[Ohio UZO News] WSJ; FT; KP; TOL; links: CSIS transcript, Belarus interview

[Deychak, Orest]

Wall Street Journal
Politics & Economics: Ukraine Wins Russian Assurance To Forgo Steep Gas
Price Increase 
By Alan Cullison
17 August 2006
The Wall Street Journal
A4
MOSCOW -- Ukraine's new pro-Russian prime minister said that he has secured
Moscow's assurance that it will forgo any steep price increase for natural
gas this year, and that he is moving toward an agreement that would
guarantee deliveries for next year as well. 
Prime Minister Viktor Yanukovych's progress should allay fears of another
disruptive gas dispute between Moscow and Kiev; a January spat led to a
supply shutoff and sent thermostats falling in Europe. The tentative accord
announced yesterday also hints at the benefits of warm relations with the
Kremlin when it comes to securing energy: Mr. Yanukovych's rapid progress in
gas talks contrasts with that of the previous government, which was
dominated by Western-leaning members of the Orange Revolution who were
pressured by Moscow to pay sharply higher prices. 
Ukraine pays $95 per 1,000 cubic meters for gas -- or roughly $2.60 per
million British thermal units -- but Russian gas giant OAO Gazprom had told
Kiev that prices could jump to $230 next year. Natural gas has traded near
$7 per million BTUs in recent weeks on U.S. futures markets. 
In his first trip abroad since being named prime minister two weeks ago, Mr.
Yanukovych, whose pro-Russian political party performed well in
parliamentary elections this year, said he managed to stave off radical
price increases, which analysts say would be ruinous to Ukraine's
energy-hungry economy. 
"We don't think there will be any race upwards in the gas price," Mr.
Yanukovych told reporters at the Black Sea resort city of Sochi, where he
was warmly greeted by Russian President Vladimir Putin. "In the course of
negotiations, I didn't get the feeling that our partners wanted to
supercharge the situation." 
Officials said it is too early to name exactly what price would be paid in
2007. But Russian Prime Minister Mikhail Fradkov said terms for the winter
would be "based on the agreements we reached in January" -- suggesting the
price would stay around the $95 level agreed at that time. 
This year Moscow accused Ukraine of laying the groundwork for a new gas
crisis by failing to build up its winter supplies fast enough. Ukraine's
natural-gas storage facilities are important to the smooth supply from
Russia to Central and Western Europe in the peak demand season. 
Mr. Fradkov said yesterday that the parties had resolved the storage
problem, too, and would be increasing the natural-gas reserves in Ukraine's
underground facilities by 24.5 billion cubic meters, a hefty buffer. 
Analysts and diplomats have watched closely to see how far Mr. Yanukovych
plans to go in fulfilling campaign promises to repair relations with Russia.
Ties between the nations were badly strained by 2004's Orange Revolution, a
popular revolt that kept Mr. Yanukovych from the presidency after a court
ruled his election had been tainted by fraud. His rival, Viktor Yushchenko,
was subsequently elected. 
Like many prominent Ukrainian leaders, Mr. Yanukovych so far has taken a
multivectored course. He campaigned actively against Ukraine's entrance into
the North Atlantic Treaty Organization but now says he would allow the
question to be settled by a referendum. His newly appointed energy minister
said Ukraine will continue to use a murky trading company criticized in the
West, RosUkrEnergo, as a go-between in gas deals with Russia, but Mr.
Yanukovych has promised that all dealings with the company will be
transparent. 
Last week he signaled a weakening resolve to pursue economic
liberalizations, saying Ukraine's entrance into the World Trade Organization
should be delayed until next year. Moscow would see Ukraine's entrance into
the organization as an affront, since its efforts were recently stymied in
talks with the U.S. 
But in Moscow, commentators have expressed some disappointment with Mr.
Yanukovych, because they think he has been backsliding on a promise to make
Russia a second official language of the Ukrainian government. In a recent
trip to the Russian-dominated Crimea in southern Ukraine, the prime minister
was reported to have said such a proposal is "unrealistic at the current
stage." And Mr. Yanukovych has resisted proposals to resolve Ukraine's gas
debts by ceding control of the country's gas-transport system to Moscow. 
Ukraine's economy, while growing rapidly, depends on heavy industries that
are largely unreformed since Soviet times. Any rise in gas prices above $120
could put a serious dent in economic growth, analysts say. 
Financial Times
Ukraine's healthy economy refuses to succumb to years of political turmoil
The country's new premier must push through reforms to secure longer-term
stability, reports Roman Olearchyk. 
By ROMAN OLEARCHYK
16 August 2006
Page 6

