Wednesday, March 31, 2010

Ukraine Backs Kazakhstan's Initiative To Convene OSCE Summit On European Security

KIEV, Ukraine -- Ukraine supports an initiative by Kazakhstan, current chairman of the Organization for Security and Cooperation in Europe (OSCE), to convene an OSCE summit, and is ready to actively participate in the discussion of a new treaty on European security, President Viktor Yanukovych said on Wednesday.

Kanat Saudabayev

"We support Kazakhstan's idea to convene a summit of the Organization for Security and Cooperation in Europe, and we're ready to work on the summit's agenda. We are ready to actively participate in the discussion of Kazakhstan's initiative on a new treaty over European security," he said at a meeting with Kanat Saudabayev, the foreign minister of Kazakhstan and Chairman-in-Office for the OSCE.

Yanukovych stressed the importance of reflecting in the new treaty security guarantees for states that voluntarily give up their nuclear arsenals, as well as for states, such as Ukraine, that are not members of any military bloc.

He said the OSCE is the "most suitable forum" for discussions on European security issues.

Saudabayev, in his turn, said that the OSCE and Kazakhstan attach great importance to developing relations with Ukraine. "We are willing to further strengthen cooperations with Ukraine in various fields," he added.

Saudabayev arrived in Kiev on Tuesday for a two-day visit to Ukraine.

Source: Xinhua

Ukraine Says IMF Talks Stuck On Deficit: Report

KIEV, Ukraine -- Negotiations on getting urgently-needed International Monetary Fund loans to Ukraine have become stuck over the size of the country's 2010 budget deficit, Ukrainian officials said on Wednesday.


"We propose (a deficit of) at least 10 percent" of gross domestic product (GDP) while the IMF is asking for less than six percent, the deputy head of the presidential administration, Irina Akimova, was quoted by Interfax as saying.

The Ukrainian finance ministry said in a statement on Tuesday that "the parties have not found an agreement concerning the budget deficit and social welfare payments" for this year, Interfax news agency reported.

An IMF delegation arrived in Ukraine earlier this month following the election in February of President Viktor Yanukovych. IMF representatives are expected to meet Prime Minister Mykola Azarov on Thursday, the government said.

Yanukovych has set renewal of cooperation with the IMF as a top priority.

Ukraine is enduring one of the worst recessions in the world after its economy shrank 15 percent last year -- the biggest drop since the industrial collapse that followed the break-up of the Soviet Union in 1991.

Ukraine was granted a 16.4-billion dollar (12.1-billion euro) loan package by the IMF in 2008 but payments were frozen in July 2009 after Ukraine passed a law raising minimum wages and pensions despite IMF opposition.

The new government has asked the IMF for a five-billion dollar tranche from the package which Ukraine was last able to draw on in July 2009.

Source: AFP

Poll: 80 Percent Of Kievans Want Mayor To Resign

KIEV, Ukraine -- Most of the Kiev city residents would like to see Mayor Leonid Chernovetsky out of his office immediately, according to a March 27-29 poll of 1,000 residents conducted by the Gorshenin Institute, a consultancy.

Mayor Leonid Chernovetsky

Some 80 percent of those polled said they would like the mayor to resign without delays, while even more people – 89.1 percent – were unhappy with his work.

Only 6.9 percent of those polled gave a positive evaluation to his work. About 15 percent were undecided.

If the city mayoral election was to be conducted next weekend, Deputy Prime Minister Serhiy Tigipko would be the most likely winner.

He would receive 30.6 percent of votes, while city’s opposition leader Vitaly Klitschko would get 22.4 percent.

Former Mayor Oleksandr Omelchenko would come third with 8.2 percent of votes.

The Gorshenin poll was conducted by phone according to a representative sample. The margin of error is 3.2 percent.

Source: Kyiv Post

Tuesday, March 30, 2010

Ukrainian Contractor Building Euro 2012 Stadium In Lviv Ousted After Criticism

KIEV, Ukraine -- The main contractor working on construction of the Lviv stadium for the 2012 European Championship is to be removed after criticism of delays at the site by UEFA president Michel Platini, a top cabinet official said Tuesday.

Lviv Euro 2012 Stadium

Ukraine Deputy Prime Minister Borys Kolesnikov said the contractor, Ukraine-based Azovintex construction company, will be discharged due to slow work. Platini said on Monday that construction in Lviv "has made no progress whatsoever."

Another Ukrainian financial and industrial group, Altcom, will be new main contractor instead with Azovintex still doing minor work on the stadium, Kolesnikov said.

Altcom deals with mining and construction. It's currently building a new runway at Donetsk airport, and has also been chosen as the main contractor to build a runway at Lviv airport.

Kolesnikov said earlier Tuesday that an international consortium of Ukrainian, Turkish, Croatian and Macedonian companies will build the stadium instead, while Azovintex will continue doing minor work on the stadium.

"The stadium will be built by late 2011 by all means," he said.

There is also concern at the lack of hotels to host fans and teams in Lviv, along with the slow construction of new ones.

Poor transport connections between the airport and the city centre add to the problems, according to Markiyan Lubkivskiy, the Ukraine Tournament Director for Euro 2012.

"Lviv is on the verge of an abyss. Very little time remains. Lviv (can do) nothing but meet all UEFA requirements. There is no choice," said Lubkivskiy.

Meanwhile, a construction company in Kiev said renovation work on the Olympic stadium, which is three months behind schedule, will catch up on its timetable by June.

Platini is expected to visit Ukraine next week.

Source: AP

Strauss-Kahn Is ‘Optimistic’ Ukraine, IMF Will Resume Program

LONDON, England -- International Fund Managing Director Dominique Strauss-Kahn said he’s “optimistic” Ukraine’s loan program will be unfrozen and talks will be aimed at reevaluating the country’s economic outlook.

International Fund Managing Director Dominique Strauss-Kahn.

“I’m rather optimistic that we will resume the relationship with Ukraine,” which “during the election period was put between parentheses,” Strauss-Kahn said in an interview today.

“The situation has changed over the last month, we have to reassess the situation and see what we can do together.”

An IMF team is in Ukraine having talks with authorities after President Viktor Yanukovych took office and managed to get a prime minister allied to him elected.

Mykola Azarov’s government is seeking a new loan program with the International Monetary Fund to help “reform the economy,” he said last week.

“We’re expecting the Ukraine side to move,” said Strauss- Kahn. “It’s their call when they have solved the domestic problem. The government will decide when they want to re-discuss the program.” What the mission reports back will remain “inside the IMF.”

Ukraine has received $10.6 billion from IMF since the former Soviet state secured a stand-by loan arrangement with the Washington based lender in late 2008 to stay afloat amid the global financial crisis.

Part of the loan was used to cover the state budget deficit and to back up payments for natural gas imports from Russia.

Source: BusinessWeek

Blind Spots In EU-Ukraine Relations

ZURICH, Switzerland -- A little over a month ago, Viktor Yanukovych was inaugurated president of Ukraine following a narrowly fought election, which, according to documents presented by his opponent, then-prime minister Yuliya Tymoshenko to the country’s High Administrative Court, was marked by fraud.

Ukraine Foreign Ministry building featuring EU and Ukrainian flags.

After the Court refused to examine her evidence presented in eight bound volumes of documents and accompanied by videotapes, Yanukovych subsequently forced a vote of confidence on her governing coalition in the Ukrainian Rada (Parliament).

When Tymoshenko lost that vote, Yanukovych then set about building his own parliamentary majority, recently naming a cabinet to govern the country within the 30-day limit prescribed by the Constitution.

Professor of Political Science (Rutgers University-Newark, USA) and expert on Ukrainian affairs Alexander J Motyl remarks to ISN Security Watch that Yanukovych’s tactics in the matter may violate the country’s Constitution, of which Article 83 specifies that only a “coalition of parliamentary f[r]actions” may compose a governing majority (even though individuals may vote against their fraction on various particular pieces of legislation), while according to the parliament’s own rules “for a party to leave a coalition, its Rada fraction must vote to do so.”

Indicating some sympathy for Yanukovych’s “frustration at the need to herd cats,” Motyl nevertheless notes that his coalition of parties, making together only about 220 of the necessary 226, “fell short of the required parliamentary majority.”

Tadeusz Olszanski of the Centre for Eastern Studies in Warsaw explains that by a “legal trick” Yanukovych had the parliament’s rules of procedure amended so as to allow “individual deputies (and not only parliamentary groups) to enter the coalition.”

It will take at least two or three months for the Constitutional Court to issue a verdict in the matter, with uncertain implications for legislation approved in the meantime.

Foreign relations

Rather than note such troublesome details, EU diplomats have preferred to congratulate themselves anonymously in the press on “playing their cards right” on Ukraine.

By this they mean that they avoided a “cooling down of strategic relations,” in part by coordinating messages from the European Commission and the European Parliament, and in particular, giving “no encouragement … to Yanukovich’s rival Yulia Tymoshenko, who had tried to challenge the legality of Yanukovich’s victory.”

It is likely that the European Parliament will play an important role in determining the future course of actual relations between Brussels and Kiev.

