Wednesday, June 30, 2010

What Can Ukraine Expect From Clinton's Visit?

KIEV, Ukraine -- U.S. Secretary of State Hillary Clinton will pay an official visit to Ukraine on July 2-3, in an effort to strengthen U.S. ties with partners in the region while trying to "reset" relations with Russia.

U.S. Secretary of State Hillary Clinton begins a tour of Ukraine, Poland, Azerbaijan, Armenia, and Georgia on July 1.

A political analyst said Ukrainian-American relations have not changed much with the change of power in Ukraine, but U.S. priorities have changed significantly after U.S. President Barack Obama took office.

Ukraine is "not included in the list of countries of priority importance for the United States," Taras Chornovil, deputy chair of the Ukrainian parliamentary committee on foreign affairs, said in an interview with Xinhua.

But the United States is also trying to find a balance and build a system of levers and counterweights to Russia, and therefore is ready to make some political concessions, he said.

Clinton is expected to meet President Viktor Yanukovych and senior government officials including Foreign Minister Konstantin Gryshchenko. She will also meet representatives of the civil society and the media.

The visit, the first by a senior American official since Yanukovych took office in Feburary, is in line with U.S. policy in Eastern Europe.

"We tried to make the 'reset' of relations with Russia and, at the same time, strengthen partnership with other key partners in the region -- in particular with Ukraine," Dan Russell, U.S. deputy assistant secretary of state for European and Eurasian affairs, said recently.

Experts had expected not only a rapprochement of Ukraine with Russia, but also a cooling-off with the United States following the election of Yanukovych, who is considered pro-Russian. Both Ukrainian and American diplomacy, however, have so far demonstrated flexibility and pragmatism.

Yanukovych confirmed the readiness of the new Ukrainian government to establish communications with the United States at a recent nuclear security summit in Washington.

Both sides avoided controversial issues, including the revival of a plan to establish a gas transportation consortium with Gazprom, which is contrary to the provisions of the United States-Ukraine Charter on Strategic Partnership.

In a gesture of goodwill, Yanukovych declared Ukraine's readiness to give up weapons-grade highly enriched uranium stockpiles by 2012, which experts said Ukraine does not need now. On top of that, Ukraine also expects to receive funds from international partners.

On the U.S. side, Clinton has voiced support for Ukraine to extend the stay of Russia's Black Sea Fleet in Ukrainian territory.

"I think it is clear that Ukraine is trying to pursue a balanced approach to its foreign policy," she told a press conference in Tallinn.

The White House also reacted calmly to Ukraine's plan to fix the non-aligned status of Ukraine in legislation, thereby effectually renouncing membership in NATO. Above all is "continuation of practical cooperation between Ukraine and the Alliance," Russell said.

U.S. Ambassador to Ukraine John Tefft listed five priorities for cooperation between Kiev and Washington, which will presumably be discussed by Clinton and the Ukrainian side.

The ambassador said the first priority is talks with the International Monetary Fund on possible cooperation.

The second is "strengthening democracy and press freedom," and the third is trade and energy, which is "no less important for the long-term prosperity of Ukraine."

The fourth is investment cooperation with a potential to boost U.S. direct investment in Ukraine with a sum of 1.4 billion U.S. dollars.

The fifth priority is fighting corruption.

Chornovil said what had been important at the time of former presidents George W. Bush and Viktor Yushchenko, including NATO-Ukraine relations, will not be important for either Yanukovych or Obama.

"The Americans will try to guarantee that on some international positions, where every vote is important, Ukraine will be loyal to the American position," he said.

Pragmatism will prevail during Clinton's upcoming visit, and it is possible that some of the "remote" issues will also be considered, including the U.S. policy goals in the Korean peninsula and Iran, Chornovil said.

It is also possible that the discussions will include potential Ukrainian participation in peacekeeping activities, he said.

Source: Xinhua

Russia's Sberbank Plans To Become Top Ukrainian Bank - Chairman

YALTA, Ukraine -- Russia's largest bank, Sberbank, plans to develop its network in Ukraine and become the market leader there, bank Chairman German Gref said.

Sberbank Chairman German Gref

"We plan to considerably expand our presence here [Ukraine] over the next few years and I think we will undoubtedly become the number one bank in Ukraine," he told reporters late on Tuesday after the opening ceremony of the bank's Yalta branch, Sberbanks' 11th in Ukraine.

Sberbank's wholly-owned Ukrainian subsidiary is now among the top 20 Ukrainian banks by assets.

Gref said that Sberbank was planning to develop its own network in Ukraine instead of buying one of the Ukrainian banks as was announced earlier.

"To buy an old network and then reinvest in it is a too expensive and is sometimes an unjustified deal," he added.

He also said that Sberbank was finalizing a deal to buy a resort on the Crimean Peninsula to be used mainly by bank employees but also by outside clients.

Source: RIA Novosti

SBU Versus Western Analysts

KIEV, Ukraine -- The 10-hour detention on June 26 in Kiev’s Boryspil Airport of Nico Lange, Ukraine director of the Konrad Adenauer Foundation -- together with a range of new policies directed at the opposition and journalists -- signifies a return to pre-August, 1991 KGB tactics. The foundation's mission is to promote freedom, liberty, peace and justice.

Nico Lange, Ukraine director of the Konrad Adenauer Foundation

This worrying development shows the degree to which Ukraine’s young democracy is threatened by a return to neo-Soviet semi-authoritarianism.

The only time a foreigner was prevented from entering Ukraine under President Leonid Kuchma was in 2000 when Jed Sunden, owner of the Kyiv Post, Korrespondent and other publications, was detained but then, like Lange, allowed to enter the country.

In the Soviet Union, the KGB had blacklists of foreigners and it would seem from the Lange detention that the Security Service of Ukraine (SBU) has, for the first time in Ukraine's two decades of independence, drawn up similar KGB-style lists of Western analysts.

The co-author of this article, Taras Kuzio, was on the KGB blacklist and was expelled from Moscow’s Sheremetyevo Airport in April 1990 on his way to attend the inaugural congress of the Ukrainian Helsinki Union. These KGB blacklists disintegrated at the same time the KGB disintegrated after the failed August 1991 hard-line putsch.

Will Western academics and experts now be prevented from visiting Ukraine, as before August 1991?

The return to KGB-style tactics is aided by the SBU's cooperation with the Russian Federal Security Service (FSB) and the re-definition of what constitute threats to the Ukrainian state. The current authorities have adopted the Russian-Belarusian threat perception that sees the West, especially the United States, as the main threat to Ukrainian national security.

Anti-Americanism resurfaced in Ukraine in response to the Kuchmagate crisis – including the release of secretly recorded audiotapes implicating the ex-president in plotting numerous crimes, allegations he has denied. This sentiment led to the rise of Viktor Yushchenko and Our Ukraine, which won the 2002 parliamentary elections.

But this anti-Americanism was tempered by Kuchma's support of NATO membership. He twice sought membership action plans in 2002 and 2004 to join the military alliance. And Ukraine sent the third largest contingent of troops to support the U.S.-led coalition forces in Iraq in 2003.

Today, Yanukovych's re-orientation towards Russia and anti-Westernism is no longer tempered by pro-Western foreign policies, as they were when he was prime minister under Kuchma in 2002-2004.

In effect, we now have the “Putinization” – or state control -- of the media (as Natalia Ligachova, editor of the Telekritika media watchdog has written) and of Ukraine's security forces. The Lange detention is confirmation that independent Ukraine, for the first time in its 20-year history, is pursuing a single-vector pro-Russian foreign policy, and not Kuchma's multi-vectorism.

Yanukovych is the first president to oppose NATO membership and not to see it as a stepping stone to European Union membership (as all Eastern European countries did). But, how serious is the claim that Ukraine seeks EU membership?

If one really wants to join the EU, one doesn't spoil relations with Germany by detaining one of its analysts. Nor does one pursue semi-authoritarianism if one is serious about European values.

Ukraine has given away its “NATO card” to get Moscow to respect Ukraine's sovereignty and territorial integrity. Damaging relations with Germany and undermining Ukraine's integration into the EU, ahead of Yanukovych's August visit to Berlin, is tantamount to giving away Ukraine's “EU card.”

The SBU under Yushchenko was never reformed into an institution under democratic control and continued to be an extension of the presidential apparatus. The lack of reform in the SBU is evident in the speed with which it has quickly returned to KGB-style operating tactics under Yanukovych.

In the meantime, Western experts traveling to Ukraine would do well to heed the following rules if detained by the authorities:

1) Do not sign any Ukrainian document.

2) Do not let them have your passport or other form of identification.

3) Call your embassy or consulate immediately. Ensure you have names, mobile telephones and emails of embassy personnel with you.

4) Telephone, text or email Ukrainian and Western politicians and journalists immediately when you are denied entry. Ensure you have names, mobile telephones and emails contacts of Ukrainian parliamentary deputies, journalists and NGO leaders. Bring contact numbers of Western journalists living in Kiev (Reuters, Associated Press, Financial Times, Wall Street Journal, Kyiv Post).

5) Ensure you have a mobile telephone with a built-in camera and email and/or texting capability. Make sure it is fully charged and bring one extra battery. Ask another Westerner in line at passport control to take a photo or video of you and send these to Ukrainian or Western journalists.

6) Ensure you have some cash with you for essential purchases. Most facilities in Kyiv's Borispil airport do not take credit cards.