Politically the last few years in Ukraine have been characterised by the
turmoil of a disputed presidential election, a popular revolt and - more
recently - months of gridlock following the indecisive outcome of a general
election. Economically, however, the country has experienced a more benign
time of healthy growth and rising foreign investment. 
In the first seven months of this year gross domestic product increased by
5.5 per cent, up from 3.7 per cent in the same period in 2005, according to
official statistics released yesterday. The data underscores a revival in
the rate of growth, which touched a low of 2.6 per cent in 2005 after
peaking at 12 per cent in 2004. 
Growth has been driven by a combination of rising world prices for exports,
such as steel, and increased domestic demand. Alongside steel, Ukraine -
once an agricultural and industrial power-house in the old Soviet Union - is
strong in chemicals, agriculture and machine building. Construction,
transportation, textiles and food manufacturing have also grown markedly in
recent years. 
"The economy has surprisingly continued to perform quite well," said
Hans-Joerg Rudloff, chairman of Barclays Capital, who also has personal
investments in Ukraine and serves on President Viktor Yushchenko's foreign
investment council. 
For Viktor Yanukovich, Ukraine's newly appointed prime minister, the
positive economic data is both a blessing and a challenge. While he has
inherited a pretty bullish economy, his government also faces the difficult
task of pushing through unpopular structural reforms needed to secure
longer-term growth and stability. 
Among the issues which need addressing are rampant corruption and an overly
complex tax system. Ukraine also needs to broaden its economic base and
reduce its over-reliance on sectors such as steel. The country's dilapidated
infrastructure, is also in need of urgent improvement. Ukrainians, many of
whom live on less than Dollars 200 (Euros 157, Pounds 106) a month, are also
looking to the government for the benefits of years of economic growth. 
The compromise struck between the rivals Mr Yushchenko and Mr Yanukovich,
under which the president's pro-western policies are largely preserved, has
given some investors cause for optimism that the prime minister will make
progress on the domestic front. 
"The feeling that many investors have is that there is now a great
opportunity," said Edilberto Segura, chief economist at Sigmableyzer, a
private equity fund manager. The appointment of Mr Yanukovich, who has
strong links to the business community but is seen as close to Russia, was a
welcome resolution to months of political crisis, he said. 
Foreign investors have stepped up their activities in Ukraine recently.
Foreign direct investment rose to Dollars 7bn last year, up from around
Dollars 1bn in previous years, with food manufacturing, banking and
agriculture among the favoured sectors. 
Many early bird investors and multinationals, such as Nestle, Coca-Cola, AES
Corporation, the US-based power company, and leading European cement
manufacturers, sneaked into Ukraine years ago. They have since been followed
by companies such Austria's Raiffeisen banking group and Leoni, the German
automotive suppliers. 
"There are very few markets left in the world where you can produce 30 per
cent growth year-on-year," said Jorge Zukoski, president of the American
Chamber of Commerce. 
But while the potential rewards are big, there could also be pitfalls ahead
for investors. There are fears that inflation could spiral if Russia insists
on raising prices for energy further. Natural gas prices were nearly doubled
earlier this year by Russia. Others worry that Mr Yanukovich will not be
able to enact reforms fast enough. 
"The moment of truth has come for Ukraine. If positive results do not become
visible very fast, Ukraine and any government running the country will be in
deep trouble," warned Mr Rudloff. 
Kyiv Post
Editorial
August 17, 2006
Echoes of Kuchma
A few weeks into the new cabinet led by Viktor Yanukovych and there is an
eerie, worrying feeling which stems from the actions and statements of the
new team. The concern is that the progress made in several areas by the
Orange authorities is being rolled back 
A few weeks into the new cabinet led by Viktor Yanukovych and there is an
eerie, worrying feeling which stems from the actions and statements of the
new team. Not surprising, really, as most of them served under the previous
president, Leonid Kuchma. The concern is that the progress made in several
areas by the Orange authorities is being rolled back. At least the Orange
authorities rightfully resold the Kryvorizhstal steel mill, initially sold
for a pittance, and initiated closer ties to the West. But now Yanukovych
ally Rinat Akhmetov has reiterated he intends to challenge the sale in the
European Court. With the Orange cabinets, gone were the Kuchma days of
playing the West off against Russia and Ukraine standing still. But with
Ukraine now on the verge of joining the WTO, with Kyrgyzstan the only
country left with which Ukraine has to sign a protocol, Finance Minister
Mykola Azarov has said that membership does not have to go ahead promptly.
He said Ukraine can join later and not in 2006, as planned. It could be
posturing to Russia so that Ukraine does not enter first and so gain an edge
on its neighbor. Azarov has already spoken of the return of three or four
privileged special economic zones, cancelled by the Yulia Tymoshenko
government. New Fuel Minister Yuriy Boyko has said that the role of shady
energy middleman RosUkrEnergo is a positive thing in keeping gas prices
stable. He should know, as he had a role in the company's creation. There
has even been talk of the hryvnya being devalued, a move which would help
Donbass exporters. Boyko has also said that the Odessa-Brody oil pipeline,
intended to take oil from the Caspian Sea to Europe, will not be used in
this direction for another two years, but used to take Russian oil to the
Black Sea. These are examples of national interests suffering. Yanukovych
even resembles Kuchma in statements on Russia. Last week Yanukovych said
both countries were competitors and ties with Moscow would always be
difficult, assuring that Ukraine could build closer ties with both the West
and Russia. This is reminiscent of Kuchma's strategy of paying lip service
while actually doing what he thought was in his own - and not Russia's -
best interests. The danger is Ukraine will not improve relations with Europe
but stagnate as it did under Kuchma. 