Alexander von Lingen, a former principal of the Secretariat of the Presidency of the European Parliament, and current director of the EquipEuropa analysis and training consultancy in Brussels, explains to ISN Security Watch that the European Parliament had already held its first bilateral meeting of the Parliamentary Cooperation Committee with Ukraine under the new government, addressing in the first instance such substantive issues as visa-free travel and other practical matters.

On the international level, Motyl says there could be positive results if Brussels “reinforces the commitment it made at last year’s energy summit to help modernize Ukraine’s gas pipeline, endorses good relations with Russia and Ukraine’s role therein, and gives Ukraine some kind of half-green, half-yellow light regarding eventual [EU] membership.”

The new foreign minister, Kostyantyn Gryshchenko, who has held the post in the past and is in Motyl’s words “a serious fellow and really genuine diplomat,” has already asked for precisely this.

Motyl criticizes the EU for having foregone already five years ago the opportunity to play a positive role in Ukraine.

“During the Orange governments of 2005-2006,” he says, “when it would have made an enormous difference, the EU never sent even the slightest half-clear signal to Ukraine about prospects for membership even in the distant future. Had they made even the most modest gesture, it would have given those governments the opportunity to mobilize the Ukrainian public around the EU agenda; but they did absolutely nothing.”

These criticisms are validated by longtime Brussels observer Alexander von Lingen, who agrees with Motyl, pointing out that “enlargement fatigue and Lisbon treaty ratification procedures” probably explain this in part, since the EU at the time had a “preoccupation with its own problems.”

He also remarks that Brussels “lost interest” in Ukraine after the latter, following the former’s wishes, shut down the last reactors at Chernobyl.

International implications of domestic developments

On the domestic side, Olszanski at the Centre for Eastern Studies in Warsaw points to fissures among the parties composing the coalition itself, which is “far from being internally united,” as well as to “friction between representatives of the various influence groups” in Yanukovych’s own Party of Regions.

Concerning relations with the opposition, Motyl says that Yanukovych could have minimized tensions and gotten a prolonged honeymoon and general sympathy with “slightly smarter appointments [but] now he’s headed for disaster [as] certainly half and perhaps more than half of the population has turned against him.”

Von Lingen in the main agrees with them both, concluding that there is “at least confrontation in the future of Ukrainian politics, if not yet certain disaster: for example, when Tymoshenko was pushed out under [former president Viktor] Yushchenko, she waited until she had another opportunity to come back to power; she is a tenacious lady and does not give up so easily.”

Motyl points out a fundamental and very recent shift in Ukrainian popular opinion that has escaped most outside observers. Most people, he says, expected Yanukovych to execute only the principal functions of a government, such as passing a budget, and then call for new parliamentary elections in autumn.

However, “a wholesale and still ongoing seizure of the administrative apparatus” by Yanukovych and the people around him “occurred within no more than a week after the formation of the government, leaving the country in shock,” says Motyl, “from the realization that these people [around Yanukovych] have failed to change [after five years in the political wilderness] and sowing fears that … in the worst case [they may revert] to unsavory aspects of [the regime of Belarusian dictator Aleksandar] Lukashenka.”

One of the first tests of the new government’s competence will be how it handles theIMF mission to Kiev this week, which will discuss reinstating the (suspended) fourth tranche of the bailout program.

This will be an indicator for future relations with the European Bank for Reconstruction and Development (EBRD) and, still more sensitively, the European Investment Bank. The advisory opinions of the European Parliament will have weight in these later decisions on the European level.

Source: ISN

Monday, March 29, 2010

Ukraine's Democracy In Danger

KIEV, Ukraine -- As Ukraine's recently elected President Viktor Yanukovych prepares to visit Washington in April, he will aim to project an image of stability, confidence, and control. In reality, Mr. Yanukovych has committed a series of mistakes that could doom his presidency, scare off foreign investors, and thwart the country's modernization.

Viktor Yanukovych's misrule is courting a second 'Orange Revolution.'

Mr. Yanukovych's first mistake was to violate the constitution by changing the rules according to which ruling parliamentary coalitions are formed, making it possible for his party to take the lead in partnership with several others, including the Communists. That move immediately galvanized the demoralized opposition that clustered around his challenger in the presidential elections, former Prime Minister Yulia Tymoshenko.

His second mistake was to appoint as prime minister his crony Mykola Azarov, a tough bureaucrat whose name is synonymous with government corruption, ruinous taxation rates, and hostility to small business. The appointment dispelled any hopes Ukrainians had that Mr. Yanukovych would promote serious economic reform.

His third mistake was to agree to a cabinet consisting of 29 ministers as opposed to 25 before—an impossibly large number that will only compound its inability to engage in serious decision making. That the cabinet contained not one woman—Mr. Azarov claimed that reform was not women's work—only reinforced the image of the cabinet as a dysfunctional boys' club.

His fourth mistake was to appoint two nonentities—a former state farm manager, and an economics graduate from a Soviet agricultural institute—to head the ministries of economy and finance. Meanwhile, he created a Committee on Economic Reform, consisting of 24 members, to develop a strategy of economic change. The size of the committee guarantees that it will be a talk shop, while the incompetence of the two ministers means that whatever genuinely positive ideas the Committee develops will remain on paper.

His fifth mistake was to appoint the controversial Dmytro Tabachnik as minister of education. Mr. Tabachnik has expressed chauvinist views that democratically inclined Ukrainians regard as deeply offensive to their national dignity, such as the belief that west Ukrainians are not real Ukrainians; endorsing the sanitized view of Soviet history propagated by the Kremlin; and claiming that Ukrainian language and culture flourished in Soviet times.

Unsurprisingly, many Ukrainians have reacted in the same way that African Americans would react to KKK head David Duke's appointment to such a position—with countrywide student strikes, petitions, and demonstrations directed as much at Mr. Yanukovych as at Mr. Tabachnik.

These five mistakes have effectively undermined Mr. Yanukovych's legitimacy within a few weeks of his inauguration. The 45.5% of the electorate that voted against him now feels vindicated; the 10-20% that voted for him as the lesser of two evils now suspect that their fears of Mrs. Tymoshenko's authoritarian tendencies were grossly exaggerated.

And everyone worries that Mr. Yanukovych and his band of Donbas-based "dons" are ruthlessly pursuing the same anti-democratic agenda that sparked the Orange Revolution of 2004.

Several other key dismissals and appointments have only reinforced this view. The director of the Security Service archives—a conscientious scholar who permitted unrestricted public access to documentation revealing Soviet crimes—has been fired. The National Television and Radio Company has been placed in the hands of a lightweight entertainer expected to toe the line.

Most disturbing perhaps, several of Mr. Yanukovych's anti-democratically inclined party allies have been placed in charge of provincial ministries of internal affairs—positions that give them broad scope to clamp down on the liberties of ordinary citizens.

Democratically inclined Ukrainians are increasingly persuaded that Mr. Yanukovych wants to become Ukraine's version of Belarus's dictator, Alexander Lukashenko. But Mr. Yanukovych's vision of strong-man rule rests on a strategic, and possibly fatal, misunderstanding of Ukraine.

First, the Orange Revolution and five years of Viktor Yushchenko's presidency empowered the Ukrainian population, endowing it with a self-confidence that it lacked before 2004 and consolidating a vigorous civil society consisting of professionals, intellectuals, students, and businesspeople with no fear of the powers that be. Mr. Yanukovych's efforts to establish strong-man rule already are, and will continue to be, resisted and ridiculed by the general population.

Second, Ukraine's shambolic government apparatus cannot serve as the basis of an effective authoritarian government. Tough talk alone will fail to whip a bloated bureaucracy into shape. Worse, Ukraine's security service and army are a far cry from those in Belarus. Mr. Yanukovych may try to emulate Mr. Lukashenko, but without a strong bureaucracy and coercive apparatus, he will fail.

Third, with an ineffective cabinet, all decision making will be concentrated in Mr. Yanukovych's hands. Even if one ignores his deficient education and poor grasp of facts, Mr. Yanukovych's appointment of Mr. Tabachnik demonstrates that Ukraine's president is either completely out of touch with his own country, or arrogantly indifferent to public opinion.

Fourth, Ukraine is still in the throes of a deep economic crisis. If Mr. Yanukovych does nothing to fix the economy, Ukraine may soon face default, and mass discontent among his working class constituency in the southeast is likely. If Mr. Yanukovych does embark on serious reforms, that same constituency will suffer and strikes are certain.

So negotiating the crisis will require popular legitimacy—which Mr. Yanukovych is rapidly squandering; a strong government—which he does not have; and excellent judgment—which is also missing from the equation.

Indeed, if Mr. Yanukovych keeps on making anti-democratic mistakes, he could very well provoke a second Orange Revolution. But this time the demonstrators would consist of democrats, students, and workers.

The prospect of growing instability will do little to attract foreign investors, while declining legitimacy, growing incompetence, and tub thumping will fail to modernize Ukraine's industry, agriculture, and education. Mr. Yanukovych could very well be an even greater failure as president than Mr. Yushchenko.

Although the outlook is grim, it is not yet hopeless for Ukraine's new president. He could still grasp a modest victory from the jaws of an embarrassing defeat by ruling as the president, not of Donetsk, but of all Ukraine.

All he has to do is restrain his appetite for power and learn to rule with the opposition and with the population. It's not so complicated—it's democracy.