7) You do not know when you will see your luggage. Include basic toiletries in your hand luggage.

8) Bring reading and writing material with you. Detention can be for up to 10 hours. Keep a log of what is taking place and what is being said. Use this log to write a blog and/or article afterwards. Publicity is good for your plight.

9) Use twitter or texting to keep people informed. To save time, prepare a mailing list on your mobile phone of key people (embassy/consulate officials, Western/Ukrainian journalists, Ukrainian politicians and NGO activists) you would wish to keep informed of your plight.

10) Before traveling to Ukraine, ask your colleagues for contact details of a Kiev-based lawyer whom you could telephone if you are detained.

Source: Kyiv Post

Tuesday, June 29, 2010

Regal Shares Crash On Ukraine Suspension Order

LONDON, England -- Shares in Regal Petroleum fell by nearly 30% after the company admitted that Ukraine ordered it to suspend operations more than a month ago because of environmental problems.

Ukraine is one of the world's key providers of gas.

However, Regal insists that its gas production is operating normally in the Eastern European country, saying it has been allowed to continue operations while official negotiations continue.

The company was forced to make the disclosure after rumours circulated on the internet that its gas wells in Ukraine have not been producing since March. Regal vigorously rejects this suggestion, saying it was only made aware of the suspension order on May 21.

It said there was previously no need to inform the stock market about the order because operations have still not been halted. A spokesman added there were no health, safety or environmental problems and the order relates to "procedural issues".

"These discussions have resulted in an ongoing dialogue with the Ukrainian government which the company believes will result in the rectification of the issues raised by the order," he said.

Regal's share price fell 10½ to 26p, as its Ukrainian assets are considered to be its best. It operates two gas fields with five wells in the country and has reserves of 169m barrels of oil equivalent.

Yesterday's dramatic drop in Regal's share price was an uncomfortable reminder of problems in 2005, when its stock crashed from 510p to 70p. Its former chairman, Frank Timis, had told people that the Kallirachi in Greece well held so much oil that on one occasion it burst and nearly killed 100 people.

However, soon after this statement, the company was forced to admit that the well was not commercially viable, and yielded just 30 barrels a day. The LSE fined Regal £600,000 for failing to inform the market.

When David Greer, the current chief executive of Regal, joined in 2007, Mr Timis signed an agreement to cease operational involvement with the company. Mr Timis still owns an 8%.

Earlier this month, Regal's shares had jumped 13% on better than expected drilling results in Ukraine.

Source: Telegraph UK

Monday, June 28, 2010

Police Seize Stolen Caravaggio, Make Arrests

BERLIN, Germany -- A Caravaggio painting stolen from a museum in Ukraine two years ago was recovered by police as four men tried to sell it in Berlin, official said Monday.

"The Taking of Christ"

Police confiscated the 16th-century painting — known as "The Taking of Christ," or "The Kiss of Judas" — and arrested the three Ukrainians and a Russian on Friday, Germany's Federal Criminal Police Office said.

They are believed to be members of an international gang of art thieves, and 20 other suspected members of it were arrested in Ukraine, the police said.

The painting, worth several million euros (dollars), was stolen from the Museum of Western and Eastern Art in Odessa, Ukraine, in July 2008 by thieves who entered the museum at night and cut the painting out of its frame.

Anke Spriestersbach, a police spokeswoman, declined to release any information about the potential buyer, saying the investigation is still under way.

The arrests in Berlin were made in cooperation with Germany's special GSG 9 forces and Ukrainian police.

Caravaggio, a Baroque master from Italy, was known for his dramatic use of light, novel perspective and the use of ordinary people in religious and mythological scenes.

Source: AP

Sunday, June 27, 2010

Yanukovych Criticizes Limits On His Power

KIEV, Ukraine -- President Viktor Yanukovych said limits on the power of the presidency introduced in Ukraine's 2004 Orange Revolution have produced a crisis of authority and urged a change in the constitution.

President Viktor Yanukovych

Reversing the amendments would help Yanukovych, who has pursued closer relations with Russia, further consolidate his power after winning the presidential election this year, installing an ally as prime minister and securing a parliamentary majority.

"The experience of state-building … shows that Ukraine's constitution requires certain changes," Yanukovych said in a televised address to the nation Friday ahead of Constitution Day, celebrated on Monday.

"Some of its norms, in particular those hastily introduced in 2004, led to misbalancing and a serious crisis of authority, and have become the target of justified criticism in the country and from the international community," he said.

The 2004 amendments weakened presidential powers such as control over naming government ministers, passing those functions to the parliament.

They were introduced as part of a deal to end the Orange Revolution street protests, which swept Yanukovych's rival, Viktor Yushchenko, to the presidency.

Yushchenko tried to reverse the amendments during a spat with then-Prime Minister Yulia Tymoshenko, but he failed to secure the support of the 300 of 450 parliament deputies required to change the constitution.

Three factions that make up Yanukovych's coalition currently control 219 seats in the parliament, but the group enjoys support from a number of individual deputies belonging to other factions, routinely securing up to 250 votes.

Source: The Moscow Times

German Analyst Says Held For 10 Hours At Ukraine Border

KIEV, Ukraine -- A leading Ukraine-based German analyst who recently criticized President Viktor Yanukovych was held for 10 hours at Kiev airport while trying to enter the country, he said Sunday.

Nico Lange

Nico Lange, the director of the Kiev office of German think-tank Konrad Adenauer Foundation, landed at Kiev Boryspil airport Saturday afternoon but was not allowed to enter Ukrainian territory, he told AFP by phone.

Only after intervention by the German embassy and long talks with the Ukrainian authorities Lange was able to leave the airport and go to Kiev at about 1:00 am Sunday (2200 GMT Saturday).

"Now I am at home in Kiev. I was let go in the night," Lange told AFP.

"According to the official version it was misunderstanding," he added. "We will check this issue in Germany and will discuss it together with the embassy."

The spokeswoman of the Ukrainian security service the SBU, Maryna Ostapenko, declined to comment.

Influential news website Ukrainska Pravda wrote that Lange -- who has worked in Kiev for the last three years -- had encountered problems with the Ukrainian authorities due to his criticism of Yanukovych's administration.

In May, Lange published a report entitled: "The first 100 Days after Change of Power in Ukraine: Authoritarian Tendencies and Rapprochement with Russia".

In early June he expressed the doubts about the will of the cabinet to implement economic reform and concerns over the future of democracy in the country, in an interview with Deutsche Welle.

The incident comes amid growing concerns over a return to media censorship under Yanukovych, which has prompted a string of complaints from private Ukrainian television channels.

The presidency has vowed to look into the complaints and insisted it puts no pressure on the press.

But US ambassador to Ukraine John Tefft on Thursday said in a speech there had been "troubling reports of pressure on journalists" and warned there should be no going back to the "old system" of government pressure.

Source: Expatica

Saturday, June 26, 2010

Tax Proposal Upsets Business; Yanukovych Calls For Major Revisions

KIEV, Ukraine -- Since coming to power four months ago, President Viktor Yanukovych has promised to swiftly fix Ukraine’s ailing economy. But his all-powerful governing coalition may be tripping up in its first major test – an attempt at tax reform.

Mykola Azarov's proposed new tax law has been described as being draconian.

The business community is calling upon Ukraine’s government to shelve plans to adopt a new draft tax code in July, asking instead for the initiative to be put off until September. The tax plan, pushed by Prime Minister Mykola Azarov, is draconian and needs major revisions, business groups say.

Represented by the Chamber of Commerce in Ukraine and the European Business Association, top foreign and domestic investors see the document as a rushed and dangerous hodgepodge of new rules. The plan, they say, will not fix Ukraine’s messy and corrupt tax system – in which people who declare incomes honestly are punished with excessively high rates and others hide their profits and live in the shadows, depriving government of much-needed revenue.

The clear-cut message for Ukraine’s leadership is: The proposed tax code is unacceptable and could threaten jobs and businesses, partly by giving excessive powers to tax inspectors.

“If they adopt it very quickly without proper input from the relevant stakeholders, then we have an unacceptable mess that will not work for the business community or the country,” said Jorge Zukoski, president of the Chamber of Commerce in Ukraine. “It will be a step backwards, not forwards.”

On June 23, Azarov downplayed criticism of the 500-page tax code drafted by his government. He said his coalition, which controls parliament, should still proceed with plans to adopt it in early July.

However, he seemed to be contradicted the very same day by Yanukovych.

“I believe that the tax code in its current form is not balanced and requires a serious revision,” Yanukovych said on June 23. “The position is clear: the tax code should be adopted for industry, businessmen, and the people, rather than tax officers.”

The statement is a strong signal that Yanukovych is being responsive to the complaints from business community representatives, who warned that the proposal gives unchecked powers to tax authorities.

Many also fear it would not offer tax relief to small businesses that need it most, nor would it bring clarity to an existing system whose complexity fuels abuse and corruption.

Although the government gave no estimates, the proposed tax code seems to be driven by the state’s need to squeeze cash from as many taxpayers, individual and corporate, as possible.

The proposal allows tax inspectors to immediately levy and collect fines for violations. “This scares us,” said one business community leader. A company can challenge the assessment, but won’t get its money back until it wins the dispute in court, he said.

“This differs dramatically from the promises given by government to ease the taxation system,” said Volodymyr Kotenko, head of the tax committee at the European Business Association.