TRANSITIONS ONLINE: 
Yushchenko: Constructing an Opposition
by Taras Kuzio
11 August 2006 

As fickle as the recent moves of Yushchenko and his party may look, they
highlight Our Ukraine's deep-seated motivations. 

The Ukrainian parliamentary elections in March were the freest in the
country's history and one of the most free and fair polls yet held in the
Commonwealth of Independent States. But this milestone in Ukrainian history
was overshadowed by a four-month parliamentary and political crisis that was
overcome only at the beginning of August with the signing of a deal that saw
President Viktor Yushchenko's Our Ukraine party enter a "National Unity"
coalition with the top vote-getter, the Party of Regions, headed by defeated
presidential candidate Viktor Yanukovych. The Socialist Party is also part
of the new coalition, and the political bloc of Yulia Tymoshenko, Our
Ukraine's Orange Revolution partner, goes into opposition.

Our Ukraine's maneuvers saw Yushchenko approving the candidacy for prime
minister of the man conventionally dubbed his arch-rival. The real rivalry,
however, is not Yushchenko against Yanukovych; it is the personal and
ideological divide between Yushchenko's party and the person and political
movement of the woman who stood at his side during the Orange Revolution. 

Yushchenko and Our Ukraine did not expect to win the elections. Surveys
clearly put Yanukovych's Party of Regions in the lead. But they never
expected to finish a distant third behind both Regions and the electoral
bloc headed by Tymoshenko, Yushchenko's Orange Revolution comrade, first
prime minister, and now rival to both him and Yanukovych. After the voting,
a leading figure in Our Ukraine, Roman Bessmertny, told the Stolychnyi
Novosti newspaper, "The elections have taken place and we should respect
their results." Instead, the president and his stunned supporters refused to
adhere to the informal agreement among the "orange" forces that whichever
political grouping in their camp won the most votes - Yushchenko's or
Tymoshenko's - would have the right to nominate the next prime minister.

Our Ukraine's unwillingness to accept the election outcome led directly to
four months of political and constitutional deadlock. And the party's
solution to the dilemma was to go into "opposition" while placing some of
its leading figures into the National Unity coalition government: a
"semi-pregnant" position, as the leading weekly Zerkalo Tyzhnia described
it. Such a move will not fool orange voters. Yet the party's decision to
adopt an awkward straddle between the opposition and government did not
arise from short-term political considerations alone, for the party has
never been a true opposition force.

OUR UKRAINE'S TWO-FRONT STRATEGY When they realized how badly the elections
had turned out for them, Yushchenko and Our Ukraine made a decision that set
the course for stalemate. Instead of living with the outcome of the voting
and putting forward Tymoshenko for the premiership, they began simultaneous
talks with the Tymoshenko bloc and the Party of Regions. In its talks with
Tymoshenko's people, Our Ukraine sought to prevent her from returning to the
premiership, or failing that, to win the post of parliamentary speaker for
Our Ukraine's candidate, Petro Poroshenko, a major figure in or near the
party since its founding in 2001. Personal animosity between Poroshenko and
Tymoshenko plagued the first year of the Yushchenko administration, and many
observers felt that the placing of the two rivals in high office would up
the odds of a quick government collapse.