Source: The Wall Street Journal

The Language Divide

KIEV, Ukraine -- Both Ukrainian and Russian are still widely used in Ukraine, a vestige of a their interwoven history. But today, language itself has become a political fracture point, one that serves as a guide, plotting the political course of the country.

A Belarus man offers a basket of food during the traditional Ukrainian Christmas (Koliady) on January 7, 2010 in Pogost, some 250 km south-east of Minsk.

The conflict stems from which language–Ukrainian or Russian–is given preference at the state level in Ukraine. Legally, Ukrainian is the only official language, but Russia has always wanted to have its tongue recognized as an official second language. The situation has provoked, from time-to-time, protests mainly organized by nationalist forces.

In newspapers, magazines, and books sold in Ukraine, most of the content is in Russian. In the central part of Ukraine, in the capital region of Kiev, the two languages are used fairly equally. Starting to travel west, Ukrainian is used more, but to the east people mainly speak Russian.

The language debate exemplifies how Ukraine is divided into two parts: a west that faces the European Union, and a Russian-facing east.

The results from February’s presidential election shows this separation with the western regions mostly supporting former Primer Minister Yulia Tymoshenko, while the east mainly sympathized with a Russian-leaning Victor Yanukovych.

According to surveys conducted by Kiev International Sociology Institute (KISI), since Ukraine’s independence in 1991, the language issue has always divided the nation’s people and politicians have used it to their advantage. The division has been evident in each presidential election.

Officials have been exploiting the issue as a tool of electoral manipulation, according to social scientists.

“The differences over which politicians struggle with each other are partly linked to language,” said Valeriy Hmelko, president of KISI, in an interview with NTDTV.

He said that the language used by a politician, “was an index of speakers’ national feelings.”

At the same time, the surveys show that most Ukrainians support maintaining good relationships with their Russian neighbor.

The expansion of the Russian language across Ukrainian territory is due to the Russia empire’s policy of Russification over the last two centuries. This policy continued to be reinforced by the leadership of the Soviet Union as well.

Former Ukraine President Victor Yushchenko (2004-2010), following his own nationalist views, considered Ukrainian to be the only language of the country. He launched an intensive Ukrainization program, earning him criticism from Russian-speaking Ukrainians and from the Russian-leaning opposition.

Under Yushchenko, more than half of the TV stations gradually started broadcasting in Ukrainian.

But with the arrival of a new president, pro-Russian Victor Yanukovych, Russia expected that the language issue would be resolved, and Russian will be entrenched as the state’s official second language.

Yanukovych repeatedly talked about this in his electoral campaign. But earlier this month, he surprised everyone by declaring that Ukrainian would be the only official language, thus destroying Russia’s hopes of exerting more influence over its former territory.

Yanukovych stated that Russian would remain the language of minorities in the country.

While politicians position themselves on the language issue, others like Igor Kogut, head of committee of Legislative Initiatives Laboratory in Kiev, sees the solution in taking it out of the hands of politicians and letting society ultimately decide the nations future. “Take the language issue away from politics and let scientists and teachers solve this issue.”

Source: Epoch Times

Platini Still Uncertain About Ukraine For 2012

BRUSSELS, Belgium -- UEFA president Michel Platini said Monday he doubts whether Ukraine will be able to co-host the 2012 European Championship and complained that work on one of its four stadiums had stopped.

UEFA president Michel Platini.

Speaking at the European Union, Platini said construction in western Lviv "has made no progress whatsoever," while work on the showpiece stadium in Kiev had fallen behind schedule.

Platini said that if the stadium in Kiev was not ready, Ukraine would be unable to co-host Europe's premier football event.

"I am worried because we put our trust in a country, in a policy," he said.

Platini will travel to Kiev next week to assess the troubled construction works and ask the new government to bring development up to par with that in co-host Poland. UEFA warned both countries in September 2008 to speed up construction or risk losing the three-week long tournament. On Monday, Platini said Poland's preparations were on track.

"For Poland all is going well. It is in Ukraine where it is a bit difficult," he said.

Both co-hosts have to provide four stadiums. In Ukraine's case, Kiev, Lviv, Donetsk and Kharkiv are to host matches. Lviv, a western city of 735,000, laid the foundations of a 30,000-capacity stadium in February 2009 but progress since had been too slow, Platini said.

Construction at Lviv had moved forward "not by an inch. So yes, I am worried," he said.

He also said renovation work on Kiev's 63,000-capacity Olympic stadium was going too slowly. The stadium is due to host six matches, including the 2012 final.

Platini said failure to complete the stadium would mean the end of Ukraine's participation in the championship. "If there is no Kiev, then no Ukraine," Platini said, before backtracking slightly. Explaining that Kiev's "difficulties" were in part due to an unusually harsh winter, Platini said, "I think Kiev will be all right in the end."

Platini also refused to be drawn on whether Germany could take Ukraine's place. "There is no Plan B," he said.

Source: USA Today

Ukraine’s Hryvnia In ‘Sweet Spot’ On Inflows, RenCap Says

KIEV, Ukraine -- Ukraine’s hryvnia will stay in a “sweet spot” this year, appreciating 5.7 percent as capital inflows surge on the back of high metal prices and government bond sales, Renaissance Capital said.


“With the steel prices and export volumes near record levels and imports still depressed, the current account is almost guaranteed to return to the black,” Renaissance Capital said in a research note today.

“The government will inevitably tap international and domestic bond markets to fund its budget financing gap, resulting in additional net capital inflows.”

Ukraine’s currency has strengthened 1.2 percent against the dollar since the beginning of the year and traded at 7.9250 as of 12:55 p.m. in Kiev.

The hryvnia lost 41.6 percent versus the dollar from September 2008 to December 2009, making it the worst performer among 127 currencies tracked by Bloomberg in the period.

Since forming a Cabinet sympathetic to President Viktor Yanukovych this month, parliament has moved closer to committing to budget cuts needed to unblock a $16.4 billion loan from the International Monetary Fund suspended since November.

A Eurobond sale may be as early as May or June, Deputy Finance Minister Andriy Kravets said March 18.

The hryvnia won’t appreciate “seriously” and will reach 7.5 versus the dollar by the end of the year, analysts led by Alexei Moiseev at the Moscow-based bank wrote.

“The central bank’s main policy line will be to keep the maintenance of a stable currency as a key priority,” they said. “Ukraine needs to remonetise its economy and recover international reserves.”

Source: BusinessWeek

Ukraine's President To Visit US In April

KIEV, Ukraine -- Peparations are underway for a visit to the United States by Ukrainian President Viktor Yanukovych, who will attend a nuclear security summit in Washington on April 12-13, the Ukrainian Foreign Ministry said on Sunday, Ukraine’s Kyiv Post Web site reported Monday.

President Viktor Yanukovych in Kiev, Ukraine.

Preparations for the visit were discussed at the Brussels forum between Ukrainian Foreign Minister Kostiantyn Hryschenko, U.S. Assistant Secretary for the Bureau of European and Eurasian Affairs Philip Gordon and U.S. Assistant Secretary of Defense Alexander Vershbow, the ministry said.

"Ukraine and the U.S. also reaffirmed their willingness to continue to develop bilateral cooperation according to the Strategic Partnership Charter and expressed interests in expanding trade and economic cooperation between the two countries," the Ukrainian Foreign Ministry said.

Source: Hurriyet Daily News

Sunday, March 28, 2010

Putin Shows Little Interest In Azarov’s Gas Price Pitch

MOSCOW, Russia -- Russia's interest in operating Ukraine's gas transit pipelines has declined after it took pains to promote other export routes, Prime Minister Vladimir Putin said, signaling that Kiev may have a hard time convincing Moscow to lower its gas import bill.

Vladimir Putin

Putin made the statement Thursday night after meeting his Ukrainian counterpart, Mykola Azarov. The new Ukrainian prime minister laid out proposals for compensating Russia for a lower gas price, including an offer for Gazprom to join a planned international consortium that would run Ukrainian transit pipelines.

The European Union is wary of any friction between Moscow and Kiev in their gas trade, because 80 percent of the Russian gas it buys is transported across Ukraine. Previous disagreements between the countries have led to disruptions of substantial transit deliveries, most recently in January 2009.

Some interest in the consortium plan — a reincarnation of an agreement dating back to the early 2000s — still exists, Putin said. If created, the consortium would have to invest heavily in the long-neglected pipelines, recouping the money by collecting transit fees.

“If this takes shape in the course of a constructive dialogue, we, of course, are ready for this work,” Putin said.

The European Union has estimated that an upgrade of Ukraine's gas pipeline grid, which is 10 years past its expected operational life, would cost 2.5 billion euros ($3.3 billion). The 13,500-kilometer pipeline network was built 40 years ago.

Moscow and Kiev plan to hold the next round of talks next month, when their intergovernmental commissions will meet to discuss trade, Azarov said. Ukrainian President Viktor Yanukovych is hoping to sign a deal revising the gas prices downward when President Dmitry Medvedev travels to Kiev in May.

“I am strongly convinced that we can find solutions even for the most difficult problems,” Azarov said after talks with Putin.

In an attempt to reduce its reliance on former Soviet republics for transit of Gazprom's gas, Russia has pursued alternative routes in recent years. A separate Gazprom-led consortium is set to break ground Thursday for the construction of the Nord Stream undersea pipeline to carry its gas to Europe.