Also, the new tax code proposes removing a six-month transition period for taxpayers to adjust to new rules adopted. “As businesses and investors, we need predictability and equality in tax administration,” Zukoski said. “But this would bring the opposite.”

Oleksandr Zholud, an economist at the International Centre for Policy Studies, a Kyiv-based think tank, said the proposed tax changes could also give tax officials access to confidential bank information and the complete financial history of a company.

“God knows what this confidential information will be used for, given the high level of corruption seen with tax inspectors,” Zholud said.

But Azarov, who headed the tax administration with an iron fist under the authoritarian 1994-2005 presidency of Leonid Kuchma, continues trying to sell his draft tax code as one that will offer relief for businesses and broaden the tax base.

In defending his position, he points to plans to reduce the value added tax from the current 20 percent rate to 17 percent. The profit tax rate will be reduced, meanwhile, from 25 percent to 20 percent.

Some experts see the proposed tax cuts as good for big business, including the business oligarchs who back Yanukovych’s coalition. But they see little in relief for small businesses struggling to survive.

“The most important thing for many businesses is not the tax itself, but how easy and transparent it is to figure how much you should pay and how you can do that fast and simple,” said Anton Stefaniv, who runs a small printing business in Kyiv.

While running for president, Yanukovych promised tax holidays for small businesses. However, the proposed tax code would grant such a privilege only to the smallest of businesses – entrepreneurs who make less than $38,000 per year in revenues and businesses with less than $12,500 per year in revenue.

“The government should be focusing more on tax efficiency in collections, not just in widening the base dramatically,” Zukoski said. “One place to start if you want to broaden the base with tax cuts is to reduce the hefty social taxes on salaries.”

Tax experts said the proposed tax code also poses bad news for foreigners and many professionals – such as accountants, auditors and others – not allowing them to pay a single small and flat monthly tax earmarked for small business entrepreneurs.

Software programmer Oleksandr Shuvalov, who currently pays the single flat monthly tax, is one of many who will be affected. He fears that such a change will simply push many workers into the grey economy, which is where up to half of the nation’s economic activity takes place.

“My guess is that more companies will suggest that their employees work unofficially,” Shuvalov said.

So, what needs to be revised?

Experts want the government to introduce a tax code that introduces property taxes, curbs powers of tax authorities and simplifies the byzantine procedures.
“They obviously should decrease fines, which they suggest raising 10 times,” Zholud said. “For example, a minimum fine for a minor mistake they want to increase to Hr 1,700 (about $200), which is unacceptable.”

Yaroslav Misyats, head of the Small and Mid-Sized Business Party, said tax officials should bear responsibility for legal violations and negligence, and suffer fines as well.

Other say the revenue limit for business and entrepreneurs to qualify for tax holidays should be raised to a maximum of $70,000.

Among other suggestions are reductions in official payroll taxes that the government collects from employers. The current rate of payroll tax is 36 percent. That money goes to the pension fund, and the high rate prompts employers to not declare their workforce as official employees to evade the taxes.

Some experts believe that lower payroll taxes will encourage more employers to make their employees official and pay government taxes.

Source: Kyiv Post

Pinchuk’s Scholars

KIEV, Ukraine -- Philanthropist Victor Pinchuk has given 17 Ukrainian students a better chance at a brighter future. In so doing, the billionaire industrialist sent a message to the state, other philanthropists, and the nation’s universities that they should improve.

Fourteen of the 17 winners of the Victor Pinchuk Foundation’s first-ever World Wide Studies scholarship program, which helps scholars study abroad at prestigious universities.

Pinchuk awarded scholarships of up to $50,000 to the students for post-graduate studies at some of the world’s best universities – all abroad, of course.

“Usually it’s a sad occurrence when people leave Ukraine,” said Pinchuk, who hosted the award ceremony from the SkyArt cafe in his posh modern art gallery on June 22. “But we are not draining brains here, we are wiring them up.

Ukraine doesn’t have many natural resources," said Pinchuk. "But our brains make up for the oil and gas. That’s why I am investing into brains. Our dividends will lead to a successful country.”

Pinchuk said he is taking a page from such governments as the ones in China, Singapore and Kazakhstan, who have for years sent thousands of their students on all-expense paid educations abroad in search of ideas and expertise that would change their nations for the better.

And Pinchuk is expecting the same from this group. In return for the scholarships, he requires the recipients to graduate and return to work in Ukraine for at least five years.

Calling himself “happy and proud” to offer the awards, Pinchuk said he expects that the Ukrainian government will follow his example and spend state money to send more students abroad.

While 17 students can’t change a nation of 46 million residents, Pinchuk expects the program to continue, with broader participation from both public and private donors. He noted that a “few thousand more” such scholars can form “an army” of change.

The donor was in a jovial and joking mood with the recipients, their parents and high-profile guests assembled. He teased the scholarship winners that their signed pledge to return to Ukraine for five years was akin to a marriage ceremony.

Altogether the industrialist shelled out over $400,000 to the winners of his foundation’s inaugural World Wide Studies for Ukraine (http://worldwidestudies.org) program.

Apart from this initiative, Pinchuk funds other educational projects.

Pinchuk is not alone, however, in sending Ukrainian students abroad. American and British governments have been running similar programs for decades. Many of their graduates are now successfully working in Ukraine’s private sector, while others remain abroad.

Although left unsaid by Pinchuk, the World Wide Studies program amounts to an indictment of Ukraine’s universities.

Former Verkhovna Rada speaker Arseniy Yatseniuk made the point for Pinchuk. He said that he had wanted an education abroad. The Pinchuk scholarship winners “can be certain drivers but there should be a different engine,” Yatseniuk said. “They won’t be able to push 46 million people.”

Even a foreign education can wither in the face of Ukraine’s hard realities, he said. “A lot of my friends whose children came back with foreign degrees can’t get jobs here,” Yatseniuk said. “ It’s a difficult process. It will depend on how the country will progress.”

The nation has more than 800 institutions of higher education, but none cracks the rankings of the world’s top 1,000 educational institutions.

An independent panel picked the winners for Pinchuk from among 260 applicants. Some of them are already sporting impressive educational and career achievements at young ages.

Among them are:

Yulia Kondratska, a partner in Moskalenko and Partners law firm, will study banking and finance law in the University of London. She’s 24.

Maksym Yavorsky, a lawyer with CMS Cameron McKenna, is off to Switzerland to garner the arts of the international dispute settlement. He’s 21; and

Nataliya Bugayova, a journalist at the Kyiv Post, is attending a Masters in Public Policy program at Harvard University’s John F. Kennedy School of Government. She’s 21.

The list goes on and includes, with their destinations: Anna Afansiyeva, University of Chicago; Anna Bilous, Jagellonian University in Poland and the University of Kent in the United Kingdom; Lesya Vasylenko, University College in London; Anna Danyliak, Lund University in Sweden; Olga Dolynina, London Metropolitan University; Nataliya Katser-Buchkovska, University College in London; Julia Kosulko, KTH Royal Institute of Technology in Sweden; Galyna Mykhailiuk, University of York; Olga Nahorna, Technical University of Munich; Maria Pavlovska of Uppsala University in Sweden; Natalia Strandadko, University of Leicester in the United Kingdom; Artem Trofymenko of University College in London; Marta Tsvengrosh, University of Geneva; and Marta Schavurska, University of Pittsburgh.

Given the supremacy of corruption and the absence of basic legal rights or economic fairness in Ukraine, it is no surprise that nine are favoring legal careers. Another five winners favor environmental studies. A lopsided 15 of the 17 finalists are women. One winner attributed the gender imbalance to long-running inequality that makes women more determined to achieve in general.

Male or female, the winners are certainly a confident bunch. “Ukraine’s rules are going to change,” lawyer Trofymenko said. “And we’re going to be the ones who change them.”

Source: Kyiv Post

Friday, June 25, 2010

Clinton To Visit Eastern Europe, Caucasus Next Week

WASHINGTON, DC -- US Secretary of State Hillary Clinton will travel to Eastern Europe and the Caucasus on July 2 for a trip aimed at bolstering bilateral ties, the State Department said Friday.

US Secretary of State Hillary Clinton

In Kiev, the top US diplomat will open the US-Ukrainian Strategic Partnership Commission, which provides for increased cooperation on a range of issues, such as economics, energy and trade, security and defense, reinforcing democracy and cultural exchanges.

She will also meet with President Viktor Yanukovych and Foreign Minister Kostyantyn Gryshchenko, as well as members of non-governmental groups and independent media leaders, according to her spokesman Philip Crowley.

Clinton will then head to Krakow for the 10th anniversary celebration of the founding of the Community of Democracies, which her predecessor Madeleine Albright and her Polish counterpart Bronislaw Geremek initiated in 2000. She will hold talks with Polish Foreign Minister Radoslaw Sikorski.

Her visit will then take her to Azerbaijan, Armenia and Georgia for meetings with government officials and civil society leaders to "discuss bilateral issues, as well as issues related to regional peace and stability," Crowley said.

Source: AFP

Ukraine Seeks To Supply Reactors With Its Own Uranium

KIEV, Ukraine -- Ukraine is seeking to supply its nuclear reactors with uranium mined in the country from 2015, Deputy Fuel and Energy Minister Natalia Shumkova said.

