Wednesday, September 30, 2009

Platini Insists Ukraine Is Ready For Euro 2012 Championship

RIO DE JANEIRO, Brazil -- UEFA president Michel Platini insists Ukraine will be allowed to co-host the 2012 European Championship despite preparation setbacks, but that the number of host cities are still undecided.

UEFA president Michel Platini.

UEFA earlier threatened to strip Ukraine of its co-hosting rights with Poland after difficulties building stadiums, hotels and transport infrastructure. However, the UEFA chief said Wednesday the competition will be played in the former Soviet republic as scheduled.

"We will go (to Ukraine)," Platini told The Associated Press in an interview on Wednesday. "The question this moment is how many cities we will have in Ukraine and where we will have the final."

Kyiv is the only city guaranteed so far, and it remains uncertain if the final will take place in the capital as originally planned. UEFA will announce the final list when executive members meet Dec. 9-11 in Portugal's Madeira islands.

"We have four Polish cities and one Ukrainian city," Platini said. "We will have to make a decision in December on how many cities we will have in Ukraine."

Ukraine was hit hard by the global financial crisis and the nation has relied on loans from the International Monetary Fund to build its infrastructure for the tournament. In addition, political decisions have been delayed by disputes between rival factions in the government.

"It was a big challenge to go into the east. UEFA took this challenge," Platini said. "We had surprises and it was not so easy, but it's working well and better."

Platini said earlier this month that Ukraine was making a lot of progress in its preparations and was on the right track to keep the competition.

Speaking a day after FIFA's executive committee meeting, Platini also defended the use of five officials on an experimental basis in the Europa league and said that with time the system will improve. He said he was happy with the system's debut on Sept. 17, but that the two additional assistants behind the goals will have to "participate more."

"It will be better, you have more justice in this system," Platini said. "You have four more eyes, it's easier."

Platini proposed the system because he said it's his "job as president of UEFA and as vice president of FIFA to help the referees see everything."

"We know that one referee can't see everything. With TV you see everything, but I'm against technology because (you need) the human factor. My job is to help the referees so they can make a good decision."

The UEFA chief said the additional assistants would have helped avoid the recent missed diving call that prompted UEFA to ban Arsenal striker Eduardo da Silva for two matches. The ban was later reversed on appeal.

On other issues, Platini also said an under-21 tournament in the Olympics would be "a very good compromise."

"We have so many problems," Platini said. "We have many games of qualifications and (the Olympics are) after the Euro, many clubs don't want to let their best players go. It's not in our calendar."

Platini said UEFA is not planning any sanctions against Serbia following the death of a 28-year French fan attacked in Belgrade by Serbian hooligans earlier this month.

"There will be no sanction because it was on the streets, in a bar," Platini said. "Outside the stadiums it's not (our) responsibility. It's the responsibility of society, it's a responsibility of the police."

Platini also said there is no immediate plan to grant the Europa League winner an automatic spot in the Champions League, and affirmed that the clubs "are very pleased" with the competition's new format.

The former star midfielder said he thinks his native France will be able to qualify for the World Cup despite its recent struggles, and that Brazil will remain a top contender for the title in next year's competition in South Africa.

"(Brazil) is so strong that you don't need Adriano, you don't need Ronaldo, you don't need Ronaldinho," he said. "(It's) always one of the best teams in the world.

Source: The Canadian Press

Ukraine's Real Tourist Trap

CHERNOBYL, Ukraine -- If you think Auschwitz is an odd tourist destination, then you're going to love Ukraine's new hot spot. Chernobyl -- home to the worst nuclear disaster in history -- offers tours of the wreckage and the local city evacuated 23 years ago. You should probably bring your own lunch.

Chernobyl reactor number 4.

Remarkably, Chernobyl has become one of the Ukraine's hottest tourist destinations, and Kiev-based companies are charging between $180 and $250 a head to take tourists to the post-apocalyptic wonderland.

A large portion of that money goes to the government, who requires tourists to pay for a "military permit" to enter. Back in the old days, $20 got independent travelers a look at the exclusion zone, so apparently the government finally realized they could be cashin' in.

Most tours focus on two main spots. First, people are taken to the reactor itself, which has now been covered over with a massive concrete block. Remarkably, the station still used the other reactors until about a decade ago when the European Union finally pressured Ukraine into shutting them down.

From here, visitors are transported to Pripyat, a town that once housed about 50,000 workers, but has since turned into ghost town. The last inhabitants were there for two days before the government finally decided to stop covering up the disaster and get these people out of there.

Most had to leave everything behind.

Today, the football stadium's field has grown a small forest and trees are even cracking through the concrete streets. The total silence is beyond spooky.

Honestly, I don't think there could be a better advertisement for green power over nuclear.

Some operators like to play up the danger by getting tourists in radioactive gear, but most places simply bring a Geiger counter that never goes into the red.

Then again, do you really want to trust the judgment of the country whose scientists let the reactor blow in the first place? Ah, why not, you didn't want kids anyway.

Source: Tonic

Russia's New Ukrainian Disinformation Campaign

WASHINGTON, DC -- Disinformation, or the planting of false information to deceive or smear an enemy, is now being regularly used by both government and non-governmental players in Russia and Ukraine in the fierce battles for control of power and assets in these countries.

In July, Ukrainians protested near Russian embassy in Kiev against Putin's disinformation about Ukraine. Putin said that 17 million Russians live in Ukraine, while the real number is closer to 8 million.

During the January 2009 "gas war" between Ukraine and Russia, the Russian leadership accused Ukraine of preventing Russian gas from reaching customers in the E.U. The charges were shown to be blatantly false, but were repeated by Russian spokesmen in order to discredit Ukraine as a gas transit country, while building up support within Europe for the North Stream and South Stream pipeline projects.

In what might have been a possible retaliation for this, Ukraine launched its own stealth campaign, claiming that the Russian consulate in the Crimea was handing out Russian passports to Russians living in the peninsula.

Ukraine was never able to prove these charges, but the idea took hold and many Ukrainians seemed convinced that these "passports" were meant to stir up the Crimean population and were a prelude to the forcible separation of Crimea from Ukraine by Russian armed might.

In September a new and apparently more elaborate disinformation campaign began. This time it was between competing Ukrainian political parties, one of which seemed to be aided by the Russian media. The campaign is centered on the poisoning of Viktor Yushchenko in 2004 during the hotly contested presidential election in Ukraine, which Yushchenko eventually won.

Members of the pro-Russian Party of the Regions, led by Viktor Yanukovych, have long claimed that the poisoning of Yushchenko was concocted and that the United States played a key role in this "hoax," meant to win sympathy votes for the pro-Western Yushchenko and discredit Russian politicians who openly supported Yanukovych in 2004.

This conspiracy-disinformation attempt did not gain a significant following at first, and was apparently shelved, but with new presidential elections scheduled to take place in Ukraine in January 2010, the old charges surrounding the poisoning were resurrected, and new lurid details were added and set in motion.

On September 18 the Ukrainian newspaper Segodnya published a sensational report stating that Larysa Cherednichenko, the former head of the department for supervision over investigations into criminal cases of the Ukrainian prosecutor general's office, claimed that high-ranking officials from the presidential secretariat and family members of Yushchenko had falsified evidence in his poisoning case.

"As [Davyd] Zhvaniya [member of the Our Ukraine People's Self-Defense faction of the Ukrainian parliament, who has more than once denied Yushchenko's poisoning] said, the victim had blood samples taken from him in September-October 2004 with help from an Austrian doctor. However, the samples were not studied in Ukraine or another European country. They were secretly taken to the U.S., where they were enriched with dioxin and were later taken to the U.K. with help from the U.S. special services."

The scenario provided by Zhvaniya was elaborated upon in the Russian newspaper Kommersant Daily on September 24. Kommersant quoted a report in its possession that Cherednichenko ordered a forensic test of a conversation recorded between two persons speaking primarily in English interspersed with occasional Ukrainian.

The conversation was about an unnamed American intelligence service whose agents were due to take Yushchenko's blood sample to Austria. Furthermore, the investigation claimed that one of the voices on the recording belonged to Kateryna Yushchenko, the wife of Viktor Yushchenko and the other voice to Roman Zvarych, a former Ukrainian justice minister and close supporter of Yushchenko.

What the paper failed to mention was how and where this alleged recording was made and by whom?

Both Kateryna and Zvarych were born in the United States and belonged to the same Ukrainian nationalist organization until moving to Ukraine in the 1990's where they eventually obtained Ukrainian citizenship. After Yushchenko's election as president, Kateryna was often accused in the Russian media of being a U.S. CIA agent.

According to a report on the BBC on January 28, 2005, "In 2001, the Russian television presenter Mikhail Leontiev, known for his controversial pro-Kremlin sympathies, accused Kateryna Yushchenko of being a "CIA agent" sent to Ukraine to bring her husband to power. Kateryna Yushchenko subsequently won a libel case in a Ukrainian court against Leontiev and his "Odnako" [However] program."

Austrian doctors responsible for examining Yushchenko several months after the poison was reportedly administered said the Ukrainian politician had ingested a concentrated dose of dioxin. The powerful toxin caused bloating and pockmarks on Yushchenko's face, giving his skin a greenish hue and adding a macabre note to a tumultuous political season culminating in the mass Orange Revolution protests in December 2004.

For unexplained reasons, the current disinformation campaign fails to name who poisoned Yushchenko and why.

Source: The Jamestown Foundation

Monday, September 28, 2009

Who Will Washington Support In The Ukrainian Elections?

WASHINGTON, DC -- The Ukrainian media has started to debate who the United States might support in the upcoming January 17, 2010 presidential elections. This issue is closely related to the question of which "political technologists" the presidential candidates will employ: American or Russian.

From left to right: Viktor Yanukovych, Julia Tymoshenko and Arseniy Yatseniuk.

On August 31 Alyona Getmanchuk, the editor of the weekly magazine Glavred, discussed "Washingtonski Stavky" - how the U.S. administration looks upon the three main presidential candidates.