Gazprom also has made considerable progress toward building another undersea gas pipeline, South Stream, later this decade.

Source: The Moscow Times

Ukraine Honors Leaders Of The Cuban Revolution

KIEV, Ukraine -- The Ukrainian president, Viktor Yanukovich, today conferred the Order of Service of First Grade Cuban Revolution leader Fidel Castro, and the Order of Yaroslav Mudry First Grade President Raúl Castro.

Ukrainian President Viktor Yanukovych honored Fidel Castro with a medal.

The high honors are awarded to the two leaders “for his personal contribution to the development of Russian-Ukrainian cooperation,” the relevant presidential decree.

Yanukovich also decorated with the order of Yaroslav Mudry fifth grade the health minister of the Caribbean island, José Ramón Balaguer, who made a significant contribution to the Russian-Ukrainian cooperation in the field, local media reported.

Balaguer also contributed decisively to a program of rehabilitation of Ukrainian children affected by the catastrophe at the Chernobyl nuclear power station, which occurred on 26 April 1986.

According to information from the Presidency, Yanukovich underlined the efforts made by Cuba in the struggle against the consequences of disaster in that nuclear power plant to serve more than 20 thousand children since the program began on March 29, 1990 .

Fidel Castro attended on that occasion at the José Martí International Airport to welcome the first recipients of the program, 139 children who presented different pictures of onco-hematological diseases.

Next to Tarara rehabilitation center, home to the Children of Chernobyl program, they work on other specialized Cuban hospitals, where they made at least 16 heart surgeries and more than 600 neurological and orthopedic operations.

Of the patients brought to Cuba under that program, 300 were suffering from blood diseases and 124 leukemia.

Source: Prensa Latina

Ukraine's Foreign Minister Names Areas Of Cooperation With Russia

KIEV, Ukraine -- Ukraine's Foreign Minister Kostyantyn Hryshchenko said on Sunday that civilian nuclear power engineering, aircraft-building, transport and agriculture were priority areas of cooperation with Russia.

Kostyantyn Hryshchenko

Hryshchenko was quoted by the Ukrainian UNIAN news agency as saying that Ukraine's pressing short-term problems, as well as medium-and long-term issues could not be resolved without cooperation with Russia in these areas.

The minister said that a top priority task for Ukraine's incumbent authorities was to restore partnership and friendly relations with Russia.

Ukrainian Prime Minister Mykola Azarov said on Thursday his government was ready to work to repair damage caused to relations with Russia by the previous 'Orange' presidency of Viktor Yushchenko.

"Restoring full-fledged relations with Russia is our goal," he said during a meeting with Russian Prime Minister Vladimir Putin. "You have already outlined various projects and we have brought new proposals for your government."

"We could significantly intensify work on agreements and sign them, proving we are ready for constructive work," Azarov added.

Azarov became prime minister earlier this month after his ally, Viktor Yanukovych, won presidential polls to replace Yushchenko, whose hostile course toward Russia had badly damaged relations between the two neighboring states.

Yanukovych has promised Ukrainians a more balanced foreign policy, including better ties with Russia.

Source: RIA Novosti

Saturday, March 27, 2010

Moskal: ‘The System Of Justice Is Rotten To The Core’

KIEV, Ukraine -- Hennadiy Moskal takes the mystery out of how the nation’s law enforcers operate. “The system of justice is rotten to the core,” said Moskal, a former police general, deputy interior minister and chief of police in Crimea, as well as a current parliamentarian from the Our Ukraine group.

Hennadiy Moskal takes the mystery out of how the nation’s law enforcers operate.

Unfortunately, Moskal’s assessment also leaves little room for hope. “The aim of the new presidential administration is to control the justice system from the top down,” he said. “The future of law enforcement looks bleak.”

Moskal, 59, was named interior minister in ex-Prime Minister Yulia Tymoshenko’s shadow opposition cabinet on March 18.

“Political allegiance is a prerequisite for being appointed” to any top position in Ukraine’s feudal power structure, Moskal said. Be it a job in government, the courts or law enforcement, the country is run by rival business and political groups, according to Moskal.

If your side is in power, you get the job and cash by collecting bribes for favors, grabbing lucrative assets, charging for get-out-of-jail-free-cards, or putting opponents behind bars temporarily to smooth your activities. Caught up in the middle and totally defenseless are average and cash-strapped citizens.

One of Yanukovych’s first moves was to ask police chiefs in charge of the country’s 27 regions to resign, a step that Moskal said proves that cronyism and not professionalism rules the day.

“Perhaps there is a reserve of qualified replacements, but if Yanukovych appoints them the same way he chose the interior minister, the future of law enforcement looks bleak,” Moskal said.

“I come from the old Soviet school of law enforcement. What I see today is one cadre of personnel in the Interior Ministry being replaced by another.”
Moskal, however, said Ukrainians have no one to blame but themselves.

“Many people from Crimea have called me and asked, ‘What is going on? This is crazy.’ I say, 'Listen, this is what you wanted. Some 1.5 million people cast votes in Crimea during the first round. Only 1.2 million showed up in the second, and 800,000 of them voted for Yanukovych.’ Who can you blame except for yourselves?” Moskal said.

“I don’t think Yanukovych has bad intentions. He simply wants a top-down presidential system of governance. But he doesn’t understand that he will be giving orders and down below no one will being carrying them out.

With all due respect to Donetsk Oblast, (where Yanukovych ruled for many years as governor and home to his billionaire backers) the region is incapable of producing enough law-enforcement professionals to staff the entire Internal Affairs Ministry.

“There used to be a golden rule during Soviet times. If a minister from Donbas was appointed, then all his assistants had to come from other regions. There could not be one deputy minister or bureau chief from the same region as the minister,” Moskal said.

“Today’s authorities have another rule. If you are from Donetsk, you are with us. If you are not, then it’s time to retire. This strategy will lead the new president nowhere fast.”

Source: Kyiv Post

Prosecutors Fail To Solve Biggest Criminal Cases

KIEV,Ukraine -- Prosecutors in Ukraine have great powers and even greater impotence. They can jail the powerless or innocent for months on end without trial, and keep criminal investigations hanging over the heads of the hapless for years. But when it comes to solving any big cases, the nation’s 10,000 prosecutors are no-shows.

Prosecutors in Ukraine have great powers and even greater impotence.

What about investigations into the theft of billions of dollars in imported natural gas? Prosecutors can’t get to the bottom of it.

Alleged misappropriations of up to billions of dollars more in central bank assistance? The culprits got away.

Who ordered the murder of Georgiy Gongadze in 2000? That’s a tough one, despite hundreds of hours of incriminating audiotapes in the office of ex-President Leonid Kuchma and a reported confession from the policeman who actually strangled the journalist.

The General Prosecutors Office of Ukraine is where criminal cases go to linger and die, not get solved. And corrupt politics, like so much in the nation, is at the root of it all.

A recent example involves Ihor Bakai, the businessman and close ally of Kuchma, who fled to Moscow when investigators started several cases against him following the democratic 2004 Orange Revolution.

Kiev’s Pechersk district court on March 23 ruled that criminal investigations against Bakai, who headed the state gas and oil monopoly Naftogaz from 1998 to 2000, should be closed for lack of evidence.

Bakai, who in 2003 was appointed head of the State Management of Affairs Department, an institution that manages properties on behalf of the president and cabinet under Kuchma, fled to Russia in December 2004. He was subsequently charged with illegally privatizing state-owned stakes in the Dnipro Hotel, Ukraina Hotel and the Ukraina Exhibition complex in Kiev.

Yuriy Boichenko, spokesman for the prosecutor’s office, said on March 24 that his office may or may not appeal the court decision to throw out the charges. “We have not received a copy of the Pechersk court ruling,” Boichenko said. “By law, our office will have seven days to study it before deciding to appeal … or not.”

Boichenko said prosecutors will not follow political dictates and will, instead, follow the law in Bakai’s case.

But the critics have a different view. They says dozens of high-profile cases involving former state officials have been thrown out or muzzled by current Prosecutor General Oleksandr Medvedko and his predecessors.

The fault, they say, lies with the unwritten rule of impunity that exists between the rivaling business oligarchs and parties that have all-but-monopolized the country’s politics and economy. They often fight ruthlessly for power, but avoid putting opponents behind bars for fear of retribution. Instead, criminal cases are opened often just to show opponents who is in charge.

Many legal experts say a legal change in the powers of prosecutors is long overdue.

The European Commission for Democracy Through Law, also known as the Venice Commission, has over the years compared Ukraine’s prosecutor’s office to the Soviet (and Czarist) style “prokuratura.” The general prosecutor controls a very powerful institution whose functions considerably exceed the scope of prosecutors in democratic nations.

According to the Constitution adopted in 1996, the authority of the prosecutor’s office is as follows: "Prosecution in court on behalf of the state; representation of the interests of a citizen or of the state in court cases determined by law; supervision of the observance of laws by bodies that conduct detective and search activity, inquiry and pre-trial investigation; and supervision of the observance of laws in the execution of judicial decisions in criminal cases, and also in the application of other measures of coercion related to the restraint of personal liberty of citizens."