Uranium billet

Ukraine aims to increase uranium production to 5,000 metric tons a year in 2020 and 6,000 tons in 2030, from 830 tons, Shumkova said at a conference in Kiev today. The eastern European country needs to invest 9.9 billion hryvnia ($1.25 billion) in uranium output through 2013, she said.

The ministry this week announced a tender to build a uranium plant and will pick a winner by early October, according to Shumkova. Russia’s OAO Tvel and Toshiba Corp.’s Westinghouse Electric Co. have the experience to build the plant, she said.

Ukraine plans to construct a third nuclear reactor at its Khmelnytskyi power plant by 2016 and a fourth by 2017, Yuriy Nedashkovskyi, the president of DP NAEK Energoatom, Ukraine’s state-owned operator of nuclear power stations, said at the same event. The construction is worth 30.1 billion hryvnia, he said.

The country’s nuclear capacity will double by 2030 by extending the lifespan of current reactors by 15 years and by building new generators, Nedashkovskyi said.

Energoatom had first quarter net income of 380 million hryvnia, Nedashkovskyi said, without elaborating. Ukrainian nuclear power plants will produce 87 billion kilowatt-hours of energy this year, he said.

Source: Bloomberg

Thursday, June 24, 2010

US Warns Against Return To Censorship In Ukraine

KIEV, Ukraine -- US ambassador to Ukraine John Tefft on Thursday warned Ukraine's authorities against a return to media censorship amid growing concerns over press freedoms in the ex-Soviet country.

US ambassador to Ukraine John Tefft on Thursday warned Ukraine's authorities against a return to media censorship.

"There should be no going back to the old system of government pressure of journalists and media companies," Tefft said during a speech to a Kiev-based think tank, a copy of which was obtained by AFP.

He noted "troubling reports of pressure on journalists" and an attack on a regional newspaper editor as recent worrying signs.

"We must also recognise that some media companies practise self-censorship, which is equally destructive to the principle of press freedom," Tefft added.

"It is essential to protect and even expand the media freedoms that emerged" after the country's 2004 Orange Revolution, he said.

Press freedom in Ukraine is seen as one of the few lasting gains of the revolution that brought pro-Western leaders to power, who were in turn ousted by President Viktor Yanukovych in this year's elections.

Ukrainian television journalists last month issued a petition complaining of an increase in censorship under the pro-Kremlin Yanukovych, saying certain issues had become taboo.

Dozens of journalists and social activists marched in Kiev this month to denounce what they see as a return to state censorship.

Source: AFP

Tymoshenko: Yanukovych’s And Azarov’s Cynicism Knows No Limit

KIEV, Ukraine -- By announcing allegedly positive results of their first one hundred days in office, Mykola Azarov’s government is deceiving society, says Yulia Tymoshenko.

Ex-PM Yulia Tymoshenko

"Yesterday as I was watching Azarov report on the first one hundred days of their work I began to think that perhaps there is no limit to the cynicism on the current ruling political team in Ukraine, because it broke my heart to hear a person talk about 6% GDP growth when I know how untrue this is," Yulia Tymoshenko said today during a meeting with representatives of the Mykolayiv branch of the Committee to Defend Ukraine.

According to Yulia Tymoshenko, based on GDP figures from March and April "there was a 1.8% drop in production in Ukraine based on state statistics, and a 2.8% decrease in May." She noted that she has never seen such a "rollback" in economic development in Ukraine.

Yulia Tymoshenko also presented official data from the National Bank of Ukraine, according to which "in the time that Azarov has been in power, direct investment in the Ukrainian economy shrank by nearly one third – 29%."

"One hundred days have passed and we’ve already taken a $4 billion loan from Russia – 32 billion hryvnias, and at a cost three times higher than what the IMF was giving us," she added.

In her opinion, $4 billion was borrowed from Russia under conditions that are unfavorable for Ukraine. "If Tsushko announced that the crisis is over, then why borrow such amounts and also issue up to 20 billion? This is already 52 billion hryvnias," she underscored.

"I wonder what the boundary is to the propaganda being demonstrated today by the Azarov-Yanukovych government’s central media, and what is the limit to what Yanukovych is doing today? There is no limit," said Yulia Tymoshenko.

Source: Tymoshenko Website

Wednesday, June 23, 2010

The “Putinization” Of Ukraine’s Security Forces

WASHINGTON, DC -- The “Putinization of Ukraine’s media policy” is taking place at the same time in Ukraine’s siloviki (security forces). Both steps lead Ukraine closer to Kuchma’s semi-authoritarian regime and Vladimir Putin’s “managed/sovereign democracy” in Russia.

Viktor Yanukovych

“Putinization” is occurring in both the Interior Ministry (MVS) and Security Service (SBU), following the return of Kuchma era discredited officials and those linked to the corrupt gas lobby. First Deputy Interior Minister, Sergei Popkov, headed MVS internal troops when they advanced on Kyiv on November 28, 2004 to suppress the Orange Revolution.

“Putinization” of the MVS comes after the Party of Regions repeatedly attacked its alleged politicization under “Orange” Interior Minister, Yuriy Lutsenko. After being elected, Yanukovych “demanded” that the MVS become “apolitical” and told Interior Minister, Anatoliy Mogiliov, that “de-politicization of your work” is the key to your success.

However, the MVS has become more politicized and is undergoing a “Putinization.” At his 100 days anniversary meeting with the media, Yanukovych was asked why the MVS prevented the opposition from protesting. He responded that this was untrue and that the MVS merely defended civic peace and halted attempts by a minority to prevent the majority from living in peace. As stated in Ukrayinska Pravda, “A few more such comments (from Yanukovych) and one could think that one was listening to an explanation by a Unified Russia party spokesman.”

Journalists pressed Yanukovych on why the MVS stood in excessive numbers in full riot gear between his supporters and the opposition? He replied that Berkut and Tytan Spetsnaz forces were there to prevent conflict between both sides.

Ukrayinska Pravda and other Ukrainian media ridiculed these official explanations saying there is a three-fold anti-opposition strategy in place.

1. Wherever Yanukovych travels in Ukraine a small group of his supporters are brought to the event.
2. Berkut/Tytan Spetsnaz are placed between the opposition and Yanukovych supporters in greater numbers than the opposition and in full riot gear with loaded weapons.
3. Spetsnaz block the opposition, surround them in a vice and prevent them moving.

The new policy nullifies the very purpose of the right to protest, “as those to whom it is addressed simply do not see it”. Yanukovych’s supporters are permitted to stand closest to him and receive the main television coverage.

The aim of the new policy is two-fold. First, to show that the opposition allegedly has little support. Second, to intimidate citizens thereby reducing the numbers of protestors.

This is accompanied by a strategy to prevent opposition protestors from travelling to Kyiv, plus, a media policy that gives excessive, positive television coverage to the authorities and limited, negative coverage to the opposition.

The SBU is under the control of the president, according to the 1996 and 2006 constitutions, and has been considered by every president as his personal institution. A lack of civilian oversight coupled with its large size (30,000 officers compared to a combined 6,000 in the UK’s MI5 and MI6) has led to the misuse of the SBU by each president.

This includes SBU involvement under Chairman, Leonid Derkach, in the export of Soviet era arms to conflict zones such as Sierra Leone, the subject of the 2005 fictional Hollywood film “Lord of War” based on the exploits of arms dealer Yuri Orlov (played by Nicolas Cage).

Mykola Melnychenko, a presidential guard in the Directorate on State Defense (UDO), which was separated from the SBU in the early 1990’s, illicitly taped Kuchma’s abuse of office including the abduction and murder of journalist, Georgi Gongadze. No SBU officers were ever prosecuted for the crime.

More importantly the SBU continues KGB-style political surveillance of opponents –not just separatists, which every intelligence agency would see as one of its areas of responsibility.

Evidence provided to EDM points to President, Viktor Yushchenko, using the SBU against domestic opponents such as the Party of Regions and also Yulia Tymoshenko. These sources also point to SBU surveillance of foreign political visitors, including this author.

An international scandal followed the attempted intimidation of the Catholic University in Lviv, where the dean was asked to sign a statement agreeing he would not permit students to become involved in protest. The US State Department and Canadian parliamentarian Boryz Wrzesnewskyj condemned the SBU’s interference in May 28 and June 2 statements.

American-Ukrainian Rector of Ukrainian Catholic University, Borys Gudziak, described the SBU’s demands as a return to KGB tactics. SBU Chairman, Valeriy Khoroshkovsky, ridiculed the complaints as “political technology” used by “opponents of the stabilization processes taking place in the state”.

Evidence of surveillance of communications was found in the press conference held by President Yanukovych on his 100th day in office. The Stop Censorship NGO, signed by 502 journalists and 132 NGO’s, planned to undertake a protest during the press conference.

As Ukraynska Pravda journalist Serhiy Leshchenko noted, only a few Stop Censorship leaders knew in advance of the planned event. Yet, from his reactions, Yanukovych had clearly been pre-prepared to expect the protest and the plan to give him a Stop Censorship t-shirt and petition. The only explanation for his knowledge of the protest is that Stop Censorship NGO’s telephones are being monitored.

Khoroshkovsky is both a billionaire oligarch and media magnate. This has meant he has always been criticized by Anatoliy Grytsenko, head of the parliament’s committee on national security and defence, as unsuitable because of his conflict of interests.