Getmanchuk characterized Viktor Yanukovych, who leads in the polls, as someone over whom Washington still has reservations, because of his background in the Kuchma ancien regime, his low intellectual capabilities, and his authoritarian and Soviet cultural attributes. Washington also looks negatively at Yanukovych's support for separatism in Georgia.

Similarly, Getmanchuk found that "in the U.S. they do not see in a President Yanukovych any threat to Ukrainian independence" because no Ukrainian leader will willingly give up Ukrainian sovereignty. This is a reference to the fact that Kuchma came to power with "pro-Russian" slogans in 1994, but quickly became a Ukrainian derzhavnyk.

However, what this comparison of Yanukovych and Kuchma ignores is that Yanukovych was born in Belarus and grew up in the highly Sovietized Donetsk where he was twice imprisoned, and as the Donetsk governor in 1997-2002 he oversaw the corrupt transition to a market economy that created oligarchs. In the USSR, Kuchma was head of Dnipropetrovsk's Pivdenmash (Yuzhmash), the world's largest producer of nuclear weapons and, therefore, a member of Ukraine's communist nomenklatura.

Getmanchuk analyzed Yulia Tymoshenko, who will most likely face Yanukovych in the second round of the elections. Getmanchuk developed the familiar canards about Tymoshenko's "populism" that dominated Western coverage of her first government in 2005, but qualified this by saying that she is no longer seen in Washington as a "populist." Any analysis of Ukrainian party and presidential programs will show that they include "populist" promises, including Yushchenko's 2004 program.

Getmanchuk pointed to one area where Washington might consider Tymoshenko as positive: her role in reforming and tackling corruption in the energy sector. Tymoshenko closed the corrupt gas intermediary RosUkrEnergo, which resulted in 2009 becoming the first year that Ukraine's gas trade is not managed by a corrupt intermediary.

Tymoshenko retains a larger number of skeptics than her supporters in Washington, Getmanchuk believes, because of her alleged "authoritarian" tendencies, and her unwillingness to compromise. However, like Yanukovych, Washington's views of Tymoshenko, Getmanchuk suggested, are also in the process of changing.

Finally, he assessed Arseniy Yatseniuk (interestingly the analysis ignores President Viktor Yushchenko who received a rapturous welcome during his April 2005 visit to Washington where he was accorded the rare privilege of speaking to both houses of congress).

Getmanchuk wrote that few in Washington know much about Yatseniuk, a factor that is unlikely to change before the election. Washington's interest in Yatseniuk is in decline, Getmanchuk believes, in a comparable way to the plateauing of his support in Ukraine over the last four months after his meteoric rise in the previous six. Yatseniuk's support in Ukraine and in the West has grown as a consequence of domestic disillusionment with Yushchenko, Tymoshenko and Yanukovych.

One of his drawbacks, Getmanchuk believes, is that Yatseniuk has little charisma, appears arrogant and little is known about him or his policies (for example, it is now understood that he is less pro-Western than at first it was assumed). Another factor contributing to this declining interest is the widely held view that Yatseniuk will fail to enter the second round.

Getmanchuk's analysis is complicated by the fact that Yatseniuk is the only main candidate using Russian "political technologists." The Ukrainian team of consultants, led by Kyiv Mohyla Academy Professor Rostyslav Pawlenko, was replaced by Russian consultants in June.

These Russian consultants were involved in preparing the anti-Yushchenko and anti-American propaganda in the 2004 elections for the Yanukovych campaign. They have also been blamed for the hugely unpopular Yatseniuk billboards and campaign tents in the center of most Ukrainian cities that use military camouflage colors to portray an air of crisis.

Yanukovych, Tymoshenko, and Yushchenko use American election consultants (information about which is easy to find because U.S. companies working for foreign governments have to register with the Department of Justice Foreign Agents Registration Unit (FARA). Yanukovych draws on political consultants linked to the Republican Party, who unlike others working in Ukraine have never registered with FARA.

Yushchenko and Tymoshenko have drawn upon election consultants who have worked for Democratic election campaigns including Bill Clinton and Barack Obama. Tymoshenko's team hired AKPD Message and Media, who played a central role in Obama's successful public relations campaign. This undermined Yatseniuk believed by many (up to the culling of Ukrainian consultants), to be "Ukraine's Obama".

The AKPD contract became public knowledge with a lengthy analysis entitled "King Makers for Tymoshenko" in Ukrayinska Pravda. One of their first steps has been to re-fashion Tymoshenko on the internet and to have input into Tymoshenko's billboards, widely seen as the best produced by all of the candidates that portray her competitors as arguing or undermining her, while she as head of government is busily working to extricate Ukraine from the impact of the global financial crisis. "They quarrel. She works," one of the billboards declares.

Tymoshenko has also managed to find support from Ukraine's most well known rock bands, such as Druha Rika (who backed Yanukovych in 2004) and Vopli Vidoplyasova -a famous band in Ukraine that supported Yushchenko in 2004 and helped to popularize the Orange Revolution. The first of many rock concerts was held on the Maidan on September 12 attended by Tymoshenko and 50,000 spectators.

In Ukraine, discussions of "Washington" wrongly lump together the present administration, which officially will not support any candidate, think tank experts and private consultants employed by Ukrainian candidates or political parties. The Bush administration did not support a Ukrainian candidate in the 2004 elections, unlike Russia whose then President Vladimir Putin twice traveled to Ukraine to support Yanukovych.

Russian political consultants on loan from Putin, such as Gleb Pavlovsky, worked for the Yanukovych campaign. U.S. political consultants working for three Ukrainian candidates represent private companies, not the Obama administration. Nonetheless, this distinction appears lost on Ukrainian observers of U.S. foreign policy.

Source: Eurasia Daily Monitor

Ukraine President To Russia: Hand Over Poisoning Figures

KIEV, Ukraine -- Ukrainian President Viktor Yushchenko has urged Russia to turn over important figures in his nearly lethal dioxin poisoning five years ago.

These combination file photographs show Ukrainian President Viktor Yushchenko, before and after his mysterious poisoning. On the left, Yushchenko is seen after he submitted his candidacy papers in the Ukrainian capital of Kiev on July 4, 2004. On the right, Yushchenko, with his face disfigured by illness, is seen answering media question in Kiev Friday, Dec. 10, 2004.

Yushchenko said in an interview aired Sunday night on Channel 1+1 that the testimony of the three men who were at a dinner in 2004 at which he believes he was poisoned is crucial to finishing the investigation.

"These three people who directly received me, treated me and served me, today unfortunately are in Russia," Yushchenko said.

He said the extradition make it possible to determine "who poisoned the president, what the motives were and who must be held responsible for this."

Ukrainian prosecutors said last year that they had failed to identify a suspect. Prosecutors declined comment on Yushchenko's statement Monday and refused to say whether any suspects have now been named.

Ukrainian prosecutors said Russia has refused to extradite one of the men, the former deputy chief of Ukraine's security service, Volodymyr Satsyuk, because he holds both Russian and Ukrainian citizenship.

Russian prosecutors also declined comment.

Yushchenko fell gravely ill while competing against a Russia-backed rival in the 2004 presidential campaign. He was later diagnosed with dioxin poisoning, which badly scarred his face. He won the election on a wave of massive public protests dubbed the "Orange Revolution."

Yushchenko has continuously accused Moscow of stalling the investigation by refusing to extradite important figures in the case or to provide Russian-made dioxin for testing. He has said repeatedly that he knows who was responsible for the poisoning but does not want to name anyone while an investigation continued.

Source: AP

Sunday, September 27, 2009

Ukraine's Got Talent Winner Brings Nation To Tears

YEVPATORIA, Ukraine -- The appearance of a shy 24-year-old on a Ukrainian TV talent show this year has caused a nation to revisit its painful wartime past and is well on the way to becoming an international sensation.

Kseniya Simonova, the winner of TV show contest 'Ukraine's Got Talent', creates a drawing in sand in Yevpatoria, Sept 24, 2009.

About 13 million people watched Kseniya Simonova win Ukraine's Got Talent live with an extraordinary demonstration of "sand art". Most of them, according to reports, were weeping. The judges and studio audience sobbed throughout.

Ukraine, where a fraught presidential election campaign is under way ahead of a vote in January 2010, is enduring a deepening financial crisis and the raw, sentimental depiction of Ukraine's suffering, even drawn in sand, was too much.

Ever since May, when Simonova first stepped on stage with a light-box full of sand and drew pictures in it, deftly creating tableaux of the country's history, her performances have collected new viewers. Her winning appearance has now notched up more than four million hits on YouTube.

The number of hits is extraordinary for a foreign web clip, especially given that few people watching it could understand its message.

Ukraine lost one in four of its population during the Second World War, the largest losses of any country and about 20% of the total deaths.

Simonova's sand story portrays the human loss after the German invasion in 1941. The opening scene shows a couple sitting on a bench under a starry sky. Warplanes appear and the happy scene is obliterated to be replaced by crying faces.

Then a baby arrives and the woman smiles again, but war and chaos return and a young woman becomes an old widow, before the image turns into an obelisk – the Ukrainian monument to its Unknown Soldier.

Simonova has returned to ordinary life in the Crimean seaside town of Evpatoria, where she has used her £80,000 prize to buy a modest house and set up a children's charity.

Simonova has told interviewers she is happy to stay in Evpatoria and will not be travelling abroad to cash in on her growing global fan base. Her success has taken the young woman by surprise. "I only entered because there was a child I know who needed an operation and I wanted to help," she said. "I did not mean to make the whole country cry."

Source: The Observer

Klitschko Stops Arreola In Heavyweight Showdown

LOS ANGELES, USA -- Vitali Klitschko retained his piece of the heavyweight title Saturday night, dominating Arreola from the opening bell before Cris Arreola's corner finally decided he had enough and refused to let the challenger come out for the 11th round.