Our Ukraine switched roles when talking with Yanukovych's side, agreeing to
a deal to retain Prime Minister Yuriy Yekhanurov in office while Regions
would be allowed to control the speakership. This would not have been too
bitter a pill for Regions to swallow, as they saw Yekhanurov as someone they
could work with, above all, someone opposed to further "reprivatizations" of
one-time state assets that had fallen into the hands of the wealthy
businessmen who are Regions' major patrons. 

Though Our Ukraine had come in third in the voting, the party believed that
having the president's backing would compensate for its election failure and
allow it to hang on as the dominant political force.

The Socialists' defection from the orange camp in July and the formation of
the "anti-crisis coalition" comprising the Party of Regions, Socialists, and
Communists, without Our Ukraine, undermined this strategy and moved the
crisis into a new phase that resolved itself only with the formation of the
"National Unity" coalition. 

The creation of this coalition in early August marks a return to the
political landscape of the early 1990s after Ukraine became an independent
state. The country's first president, Leonid Kravchuk, sought to align
himself with the so-called national democrats - center-right parties, such
as Rukh, who favored building a strong state ahead of reform - to support
his statist policies in the face of internal and external threats. National
democrats divided over their attitudes toward cooperating with Kravchuk.
Rukh underwent a split, one wing going into opposition while hewing to the
president's overall policies - a stance known in Ukrainian political jargon
as "constructive" or "loyal" opposition - while another wing fully aligned
itself with the president. Our Ukraine's split this summer came about in a
similar manner, with one "constructive opposition" wing against cooperation
with Yanukovych and another faction willing to join a Yanukovych-led
government. The party's deep d ivision showed clearly in the parliamentary
vote on Yanukovych's candidacy for the premiership on 4 August, when only 30
of Our Ukraine's 80 deputies voted for him. 

Today, as in the early 1990s, those in Our Ukraine, such as Yushchenko, who
countenance cooperation with Yanukovych do so believing that national
democrats and "centrists" need to work together to unite Ukraine, bringing
together the western and central areas where the national democrat power
base lies with the eastern and southern strongholds of the
business-oriented, typically Russophone "centrists." 

LOYALTY TEST Our Ukraine was established after parliament removed Prime
Minister Yushchenko from office in 2001. The aim was to unite
national-democratic and liberal parties against the growing authoritarianism
of President Leonid Kuchma's administration. Yet Kuchma did not see Our
Ukraine as a threat, because its leaders - including Poroshenko, who brought
another "loyal opposition" party, Solidarity, and enticed business interests
into Our Ukraine's fold; Yushchenko; and former parliamentary speaker Ivan
Pliushch - made clear they were not like the true opposition represented by
Tymoshenko's party and the Socialists. Our Ukraine sought out a niche
between pro-regime and anti-regime parties.

 National democratic forces in Ukraine have never been comfortable
oppositionists. Their qualms in the early days over taking overly critical
stances against the presidential administration can be partially understood
by looking at the political tensions of the day. Under Kravchuk and during
Kuchma's first term, the new state was threatened by internal and external
threats from the Communist Party and Russia respectively, which refused to
accept Ukraine's sovereignty or borders. The strategic priority for national
democrats was state and nation building; that is, they were first and
foremost statists rather than reformers, as the 1992 split of Rukh into
"constructive oppositionists" and strong supporters of Kravchuk's
state-building policies shows. 

These two poles of the national-democrat camp have always ruled out a
position of real opposition. Not until the "Kuchmagate" affair of 2000-2001
would Ukraine see its first true opposition movement, embodied in
Tymoshenko's supporters and the Socialists.

RELUCTANT REBEL The emergence of Tymoshenko as a leader of the protests
against Kuchma over his alleged involvement in the murder of journalist
Georgy Gongadze deepened the split in the national-democrat camp between
mild oppositionists and those willing to cooperate with the authorities. Her
bloc, which entered the 2002 elections as the National Salvation Front,
attracted some radical national democrats and liberals who opposed any
cooperation with pro-Kuchma centrists, but most national democrats joined
Our Ukraine and backed away from Tymoshenko's and the Socialists' calls for
Kuchma's impeachment. 