Ukraine’s most viewed television channel, Inter, the general director of which is Khoroshkovsky’s spouse, Olena, is mainly watched in Russophone Eastern-Southern Ukraine. Valeriy Khoroshkovsky, “is in charge of contacting other media owners to ensure a favorable TV coverage of the new leadership”.

Khoroshkovsky was accused of taking control of the National Council on Television and Radio which controls the distribution of licenses. A June 7 appeal to President Yanukovych by Channel 5 journalists claimed that Khoroshkovsky is aiming to take over its license and remove their channel.

Censorship has a long-term connection to the Putin regime. Igor Shuvalov (a Russian citizen), coordinates the news policies of Inter and State Channel 1 on behalf of the presidential administration. Shuvalov was the main author of temnyky censorship instructions sent by the presidential administration in 2002-2004 to television channels.

“Putinization” of Ukraine’s siloviki is an outcome of the Yanukovych administration learning the lessons of how the Orange Revolution was permitted, neo-Soviet political culture that permeates the administration, and inspiration from one party rule in Donetsk and Russia.

Source: Jamestown

Kiev To Take Up Gas Slack From Belarus?

KIEV, Ukraine, June 22 -- Ukraine can transport more Russian natural gas bound for European costumers if a gas row with Belarus causes supply disruptions, the state energy company said.


Moscow said Belarus owes Russian gas company Gazprom millions in gas payments for supplies from the first four months of the year. Minsk says Gazprom owes a similar amount for gas transit fees.

A Russian gas pipeline through Belarus supplies Germany, Poland and Lithuania. Redirecting gas from Belarus through Ukraine could ally supply concerns, the Platts news service reports.

Moscow, Platts said, asked Kiev last week to stand by for possible additional gas supplies if the gas dispute with Belarus drags on.

Ukraine's state-owned energy company Naftogaz said it was ready for emergency shipments but has so far not seen any additional gas from Russia.

Around 80 percent of all Russian gas bound for European markets travels through Soviet-era pipelines in Ukraine. The remaining 20 percent runs through Belarus.

Gazprom said it would gradually cut gas supplies to Belarus by as much as 85 percent if the dispute lingers.

The Russian energy company cut gas supplies to Ukraine most recently in 2009 over a similar issue.

Source: UPI

Tuesday, June 22, 2010

Ukraine 'Neutral' On Russia-Belarus Gas Conflict - Foreign Ministry

KIEV, Ukraine -- Ukraine has taken a neutral position in the Russia-Belarus gas conflict, a spokesman for the Ukrainian Foreign Ministry said on Tuesday.

Ukrainian Foreign Ministry

"On a political level, Ukraine is completely neutral on this issue. We have absolutely no plans to interfere in this economic conflict," Oleh Voloshyn said.

However, earlier on Tuesday, Ukrainian Prime Minister Mykola Azarov said Ukraine is ready to provide extra gas transit through its territory if the conflict causes a drop in Russian gas supplies to the EU.

"We're talking about 15-20 billion cubic meters of gas," he said.

Belarus refuses to pay the Russian gas price, set at $169 per 1,000 cubic meters for the first quarter of the year and $185 for the second quarter, and has been paying $150 since January 1 instead.

The Russian gas giant Gazprom decreased its Belarus supplies 15% on Monday over a $200 million debt Minsk has accumulated since the start of the year and further cut its supplies by 30% on Tuesday.

Source: RIA Novosti

Monday, June 21, 2010

Russia's 'New' Stance Remains Anti-West

WASHINGTON, DC -- Ahead of Dmitry Medvedev's visit to Washington this week, a "leaked" Russian foreign policy document is causing some Russia watchers to wonder whether the Russian president is shifting his country toward a more positive, pro-Western stance. A careful read of the 18,000-word document does not support such wishful thinking.

Russian President Dmitry Medvedev

Russian Newsweek published the document in May, along with a Feb. 10 cover letter to Medvedev from Russian Foreign Minister Sergei Lavrov. While the foreign ministry did not dispute the authenticity of the document, neither it nor the Kremlin has issued it formally. This contrasts with Russia's military doctrine, which was released officially in February.

Unlike the foreign policy document, the military doctrine was not greeted warmly in the West, given its clear anti-Western tone. According to the doctrine, the top dangers to Russia are NATO's enlargement and its efforts to take on "global functions carried out in violation of the norms of international law."

Other dangers include deployment of foreign (i.e., American) troops in states bordering Russia and strategic missile defense, which would "undermin[e] global stability and violat[e] the established correlation of forces in the nuclear-missile sphere."

The foreign policy document, by contrast, is a more polished, economically focused paper that largely -- but not entirely -- avoids such bellicose rhetoric. Yet a close reading makes clear that Russia's foreign policy objectives align closely with those reflected in the military doctrine.

For example, the foreign policy document seeks the "abandonment by the United States of unilateral actions aimed at deploying in Europe elements of a global missile defense that are capable of undermining Russia's deterrence potential, in favor of forming a 'missile defense pool' of interested states.

It seeks to revive the noxious European Security Treaty proposed by Medvedev last year, which would create an architecture that would subsume NATO and the Organization for Security and Cooperation in Europe and succeed in the "containment of NATO's expansionist activities."

It also emphasizes cooperation with European Union member states that are "positively disposed toward the Russian Federation, primarily the Federal Republic of Germany, France, Italy, and Spain" -- as opposed to the newer, eastern members.
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Overall, the foreign policy document clearly supports establishment of a Russian sphere of influence, emphasizing the need to "consolidate the CIS (post-Soviet) area" and the imperative "actively to counter . . . attempts by forces outside the region to interfere in Russia's relations with the CIS countries."

It calls for bolstering the Russia-led Collective Security Treaty Organization and consolidating Russia's Black Sea Fleet presence in Ukraine's Crimea and argues for the promotion of Russian language and culture in the countries along its borders.

It talks about providing "high-technology" energy assistance to the Georgian separatist region of Abkhazia but makes no mention of Georgia itself. So much for that country's territorial integrity.

Latvia, Lithuania and Estonia should be especially concerned about Russia's plans to expand its economic presence in the Baltic region "in light of the sharp fall in their investment attractiveness for countries of the E.U. and the substantial decline in the value of their national assets."

If assets in these countries are unappealing to European investors, one can only assume that Russia's interest is driven by a desire to reassert control over them through economic means. Indeed, a common theme of the document is the use of Russian money to buy up critical assets in other countries.

For example, the document seeks to "promote the consolidation of Russian business in strategic sectors of the Romanian economy"; it calls for drawing Ukraine "into the orbit of economic cooperation with Russia." It also pushes for a consortium to manage and develop Ukraine's gas-transportation system and the "acquisition by Russian investors of controlling shareholdings in major Ukrainian enterprises."

From the United States, the document seeks ratification of the Nuclear Cooperation Agreement, which President Obama recently resubmitted to Congress, the lifting of unilateral sanctions on Russian enterprises and greater bilateral investment, along with the lifting of the Cold War-era Jackson-Vanik amendment and the granting of most-favored-nation status.

It offers nothing in return. It praises Obama's interest in "multilateralism" but warns against the "weakening" of his political position in the United States, which could open the door to those who want to "turn back the clock" and presumably take a less friendly approach toward Moscow.

Meanwhile, the document promotes continued collaboration with Iran "across a broad spectrum of issues," including cooperation on nuclear energy, and greater military cooperation with the junta in Burma as well as increased arms sales to Latin America and the Caribbean.

This foreign policy document is not pro-Western at all. The officially released military doctrine may be a crude expression of Russian intentions, but the more nuanced, unofficial foreign policy document differs little in substance. During Medvedev's visit, no one should mistake this foreign policy document as reflecting a kinder Russia.

Russia under Medvedev remains a country with which we can still get some things done. But vast differences in our interests and values remain. They should not be swept under the rug.

Source: The Washington Post

Small Victory In The Fight Against Global Cybercrime

NEW YORK, NY -- At the Kiev offices of Innovative Marketing Ukraine, hundreds of programmers, translators and database engineers created a software product that made the company a world leader — an exceptional achievement in the impoverished former Soviet republic.

Analysts are using a wide range of tools to identify potential attacks.

But the way the company made its multimillion-dollar profits is nothing to celebrate, according to the criminal charges its owners now face in a district court in Chicago.

Innovative Marketing, say investigators and Internet-security researchers, was one of the biggest and cleverest propagators of "scareware" — programs that run fake scans on computers of unsuspecting users and then claim to find viruses that can only be removed by downloading some software.

Except the viruses don't exist and the software — which can cost between $30 and $70 — is either useless or can infect the computer itself.

Scareware is one of the fastest-growing and most prevalent types of Internet fraud. Security-software firm McAfee says it saw a 400% increase in incidents reported last year and predicts the use of scareware will be the most costly online scam in 2010, infecting around 1 million computers per day and bringing in illegal global profits of over $300 million.

Charges against Innovative Marketing, run by Swede Bjorn Daniel Sundin and Indian-born Shaileshkumar Jain, put it squarely in the frame as one of the leading perpetrators of the scam.

Sundin and Jain are yet to appear before the Chicago court, which on May 27 charged them with computer fraud and wire fraud, but two months before that indictment they had already been ordered to pay $163 million by a court in Maryland by a default judgment in a civil suit brought against them by the Federal Trade Commission (FTC).