Vitali Klitschko of Ukraine beat Cristobal Arreola of the U.S. in the 10th round of their WBC Heavyweight Championship bout at the Staples Center in Los Angeles, California.

It was the first loss for Cristobal Arreola, who was trying to become the first Mexican-American to win a heavyweight title.

Arreola spent almost the entire fight moving forward in an attempt to get inside his taller opponent, but paid a heavy price as Klitschko landed punches from almost every angle to his head and midsection. By the later rounds, Arreola's face was a bloody mess, yet he continued to plod forward in an increasingly desperate attempt to land a big punch inside.

The fight ended with Arreola on his stool after the 10th round, still ready to fight some more when his trainer refused to allow him to go on.

"He was taking too much punishment," trainer Henry Ramirez said. "When I told him I was going to stop the fight he was irate."

Klitschko put on an impressive show, using both his reach advantage and his considerable ring skills to land left hooks followed by an assortment of right hands. But he was never able to put Arreola down, and never landed enough big punches to make him want to quit.

"I know I was hurting him a lot but he has a great, great chin," Klitschko said. "I was surprised he did not come out (for the 11th round)."

One ringside just gave Klitschko all 10 rounds while the other two gave Arreola one round. The Associated Press had Klitschko winning every round.

It was the third win for Klitchko since he returned last year from a four-year retirement he said he needed to allow his body to heal. His brother, Wladimir, also a heavyweight champion, was in the corner to give him advice but there was little that needed to be said about a performance so dominating that there seemed little chance for Arreola even after the first round.

"I'm so sorry, I really wanted to be champion," Arreola said. "I never wanted to quit."

Ringside punch statistics showed Klitschko threw 802 punches, a huge amount for a heavyweight, and landed 301 of them. Arreola was credited with landing 86 of 331 punches.

Klitschko was a 5-1 favorite, but Arreola thought he would have a puncher's chance at the very least. He didn't, largely because Klitschko not only takes a good punch but refused to allow him inside to land many.

The pace of the fight was set in the first round, with Klitschko moving backward slowly, landing punches to the head, while Arreola lunged at him, usually finding only air at the end of his punches. The fight continued in much the same fashion, with Arreola's face reddening and blood streaming from his nose and mouth.

"This was a hard fight, like I expected," Klitschko said. "He's a tough fighter.

It was a successful return for Klitschko to the Staples Center, where he made a name for himself in a loss to Lennox Lewis in 2003 and won the WBC title the next year. Though Klitschko has a home in Los Angeles, Arreola is a Southern California native and most in the near capacity crowd were there to cheer him on.

The cheers grew fainter, though, as the rounds added up and the crowd realized this was not going to be their man's night.

"I couldn't get to him," Arreola said. "He was fighting the fight he was supposed to fight."

Source: USA Today

Friday, September 25, 2009

Central Bank Salaries Higher Than President's

KIEV, Ukraine -- As more allegations of possible impropriety at the National Bank of Ukraine surface, lawmakers and others are also taking a closer look at the salaries and extravagant lifestyles of the central bank’s top management.

Lawmakers are taking a closer look at the earnings of National Bank’s top managers. Some of them earn four times as much as the president.

On Sept. 17, parliament vice chair Mykola Tomenko filed an official inquiry asking the NBU to reveal recent salary increases given to top management.

Two days earlier, leading Ukrainian news portal reported that NBU Chairman Volodymyr Stelmakh and his first deputy, Anatoliy Shapovolov, had taken home more than $187,000, including $150,000 in salary and other compensation last year. If accurate, then Stelmakh’s income is about three times higher than what Ukraine’s president earns.

Tomenko asked the NBU supervisory council to check if salaries have been doubled for the central bank’s top executives and, if so, to explain why. He cited press reports alleging that Stelmakh, a presidential ally, had received upwards of $57,000 during the first three months of 2009, including $55,000 in salary and $1,500 in perks. The reports suggest Stelmakh received a sizable increase on a $36,000 salary received during the first quarter of 2008.

Stelmakh has neither confirmed nor denied these reports. Meanwhile, Shapovalov refused to divulge his official salary, citing privacy laws.

“I am not a public person, and there are no grounds to publish the information because I do not give my consent,” Shapovalov said, delivering more ammunition to critics’ complaints that the central bank is secretive and non-transparent.

However, Shapovalov said that salaries for NBU board members – which he would not disclose – were cut 8 percent in 2009 in connection with Ukraine’s precarious financial predicament.

NBU spokesman Serhiy Kruglyk told the Kyiv Post on Sept. 16 that the base salary for NBU board members is $1,687 monthly. Kruglyk said supplementary payments to board members, including bonuses, are calculated based on civil service rank and seniority, in accordance with Ukrainian legislation.

Vasyl Horbal, a parliament lawmaker and member of the opposition Party of Regions faction, is neither concerned nor surprised by the amounts that NBU board members are reportedly earning.

“The salary of the board chairman of a commercial bank can easily reach $15,000 a month,” said Horbal, who is a banker and member of the NBU’s supervisory council.

“The NBU needs to retain professional staff and prevent commercial banks from draining away talent. And the salaries of bank specialists are calculated on the basis how much bank board members are paid,” Horbal said.

Source: Kyiv Post

Thursday, September 24, 2009

Financial Free Fall?

KIEV, Ukraine -- The official investigation into what the nation’s top cop is calling one of the worst financial frauds in the nation's history may be going nowhere fast.

Alleged massive corruption in spending of Western aid, at Ukraine's National Bank, may stall economic recovery.

Interior Minister Yuriy Lutsenko on Sept. 23 said employees with the National Bank of Ukraine (NBU) are not cooperating with his ministry’s investigation into how the central bank has refinanced commercial banks and conducted foreign currency auctions.

“We are questioning anyone who can give valuable information, but it is too early to talk about results. Much will depend on whether top NBU officials want to cooperate. We have asked for information about who was in charge of what, but we still have not received answers,” Lutsenko said. “We do not sense any desire on their part to cooperate with our investigation.”

At issue is how billions of dollars got spent – or misspent – in government assistance that was supposed to help the nation’s banks recover from a raft of bad borrowing and lending. Much of the aid came from the International Monetary Fund or World Bank in loans that will have to be repaid by Ukrainian taxpayers.

So far, the government has spent Hr 107 billion ($13 billion) to refinance many of the nation’s 170 or so commercial banks. Further, the government has recapitalized three of the most financially precarious – Rodovid Bank, Ukrgazbank and Kyiv Bank. The government now owns and runs those three banks. Currently, 15 of the most trouble banks are under temporary NBU administration and others might fail.

If the central bank ended up helping favored insiders profit from sweetheart deals, then recovery of the banking sector – vital to getting the nation out of recession – could stall even further.

Most Ukrainians distrust their banks anyway, so the burgeoning scandal will only reinforce these opinions. The lack of faith undermines Ukraine’s ability to emerge from one of the worst financial crises in its 18 years of independence. If disillusionment rises, more citizens may stop trusting banks altogether with their deposits or stop repaying their loans.

Oleksandr Savchenko, who resigned as deputy head of the central bank on Sept. 11, said the central bank’s recapitalization of commercial banks was done in an unfair and non-transparent way that allowed insiders to profit on currency manipulation and speculation.

Savchenko told Korrespondent magazine in an interview published on Sept. 18 that at least one scheme involved selling dollars to favored banks at the official NBU rate, which is much lower than the commercial rate. Those who benefited, Savchenko said, profited greatly.

“The banks which were able to buy currency at the official rate made big profits because of the 8-12 percent difference between the official and commercial rates. Imagine you bought $20 million for Hr 7.55 and sold for Hr 8.55. That’s $2 million in your pocket,” Savchenko said.

Suspicions of irregularities also haunt NBU’s infusions to improve their liquidity. Nadra Bank (Hr 7.1 billion), Rodovid Bank (Hr 2.1 billion), Ukrgazbank (Hr 1.2 billion) and Kyiv Bank (Hr 412 million) were among the top recipients.

Prime Minister Yulia Tymoshenko flagged the problem as far back as December.

“The redistribution of the Hr 40 billion among Ukraine’s commercial banks occurred in such a fashion that much of it went to individual banks conducting large-scale speculative attacks against the hryvnia,” Tymoshenko said on Dec. 18. “Nearly one-fifth went to a bankrupt bank, which turned around and bought cheap dollars at the NBU rate.”

The IMF and World Bank, which have lent billions of dollars to support Ukraine’s currency and banking, commissioned their own probes months ago, analyzed the results and effectively reached a two-word conclusion: No wrongdoing.

In its most recent country report this month, the IMF says that its special review of refinancing and foreign exchange interventions “suggests that the NBU had broadly followed approved procedures and authorization policies in conducting these operations.”

And the World Bank chimed in: “A recently completed audit by Ernst & Young on behalf of the IMF of the NBU’s liquidity support suggests that the NBU followed approved procedures and authorization policies in conducting liquidity operations in late 2008.”

But these findings appear to contradict the results of an audit by Ukraine’s Accounting Chamber, conducted in May, which said that most of the decisions taken by the NBU board on refinancing commercial banks in December 2008 “did not comply with existing laws and procedures.” The Accounting Chamber is responsible to parliament for reporting how budget funds are spent.

One commercial bank manager, who did not want to be identified because of fear of central bank retaliation, said he regarded the NBU as opaque in its hard-currency dealings.

The Ernst & Young report is considered confidential and neither the IMF nor World Bank responded to requests for comment on its findings.

The Economist Intelligence Unit on Sept. 22 said that “an audit for the IMF showed that the NBU had not fully followed approved procedures and authorization policies in conducting refinancing and foreign-exchange operations.”

The IMF last November began lending Ukraine money from a $16.4 billion credit limit to help restore confidence in the economy and financial sectors. Nearly one year later, after more than $10 billion in disbursed loans, stability is far from assured.

Ukraine’s Finance Ministry, in the government’s 2010 draft budget, anticipates Hr 50 billion ($6.2 billion) for recapitalizing a dozen so or more banks.

