office in December, the prime minister has backed populist policy initiatives such as wage and social benefit hikes that not only increase state spending but also drive inflation by encouraging consumption.

This comes just as the president is squeezing state coffers by stalling several privatization projects worth billions of dollars. One, the Odessa Portside Plant, Ukraine's largest nitrogen fertilizer and ammonia producer, reportedly has a sticker price of $600 million.

Ukraine is expected to have a budget deficit of around 1 percent of GDP this year. The president blames both it and inflation on Tymoshenko, who maintains she inherited the former prime minister's dysfunctional economy and that Yushchenko is trying to undermine her government.

Nevertheless, it's clear both leaders' policies are contributing to a budget imbalance that will keep inflation high.

On the positive side, economic growth remains robust—the IMF's 2008 forecast is 5.6 percent—and Ukraine's entry into the World Trade Organization this month will invigorate the trade economy.

But, as Fitch Ratings noted when downgrading its outlook for Ukraine from positive to stable 14 May, sustained high inflation will erode the economy. The agency urged leaders to develop a clearer inflation strategy.

Allowing the hryvnia to further appreciate is at the center of any meaningful plan, many economists say. That is largely the domain of central bankers, but the prime minister and president could contribute to a broader inflation-reduction strategy by cooperating to meet the IMF's balanced budget target.

The former allies in the struggle to make Ukraine a more open, progressive country would have to put politics aside to do this, of course. Unfortunately, a lust for power seems to have consumed their commitment to progress.

Source: Business Week