A fifth function was added in constitutional amendments adopted in December 2004: “To supervise over the observance of humans’ and citizens’ rights and freedoms and the observance of laws on these matters by bodies of state power, local self-government, their officials and functionaries.”

Parliament made another step to broaden the prosecutors’ function through a new law adopted in first reading on March 14, 2009. The law would make it a very powerful and excessively centralized institution whose functions considerably exceed the scope of functions performed by a prosecutor in a democratic country, the Venice Commission opined in June 2009.

“The draft does not bring Ukraine any closer to complying with the commitment towards the Council of Europe that ‘the role and functions of the Prosecutor’s Office will change, transforming this institution into a body which is in accordance with Council of Europe standards,” the opinion said.

In other words, don’t expect any changes for the better anytime soon.

Source: Kyiv Post

Ukraine Needs A Russia That Is A Country Like Any Other – And So Do The Russians, Kiev Analyst Says

NEW YORK, USA -- Both in the course of the Ukrainian elections and following the victory of Viktor Yanukovich, Russian commentators have discussed what kind of a Ukraine Russia needs, commentaries that have not only implied that only Ukraine needs to change but also have defined how many analysts elsewhere see the issue.


But in an essay posted online yesterday, Olesya Yakhno, a commentator for the Ukrainian portal Glavred, argues that this is the wrong or at least not the only question. And she insists that an equally or even more important issue for Ukrainians and Russians alike is “what kind of Russia does Ukraine need?”.

Her answer is that both need Russia to become for Ukraine a country like any other rather than revisionist state which seeks to dominate or even absorb its neighbors, thus threatening not only more conflicts in the future but rendering it almost impossible for Russia itself to make the transition to a modern, free and democratic country.

Since Yanukovich’s victory, she notes, “Russia has hurried to make a number of acts of obeisance of a public character toward the new Ukrainian leadership” in order to show that “the period of Russian-Ukrainian alienation is in the past,” that these past difficulties were the fault of President Viktor Yushchenko, and that “life is becoming better, life is becoming happier.”

At the same time, she notes, Russian commentators have hurried to specify “what kind of a Ukraine Russia needs,” arguing that Moscow needs a Ukraine which is “predictable” both at home and abroad, “semi-authoritarian” for whom “’stability’ is a euphemism for reform, and which makes Russian the second state language and the Moscow Patriarchate the main church.

Moreover, these Russian commentators have said, Russia needs a Ukraine which will not join NATO but will allow Russia’s fleet to remain in Crimea after 2017 and will meet the “business needs” of the Russian political elite, needs, which remain largely “outside of the framework of public discussions.”

And at the most general level, the Glavred commentator says, Russians “consider (or give the impression they do) that for effective cooperation and the conduct of a friendly policy between Russia and Ukraine, the preeminent factor is the level of loyalty of the Ukrainian president to Moscow.”

But in all these discussion, Yakhno continues, one question is missing: “what kind of Russia does Ukraine need?” And behind that question, for which Russian commentators have failed to provide any answer, is “another question,” one that if anything is more fateful: “What kind of Russia does Russia itself need?”

It is clear, the Glavred writer says, that “the format of bilateral Russian-Ukrainian relations depends more on Russia than it does on Ukraine,” something that is not a source for optimism because “even with friendly countries” like Belarus and Kazakhstan, Russia has difficulties maintaining close ties.

The situation with Ukraine in this regard is especially important, she says. While relations between Russia and Ukraine under Yushchenko were not especially good, “however paradoxical it may sound, his presidency despite all the anti-Yushchenko rhetoric of Russian politicians, had its benefits for the ruling Russian tandem.”

Ukraine, second only to Georgia, played the chief “anti-hero in the Russian public space.” And the existence of that image obviated the need for “real policy” and even “allowed the Russian powers that be to hide Russia’s lack of a serious strategy relative to the CIS countries in general and Ukraine in particular.”

In fact, Yakhno continues, it allowed Moscow the chance to “project Russia on a blank screen as a giant of geopolitics.”

There is no doubt that relations between Moscow and Kiev will improve now that Yanukovich is president. But “in order that cooperation bear a real and not exclusively declarative character, it is obvious that there will have to developed an integral and internally consistent philosophy of these relations,” a challenge above all for Russia.

That is because, Yakhno suggests, “the position of Ukraine through the period of independence was and is unchanged.” Yanukovich has “reaffirmed that the strategic goal of the foreign policy of Ukraine is European integration, alongside effective cooperation with Russia and the US.”

Given that “multi-vector approach,” she writes, “where Europe is conceived of as a political partner and model of the future, and Russia as above all an economic counter-agent and ‘reliable rear,’ inherited from the past,” Kiev’s choice will remain with the future, and “therefore, there will not be a cardinal turn of Ukraine toward the Russian Federation.”

And what that means, Yakhno says, is that “the real test for Russian-Ukrainian relations did not end with the departure of Yushchenko but only began with the installation of Yanukovich in office” because Moscow can no longer avoid facing the need to develop a real policy toward Kiev rather than hide behind denunciations of the Orange Revolution.

Whether Moscow is up to that task is unclear, she writes. Not only does Russia face a broad range of economic and political problems at home, but the regime itself is divided about what it wants and will do next. President Dmitry Medvedev clearly wants to see some kind of modernization, although “today few people in modernization Kremlin-style.”

As for Prime Minister Vladimir Putin, Yakhno continues, he has talked about three “possible variants of the development of the political system on the post-Soviet space:” Ukrainianization, which Russians understand to mean “political instability and a lack of control,” “harsh authoritarianism” (Turkmenistan), and semi-authoritarian Putinism as in Russia.

Putin clearly wants the third to continue in Russia, “even if this directly contradicts modernization,” as it almost certainly does. That is because, Yakhno insists, “modernization is possible only under conditions of ‘Ukrainianization’ or ‘authoritarianism,” the one allowing messy competition and the other marching forward under tight control.

The tension between the requirements of modernization and the needs of the members of the current set of powers that be in Moscow to remain in office, the Ukrainian analyst continues, are creating conditions for the rise of “subjectivism in politics,” a term taken from the Khrushchev period.

It refers, Yakhno says, to an approach which rejects “institutional forms of control” and thus opens the way for actions “which do not take into account the objective patterns of history and the real circumstances of the contemporary development of the country.” In short, it leads to decisions “based on faith in the all powerful nature of administrative and force decisions.”

Such an approach, now very much in evidence in Moscow, does not create the kind of Russia that Ukraine needs, Yakhno says. She then gives a list of six qualities that she argues Russia needs to develop if it is to have good relations with its neighbors and to develop and modernize at home.

First, she writes, Ukraine needs a Russia “which clearly understands its place in the contemporary world: a major, economically powerful and rich country with enormous natural resources and human potential but not a global or even a regional power.”

Second, Ukraine needs a Russia which “is not an empire but a contemporary nation state.” Third, it needs a Russia which “at least approximately believes in what it officially proclaims.” Fourth, it needs a Russia “which thinks in the categories of politics and not business camouflaged as politics.

Fifth, it needs a Russia which “decides above all its state tasks and not the tasks of big business.” And sixth, it needs a Russia “which can once and for all formulate an exhaustive list of its expectations from Ukraine,” thus allowing Kyiv to respond positively to those it agrees with and negatively to those it does not.

In sum, Yakhno says, “Ukraine needs a Russia will simply be another country, important and strong to be sure, but one of the other countries and not the boss, not the elder brother, and what is the most important thing, not an eternal factor in Ukrainian domestic politics.”

That will benefit both countries because “when the policy of Ukraine in the Russian direction finally becomes a foreign and not a domestic manner, then will take place the psychological liberation of Ukraine and its elite from Russia, and Ukraine finally will acquire its independence.”

Source: Georgian Daily

Russia-Ukraine Gas Deal: Who Got It Wrong?

MOSCOW, Russia -- Ukraine wants to "reset" ties with Russia but Prime Minister Mykola Azarov may have pushed the wrong button, a Russian government daily said on Friday.

Mykola Azarov

Azarov met with Russian Prime Minister Vladimir Putin at a government residence near Moscow on Thursday amid pledges to repair Russia-Ukraine ties badly damaged during the previous 'Orange' presidency of West-leaning Viktor Yushchenko.

Ukraine is unhappy about the gas legacy left behind by former premier Yulia Tymoshenko, who signed a long-term gas deal with Putin in early 2009. Adding to the fuel mix-up, Russia introduced a market gas price for Ukraine earlier this year, which means that Kiev will have to pay $305 per 1,000 cu m of Russian gas in the first quarter, and the price is set to rise.

Ukraine has said the price is "unreasonably high," pointing to Belarus, which only pays $168. Putin deflected the Belarusian argument, saying that Russia and Belarus "are building a Union State and the Customs Union, and that is why we do not take a 30% custom duty [off Belarus]," according to Rossiiskaya Gazeta.

Indeed, in saying this, Putin may have indicated where Kiev is going wrong.

"Here is [where one finds] Ukraine's interest about integration in the post-Soviet space. It is essential that our colleagues assess and weigh everything up and understand what is necessary and what is not," he said.

While Moscow has consistently said there are no real obstacles to prevent Ukraine from joining the Customs Union of Russia, Belarus and Kazakhstan, Kiev has so far been reluctant to do so.