But government officials are still arguing with lawmakers and financiers over whether the new rules make sense. The list of candidates for recapitalization emerged in April, when eight of the country’s larger banks applied for assistance. The number dropped subsequently to three, as some banks withdrew because of their owners’ unwillingness to cede majority stakes to the state. The government was demanding stakes of at least 75 percent.

Oleksandr Suhoniako, chairman of the Association of Ukrainian Banks, a non-governmental organization representing 130 commercial banks, said the new scheme is as vague as the old NBU scheme was secret.

Suhoniako said his association “was excluded from the process of formulating a new recapitalization program because of our unequivocal opposition to the half-baked eligibility criteria proposed by the government. We think that the new recapitalization plan, which is actually a bank nationalization plan, is doomed. The proposed terms do not make sense and the program will serve clan interests.”

Suhoniako continued: “Just take a look at the members of new supervisory council of the NBU, at how the NBU regulated the currency exchange during the crisis, how the NBU refinanced and capitalized banks, the central bank’s monetization policy. Its dependence on the different centers of power and business interests is obvious.”

Victor Suslov, head of the state committee for regulation of financial services, agrees. He says by law the NBU has conflicting tasks, and this basic contradiction has to be removed. “It is difficult anywhere in the world besides Ukraine to find a central bank responsible for both the monetary policy and supervision of commercial banks.

Overseeing commercial banks makes the NBU establish close ties with their owners. And in the end, instead of implementing the monetary policy in the best interests of the state, the National banks ends up protecting certain banks,” Suslov said.

Victor Marchenko, former owner of Kyiv Bank, said that cordial relations with government banking officials are the most important eligibility requirement for recapitalization. “It is necessary to lobby in order to receive preference. Whether recapitalization is forthcoming depends more on government connections than a NBU recommendation,” Marchenko said.

He says financial scandals are continuing. He said the now-government owned Rodovid, Ukrgazbank and Kyiv Bank are asking for more money than the government had been willing to give them earlier. Marchenko’s former Kyiv Bank received Hr 3.5 billion and he said its government-appointed managers are seeking an additional Hr 1.5 billion.

“Hr 5 billion? Kyiv Bank doesn’t have that much in assets. I think the Finance Ministry is using recapitalized banks for their own purposes,” Marchenko said. “Imagine you want to buy a car for $20,000 and ask your parents to give you $30,000, so you can spend the difference on something else. The government acts the same way.”

Millionaire confectioner Petro Poroshenko, chairman of the central bank’s advisory council, appeared sanguine during a cameo appearance at a telephone conference call by Concorde Capital on Sept. 22. He credited tighter monetary policy, including a revised procedure for hard-currency auctions put in place by the NBU, for decreasing the gap between the official and commercial exchange rate.

That, in turn, has resulted in the hryvnia regaining “some equilibrium in recent days.” Other positive signs, he said, are that most of Ukraine’s corporate external debt has been restructured and there are no liquidity problems at any of Ukraine’s major banks.

Poroshenko is unlikely to impress ordinary Ukrainians, who are finding it more difficult to afford imported goods, especially medicine, and to repay their bank loans denominated in hard currency, which has gained greatly in value against the hryvnia in the last year.

According to a survey conducted Sept. 14-16 by the Horshenin Institute of Management Issues, 85 percent of Ukrainians call their banks “unreliable” places to keep money. Even more – 88 percent – are concerned by the hryvnia’s sharp devaluation.

The bad news – discussed after Poroshenko delivered his monologue and departed – is that the percentage of loans not being repaid is rising. The NBU reported on Sept. 21 that the share of non-performing loans rose 0.6 percent in August, to 6.8 percent by Sept. 1.

In volume, non-performing loans increased 11.6 percent, or by Hr. 5.3 billion in July, up from 5.4 percent registered at the end of June. Bankers fear the bad loans could hit 30 percent by year’s end, which would radically raise the cost of further government bailouts.

Source: Kyiv Post

Czech Diplomat Accused In Ukraine Visa Scam

KIEV, Ukraine -- A senior diplomat from the Czech Republic working in Ukraine will face charges that he pocketed more than a half a million dollars in a visa scam, the Segodnia newpaper reported Thursday.

Jaroslav Basta

Czech ambassador Jaroslav Basta was the ringleader of an illegal visa application registration operation in the western Ukrainian city of Lviv, the Korrespondent web magazine reported, citing police investigators working for the Czech Republic's Foreign Ministry.

Basta allegedly oversaw a business running for eight months in 2008, during which Czech consulate workers in Lviv instructed Ukrainians applying for visas to the Czech Republic to register their applications by telephone with a private company, rather than the consulate itself.

The telephone registration procedure was illegal and not Czech Foreign Ministry policy, officials said. Czech diplomatic staff involved will face criminal charges, according to the reports.

More than 30,000 applicants paying the equivalent of 20 dollars per telephone registration transferred money to the company before it ceased operation in January, according to the reports.

The Segodnia article identified a Czech national, allegedly 'a close friend of ambassador Basta', as the owner-operator of the Lviv company registering the visa application phone-ins and accepting the application payments.

Law enforcement officials became aware of the scam after more than 150 Ukrainians applying for Czech visas in Lviv complained to Ukrainian police, who informed their Czech counterparts, according to the Korrespondent report.

Czech embassy staff in Kiev had no comment on the Ukrainian news reports.

Source: DPA

Ukraine: Hotel Plan For Nazi Killing Field Opposed

KIEV, Ukraine -- Jewish groups condemned Thursday a plan by authorities in the Ukrainian capital to build a hotel on what a leading scholar said was a killing field in the Babi Yar massacre, a horrific chapter of the Holocaust.

Babi Yar memorial

The controversy erupted days before the 68th anniversary of the killing of more than 30,000 Jews in late September 1941 at Babi Yar, a ravine that became choked with the bodies of victims shot at its edges.

Legislators loyal to Kiev mayor Leonid Chernovetsky approved a plan last week to build dozens of hotels in the city over the next decade, including one across the street from a monument commemorating the victims.

The Simon Wiesenthal Center in Israel decried the plan, saying it disrespected the dead and demonstrated Ukrainian authorities' reluctance to investigate wartime collaboration with the Nazis.

"The plan to build a hotel on the site of the one of the worst Holocaust massacres is an example of utter insensitivity to the terrible crimes committed by the Nazis and their Ukrainian collaborators during World War II," the Center said in a statement. "We urge the Ukrainian authorities to take all necessary measures to prevent the building of such an obviously inappropriate edifice at Babi Yar."

More than 33,700 Jews were rounded up and shot at Babi Yar over 48 hours beginning on Sept. 29, 1941. In the ensuing months, the ravine was filled with an estimated 100,000 bodies, among them those of non-Jewish Kiev residents and Red Army prisoners of the Nazis.

The hotel would be built in the middle of the main killing site, according to Vitaliy Nakhmanovich, a leading Ukrainian Babi Yar scholar.

"You wouldn't build a hotel in Babi Yar because you would be afraid that nobody would go there," Nakhmanovich said. "But they build for people like themselves."

Oleksandr Bryhynets, who heads the Kiev city council's culture and tourism commission, said the planned three-star, 700-room hotel would be named Babi Yar. He called the plan immoral and said he would fight it.

"Such sacred places, which have already become the face of the city ... are no place for hotels," said Bryhynets, a member of Prime Minister Yulia Tymoshenko's faction in the city council. "The authorities have no morals."

Lawmaker Viktor Hrinyuk, from Chernovetsky's faction, said the hotel would not disturb any remains. He also said the plan was not final and subject to change.

"We need to start somewhere," Hrinyuk said, according to his party's press service. "When the land is distributed, then we can start discussions."

Jewish leaders have expressed concern over what they say are persistent instances of disrespect for Jewish heritage and of anti-Semitism in Ukraine, which lost 1.4 million of its 2.4 million Jews during the Holocaust.

The mayor of the western city of Uzhhorod is under investigation for making what was widely seen as an anti-Semitic remark referring to a leading politician and presidential hopeful.

Ukraine is also torn by controversy over the extent of wartime collaboration with the Nazis.

Jewish leaders also condemned Tuesday's decision by lawmakers in the western city of Lviv to call on President Viktor Yushchenko to secure the release of a Ukrainian-born man accused by German authorities of involvement in the murder of 27,900 people at a Nazi death camp.

The legislators say they believe 89-year-old John Demjanjuk, who lived for decades in the United States following the war, is innocent and that materials incriminating him were fabricated by Soviet authorities.

Source: AP

Wednesday, September 23, 2009

Time To De-Mothball The Budapest Memorandum For Ukraine

WASHINGTON, DC -- A representative group of Ukraine's cultural elite has alerted Western governments and public opinion to Russia's mounting threats against Ukrainian independence.

OSCE headquarters in Vienna.

Alarmed by Moscow's latest moves, the signatories of the appeal are also concerned by the failure of Western governments to respond by using existing mechanisms. The appeal, published in the Ukrainian media, has also passed unnoticed by Western media and the governments to which it is addressed.

The signatories include some 30 senior scientists, scholars, and artists. Most of them are the heads of research institutes and university departments in fields ranging from mathematics, physics, biology and medical sciences to economics and the social sciences. The document proposes reactivating the 1994 Budapest Memorandum (signed under OSCE aegis) on guarantees to Ukraine's security.

The document notes that Ukraine's independence was central to ending the East-West conflict in Europe and remains a guarantee against its resumption. Recently, however, "the Russian government has embarked on a calculated policy to dismantle the existing system of international security: "As part of this policy, the Russian leadership seeks "to force Ukraine to serve Russia's geopolitical interests".

Ukrainians are particularly concerned about Russian President Dmitry Medvedev's latest initiatives, two of which are singled out in the intelligentsia's appeal. One is the amending of Russia's Law on Defense to create a wide range of possibilities for Russia unilaterally to use military force beyond its borders, at short notice, and at the president's full discretion.