The FTC case was a rare victory in the fight against cybercriminals, who use lax law enforcement in countries like Ukraine to stay beyond the reach of the law. "This is one of the largest Internet-based fraud cases the FTC has ever prosecuted," says Ethan Arenson, an attorney at the FTC who led that investigation. "[Innovative Marketing] were the biggest players in scareware operations for a long time."

According to the FTC, in 2003, Innovative Marketing began peddling hundreds of antivirus products under names such as WinAntiVirus and DriveCleaner. Misleading advertisements placed on websites — including those of the National Hockey League, the Economist magazine and Major League Baseball — were used to automatically launch the bogus scans before directing the user to purchase the malicious software.

After receiving more than 1,000 complaints from computer users who had been duped, the FTC began tracking the suspects through shell companies set up around the world. A major breakthrough came when Dirk Kollberg, a researcher with McAfee in Germany, decided to investigate Innovative Marketing's servers in 2008, after discovering that some of its ads were being used to automatically download software without the user's consent.

Astonishingly, the company's servers were not password-protected, meaning the information they held was publicly available. The data gave Kollberg an insight into the inner workings of the company and its products. What he saw convinced him that, behind its smart logo and customer-care hotline, Innovative Marketing was producing and selling fake antivirus software on a massive scale.

Using figures obtained from the servers, Kollberg calculates that the alleged scam scored $180 million in sales in 2008 alone. His findings helped the FTC build its case against the company.

Attempts to crack down on the scareware industry are hamstrung by the fact that many of the companies are run out of countries with weak legislation, ineffective law enforcement and corrupt officials. Paul Ferguson, a threat researcher at California-based Trend Micro, says a number of major threats have emanated from Ukraine, including the Zeus trojan, which steals bank-account details and ran rampant in early 2009.

According to Ferguson, the shifty business is run by organized criminal gangs who trade control of infected computers — and the information stolen from them — for cash "like at a bazaar." "It's like the Wild West," he says. "There's no sheriff."

Ukraine is slowly waking up to the need to take on its cybercriminals. The Interior Ministry set up an anticybercrime unit last year, but according to unit leader Ruslan Pakhomov they are fighting an uphill battle. Pakhomov says he lacks vital resources and laments that judges and prosecutors don't have the knowledge they need to bring cases to a conviction.

And in a country where the average wage is a miserable $200 a month, young computer specialists are queuing up for work wherever they can find it — even if it's at a scareware company. "There are lots of talented, well-educated programmers, but there aren't enough jobs," says Pakhomov. "They try to find a place to use their skills."

According to profiles posted on the LinkedIn careers networking website, former Innovative Marketing staff are now working at leading banks and consulting companies, while others have moved to another Kiev-based antivirus software company. Innovative Marketing's former bosses, meanwhile, are facing their day in court.

According to the U.S. Department of Justice, Sundin is believed to be in Sweden, while Jain is thought to be in Ukraine and is listed as wanted by Interpol. A third defendant from Ohio is expected to present himself for arraignment at the Chicago court at a later date.

As far as anyone can tell, Innovative Marketing shut its doors last year, but Ukraine's Interior Ministry says it could still be operating from another location. McAfee researcher Kollberg says many of the scareware scams traced to the company are still running, although it's difficult to tell who is behind them now.

"If you have a business and you're making hundreds of millions," he says, "why would you just give it up?"

Source: Time

Ukraine Wishes South Stream ‘Peaceful Death’

KIEV, Ukraine -- South Stream, a gas pipeline backed by Moscow that would allow Gazprom to sell gas directly to Europe while bypassing Ukraine, has lost its raison d’ĂȘtre since Kiev started to normalise relations with Russia, according to one of the country's top advisers.


Andriy Fialko, foreign policy advisor to the president of Ukraine, said he wanted the project "to peacefully die".

Speaking at a round table organised by the European Policy Centre (EPC) on Friday (18 June), he said South Stream would represent a key test for Ukraine-Russia relations.

The new Ukrainian leadership sees itself as a strategic partner for Russia and it would make no sense for Gazprom not to use Ukraine's gas pipeline infrastructure, Fialko explained.

Referring to the South Stream project, he said it was "disappointing" to see "other strategic partners" strike deals which harmed Ukraine's interest without first consulting Kiev.

He added that the same applied to Nord Stream, an undersea pipeline bringing gas directly from Russia to Germany, the construction of which began recently (EurActiv 08/04/10), as well as "other projects".

Asked by EurActiv what Kyiv would do if Russia were to go ahead with the construction of South Stream, Fialko said: "I think one can safely say that it will seriously affect the readiness to go ahead with certain bilateral projects, if this is not addressed."

Asked to name such projects, he said he would not do so at the moment. Such projects were discussed, but for the time being, the question was hypothetical, he said.

"Our hope is that South Stream will peacefully die," he said.

Asked if Kiev had received indications from the Russian side that the pipeline could be scrapped, he said that this was not the case, but "financial realities" and developments such as the oil spill in the Gulf of Mexico could help to change Moscow's mind.

Fialko also indicated that the EU had a serious stake in the gamble, as Ukraine had an agreement with the Union to upgrade its gas transportation system. However, he said there was no commitment from the EU side or the Russian side as to how much gas would be pumped through that system.

"It would be a very extravagant exercise, particularly under the current economic situation, to invest two or three billion dollars in upgrading dramatically this potential, with the result of having 40% less gas pumped through. So we need reassurances from both sides, and this is not a caprice, but a necessity," concluded the policy adviser to the Ukrainian president.

Source: EurActiv

Sunday, June 20, 2010

Visa-Free Travel From Ukraine

TEL AVIV, Israel -- The cabinet on Sunday approved a proposal by the foreign and tourism ministers to cancel the mutual tourist visa requirement between Israel and Ukraine.

Israeli Tourism Minister Stas Meseznikov

The plan, which has been discussed for a year, is expected to raise the numbers of tourists from the Ukraine.

At the meeting, Tourism Minister Stas Meseznikov argued for the change, noting that the Tourism Ministry has been promoting tourism in the Ukrainian market for several years.

However, obtaining a tourist visa in a procedure that is both cumbersome and protracted, he said, and prevents the realization of the tourism potential from the Ukraine to Israel.

Prime Minister Binyamin Netanyahu expressed his support for the visa cancellation and noted that the relevant ministries should work implement it. The visa cancellation will go into effect after an agreement is signed by both countries’ foreign ministers subsequent cabinet ratification.

“Given that with every 100,000 additional tourists, about 4,000 new jobs are created and about $200 million injected into the economy, this is a decision with important economic and social implications for the economy,” said Meseznikov.

“Russian tourism alone has already created thousands of new jobs and brought in hundreds of millions of dollars into the Israeli economy since the cancellation of the visa requirement in October 2008.”

In 2009 73,500 people visited Israel from the Ukraine.

According to Tourism Ministry estimates, the number would reach 200,000 a year once the visa requirement is dropped.

The cancellation of visas for Russians produced a significant increase in incoming tourists, from about 193,500 in 2007 to 402,000 in 2009.

The Tourism Ministry sees countries from the former Soviet Union, in particular Russia and the Ukraine, as having great potential for incoming tourism.

Before the visa requirement from Russia was canceled, organized tour groups from Russia and Eastern Europe were allowed to visit Israel for one day, a ministry spokeswoman explained.

This option still exists today, but now, having been exposed to Israel, it is easier for these day-trippers to come back for a longer visit.

The cabinet decision was greeted warmly by most local tourism operators.

“The cancellation of visa requirements from Ukrainian tourists who wish to visit Israel will contribute to the development of incoming tourism to Israel,” read a statement from the Incoming Tour Operators Association.

“This decision will enable the realization of the Ukrainian tourist potential for travel, vacations and pilgrimages.”

Not everyone was impressed by the decision, however. Joseph Fischer, owner and executive board member of IDB Tourism, said that the decision was at heart a political one and not an economic one and that the prospects of Ukrainian tourism are over-hyped.

“The tourism minister is a man with a clear political agenda,” said Fischer. “As a high-ranking figure in Israel Beiteinu, the minister is committed to his constituents.

By promoting tourism, he is actually assisting Ukrainian immigrants to Israel to go home on visits without having to pay for visas.”

Fisher said that Ukraine, which was hard hit by the global economic crisis, is not a lucrative market for the Israeli tourism sector and that most of the Ukrainian visitors who come to Israel, do so on day trips, without leaving their money behind in Israeli hotels and shops.

“I would urge the minister to divert his attention to markets which offer quality tourism potential to Israel,” said Fischer.

Source: The Jerusalem Post

Russian Ghosts Haunt Storied Ukrainian Port

SEVASTOPOL, Ukraine — Glory, tragedy and an army of ghosts haunt this great naval base that commands the Crimea and surrounding Black Sea.

Warfare at its most courageous and tragic: The Charge of the Light Brigade in 1854 during the Crimean War.

I had been invited by Britain’s 8th Hussars to commemorate the 150th anniversary of their unit’s participation in the fabled Charge of the Light Brigade at Balaclava. Alas, a serious injury prevented me from going to Crimea, a place I had studied and dreamed about since boyhood.

As I sailed Sevastopol’s magnificent natural harbour, I was gripped by the drama of the place.

In 1854, a British, French, Turkish and Sardinian force attacked Crimea to stop the expanding Russian Empire from gobbling up the dying Ottoman Empire.

The Crimean War was a nightmare for the soldiers involved. Disease killed four times more than combat, provoking a refined lady named Florence Nightingale to open Britain’s first field hospital at Balaclava.