In return for cheaper gas, Ukraine has offered Russia a stake in its state gas transportation system, involving the EU and Ukrainian companies. The system currently accounts for about 80% of Russian natural gas exports to Europe.

While Putin indicated that Russia was positive about the idea of creating the gas consortium, which would give the Russian gas giant Gazprom direct access to Ukraine's gas market, many experts believe that the project is somewhat overdue, now that Finland and the Baltic states have lifted environmental concerns over the construction of the Kremlin-backed Nord Stream gas pipeline.

The two premiers told a press conference after the meeting that Russia and Ukraine would not directly link a reduction in prices with Russia's stake in the consortium.

Putin said there were no proposals on the table on the principle of "you give us the pipeline and we will give you the [lower] gas prices."

Ukraine's gas transportation system is Europe's second largest gas pipeline network and the main route for Russian natural gas supplies to European consumers. In early 2000, Kiev and Moscow discussed the possibility of creating a gas transport consortium with the involvement of EU partners to manage and modernize Ukraine's Soviet-era gas pipeline network.

The project was put on hold when West-leaning president Viktor Yushchenko came to power in Ukraine in 2004.

Russia has made repeated attempts to obtain a stake in the Ukrainian gas pipeline network to modernize the system and ensure uninterrupted gas supplies to Europe. Ukraine has so far resisted, saying a consortium with Russia would jeopardize its sovereignty.

Source: RIA Novosti

Thursday, March 25, 2010

Drivers In Ukraine Suffer Europe's Worst Roads

KIEV, Ukraine -- Road conditions in Eastern Europe are notoriously bad with Ukraine winning as worst in Europe. In Ukraine, over half of the roads are in an extremely poor condition, with potholes reaching meters in size.

One of the streets in Kiev, capital of Ukraine.

"When you drive, you have to look for your route as there is hole after hole. The roads are so bad in small towns, that your wheels are coming off,” said Anatoliy Krivenko, a Ukrainian driver who frequently travels to different parts of the country.

Krivenko says that driving the roads in Ukraine is almost not doable because of all of the potholes. His car was severely damaged last winter, “I had to change a running gear and other parts. I have worn out the rotor four times,” he said.

According to the Ukravtodor, Ukraine's national road service, more than 60 percent of the roads are in need of a complete overhaul, with 30 percent of those considered to be in state of emergency.

To make matters worse, local and state roads in Ukraine have been increasingly damaged due to severe weather this winter. Temperature changes and the huge amount of snow on the roads caused melting water to penetrate Ukraine's poorly constructed roads, creating potholes of various sizes.

Elena Slavinskaja, an assistant professor from Ukraine's National Transport University, says that the main reason for the poor road conditions is the lack of financing and the low quality of road construction methods.

“The total amount of financing for the development of the public road network and its maintenance has consistently decreased,” Slavinskaja said.

“The road conditions are directly related to the quality of road-building materials, primarily the asphalt bitumen which is made from low quality petroleum,” she says.

The question of funding is a problematic issue for each sector in Ukraine. The reconstruction of the main roads is funded by the state budget, but this has not been developed yet.

Road service workers are attempting to repair the potholes. Officials say that if there is enough financing, they can manage to repair the potholes by the summer. However, this would require roughly $800 million in funds.

But according to Slavinskaja, who stated that Ukraine's roads are the worst in Europe, that would not solve the problem because the cracks would remain, through which water will once again penetrate creating new holes.

With construction of new soccer stadiums for the 2012 Union of European Football Associations (UEFA) championship in Ukraine already behind schedule, Ukraine's poor road infrastructure makes things worse. The government has promised to meet the financing needed to finish the projects in time for the championship.

Source: Epoch Times

Ukraine’s Premier Wants ‘Clean Slate’

NOVO-OGARYOVO, Russia -- Ukrainian Prime Minister Mykola Azarov, seeking to revise a gas contract with Russia, called for the two sides to forget the legacy of Ukraine's previous government during talks Thursday with Prime Minister Vladimir Putin.

Putin welcoming his Ukrainian counterpart, Azarov, before a meeting Thursday at his Novo-Ogaryovo residence.

“Perhaps, we must forget what happened between our countries over the past five years, turn the page and start our relations from a clean slate,” Azarov said in his opening remarks.

He was referring to the five-year presidency of Viktor Yushchenko, during whose tenure relations between the two countries were tested by several gas wars and other political feuds.

The current government, under President Viktor Yanukovych, who ousted Yushchenko in February elections, wants to repair the rift between the two neighbors as part of an effort to steer the economy out of its nosedive, Azarov said.

“We will do everything to rebuild our cooperation and our joint projects,” he said.

Azarov said he brought new proposals for Russia, possibly referring to a plan that would see operational control over Ukraine's giant gas pipeline network handed over to a consortium including Ukrainian energy firm Naftogaz, Russia's Gazprom and European Union energy firms.

Ukrainian officials, including Yanukovych, have repeatedly floated the idea in past weeks. Even so, Azarov didn't even mention gas during his introductory speech.

“We may … reach some agreements soon; sign them and show that we don't simply exchange proposals but work constructively,” he said.

Putin, receiving his counterpart in the Novo-Ogaryovo residence outside Moscow, was quick to note that this was Azarov's first foreign trip as prime minister.

“It's very pleasant. It's a good sign,” he said, before lamenting that the trade between the countries had decreased over the past few years. It is possible, he said, to restore previous trade levels or even raise them to new heights.

Afterward, the talks were continued behind closed doors and were still ongoing Thursday evening. Ukraine's new government believes that the current gas trade contract is charging an unfairly high price on imports from Russia.

Earlier Thursday, Gazprom urged Ukraine to store up enough gas during the summer to ensure smooth westward transit during the winter, the company said in a statement after its chief Alexei Miller met Azarov. About 80 percent of Gazprom's exports to Europe traverse Ukraine.

Opposition parties in Kiev promised a tough fight over the gas consortium plan, describing it as harmful to national security. A Ukrainian opposition lawmaker said there would be riots if the government handed some of the authority over the country's pipelines to Gazprom.

“If the government attempts to trade away Ukraine's independence, sovereignty and national interests, including strategic national assets, our people will be strong enough … to stand up for everything Ukrainian,” said Ostap Semerak, a senior member of the Yulia Tymoshenko Bloc, named after its chief, the former prime minister.

“Radical methods of resistance, including physical defense of gas pipelines, are not ruled out.”

Source: The Moscow Times

Platini Plea To Poland, Ukraine On Euro 2012 Preparations

TEL AVIV, Israel -- UEFA president Michel Platini made a direct appeal to the heads of Poland and Ukraine's football federations Thursday, demanding they step up their efforts to ensure everything is ready for Euro 2012.

UEFA president Michel Platini.

Platini, addressing delegates at the annual UEFA Congress, told Ukraine's Grigoriy Surkis and Grzegorz Lato of Poland that they must not allow preparations for hosting the tournament to fall further behind.

"Mr Surkis, Mr Lato it is imperative that you steer a steady course as you approach the final straight. I believe in you, we believe in you," Platini said in front of delegates from UEFA's 53 member nations.

"Remember in only 27 months the eyes of the whole world will be on you. So don't take your foot off the pedal, but step up your efforts."

Economic troubles, a severe winter and political difficulties have led to delays in the build-up to the 16-team tournament, which is being staged in eastern Europe for the first time.

Preparations in Ukraine have fallen five months behind schedule with particular problems in Kiev, which is due to stage the final, and the city of Lviv, where serious delays have restricted construction work on the stadium.

"Conditions may not be exactly the same as at the two previous European Championship final rounds," Platini admitted.

"We have faced many difficulties in these two countries, but having visited Ukraine and Poland I can tell you the people in these countries are proud to be welcoming European football on to their soil."

DANGEROUS THREAT

Platini also reiterated that UEFA's determination to stamp out illegal betting on matches, which he identified as "the greatest danger" faced by the game, "the one that can kill football."

Platini said the fraud detection system set up after last year's congress in Copenhagen was bearing fruit.

"The cheats now know that they are being hunted down and watched and that when they are caught, and believe me they will be," he said.

"They will face disciplinary sanctions that could lead to lifetime bans from football. Coaches, directors, players and referees must help us in this fight. We are operating a zero tolerance policy and we will continue to do so until the very end."

Platini was less bullish, however, on the matter of illegal transfers, or what he described as "trafficking of minors."

A year ago Platini told Congress that he was determined to persuade political institutions to allow UEFA to restrict the international transfers of players aged under 18.

"Today I cannot tell you that we are on the verge of meeting this challenge because it is undoubtedly the area in which progress is proving hardest to achieve," he told the congress.

"We must be realistic, we will not perform miracles in this area. Those who want to circumvent the rules will doubtless find a way of doing so.

"But I firmly believe it is our duty to protect children, it is a social battle we are waging, a noble and just battle."

Source: The New York Times

Seeking Lower Fuel Costs, Ukraine May Sell Pipelines

MOSCOW -- In recent years, state-owned natural gas pipelines in Ukraine have been the source of such tension that a midwinter fight between Russia and Ukraine over pricing — often leading to Russia’s shutting the valves and leaving people in Europe freezing — has become an annual ritual.

President Viktor F. Yanukovich has made the Russians an offer on gas pricing.