The Russian Duma adopted these amendments on September 9, creating a wide range of potential casus belli situations that Russia reserves the right unilaterally to invoke. This initiative is meant to operationalize Medvedev's own ideas about military intervention, enunciated by him after the invasion in Georgia and dubbed as the "Medvedev doctrine."

It justifies the use of military force to protect the "rights and dignity" [undefined] of Russian citizens and "Russian-speakers" in other countries. This excuse can find a wider scope for application in Ukraine than in any other country.

Medvedev's other recent move was his prosecutorial letter, addressed formally to the Ukrainian President Viktor Yushchenko, but directed in fact at the entire body politic in the run-up to the Ukrainian presidential election. The letter sets markers and red lines with regard to Ukrainian foreign policy and its internal national development in accordance with Russian strategies.

Medvedev's open letter, which continues to be discussed in Ukraine in the pre-electoral context, presumes to veto Ukraine's future integration into NATO; asserts a droit de regard over Ukraine's international relationships; seeks explicitly to criminalize Ukrainian-Georgian military cooperation; accuses Ukraine of deviating from the 1997 bilateral treaty (a veiled threat to rescind Russia's recognition of Ukraine's territorial integrity under that treaty); implies that Ukraine's gas transit system should be part of a unified one with Russia; denounces (against all evidence) the "ousting of the Russian language" from Ukraine's public life; and demands bringing Ukrainian historiography into line with an officially backed Russian view of historical events. Medvedev demands policy changes across the board in accordance with Ukrainian-Russian "brotherhood."

The intelligentsia's representatives noted in their document that Moscow misunderstands Ukrainian aspirations. Ukraine's western-oriented policy is not directed against Russia, but serves Ukrainian interests. Russian policy, however, aims to "turn Ukraine into a zone of Russian direct influence and control." In that event, "subordination of Ukraine to Russia's strategic objectives can bring back the division of Europe.

It could directly threaten the security of European Union member countries." In this regard, Moscow's recent steps signify an escalation, "a new phase in the attitude of Russia's power-center toward Ukraine".

The Ukrainian signatories observed that the existing security framework can no longer reliably protect Ukraine's sovereignty against pressure and intrusion from outside. The document appeals to E.U. governments and institutions "to take a clear and unambiguous stand regarding Ukraine's sovereignty; to restrain Russia from intruding into Ukraine's internal affairs."

Invoking the 1994 Budapest Memorandum, they also noted that the security guarantees contained therein have diminished in their effectiveness, but remain useful and need reaffirmation. Under that memorandum (signed during the OSCE's summit that year), the nuclear powers extended security guarantees to Ukraine after the latter had completely renounced its arsenal of nuclear weapons.

The intelligentsia representatives are appealing to the U.S., British, French, and Chinese governments to call a conference of the five nuclear powers -including Russia- with the aim of reaffirming the security guarantees as stipulated by the Budapest Memorandum. Those guarantees cover Ukraine's territorial integrity, the inviolability of its borders in accordance with the OSCE's Helsinki Final Act, and protection against other forms of external coercion on Ukraine.

Given the growing uncertainties surrounding NATO and U.S. policies in Eastern Europe, where Moscow is moving into a perceived grey zone, a reaffirmation of the Budapest Memorandum would make sense at least as a stop-gap measure. Although the implementing mechanism may be subject to each signatory power's consent -or a Russian veto- discussion of this issue at an appropriately high international level could focus much needed attention on this major security issue in Eastern Europe. Beyond Ukraine itself, such a step could also positively affect the security environment in the Black Sea region.

The Budapest Memorandum retains its validity continuously since 1994. Its de-mothballing could also help limit the intrusion of Russia's strategic agenda into Ukraine's presidential election campaign. Such intrusion demonstrated its explosive potential in Ukraine's 2004 presidential election.

The security environment around Ukraine has since deteriorated markedly, and at an accelerating rate in recent months. The OSCE's upcoming year-end meeting would be the right venue for a reaffirmation of the Budapest Memorandum, 15 years after the same organization affirmed its support for the memorandum's signing.

Source: Jamestown Foundation

Tuesday, September 22, 2009

Canada, Ukraine Announce Free Trade Talks

OTTAWA, Canada -- Canada's Trade Minister Stockwell Day and Ukraine's Economics Minister Bohdan Danylyshyn on Tuesday launched "free trade" talks for their countries.

Canada's Trade Minister Stockwell Day.

Representatives are to meet in the coming months to discuss a range of bilateral trade and investment issues "to facilitate economic relations and fight protectionism," Day said in a statement during a visit to Kiev.

"Free trade negotiations could help to extend our deepening partnership," Day said. "We know the support is there -- on both sides."

According to Ottawa, a Canada-Ukraine free trade pact could boost Canadian exports of agricultural and seafood products, as well as machinery and pharmaceuticals to Ukraine.

It could also help address non-tariff barriers.

Canadian exports to Ukraine totaled $229.7 million Canadian dollars ($215 million US dollars) last year, up 80 percent from the year before and 400 percent from 2004.

Over the past year, Canada has signed trade accords with Jordan, Peru and Colombia and has launched trade talks with the European Union.

Source: AFP

Black Sea Wars

WASHINGTON, DC -- In August, the Georgian navy seized a Turkish tanker carrying fuel to Abkhazia, Georgia’s former province whose declaration of independence a year ago is recognized by Russia but not the West.

Patrick J. Buchanan is the author of this article.

The Turkish captain was sentenced to 24 years. When Ankara protested, he was released. Abkhazia has now threatened to sink any Georgian ship interfering in its “territorial waters,” but it has no navy.

Russia, however, has a Black Sea Fleet and a treaty of friendship with Abkhazia, and has notified Tbilisi that the Russian coast guard will assure, peacefully, the sea commerce of Abkhazia.

Not backing down, Georgian President Mikheil Saakashvili – who launched and lost a war for South Ossetia in 48 hours in August 2008 – has declared the blockade of Abkhazia, which he claims as Georgian national territory, will remain in force. And he has just appointed as defense minister a 29-year-old ex-penitentiary boss with a questionable record on human rights who wants to tighten ties to NATO.

We have here the makings of a naval clash that Georgia, given Russian air, naval, and land forces in the eastern Black Sea, will lose.

What is Saakashvili up to? He seems intent on provoking a new crisis to force NATO to stand with him and bring the United States in on his side – against Russia. Ultimate goal: Return the issue of his lost provinces of Abkhazia and South Ossetia back onto the world’s front burner.

While such a crisis may be in the interests of Saakashvili and his Russophobic U.S neoconservative retainers, it is the furthest thing from U.S. national interests. President Obama should have Joe Biden, Saakashvili’s pal, phone him up and instruct him thus: “Mikheil, if you interfere with the sea commerce of Abkhazia, and provoke Russia into a Black Sea war, you fight it yourself. The Sixth Fleet is not going to steam into the Black Sea and pull your chestnuts out of the fire, old buddy. It will be your war, not ours.”

Nor is the Abkhazian crisis the only one brewing in the Black Sea.

Last month, Russian naval troops blocked Ukrainian bailiffs from seizing navigational equipment from a lighthouse outside Sevastopol, the Crimean base of Russia’s Black Sea Fleet for two centuries.

The Sevastopol lease, however, runs out in 2017. And Kiev has informed Moscow there will be no renewal. Russia’s fleet will have to vacate Sevastopol and the Crimea, which belonged to Russia before Nikita Khrushchev ceded the entire peninsula to Ukraine in 1954 in a “brotherly gesture” while Ukraine was still part of the Soviet Union.

Russia also bears a deep animus toward Ukrainian President Victor Yushchenko, for trying to bring his country into NATO. Yushchenko, whose approval rating is in single digits, has been seen, ever since the U.S.-backed Orange Revolution of 2004 that brought him to power, as America’s man in Kiev.

Moreover, as religious, cultural, ethnic, and historic ties between Kiev and Moscow go back centuries, Russians remain unreconciled to the loss of what they regard as the cradle of their country.

What is America’s vital interest in all these quarrels? Zero.

The idea, mentioned in hawkish quarters, of having the Sixth Fleet take over the vacated naval base at Sevastopol would be as rash and provocative an act as having Chinese warships move into Guantanamo, were Havana to expel the United States.

But that is unlikely to happen. For Obama appears to be rolling back the George W. Bush policy of expanding NATO into former republics of the Soviet Union.

Lithuania, Latvia, and Estonia are already members, and Bush and John McCain were anxious to bring in Ukraine and Georgia. But, as Bush’s inaction during the Russia-Georgia war revealed, America is not going to fight Russia over who controls Abkhazia, North or South Ossetia, Dagestan, Ingushetia, Chechnya, or Georgia. All are beyond any vital interest or legitimate sphere of influence of the United States.

With his cancellation of the U.S. missile shield in Poland and the Czech Republic – a shield designed to defend against a nonexistent Iranian ICBM – Obama sent two messages to Moscow.

First, Obama believes entente with Russia is a surer guarantee of the peace and security of Eastern Europe than any U.S. weapons system. Second, Obama puts Washington-Moscow ties before any U.S. military ties to NATO allies in Eastern Europe.

Which means NATO is approaching an existential crisis.

Almost all NATO troops, except U.S., are gone from Iraq, and the alliance’s minimal commitment to Afghanistan is ending with no victory in sight. NATO’s expansion eastward has come to a halt. Ukraine and Georgia are not coming in. And the United States is not going to place troops, warships, or missiles any closer than they are now to Russia’s frontiers.

“NATO must go out of area, or go out of business,” said Sen. Richard Lugar at the Cold War’s end. NATO went out of area, and is coming back with its tail between its legs. The alternative arises.

Source: AntiWar

Monday, September 21, 2009

AP Interview: Ukraine Leader Yushchenko Optimistic About NATO Membership, Re-Election Chances

NEW YORK, NY -- Ukraine President Viktor Yushchenko says he is optimistic that his country will join NATO, declaring the tide of public opinion in the former Soviet republic is swinging in favor of membership in the Western military alliance.