Sevastopol was besieged for 349 days. Its bastions and redoubts were brilliantly defended by Russian soldiers and sailors. Combat was brutal. The British hogged most of the military glory, but the French really won the siege.

In September, 1855, French Zouave elite infantry in baggy red pants, blue vests and tasseled hats finally stormed the great Malakoff Redoubt, breaking Russian defenses.

Near the British supply base at Balaclava, Lord Cardigan’s Light Brigade misunderstood its orders and charged to its doom against Russian guns.

Nearby, in a now forgotten action, Gen. Scarlett’s Heavy Brigade staged a brilliant charge against massed Russian cavalry.

Pictures painted by the great Victorian artist, Lady Butler — Charge of the Heavy Brigade, and the famous Thin Red Line of Highlanders defending Balaclava — hang in my home.

Most of Sevastopol was destroyed by British-French bombardment. Eight decades later, in 1941, Germany attacked Crimea. The ablest German general, Erich von Manstein, led his 11th Army into Crimea and besieged Sevastopol, defended by 236,000 Soviet sailors and soldiers.

The Germans used enormous siege guns against the port’s fortifications, including “Thor,” a monster 800-mm railroad gun, and a 615-mm mortar, “Schwerer Gustav.” Both had been secretly built to crush France’s Maginot Line forts.

Sevastopol held out for nine months of ferocious fighting in which almost all the Soviet defenders died or became prisoners. I explored the ruins of the Maxim Gorky 305-mm battery which fought to its last round, then was blown up. Photos of its valiant defenders hang on its concrete walls.

On May 9, 1944, the 2nd Soviet Guards Army recaptured Crimea and Sevastopol. Ninety-eight percent of the city lay in ruins. Soviet leader Stalin proclaimed Sevastopol a “Hero City of the Soviet Union,” along with Leningrad and Stalingrad, and ordered it rebuilt to its former neo-classical beauty.

Sevastopol was just back in the news. Ending a rancorous dispute with Moscow, Ukraine’s new government renewed Russia’s lease on the Black Sea Fleet’s Sevastopol base until 2042 in exchange for $40 billion worth of deeply discounted natural gas. Ukraine had previously been unable to pay its national heating bills, facing a Russian shut-off in winter.

I observed morning formation aboard one of the sleek Russian destroyers, bristling with anti-ship and anti-aircraft missiles. Watching the sailors raise their fleet’s historic battle standard, the blue Cross of St. Andrew, seemed a fitting tribute to Sevastopol’s suffering.

Ukraine is doing surprisingly well. The new government of Viktor Yanukovich says Ukraine will not join NATO but rather maintain close relations with Russia. All the empty sound and fury of the former pro-western Orange government is unlamented by many Ukrainians who crave political peace. So far, Ukrainians and Russians seem to be getting along.

Warm, sunny Sevastopol and Odessa are becoming Ukraine’s Riviera. The scenic little port of Balaclava, with its former Soviet underground submarine base that housed nuclear weapons, is thronged by pleasure boats and yachts.

Sevastopol has belonged to Ukraine since the 1954. But its soil is soaked deep by Russian blood, and in spirit, Russian it will always remain.

Source: Toronto Sun

Saturday, June 19, 2010

Ukraine Mulls Gas Project With Gazprom, Vows Secure Supplies

KIEV, Ukraine -- Ukraine is “potentially interested” in a joint project of state-run energy company NAK Naftogaz Ukrainy and OAO Gazprom that might include an exchange of assets, Prime Minister Mykola Azarov said.

Ukraine's PM Mykola Azarov

Russian Prime Minister Vladimir Putin offered to merge the country’s gas monopoly Gazprom with Naftogaz at a meeting with Azarov on April 30. Naftogaz moves about 80 percent of Russia’s Europe-bound gas exports via its Soviet-era transportation network and Russia has sought control over it.

“Ukraine is interested in getting access to gas and oil reserves of Russia because we don’t have such deposits and resources,” Azarov said in an interview in Luxembourg. “The Russian counterparts are interested in participating and running our gas transportation system and its modernization.”

The idea “is being developed and pondered by the networks of Gazprom, Naftogaz and corresponding ministries,” Azarov said, adding that a decision will be made “when we reach a mutually beneficial compromise.”

Naftogaz, which currently pumps about 100 billion cubic meters of gas a year, is seeking to upgrade its pipelines. The system capacity totals 142 billion cubic meters of gas a year and the company wants Russia and the European Union to cooperate on upgrading the pipelines, which may cost as much as $4 billion, its chief executive officer said last month.

Russian Relations

Ukraine has focused on relations with Russia since President Viktor Yanukovych took office in February and formed a cabinet loyal to him in March.

Two months ago in Kiev, Putin suggested forming a nuclear energy holding company between the two former Soviet Union republics after Russia agreed to cut gas prices for Ukraine by 30 percent through 2019.

The warming of ties came after Russia cut gas supplies to Ukraine in 2006 and 2009, when the country was governed by President Viktor Yushchenko, who took office on promises to join the North Atlantic Treaty Organization, or NATO.

A dispute with Russia in January last year left more than 20 countries in Europe without gas for almost two weeks in freezing temperatures.

“There’s no reason for the European consumers to fear any gas disruptions or situations similar to January 2009,” Azarov said. “All we need to ensure is that Naftogaz is having an efficient management and with the stable leadership in the country, with the president and prime minister being one team, we shall definitely prevent any potential hiccup or disruption in gas supplies to Europe.”

He also said Ukraine wants to have close relations with both the 27-nation European Union, which it borders to the west, and its eastern neighbors.

“We believe that building tighter links with eastern partners, including Russia, as well as other countries in the east and tighter relationships with the EU are two vector processes that we’re to pursue, with the final objective of benefiting the Ukrainian economy.”

Source: Bloomberg

Danone And Unimilk Link Up On Russian Dairies

MOSCOW, Russia -- Russian dairy producer, Unimilk, and French and leading global dairy producer, Danone, have agreed to merge their Russian, Ukraine, Kazakhstan and Belarus operations.


The move will see the combined Unimilk-Danone with a 21% share of the Russian dairy market, with more than 18 thousand employees and estimated revenues of about 1.5 billion euro annually.

Danone will take a 57.5% stake in the merged company, leaving Unimilk with 42.5%, with the deal also seeing Danone make an undisclosed cash payment, and providing put options to Unimilk shareholders which will see it take on an additional 1.3 billion euro in debt.

The options will see Danone exercise right of purchase should Unimilk shareholder wish to sell out of the entity according to a Danone statement.

"These options will allow them to dispose of part or all of their shares in the new entity, Danone being able to hold 100% of these shares in 2022. The operation will be accretive to Danone earnings per share starting in 2011."

The merged company will be headed by Unimilk CEO Andrey Beskhmelnitsky, with operations under the charge of Filip Kegels, currently General Manager of Danone
Fresh Dairy Products in Eastern Europe and Central Asia.

Russian First Deputy Prime Minister, Viktor Zubkov, said the announcement would not be likely to lead to monopolization of the Russian dairy market.

“We believe that this is a normal development. There are many other major, medium and small companies, there is a competitive environment."

He added that Danone would bring its experience from European and global markets to the venture and that the announcement was an expression of confidence in Russian agriculture.

"What happened today is a very important event in the life of the agricultural industry in Russia and the CIS countries, because creation of such a major company instills confidence that it will be a modern company with good investments, with modern production."

Source: Russia Today

Thursday, June 17, 2010

Waistline Watch: Dunkin’ Donuts Coming To Ukraine

KIEV, Ukraine -- Dunkin’ Donuts is set to hit Ukrainian streets next year, with five stores opening in Kyiv.

A visitor orders sweet rolls inside a newly opened Dunkin' Donuts cafe in Moscow on May 2.

The coffee and pastry outlet will then spread to other major cities, such as Odesa, Dnipropetrovsk, Donetsk and maybe Kharkiv, according to Kostyantyn Petrov, the Ukrainian businessman who owns the franchise rights in Ukraine and Russia.

Petrov, 38, who hails from Alchevsk in eastern Ukraine, is banking on breaking new ground with an international big name in a country that hasn’t had many fast-food chains with great success, McDonalds being one of the few exceptions.

He said he’s convinced that Dunkin’ Donuts’ “high quality with a modest price” is going to help it succeed where others have failed.

Australian cafe chain Gloria Jean’s Coffee entered the market in late 2007, eventually opening three spots in Kyiv before closing last year during the economic crisis.

Market insiders say Gloria Jean’s failed for a number of reasons. “The right to operate this kind of global franchise is very expensive by itself, and they oblige their owners to open new spots, which is financially challenging,” said Olha Nasonova, a restaurant business consultant.

It struggled to meet chain development commitments, according to experts. The franchise owner went bankrupt and eventually sold rights to other businessman who has now opened stores in Odesa and Lviv.

Moscow-based Petrov is a wealthy businessman with a number of interests across many sectors, including construction, heavy industry and real estate. He runs 10 restaurants in Ukraine and Russia and an entertainment center.

Petrov said he has an equal partner in the venture, whom he refused to name. “We estimate that opening of one store in Kyiv will cost about $200,000,” said Petrov, noting the need to purchase equipment to make the products, train staff and invest in stores.

Petrov, who also owns the franchise for Russia, opened the first Dunkin’ Donuts store in Moscow in May. He said the company would focus on take-away, or to-go, services and hopes to beat its competitors with targeted marketing and modest prices.