To prevent such blowups in the future, Ukraine’s new Moscow-friendly president, Viktor F. Yanukovich, has proposed an improbable solution. This week he opened negotiations with the Kremlin to sell control over the pipelines’ operations to a consortium including Ukraine’s usual antagonist in these disputes, Russia’s natural gas giant Gazprom, and an unspecified European company.

Russia has already negotiated similar agreements with Belarus and Armenia, where Gazprom owns stakes in the pipeline systems with implied vetoes over strategic energy decisions and in exchange sells gas at steep discounts. Belarus, for example, now pays $168 for 1,000 cubic meters of gas compared with $305 in Ukraine.

If Ukraine had the lower price, it would save about $3.7 billion a year, supporters of Mr. Yanukovich’s proposal say.

From Russia’s perspective, the deal would be a coup in the long-running quest for supremacy of the Eurasian pipeline network, sometimes called a modern version of the Great Game, after the 19th century struggle between Russia and Britain for colonial possession in Central Asia.

Even partial control of the Ukrainian pipelines, which carry about 80 percent of Gazprom’s exports to Europe, could eliminate the need for Russia to build a costly new pipeline under the Black Sea from Russia to Bulgaria around Ukraine, called South Stream.

But the idea — illegal under existing Ukrainian law — is controversial even though it would help put debt-strapped Ukraine back on its feet. Kiev spends billions every year subsidizing gas prices for consumers, and the International Monetary Fund has made reducing such outlays a condition for resuming lending halted last fall.

Ukrainians now pay about 30 percent of the true cost of heat and electricity, according to Olena Bilan, chief economist for Dragon Capital, a Kiev investment bank. The I.M.F. has suggested a variety of austerity measures, including politically unpopular steps like raising fees for residential heating.

That would not be necessary, however, if Mr. Yanukovich could swiftly close a deal with Moscow to lower the gas price.

The idea of transferring pipeline control to a Russian-European consortium may comfort some European consumers, but it sends chills through many Ukrainians, who remain fearful of creeping Russian influence after spending centuries as part of Moscow’s empire.

“When the Kremlin loans money, it doesn’t want interest, it wants political concessions,” Sergiy Terokhin, a former minister of the economy, said in a telephone interview from Kiev.

Iryna M. Akimova, Mr. Yanukovich’s chief economic adviser, said Mr. Yanukovich was merely fulfilling a campaign promise by negotiating with the Russians on gas, and if it helped meet international lending requirements, all the better.

“The new president considers it very important to build good economic relations with partners in the West and the East,” Ms. Akimova said.

Source: The New York Times

Ukrainian Women Berate 'Neanderthal' PM For Sexist Remarks

KIEV, Ukraine -- Ukraine's new pro-Russia prime minister, Mykola Azarov, has enraged feminist groups by suggesting that women are unsuitable for high political office and incapable of carrying out reforms.

Mykola Azarov said conducting reforms was 'not women's business'.

Women's groups in Ukraine have angrily reported Azarov – who presides over an all-male cabinet – to the country's ombudsman following his remarks last week. They accuse him of gender discrimination and holding Neanderthal views.

Speaking on Friday, Azarov said Ukraine's economic problems were too difficult for any woman to handle.

"Some say our government is too large; others that there are no women," he said. "There's no one to look at during cabinet sessions: they're all boring faces. With all respect to women, conducting reforms is not women's business."

Ukraine's new woman-free government was capable of working 16 hours a day with "no breaks and weekends", Azarov boasted.

The prime minister's gaffe echoes comments made recently by the man who appointed him – Ukraine's new president, Viktor Yanukovych. During February's election campaign, Yanukovych declared that his female opponent, Yulia Tymoshenko, should "go to the kitchen".

Today, Azarov's political enemies denounced him as an unreconstructed dinosaur. They said his derisory remark, snubbing half of the country's 46 million population, underlined just how out of touch he is with ordinary Ukrainians.

Source: Guardian UK

Wednesday, March 24, 2010

Ukraine's New PM To Ask Putin To Lower Gas Prices

KIEV, Ukraine -- Ukraine's new Prime Minister Mykola Azarov will try to persuade his Russian counterpart Vladimir Putin to review Russian gas prices for Ukraine during a meeting in Moscow on Thursday.

Prime Minister Mykola Azarov

Ukraine's new President Viktor Yanukovych, who came to power in February after narrowly winning a presidential runoff, has been seeking to revise a long-term gas deal signed by ex-premier Yulia Tymoshenko and the Russian prime minister in early 2009.

In return for cheaper gas, Ukraine wants to offer Russia a stake in its gas transportation system, which currently accounts for about 80% of Russian natural gas exports to Europe.

Azarov was quoted as saying on Wednesday that Russia has set unreasonably high gas prices for Ukraine, which have further strained the country's meager finances.

"That is why the issue... will be on the first place during a meeting of the Ukrainian and Russian premiers," the Ukrainian government's press service said.

"We expect that a bilaterally beneficial draft project [on Russian gas supplies to Ukraine] will be worked out and we will jointly implement it. We should certainly find a compromise solution, which would make the development of Ukraine's economy possible," Azarov said.

Last year, Russia reduced its gas price for Ukraine by 20%, but in 2010 the market price, which fluctuates depending on oil prices, was introduced.

In the first quarter of this year, Ukraine will pay $305 per 1,000 cubic meters of Russian gas. The price will grow to $320 in the second quarter due to rising oil prices.

Ukraine's gas transportation system is Europe's second largest gas pipeline network and the main route for Russian natural gas supplies to European consumers.

In early 2000, Kiev and Moscow discussed the possibility of creating a gas transport consortium with the involvement of EU partners to manage and modernize Ukraine's Soviet-era gas pipeline network.

The project was put on hold when West-leaning president Viktor Yushchenko came to power in Ukraine in 2004.

Russia has made repeated attempts to obtain a stake in the Ukrainian gas pipeline network to modernize the system and ensure uninterrupted gas supplies to Europe. Ukraine has so far resisted, saying a consortium with Russia would jeopardize its sovereignty.

According to a poll conducted in Ukraine earlier in March, only 40.5% of respondents welcomed the idea of a gas consortium with Russia. 23.3% opposed the move.

Azarov was appointed prime minister after Yanukovych's chief rival, then Prime Minister Yulia Tymoshenko, was dismissed after a vote of non-confidence on March 11.

Yanukovych has repeatedly claimed he wants to boost ties with Russia, which deteriorated during his predecessor Yushchenko's presidency.

Source: RIA Novosti

Inside A Global Cybercrime Ring In Ukraine

BOSTON, USA -- Hundreds of computer geeks, most of them students putting themselves through college, crammed into three floors of an office building in an industrial section of Ukraine's capital Kiev, churning out code at a frenzied pace. They were creating some of the world's most pernicious, and profitable, computer viruses.

U.S. Federal Trade Commission investigators Sheryl Novick (L) and Martha Vera look at images (top half of monitors) as part of their investigation of the scareware company Innovative Marketing Ukraine (IMU) in the FTC internet lab in Washington March 22, 2010.

According to court documents, former employees and investigators, a receptionist greeted visitors at the door of the company, known as Innovative Marketing Ukraine. Communications cables lay jumbled on the floor and a small coffee maker sat on the desk of one worker.

As business boomed, the firm added a human resources department, hired an internal IT staff and built a call center to dissuade its victims from seeking credit card refunds. Employees were treated to catered holiday parties and picnics with paintball competitions.

Top performers got bonuses as young workers turned a blind eye to the harm the software was doing. "When you are just 20, you don't think a lot about ethics," said Maxim, a former Innovative Marketing programer who now works for a Kiev bank and asked that only his first name be used for this story. "I had a good salary and I know that most employees also had pretty good salaries."

In a rare victory in the battle against cybercrime, the company closed down last year after the U.S. Federal Trade Commission filed a lawsuit seeking its disbandment in U.S. federal court.

An examination of the FTC's complaint and documents from a legal dispute among Innovative executives offer a rare glimpse into a dark, expanding -- and highly profitable -- corner of the internet.

Innovative Marketing Ukraine, or IMU, was at the center of a complex underground corporate empire with operations stretching from Eastern Europe to Bahrain; from India and Singapore to the United States.

A researcher with anti-virus software maker McAfee Inc who spent months studying the company's operations estimates that the business generated revenue of about $180 million in 2008, selling programs in at least two dozen countries. "They turned compromised machines into cash," said the researcher, Dirk Kollberg.

The company built its wealth pioneering scareware -- programs that pretend to scan a computer for viruses, and then tell the user that their machine is infected. The goal is to persuade the victim to voluntarily hand over their credit card information, paying $50 to $80 to "clean" their PC.

Scareware, also known as rogueware or fake antivirus software, has become one of the fastest-growing, and most prevalent, types of internet fraud. Software maker Panda Security estimates that each month some 35 million PCs worldwide, or 3.5 percent of all computers, are infected with these malicious programs, putting more than $400 million a year in the hands of cybercriminals.

"When you include cost incurred by consumers replacing computers or repairing, the total damages figure is much, much larger than the out of pocket figure," said Ethan Arenson, an attorney with the Federal Trade Commission who helps direct the agency's efforts to fight cybercrime.