Ukranian President Viktor Yushchenko is photographed during an interview with AP in New York on Monday, Sept. 21, 2009.

Yushchenko, who faces a tough re-election battle in January, also disputed reports that only about 5 percent of Ukrainians support his re-election in January, saying his poll numbers show about 10 percent backing with the number rising.

The embattled Ukrainian leader spoke Monday with The Associated Press shortly after arriving in New York for the United Nations General Assembly. He said NATO membership, which the United States supports, was not a matter for outsiders, like Russia, to decide.

The Kremlin, smarting over NATO expansion into its former Baltic republics and Central and Eastern European satellites after the Soviet Union broke apart in 1991, has put extreme pressure on Ukraine not to join the alliance.

But Yushchenko declared he was determined to bring Ukraine into the Western alliance, which was established after World War II to counter Soviet expansionism in Europe.

"I would like to underline that if you analyze the history of Ukraine in the 20th century," Yushchenko said, "you will see that from 1917 to 1991 Ukraine declared its independence six times and five times we lost it."

He blamed the Soviet Union for the reversals.

Yushchenko, who looked well after he was poisoned under suspicious circumstances as he successfully fought for a first term as president in 2004, declared that 33 percent of Ukrainians support NATO membership while the number opposed has slipped to 27 percent. He said that contrasted with figures four years ago of only 14 percent favoring alliance membership with 30 percent to 37 percent opposed. Independent polling in the country still shows a majority against joining NATO.

"We have good dynamics, and month by month the number of NATO supporters is growing," he said. "I'm a great optimist. I'm sure Ukraine will follow the path of Latvia, Estonia, Lithuania, Poland, Czech Republic, Slovakia, Romania, Hungary, Bulgaria."

He pointed also to the Russian invasion of Georgia, another former Soviet republic, in August 2008 as a strong selling point for NATO membership, which includes a guarantee that an attack on any member state will be viewed as an attack on the alliance as a whole.

The Russians swept into Georgia, also a candidate for NATO membership, after it sought to bring the breakaway region of South Ossetia back under central government control.

After the invasion, Russia declared that South Ossetia and Abkhazia, another breakaway region in Georgia, were independent states under Moscow's protection.

Appearing unfazed by his lack of support with the January election just four months away, Yushchenko said: "I plan to win."

"I have done some things I can be proud of," he said. "In the last four years our GDP grew 7 to 7 1/2 percent (annually). ... We made considerable social changes. We took care of orphans. ... Unemployment is the lowest of the 18 years of our independence. Living standards are the best in 18 years. We've instituted free speech, free press, free elections."

But this year Ukraine's economy is among the worst suffering in Europe from the global economic recession and the country has relied on an emergency loan from the International Monetary Fund to avoid a complete meltdown. The IMF has predicted that Ukraine's economy will shrink by 14 percent this year.

In June, parliamentary auditors reported that unemployment had risen to 879,000 people since last year as the metals and chemical industries laid off thousands of workers.

Independent polling shows Yushchenko likely to lose the presidential election. Polls have the incumbent trailing both Moscow-aligned Viktor Yanukovych, whom Yushchenko overwhelmed in the so-called "Orange Revolution" in 2004, and Prime Minister Yulia Tymoshenko. She was a close ally of Yushchenko in the last election, but they have become bitter enemies and do not speak to each other.

Source: AP

Yushchenko Unrepentant As Ukraine Sours On Orange Revolution

KIEV, Ukraine -- Ukrainian President Viktor Yushchenko swept into power five years ago at the head of an Orange Revolution that promised national revival. Now he is running fourth in polls as voters blame him for political paralysis and a collapsing economy.

Viktor Yushchenko

Even as he faces likely defeat in Jan. 17 elections, Yushchenko offers no regrets. He casts his rivals, Prime Minister Yulia Timoshenko and pro-Russian leader Viktor Yanukovych, as “populist” vote-chasers and himself as a champion of unpopular truths about the need for an independent national identity.

“I say words that many don’t like, but I won’t give up,” said Yushchenko, 55, in a Sept. 17 interview in his Kiev office. “If a lot of people don’t agree with you, that doesn’t mean that you are wrong. Either you aren’t popular but deliver a strategic service to the nation, or you dream about elections.”

Others say the unrelenting enmity between the president and his adversaries has created a deadlocked government and exacerbated the former Soviet republic’s economic troubles.

“This disunity and continual political infighting is setting back the cause of reform and the ability of the country to consolidate its independence and stand comfortably on its own two feet,” said John Lough, an associate fellow for Russia and Eurasia at the London-based research group Chatham House.

Parliament has been dissolved on two occasions in the past two years, Russia has twice shut off the country’s natural gas supply and the European Union is withholding concrete promises of membership talks.

Economic Woes

The Ukrainian hryvnia has shed 45 percent against the dollar in the past year, the worst-performing of all currencies tracked by Bloomberg. The economy contracted 20.3 percent in the first quarter, the most for all 32 European countries tracked by Bloomberg. Inflation -- 15.3 percent in August -- is the highest of any European country tracked.

Investors have noticed. Elena Suslova, a Moscow-based portfolio adviser with Wermuth Asset Management GmbH, said Ukrainian investments represent only 2 percent of the $250 million in assets under management that she advises.

After a surge of interest in Ukraine after the 2004 political upheaval that brought Yushchenko to power, Wermuth Asset Management in early 2008 advised its funds to stop all projects in the portfolio for now, Suslova said.

High Risks

Ukrainian voters have also noticed. A poll released Aug. 10 by the Kiev-based Razumkov Center, a research institute, showed Yanukovych, head of the opposition Regions of Ukraine political party, with 21.7 percent, followed by Timoshenko with 13.2 percent, former parliamentary Speaker Arseniy Yatsenyuk with 10.9 percent and Yushchenko with 4.2 percent. The margin of error was 2.3 percentage points.

An unpublished poll by Washington-based PBN Co., an advisory firm for business leaders, investors and governments in eastern Europe, showed a similar result, with Yushchenko in fourth, according to figures provided by Myron Wasylyk, managing director of PBN’s Kiev office.

“Five years ago, I believed my country had a chance and was so proud of it and now I am very disappointed,” said Lyudmyla Telnyuk, 63, as she waited for her granddaughter at a Kiev music school.

“Yushchenko has been trying really hard to restore Ukrainian culture as well as people’s memories of Ukraine’s real history, but fights between all these politicians stole away everyone’s attention,” Telnyuk said.

Ukraine has made some progress, Wasylyk said. It joined the World Trade Organization, the poverty level has dropped to less than 20 percent from 45 percent in 2004 and a free press has emerged, he said.

Falling Jobless Rate

Unemployment fell to 6.9 percent in 2008 from 9.2 percent in 2004, using International Labor Organization standards, Ukrainian state data shows. The International Monetary Fund projects a 2.7 percent growth rate for 2010.

Yushchenko took credit for the progress, saying in the interview: “Today, Ukraine is another country, a country used to the freedom of speech and freedom of choice. That is due to my policies.”

Yushchenko spoke about his battles with his adversaries in his high-ceilinged office in the center of Kiev, adorned with a large portrait of Ukrainian writer and painter Taras Shevchenko. He and Timoshenko, 48, have clashed over her push to raise social spending and his demands for budget cuts. Next year’s budget deficit, Yushchenko said, may reach 12 percent of gross domestic product.

The prime minister has already started her presidential campaign, with billboards around Kiev that say, “They are blocking, she works.”

‘Won’t Give Up’

“I don’t think about elections, I think about my kids -- what country I am going to leave them?” the president said. “I say words that many don’t like, but I won’t give up.”

Yushchenko spoke about the tensions during his tenure between Ukraine and Russia, which opposes Ukraine’s stalled bid to join the North Atlantic Treaty Organization.

Russian President Dmitry Medvedev last month said he hoped to rebuild ties under “Ukraine’s new political leadership” after the elections. Yanukovych blamed Yushchenko for “poor relations” with Russia in a Sept. 19 campaign speech posted on his Web site. He said he shared Medvedev’s view that under the current “authorities it is impossible to improve ties.”

Yushchenko said that Russia “will have less influence on the January presidential elections. But it is not because they are now less interested and their desire is less. It is only because my nation became more independent.”

His face still bears some of the scars from an illness during the 2004 presidential campaign that he said was caused by poisoning from dioxin produced by Russia, a charge Russia denies.

Though Yushchenko didn’t mention Yanukovych, 59, by name, he made clear he knows he is far behind him in the polls.

“High ratings are easy to get,” Yushchenko said. “You just play populism games and it’s there. That is not my way.”

Source: Bloomberg

Sunday, September 20, 2009

Emotional Politics: The Orange And The Anti-Obama Type

KIEV, Ukraine -- Politics ruled by emotions is biased, as it lacks an open mind that can objectively evaluate more than one side on any issue. People who are unable to control their emotions are an easy prey to be exploited by any political force. Be it national or foreign. Not excluding those foreign forces represented by political NGOs. Politics without reason creates people who are hateful, panicky and vicious.

Orange Revolution in Ukraine brought a pro-western government to power in 2005.

In general, people who are followers of politics of hate, do not think for themselves. Rather, they are told what to think, what to say, and how to act. They trust their ears better than their eyes and their minds. It is easier. No effort. Let somebody else do the thinking for you.

The Orange Revolution in Ukraine, which brought a pro-western government to power in 2005, thanks to largely an euphoric public organized and funded by well oiled western NGOs has led the citizens to be disillusioned and hopeless of their future. Today, that very popular leader of the orange revolution, president Yushchenko has an approval rate of 3.5%.

What the orange revolution has to show for the euphoria of 2004 and massive western support is, factory closings, massive job cuts, the reduction of GDP by thirty percent, the resignation of at least four cabinet ministers, corruption, serious political in-fighting, and on the way of a total economic collapse in spite of a $16.5 billion dollars of IMF bailout.