Our Ukraine and dismissed premier Yushchenko did not condemn Kuchma or call
for his removal from power. Instead, they merely called for the removal of
the heads of law enforcement bodies involved in the Gongadze investigation,
a sacrifice that Kuchma accepted. When Yushchenko took over Kuchma's office,
although free from any allegations of personal involvement in the
journalist's murder, he, too, shied away from a thorough investigation of
the affair, even after the 2005 shooting death (officially by suicide) of
former Interior Minister Yuri Kravchenko, one of the officials reportedly
mixed up in Gongadze's death.

During the 2004 presidential campaign, the violence committed against
Yushchenko and his supporters, coupled with the level of fraud undertaken by
the authorities, temporarily changed Our Ukraine's constructive opposition
to open protest against Kuchma. He was no street activist, unlike
Tymoshenko, but Yushchenko had little choice than to prepare for a
revolution after his poisoning and the mass fraud in the runoff vote against
Yanukovych, which convinced him that the authorities would never allow him
to win.

Yushchenko's transformation into temporary revolutionary did not convert him
into a true oppositionist, and the division between Our Ukraine and the
forces led by Tymoshenko and the Socialists was only set aside during the
Orange Revolution. The division has dominated the Yushchenko administration,
leading to the dismissal of the Tymoshenko government in September 2005 and
bitter recriminations ever since. This spilled over following the 2006
elections in Yushchenko and Our Ukraine seeking not to permit the return of
Tymoshenko as prime minister. 

Our Ukraine's inability to become an opposition force showed through again
in its reaction to the formation of the National Unity coalition. The
Socialists' abandonment of the orange coalition for the Party of Regions
sent Our Ukraine reeling, and the party's tactics have continued to remain
confused. One part of Our Ukraine has stated its readiness to go into
"constructive opposition" to the new Yanukovych government while another is
eager to join forces with him. Meanwhile, neither of these wings of Our
Ukraine is willing to go into true opposition alongside Tymoshenko's party. 

OUR UKRAINE REDUX
 The Our Ukraine bloc that won the 2002 elections under Kuchma is very
different from the Our Ukraine that lost the 2006 elections under
Yushchenko.

Our Ukraine-2002 was a far broader coalition of liberal and national
democratic parties. Our Ukraine-2006 is more centrist and pro-business,
comprising parties such as the Party of Industrialists and Entrepreneurs,
which supported Kuchma in the 2002 elections, defected to Yushchenko's camp
only in the second round of the 2004 presidential election, and joined Our
Ukraine-2006. Other democratic groups that had joined up with Our Ukraine in
2002, such as the Reforms and Order Party and the civil-society organization
Pora, backed away from Yushchenko in 2006 and failed to win any seats in
parliament.

The more centrist and pro-business Our Ukraine became the more it grew
estranged from the Tymoshenko bloc and the closer it moved toward the Party
of Regions. Yushchenko has always been more threatened by Tymoshenko,
personally and ideologically, than by Yanukovych. 

One of the paradoxes of the Yushchenko administration has been his
dispensing with allies who assisted his rise to power. The presence of Pora
and Reforms and Order in the Our Ukraine camp for this spring's elections
would undoubtedly have helped the party attract more than a measly 14
percent of the vote and would have helped Yushchenko build a stronger
support base in parliament from which to challenge more effectively the
rebounding Party of Regions during the spring and summer negotiations. True
to form, Yushchenko has seemingly preferred to team up with the former
authorities than with the opposition.

Taras Kuzio is a senior fellow at the German Marshall Fund of the United
States and an adjunct professor at the Institute for European, Russian, and
Eurasian Studies, George Washington University. The views expressed in this
article are those of the author alone. 


Transcript from CSIS/Atlantic Council Event on Ukraine August 9, 2006 with
Taras Kuzio, Anders Aslund, Steven Pifer:
http://www.csis.org/media/csis/events/060809_ruseura_transcsisatlanticcounci
l.pdf
<http://www.csis.org/media/csis/events/060809_ruseura_transcsisatlanticcounc
il.pdf> 


Interview with Orest Deychakiwsky in Belarusky Rynok, one of the few
remaining independent newspapers in Lukashenka's Belarus:
http://www.charter97.org/bel/news/2006/08/14/orest
<http://www.charter97.org/bel/news/2006/08/14/orest> 
http://www.br.minsk.by/index.php?article=28167
<http://www.br.minsk.by/index.php?article=28167> 


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