Dunkin’ Donuts, he said, will target the “golden youth” aged from 16 to 30 years and plans to focus its advertising efforts on positioning it as “stylish fast food.”

“We anticipate that in Kyiv an average bill will be $6-7, and I think our price for a donut will be less than a dollar,” he added.

The menu for Dunkin’ Donuts will be adjusted to the tastes of local consumers and include coffee from only fresh-roasted Arabica beans, iced coffee drinks, as well as donuts, salads and sandwiches.

The U.S.-based chain sells more than 1.5 billion cups of coffee annually worldwide and 2.5 million donuts daily in 33 countries. Russia became the 33rd, and next year Ukraine will be the 34th.

The return of Dunkin’ Donuts comes 13 years after McDonald’s, the fast-food king with a more comprehensive menu and loyal customer base, first entered the Ukrainian market.

“All the big names, like Burger King, KFC and Starbucks are constantly watching Ukraine, and are waiting for the right moment,” said Andriy Kryvonis, head of the Franchise Association in Ukraine.

However, research shows that Ukrainian consumers still eat out less than other Europeans. According to Euromonitor, a global consumer market consultancy, the food-service volume of coffee sales in 2009 reached 1,026 tons, while retail sales of coffee accounted for 41,638 tons. “Ukraine has not developed a culture of dining out,” reads Euromonitor’s report.

The consultancy noted an 11 percent drop in food-service sales because of the economic crisis, and predicts a growth of only 1 percent per year over the next five years, against a 26 percent increase in retail.

But Petrov is not deterred. “It’s the tastiest coffee in the world,” he boasted. “Within the next couple of years, we plan to have up to 30 outlets in Kyiv.”

Another coffee trend from the West has also emerged in Kyiv in recent weeks, with street vendors popping up across the capital. Oleksandr Luhovsky and Oleksandr Khadgy, baristas with more than 10 years of experience in the coffee business, set up a coffee machine last month on a street in the center of the city.

“People suspect that if we sell cheap coffee in the street, it’s probably not tasty or high quality,” said Luhovsky, “but we give them a pleasant surprise.”

In took only $5,000 and permission for street trading to set up the stall, offering a cup of espresso at Hr 7, a cappuccino for Hr 11 and a latte for Hr 13.

“Such a coffee spot is very warmly welcomed by foreigners that recognize familiar street vending,” said Khadgy. “Our people tend to be cautious before they try it and then become regular customers.”

Source: Kyiv Post

Ukraine City Marks Soviet-Era Stakhanov Movement

STAKHANOV, Ukraine -- The eastern Ukrainian city of Stakhanov is preparing to commemorate the 75th anniversary of the Soviet-era Stakhanovite movement that lionized productive workers, RFE/RL's Ukrainian Service reports.

Aleksei Stakhanov appears in an official portrait, with a coal hammer and miner's lamp, in 1935.

In 1935, miner Aleksei Stakhanov was reported to have extracted 102 tons of coal during one shift -- which was 14 times his quota and determined to be a record amount. He became a Soviet icon of dedicated labor and his "achievement" was used by the Soviet authorities to motivate people to exceed production norms.

Soviet propaganda extolled Stakhanov's achievements and hard workers in all fields were named Stakhanovites if they reached certain production levels.

Stakhanov died an alcoholic in a psychiatric hospital in 1977 and his mining achievements were later said to have been inflated, including in a 1988 article in the Soviet newspaper "Komsomolskaya Pravda."

Local historian Volodymyr Semystiaha told RFE/RL that the Stakhanovite movement was not appreciated by many other workers, as it meant continued pressure on them from authorities to produce more goods or resources in all spheres of industry.

"After a while, other miners and workers began to hate the Stakhanovites," he said.

Many Stakhanovites eventually became victims of Stalinist repression and, after the Soviets' third Five-Year Plan, the movement began to die out.

Semystiaha told RFE/RL that commemorating the Stakhanovite movement in an independent Ukraine is simply for nostalgic reasons.

"Our current government is made of former Communists and Komsomol members," Semystiaha said. "They don't know history. All they know is what was pumped into their heads by the Communist line, the young guard, and the Stakhanovite movement."

The city of Kadiyivka was renamed Stakhanov in his honor in 1978.

Today there are no working mines there, and the surrounding Luhansk Oblast is one of the most economically depressed areas in Ukraine.

Some miners in the area dig for coal in illegal mines that have no safety measures.

Stakhanov officials hope the commemoration of the Stakhanovite movement will provide them with some much-needed funds so they can repair roads and renovate the city's cultural center, where the commemorations for the 75th anniversary of Stakhanov's feat are to take place on August 31, also known as Miners Day.

Source: Radio Free Europe

Is Ukrainian Democracy Really Dead?

KIEV, Ukraine -- As the EU fetes the new government of Ukraine in a string of diplomatic encounters, there is one question on the lips of the EU side that no one has the nerve to ask: is Ukraine still a democracy and does it really aspire to European values?

A quarter of a million people came out on the streets in 2004 in the Orange Revolution.

In view of recent events it would be easy to believe that the spirit that inspired 98 percent of the population to vote for an independent and democratic Ukraine in 1990, and the hope that again inspired 250,000 people to flood Independence Square in 2004, is no more. But is this really so?

Absolute power backed by virtually unlimited financial resources is now in the hands of the president and the people he chooses. Ukraine has become a classic oligarchy, with the opposition offering little more than empty rhetoric. While in power, for whatever reason, the opposition achieved precious little in terms of election promises.

They campaigned vociferously to remove the immunity of parliamentary deputies, but when in power they used their immunity to follow in the footsteps of those before them. Nothing really changed. The ideals of the Orange Revolution were betrayed.

Today, negotiations to raise the ceiling for political parties to enter parliament from 3 percent to 7 percent could ensure that in future just two parties get in. The constitutional checks and balances for a functioning democracy, with a government and an opposition, have already been weakened by the new administration, as deputies brazenly sell their votes to the highest bidder.

The last semblances of democratically elected, party-based politics are fading, only to be replaced by what will one day be a one-party state ruled not by the people, but by a self-elected, self-styled elite, ruled only by the power of money.

Some say Ukraine is simply adopting the Russian model. But who gave the politicians the mandate for such change? Where was the referendum to enable the dismantling of Ukrainian democracy in favour of an oligarchy? There was none. Power has simply been stolen.

The real defence of the constitution should have come from the Constitutional Court. But it has become a mockery and failed to uphold its constitutional obligation to be independent and to offer justice.

The civil courts now administer justice to the highest bidder to the degree that there is little point in seeking justice. The whole judicial system is on the verge of collapse if it has not already failed.

One might expect at least some comment from the EU. But instead it welcomes our new leaders, condoning by its limp rhetoric what is happening. It fights wars in the name of democracy, but says nothing to uphold democratic principles being threatened on their very doorstep.

Corruption is now the only way to get anything done. But the cost of doing real business has reached levels unacceptable to both domestic and foreign investors. So, instead of Ukraine rising to the economic levels predicted in 1990, it languishes in poverty, while those who have bought power divide up the spoils of an ever decreasing cake.

The Ukrainian economy is, according to both the IMF and the World Bank, 30 percent smaller than it was in 1990 after the collapse of the Soviet Union. Some 78 percent of the population now live below the poverty line.

The GDP per capita is only 13.67 percent of neighbouring Slovakia, barely 50 percent of Belarus and only 4 percent higher than Georgia, which is still recovering from war. Shockingly, 34.5 percent of the population would now be happy to emigrate and with negotiations proceeding on an EU visa-free zone, Ukraine could become a major European problem if the status quo prevails.

So, what is the future?

The future offers a number of scenarios. One suggests that the current autocratic government will clamp down on just about everything until the country literally chokes. This would suit those who want to turn Ukraine back into Little Russia with a one party system and absolute power at the centre.

But Ukraine is no Russia and Ukrainians are not as subservient as Russians despite what those in power choose to believe. This leads me to explain a more likely scenario - one that is born from Ukraine's turbulent past.

For 350 years before independence, Ukrainians were forced to live at somebody else's behest. We were abused, deported, enslaved and millions were starved to death. We were invaded, sent to prison camps, gassed in concentration camps and subjected to depravities that even Hollywood has yet to depict. Yet we survived.

Had we not tasted independence and freedom, I dare say the plans of those in power would once again subject us to more indignity. But unlike our northern neighbours we have tasted freedom, we have voted for democracy, we have enjoyed freedom of speech and freedom of assembly.

We have mobile telephones and the Internet. We can communicate with the outside world. About 14 million of us travel abroad each year and have seen and tasted what freedom means. We can see the real benefits of democracy just across the EU border.

My forecast is that people will express themselves in non-violent ways. Already we have resurgence in grassroots civic society groups, which have sprung up to defend Ukraine's young democracy. Whether it is by peaceful street protests, internet referenda or strike action, the people of Ukraine will prove they are not ready to be silenced.

Even if the West continues to ignore our plight, the voices of protest will continue. They will last until the government understands that Ukraine is a democracy ruled not by an oligarchy of 450 people, supported by corrupt judges, but by a population of 46 million, the same 46 million that voted for an independent democracy in 1990.

Ukrainian democracy is not dead: it's just waking up to the reality of what it means to lose it.

Source: EU Observer