In a recent interview president Yushchenko gave to Der Spiegel, when asked about “rumors of mafia-style groups in parliament” he replied by saying, “We have a number of convicted criminals there; they could form their own parliamentary group. The failed constitutional reform has meant that we have representatives in parliament who are only interested in acquiring certain companies and controlling private financial interests.”

I doubt, even if Prime Minister Tymoshenko, the so-called “goddess of the revolution”, with the peasant-braid as tiara hairstyle is going to have a solution to the disaster wrought on Ukraine , by the euphoric orange revolution and its handlers. The political NGOs that primarily focus on, and are actively engaged in influencing policy outcomes by putting pressure on policy makers.

While emotion is based on subjectivity, reason is based on objectivity. In a Democracy, people have the right to disagree. They also have the right to have religious, political, and philosophical disagreements. But, when certain opposition forces believe that those who do not think as they do are evil, and must be destroyed, it raises the issue of dealing with an irrational force that doesn’t understand in a dialogue and an open debate.

How else can one explain, the rally in Washington , D.C. against president Obama? During the rally in Freedom Plaza, the demonstrators carried signs that read, “ Liar In Chief”, “ Parasite In Chief”, “save freedom , stop Obama”, “Don’t blame me ,I voted for the American”, etc. Is this not a clear example of politics of hate? Politics of irrational folks? As the great Kahlil Gibran wrote in his poem “Reason and Passion”, “Passion unattended, is a flame that burns to its own destruction”.

Source: WaltaInfo

Crisis Still Grips Ukraine Amid IMF Jitters

KIEV, Ukraine -- One year after the economic crisis plunged Ukraine into one of Europe's deepest slowdowns, the country's economy remains fragile amid fears the IMF may suspend billions of dollars in credit.

Indicators have emerged of a gradual improvement in the economy.

The International Monetary Fund may not release the next tranche of its pledged 16.4-billion-dollar (11.2-billion-euro) loan to Ukraine due to fears over the government's control of the budget deficit and inflation, analysts and officials say.

"There is a considerable risk that the release of the new tranche could be delayed until the start of 2010," said Mykyta Mikhailichenko, an economist at Concorde Capital, an investment fund in Kiev.

Ukraine, one of world's hardest-hit countries by the crisis, was the first country to get IMF help last year, a shocking setback for an economy that had enjoyed strong growth of around 7.0 percent per year from 2000 to 2007.

The economy ministry is now forecasting a contraction in Gross Domestic Product (GDP) of 10-12 percent in 2009 after a dramatic fall of over 20 percent in the first quarter.

So far the Washington-based IMF has released three tranches worth a total of 10.6 billion dollars.

But the release of the next tranche of 3.8 billion dollars, due in November, is uncertain because the government has been dragging its feet in implementing unpopular measures demanded by the Fund.

In particular, the government has been reluctant to raise prices for natural gas and electricity, moves that would be politically risky ahead of presidential elections set for January 2010, Mikhailichenko said.

The IMF is also unhappy about a bill under consideration that calls for 1.15 billion dollars to be spent on preparations for the Euro-2012 football tournament.

"If the authorities conduct the policy that leads to inflation and undermines stability of (the) banking and financial system, we cannot support that," the IMF's top representative in Ukraine, Max Alier, said in an interview with the Kontrakty business weekly.

"We are prepared to provide assistance to Ukraine and be partners of Ukraine in successfully overcoming the crises, but we are not prepared to support a policy that deepens the economic crisis."

Ukraine's government submitted a draft budget for 2010 last Tuesday that was based on a deficit equal to just under 4.0 percent of total economic output, in line with IMF demands.

But the opposition Regions Party criticised the document as unrealistic and the Moscow-based investment bank Renaissance Capital said it was based on a "rather optimistic" economic forecast.

Officials close to Ukrainian President Viktor Yushchenko have expressed doubt about the IMF's continued support.

"I believe they won't give anything else," the deputy head of Yushchenko's administration, Olexander Shlapak, said last week.

Yushchenko is expected to run in the January 2010 election, as is his bitter political arch-rival, Prime Minister Yulia Tymoshenko.

If the IMF halts its support, "Ukraine would find itself in a difficult situation, without money, with a collapsed currency ... and a paralysed economy," the business weekly Investgazeta wrote.

"The suspension of cooperation with the IMF is a great danger, above all for the financial sector," said Olena Belan, an analyst with the Ukrainian investment fund Dragon Capital.

An IMF cutoff could push the government into a "considerable monetary emission" to cover its deficit, Belan said.

That would further weaken Ukraine's currency, the hryvnia, after it lost over 40 percent of its value against the dollar in the past year.

Others warn that the end of IMF support would tarnish Ukraine's image abroad.

"This is a very negative signal in the eyes of investors," said Dmytro Boyarchuk, head of CASE Ukraine, an economics research centre in Kiev.

"Nobody will want to work with a country that the IMF does not want to cooperate with anymore."

But indicators have emerged of a gradual improvement in the economy with, activity picking up in the crucial metals sector where production rose 15.3 percent in July from the month earlier.

"We think that Ukraine has hit the bottom," Renaissance Capital said in its latest report on the Ukrainian economy, saying there was now "macroeconomic evidence of a real economy recovery, at a basic level."

With the economy contracting by 18 percent year-on-year in the second quarter compared with a 20.3 percent fall in the first quarter, Ukraine recorded quarter-on-quarter GDP growth in the April-June period.

Source: AFP

Saturday, September 19, 2009

Ukrainian Prosecutor Says Evidence Was Falsified In Yushchenko Poisoning Case

KIEV, Ukraine -- High-ranking officials from the presidential secretariat and family members of Ukrainian President Victor Yuschenko falsified evidence in his poisoning case, according to Larysa Cherednichenko, head of the department for supervision over investigations into criminal cases of the Ukrainian Prosecutor General's Office.

Allegations are that Yushchenko's blood samples were flown to the US, where they were taited with dioxin and sent to the UK for analysis.

Cherednichenko came to this conclusion while working in the parliamentary permanent investigations commission investigating the circumstances surrounding Yuschenko's poisoning, and reported it to Ukrainian Prosecutor General Oleksandr Medvedko, the Segodnya newspaper reported on Saturday.

In her report to the prosecutor general, Cherednichenko accused some officials close to Yushchenko, led by his wife Kateryna, of interfering with the investigation and try to hide the "artificiality" of the fact of the poisoning, which is believed to have taken place when Yuschenko ran for president.

"As Davyd Zhvaniya, member of the Our Ukraine faction of the Ukrainian parliament, who has more than once denied Yuschenko's poisoning said, the victim had blood samples taken from him in September-October 2004 with help from an Austrian doctor.

However, the samples were not studied in Ukraine or another European country. They were secretly taken to the U.S., where they were enriched with dioxin and were later taken to the UK with help from the U.S. special services.

Those blood samples were sent by the administration of the Austrian clinic Rudolfinerhous to expert establishments, which found dioxin," Segodnya quoted Cherednichenko as saying.

Yuschenko's wife said in an interview with the Ukraina Moloda newspaper, commenting on this statement, that she has been accused of involvement in her husband's poisoning.

"I was accused of falsifying the test results and making that plan to help him win the elections," she said.

According to information possessed by Segodnya, Cherednichenko was warned that she would be dismissed from her office immediately after she wrote her report on August 26. She was offered two positions, which she refused and contested her dismissal in court.

Source: Kyiv Post

Ukraine Debates The Russian Threat

KIEV, Ukraine -- The poor state of Ukrainian-Russian relations, as vividly noted in Russian President Dmitry Medvedev's August letter to President Viktor Yushchenko, the expulsion of two Russian spies from Ukraine and Russia's newly adopted law giving its military the right to intervene abroad is intensifying the debate in Ukraine over the Russian threat.

Anatoliy Grytsenko, the former Ukrainian Defense Minister and the head of the parliamentary committee on defense and national security.

On September 18 three journalists from the Rossiya channel were banned for five years from entering Ukraine for conducting "falsified information propaganda against Ukraine". Earlier, Medvedev told the Valdai Club that his letter had fulfilled its purpose.

Acting Foreign Minister Yuriy Kostenko explained that the expulsion of the two spies was seen by Moscow as an "aggressive attack against Russia, and a provocation". Russia did not attempt to understand Ukraine's argument that the spies were acting in a manner "contrary to their diplomatic status."

Medvedev's staunch and unprecedented criticism of Ukrainian domestic and foreign policies was worsened by the fact that two of the three leading presidential candidates -Party of Regions leader Viktor Yanukovych and Front for Change leader Arseniy Yatseniuk- supported the Russian side. On August 26 Yanukovych told a phone-in to Segodnya: "Never before have we had such unpleasant relations with Russia as at present."

Yanukovych promised that relations would improve if he is elected. Such promises echo the 1994 presidential elections when Leonid Kuchma claimed that he -rather than the incumbent Leonid Kravchuk- would be in a position to improve such relations.

Both Kuchma and Yanukovych failed to see the deeper issue involved; namely, Moscow's "refusal to recognize the existence of the Ukrainian nation," explained Volodymyr Horbulin, the former National Security and Defense Council (NRBO) Secretary and the security expert Valentyn Badrak.

"In the last 18 years since the disintegration of the USSR the Kremlin elite has not come to terms with the existence of an independent Ukraine,' as another Ukrainian newspaper noted.

These experts suggested that the situation in Ukraine resembled Austria in the 1930's before its anschluss with Germany. Various political experts provided pessimistic answers as to why they did not believe that the quarreling Ukrainian elites could mobilize Ukrainians against a foreign aggressor.

Russia is held back from direct military intervention in Ukraine, Ukrainian experts believe, due to two factors. Firstly, it would destroy any hope of CIS integration. Secondly, "a war with Ukraine could destroy Russia as a state". If Russia successfully took the Crimea, "Moscow would forever lose Ukraine," Horbulin and Badrak asserted.