Groups like Innovative Marketing build the viruses and collect the money but leave the work of distributing their merchandise to outside hackers. Once infected, the machines become virtually impossible to operate. The scareware also removes legitimate anti-virus software from vendors including Symantec Corp, McAfee and Trend Micro Inc, leaving PCs vulnerable to other attacks.

When victims pay the fee, the virus appears to vanish, but in some cases the machine is then infiltrated by other malicious programs. Hackers often sell the victim's credit card credentials to the highest bidder.

Removing scareware is a top revenue generator for Geek Choice, a PC repair company with about two dozen outlets in the United States. The outfit charges $100 to $150 to clean infected machines, a service that accounts for about 30 percent of all calls.

Geek Choice CEO Lucas Brunelle said that scareware attacks have picked up over the past few months as the software has become increasingly sophisticated. "There are more advanced strains that are resistant to a lot of anti-virus software," Brunelle said.

Anti-virus software makers have also gotten into the lucrative business of cleaning PCs, charging for those services even when their products fall down on the job.

Charlotte Vlastelica, a homemaker in State College, Pennsylvania, was running a version of Symantec's Norton anti-virus software when her PC was attacked by Antispyware 2010. "These pop-ups were constant," she said. "They were layered one on top of the other. You couldn't do anything."

So she called Norton for help and was referred to the company's technical support division. The fee for removing Antispyware 2010 was $100. A frustrated Vlastelica vented: "You totally missed the virus and now you're going to charge us $100 to fix it?"

AN INDUSTRY PIONEER

"It's sort of a plague," said Kent Woerner, a network administrator for a public school district in Beloit, Kansas, some 5,500 miles away from Innovative Marketing's offices in Kiev. He ran into one of its products, Advanced Cleaner, when a teacher called to report that pornographic photos were popping up on a student's screen. A message falsely claimed the images were stored on the school's computer.

"When I have a sixth-grader seeing that kind of garbage, that's offensive," said Woerner. He fixed the machine by deleting all data from the hard drive and installing a fresh copy of Windows. All stored data was lost.

Stephen Layton, who knows his way around technology, ended up junking his PC, losing a week's worth of data that he had yet to back up from his hard drive, after an attack from an Innovative Marketing program dubbed Windows XP Antivirus. The president of a home-based software company in Stevensville, Maryland, Layton says he is unsure how he contracted the malware.

But he was certain of its deleterious effect. "I work eight-to-12 hours a day," he said. "You lose a week of that and you're ready to jump off the roof."

Layton and Woerner are among more than 1,000 people who complained to the U.S. Federal Trade Commission about Innovative Marketing's software, prompting an investigation that lasted more than a year and the federal lawsuit that sought to shut them down.

To date the government has only succeeded in retrieving $117,000 by settling its charges against one of the defendants in the suit, James Reno, of Amelia, Ohio, who ran a customer support center in Cincinnati. He could not be reached for comment.

"These guys were the innovators and the biggest players (in scareware) for a long time," said Arenson, who headed up the FTC's investigation of Innovative Marketing.

Innovative's roots date back to 2002, according to an account by one of its top executives, Marc D'Souza, a Canadian, who described the company's operations in-depth in a 2008 legal dispute in Toronto with its founders over claims that he embezzled millions of dollars from the firm. The other key executives were a British man and a naturalized U.S. citizen of Indian origin.

According to D'Souza's account, Innovative Marketing was set up as an internet company whose early products included pirated music and pornography downloads and illicit sales of the impotence drug Viagra. It also sold gray market versions of anti-virus software from Symantec and McAfee, but got out of the business in 2003 under pressure from those companies.

It tried building its own anti-virus software, dubbed Computershield, but the product didn't work. That didn't dissuade the firm from peddling the software amid the hysteria over MyDoom, a parasitic "worm" that attacked millions of PCs in what was then the biggest email virus attack to date.

Innovative Marketing aggressively promoted the product over the internet, bringing in monthly profits of more than $1 million, according to D'Souza.

The company next started developing a type of malicious software known as adware that hackers install on PCs, where they served up pop-up ads for travel services, pornography, discounted drugs and other products, including its flawed antivirus software. They spread that adware by recruiting hackers whom they called "affiliates" to install it on PCs.

"Most affiliates installed the adware product on end-users' computers illegally through the use of browser hijacking and other nefarious methods," according to D'Souza. He said that Innovative Marketing paid its affiliates 10 cents per hijacked PC, but generated average returns of $2 to $5 for each of those machines through the sale of software and products promoted through the adware.

ANY MEANS BUT SPAM

The affiliate system has since blossomed. Hackers looking for a piece of the action can link up with scareware companies through anonymous internet chat rooms. They are paid through electronic wire services such as Western Union, Pay Pal and Webmoney which can protect the identity of both the sender and the recipient.

To get started, a hacker needs to register as an affiliate on an underground website and download a virus file that is coded with his or her affiliate ID. Then it's off to races.

"You can install it by any means, except spam," says one affiliate recruiting site, earning4u.com, which pays $6 to $180 for every 1,000 PCs infected with its software. PCs in the United States earn a higher rate than ones in Asia.

Affiliates load the software onto the machines by a variety of methods, including hijacking legitimate websites, setting up corrupt sites for the purposes of spreading viruses and attacks over social networking sites such as Facebook and Twitter.

"Anybody can get infected by going to a legitimate website," said Uri Rivner, an executive with RSA, one of the world's top computer security companies.

A scareware vendor distributed its goods one September weekend via The New York Times' website by inserting a single rogue advertisement. The hacker paid NYTimes.com to run the ad, which was disguised as one for the internet phone company Vonage. It contaminated PCs of an unknown number of readers, according to an account of the incident published in The New York Times.

Patrik Runald, a senior researcher at internet security firm Websense Inc, expects rogueware vendors to get more aggressive with marketing. "We're going to see them invest more money in that -- buying legitimate ad space," he said.

To draw victims to infected websites, hackers will also manipulate Google's search engine to get their sites to come up on the top of anyone's search in a particular subject. For instance, they might capitalize on news events of wide interest -- from the winners of the Oscars to the Tiger Woods scandal -- quickly setting up sites to attract relevant search times.

Anti-virus maker Panda Security last year observed one scareware peddler set up some 1 million web pages that infected people searching for Ford auto parts with a program dubbed MSAntispyware2009. They also snare victims by sending their links through Facebook and Twitter.

Some rogue vendors manage their partnerships with hackers through software that tracks who installed the virus that generated a sale. Hackers are paid well for their efforts, garnering commissions ranging from 50 to 90 percent, according to Panda Security.

SecureWorks, another security firm, estimates that a hacker who gets 1 to 2 percent of users of infected machines to purchase the software can pull in over $5 million a year in commissions.

Hackers in some Eastern European countries barely attempt to conceal their activities.

Panda Security found photos of a party in March 2008 that it said affiliate ring KlikVIP held in Montenegro to reward scareware installers. One showed a briefcase full of euros that would go to the top performer. "They weren't afraid of the legal implications, " said Panda Security researcher Sean-Paul Correll. "They were fearless."

BANKING

One of Innovative Marketing's biggest problems was the high proportion of victims who complained to their credit card companies and obtained refunds on their purchases. That hurt the relationships with its merchant banks that processed those transactions, forcing it to switch from banks in Canada to Bahrain. It created subsidiaries designed to hide its identity.

In 2005, Bank of Bahrain & Kuwait severed its ties with an Innovative Marketing subsidiary that had the highest volume of credit card processing of any entity in Bahrain because of its high chargeback rates, according to D'Souza.

Innovative Marketing then went five months without a credit card processor before finding a bank in Singapore -- DBS Bank -- willing to handle its account. The Singapore bank processed tens of millions of dollars in backlogged credit card payments for the company, D'Souza said.

To keep the chargeback rate from climbing even higher, Innovative Marketing invested heavily in call centers. It opened facilities in Ukraine, India and the United States. The rogueware was designed to tell the users that their PCs were working properly once the victim had paid for the software, so when people called up to complain it wasn't working, agents would walk them through whatever steps it took to make those messages come up.

Often that required disabling legitimate anti-virus software programs, according to McAfee researcher Dirk Kollberg, who spent hours listening to digitized audio recordings of customer service calls that Innovative Marketing kept on its servers at its Ukraine offices.

He gathered the data by tapping into a computer server at its branch in Kiev that he said was inadvertently hooked up to Innovative's website. "At the end of the call," he said, "most customers were happy."

Police have had limited success in cracking down on the scareware industry. Like Innovative Marketing, most rogue internet companies tend to be based in countries where laws permit such activities or officials look the other way.

Law enforcement agencies in the United States, Western Europe, Japan and Singapore are the most aggressive in prosecuting internet crimes and helping officials in other countries pursue such cases, said Mark Rasch, former head of the computer crimes unit at the U.S. Department of Justice.

"In the rest of the world, it's hit or miss," he said. "The cooperation is getting better, but the level of crime continues to increase and continues to outpace the level of cooperation."

The FTC succeeded in persuading a U.S. federal judge to order Innovative Marketing and two individuals associated with it to pay $163 million it had scammed from Americans. Neither individual has surfaced since the government filed its original suit more than a year ago. But Ethan Arenson, the FTC attorney who handled the case, warned: "Collection efforts are just getting underway."

Source: MSNBC