Although any Russian invasion into Eastern Ukraine or the Crimea might at first be successful, it would eventually be met by fierce resistance from guerrilla and loyal Ukrainian units. Interestingly, no Ukrainian experts believe that Russian aggression would be prevented by Moscow taking Western responses into consideration; this itself reflects the E.U. and NATO's ineffectual response to the Russian invasion of Georgia.

Anatoliy Grytsenko, the former Ukrainian Defense Minister and the head of the parliamentary committee on defense and national security has advised the military to develop additional spetsnaz units capable of taking conflict deep into enemy territory.

Horbulin, the director of the National Institute on the Problems of International Security, affiliated to the NRBO, and Badrak, a senior expert at the Kyiv think tank the Center for Research into the Army, Conversion and Disarmament, advised the NRBO to relocate spetsnaz units Special Forces, Security Service (SBU) and interior ministry units to southern and eastern Ukraine.

Grytsenko also warned the E.U. and NATO to not continue to ignore the Russian threat, as any conflict in Ukraine might risk damaging the gas pipelines crossing Ukraine. Europe could not stand aside from such a conflict, as it could severely undermine European energy security.

Critical, but diplomatic, responses to Medvedev were given by Yushchenko and Prime Minister Yulia Tymoshenko. Tymoshenko, who is running second in the polls and is likely to face Yanukovych in the second round of the presidential election, has adopted a pragmatic nationalist position that has permitted her to court western and central Ukrainian voters while continuing a dialogue on energy and economic issues with Russia.

Yushchenko, in contrast, has moved towards a more nationalistic position that has narrowed his support to only Galicia, giving him just 3 percent in opinion polls -making him the sixth most "popular" candidate.

Horbulin and Badrak concluded that following the 2008 Georgian-Russian war "international law" no longer works in dealing with Russia. Moscow wants to alter "the Ukrainian foreign policy trajectory, split the country and annex portions of its territory and indefinitely extend the basing of the Black Sea Fleet in Sevastopol.

Russia seeks a ‘politically loyal, pro-Russian Ukraine'". In the January 2010 elections, Moscow also wants to see the election of a "Kremlin vassal who would lead the country as a Little Russia".

Two conclusions can be drawn from this discussion. Firstly, Ukraine is being given an impossible task by western E.U. and NATO members: to pursue good relations with Russia at a time when it seeks to undermine Ukraine's sovereignty and assassinate its pro-Western leaders (Ukrainian investigators reached the conclusion earlier this month that the Russian authorities were behind Yushchenko's 2004 poisoning).

Moreover, Ukrainian-Russian relations might deteriorate further in the next eight years as the deadline approaches for Russia to withdraw the Black Sea Fleet from Sevastopol.

The recent adoption of the Russian law on military intervention abroad provides for "the ability for a direct military threat from the Black Sea Fleet". Horbulin and Badrak advised the SBU to ensure "control over extremist and radically oriented Ukrainian groups in the south and southeast of the country".

Secondly, the West's reputation is at stake in dealing with countries such as Iran and North Korea. Ukraine gave up the third largest nuclear weapons stockpile in 1994-1996 in return for "security assurances" from the five nuclear powers, one of whom -Russia- constitutes its main threat. In 2003, less than a decade after the "Budapest Memorandum," Russia sought to annex the Tuzla Island off the Crimean coast.

As Horbulin and Badrak argued, the nuclear powers are "de facto demonstrating a rejection of their responsibilities" and "those who are not speaking of a repetition of Munich in 1938 today in Europe and Ukraine are only ignoring the facts'. If Tehran interprets Western policy towards Kyiv as weak, then it is less likely to halt its nuclear weapon ambitions.

Source: The Jamestown Foundation

Friday, September 18, 2009

Behind The Golden Doors

MOSCOW, Russia -- Sometimes you have to admire the candour of Russian leaders. Whereas Kremlinologists love conspiracy theories, Dmitry Medvedev, Russia’s president, and Vladimir Putin, its prime minister, tell things how they are.

President Dmitry Medvedev sets out a modernisation agenda, but he may yet be undercut by his prime minister, Vladimir Putin.

On September 10th Mr Medvedev published a manifesto on, a Russian website, highlighting Russia’s failings. He wrote of a primitive, oil-dependent economy, weak democracy, a shrinking population, an explosive north Caucasus and all-pervasive corruption. His critics would not disagree with this stark diagnosis, even if he offered few answers. A day later Mr Putin told the visiting Valdai club of foreign journalists and academics that he and Mr Medvedev would decide between themselves who is going to be president when Mr Medvedev’s first term expires in 2012. Most Russians already assumed as much.

One subject both leaders avoided was how this tallies with Mr Medvedev’s lament about the weakness of democracy. Nor do they explain what they have been doing in their past ten years in charge. Mr Medvedev’s article reads like a cry of desperation, an attempt to appeal to Russian progressives over the heads of corrupt bureaucrats. “The global economic crisis has shown that our affairs are far from being in the best state. Twenty years of tumultuous change has not spared our country from its humiliating dependence on raw materials,” he notes. He predicts optimistically that Russia will develop a knowledge-based economy and lead the way in new technologies, which may in time lead to an open and flexible political system that fits the requirements of a free, prosperous and confident people.

In politics, however, Mr Medvedev is more cautious. “Not everyone is satisfied with the pace at which we are moving in this direction. They talk about the need to accelerate changes in the political system. We will not rush.” He ends with a dramatic flourish. “Influential groups of corrupt officials and do-nothing entrepreneurs are well ensconced. They have everything and are satisfied…But the future does not belong to them—it belongs to us. And we are an absolute majority.”

Mr Medvedev’s article evoked memories of Mikhail Gorbachev’s perestroika speeches in the 1980s; he said this week that what went wrong with Mr Gorbachev was that he began but failed to complete his reforms. Mr Medvedev, however, has not ever started. But cynics also saw an echo of Mr Putin’s first state-of-the-nation address as president in July 2000. Mr Putin talked then of a shrinking population, a backward economy and the importance of freedom of speech and human rights.

So it is not surprising that many Russians were unimpressed. As one website visitor commented: “Mr President, your mostly correct words have nothing in common with what is happening in the country of which you are the leader. I don’t believe you. Do something first, something that would illustrate your readiness to modernise the country and move it forward. Fire the government or let Khodorkovsky out. At least do something!”

The problem, argues Nikolai Petrov of the Carnegie Moscow Centre, is that the economy cannot become dynamic and progressive if the political system is not fair and free. But Mr Medvedev’s liberalism is virtual not real. In 18 months of his presidency, the Russian media has not become any freer. Political opponents have not gained access to television. The number of murders and attacks on human-rights activists has gone up. And the trial of Mikhail Khodorkovsky, once one of the country’s wealthiest oligarchs, has turned into a showpiece of political repression.

Mr Medvedev’s article and Mr Putin’s comments on 2012 may reflect a tension between the two men and their teams that has brought Russia into a state of inactivity caused by competing forces. Stasis is certainly visible in Mr Khodorkovsky’s trial. In what looks like the theatre of the absurd, prosecutors have for weeks been senselessly reading out pages from their multi-volume case, often confusing pages and repeating passages twice. Their aim seems to be to drag out the case while the powers-that-be decide what to do.

In the past few months some of Mr Medvedev’s supporters have defected to Mr Putin’s camp, arguing that modernisation is possible under the prime minister’s leadership. Others, such as Gleb Pavlovsky, a weathered Kremlin spin-doctor, have been trumpeting Mr Medvedev’s emergence as an independent and powerful leader. Mr Medvedev’s new-found ambition may also have been boosted by Barack Obama. The American president went out of his way during his July visit to treat Mr Medvedev as the real leader. Mr Medvedev talked to the Valdai club about the joys of spending eight hours with Mr Obama, whereas Mr Putin reminisced more about his old friend George.

Mr Putin’s words about 2012 undermine Mr Medvedev, making him a lame duck 30 months before his term runs out. Mr Medvedev has spent most of his career as Mr Putin’s subordinate. It was his loyalty, not his independence, that qualified him for the top job. As president he has largely followed Mr Putin’s policies, including in last year’s war with Georgia. He visited South Ossetia and introduced a new law that makes it easier to deploy Russian forces outside the country. And it was Mr Medvedev who sent an aggressive and insulting letter to Viktor Yushchenko, Ukraine’s president, blaming him for supplying arms to Georgia and falsifying history.

Indeed, January’s presidential election in Ukraine may be the key event in Russia’s new political season. Five years ago Mr Putin suffered the biggest embarrassment of his presidency when he rushed prematurely to congratulate Viktor Yanukovich as winner, only to see him pushed aside in the “orange” revolution. The election offers him an opportunity for revenge. Gazprom, Russia’s gas giant, is already muttering belligerently that Ukraine may be unable to pay its gas bill after the vote.

As Mr Medvedev’s letter to Mr Yushchenko shows, he fits in with the Kremlin’s policy of confrontation and the search for enemies, particularly at times of crisis. The tension at the top of the government does not seem to make Russia any friendlier towards the West. Although his article said that Russian foreign policy should be defined by the goal of modernisation, Mr Medvedev shook hands with Venezuela’s Hugo Ch├ívez on an arms deal (see article). “We will supply Venezuela with the types of arms it asks for, acting in compliance with our international obligations. We will certainly deliver tanks too, why not? We have good tanks.”

On September 14th, at a conference on global security in Yaroslavl, Mr Medvedev again lambasted America for causing the global crisis. He also called for a new European security architecture that would give Russia greater influence, particularly in the former Soviet space. For the moment, though, European and American security experts are more interested in another matter: what cargo a Russian vessel, Arctic Sea, was carrying when it vanished in closely monitored European waters, why a journalist who alerted the world to its disappearance had to flee Russia and why Binyamin Netanyahu, Israel’s prime minister, paid an urgent and secret visit to Moscow just a few days later. True to form, Mr Medvedev’s article gives no answers to any of these questions.

Source: The Economist