[Ohio UZO News] WP; FT; WSJ; State Dept; EDM (2)

[Deychak, Orest]

Washington Post

Ukraine's Yanukovych Halts NATO Entry Talks

By Peter Finn
Washington Post Foreign Service
Friday, September 15, 2006; A15

MOSCOW, Sept. 14 -- Prime Minister Viktor Yanukovych of Ukraine said
Thursday that his government would suspend negotiations on membership in the
NATO alliance, his first major step toward reversing his country's drift
away from Russia and toward the West.

"Because of the political situation in Ukraine, we will have to take a
pause," Yanukovych told reporters in Brussels after talks with NATO
Secretary General Jaap de Hoop Scheffer and NATO ambassadors. "We have to
convince society."

The prime minister, who has said he personally opposes NATO membership,
cited insufficient popular support for the step. A recent survey found that
60 percent of Ukrainians are against membership in the alliance,
significantly more than support the prime minister and his coalition
partners.

Making Ukraine, a former Soviet republic, part of the alliance is a
cherished goal of Yanukovych's rival, President Viktor Yushchenko.

In late 2004, the two men competed in a presidential election. Yanukovych,
Russia's favored candidate, was initially declared the winner, triggering a
street revolt and a new vote that swept Yushchenko into office.

Yushchenko set the country on a firmly pro-Western course, setting off alarm
bells in Moscow and the Russian-speaking parts of his own country with a
promise to quickly push for Ukraine's membership in the Western military
alliance.

Yushchenko had expressed hope that the country could join as soon as 2008,
and the issue was scheduled to be discussed at a NATO summit in November.

But the coalition that backed him disintegrated last September, and after
parliamentary elections earlier this year, Yanukovych, whose party won a
plurality of votes, resurrected himself on the back of his rivals'
infighting. He became prime minister in July.

American officials have been enthusiastic about Ukraine's potential
membership in NATO. But they have become increasingly worried about the
anemic support for the move within the country, Western diplomats said in
recent interviews. The prospect of Ukraine joining the alliance is also
anathema to the Kremlin and the vast majority of Russians, who regard it as
an attempt to encircle and isolate their country.

Yanukovych stressed Thursday that he was not turning his back on the West.
"For the time being, we are looking at enlargement of our cooperation with
NATO," rather than membership, he said. "We should be a reliable bridge
between the European Union and Russia."

Yanukovych promised to continue supporting internal reforms that "will bring
us in the long term to accession of the European Union."

E.U. officials, facing growing skepticism in the bloc's 25 member nations
about any further expansion, were reserved, if not cold, to Ukrainian
membership but said a free-trade zone could be negotiated.

E.U. External Relations Commissioner Benita Ferrero-Waldner said the union
had no plans to offer Ukraine membership "at this moment."

Financial Times

Yanukovich puts Kiev's Nato plans on hold

By Daniel Dombey in Brussels and Roman Olearchyk in Kiev 

Published: September 15 2006 03:00 | Last updated: September 15 2006 03:00

Ukraine's path towards greater integration with the west was cast into doubt
yesterday when Viktor Yanukovich, the country's prime minister, said he was
putting on hold Kiev's plans to join Nato.

On his first trip to Brussels since taking office last month, Mr Yanukovich
dashed the hopes of pro-western Ukrainian politicians, and of officials in
Europe and the US, that he would use the visit to endorse joining Nato's
membership action plan - a stepping stone to membership of the 26-nation
alliance.

Instead, standing next to Jaap de Hoop Scheffer, Nato secretary general, Mr
Yanukovich argued that the membership bid had to be put on ice because of
popular suspicions about Nato membership and doubts about its impact on
relations with Russia.

"Because of the political situation in Ukraine we will now have to take a
pause, but the time will come when the decision will be made," he said.

"We will do everything possible to persuade the Ukrainian people that there
is no alternative," he said, adding that the question of Nato membership
should be kept separate from his administration's goal of good relations
with Moscow.

Until recently the US, the most powerful country in Nato, had hoped that the
alliance would mark its November summit in Riga, the Latvian capital, by
bringing Ukraine into the membership action plan and hence a step closer to
full membership.

"The door to deepening the relationship is open," said a senior Nato
diplomat who emphasised that the alliance's ambassadors had told Mr
Yanukovich yesterday they valued the relationship with Ukraine.

"But allies also understand that it is up to Ukraine to set the pace for
that relationship."

Recent polls indicate that Ukrainian opposition to joining Nato is running
at about two-thirds of the electorate.

Ukraine is also heavily dependent for low-cost oil and gas on Russia, which
strongly opposes any suggestion that the country join Nato. Mr Yanukovich's
declaration yesterday could be a setback for plans to expand his governing
coalition by bringing in members of Viktor Yushchenko's Our Ukraine party,
which favours joining Nato.

While Mr Yushchenko's ascent to power following the 2004 Orange Revolution
was seen in the US and Brussels as a sign that Kiev had moved decisively
towards the west, Mr Yanu-kovich's election triumph this year has cast doubt
on prospects for further Euro-Atlantic integration.

Mr Yanukovich stressed the importance of ties with the European Union, and
negotiations on a wide-ranging agreement are set to begin next year. But
while Ukraine would like a trade deal with Brussels, EU officials warn this
will be impossible if Kiev joins a customs union with Russia. Moscow is
promoting such a customs union with several former Soviet neighbours


Wall Street Journal

Politics & Economics: Ukraine Puts Efforts to Join NATO on Hold 

By Alan Cullison
15 September 2006
The Wall Street Journal
A8


MOSCOW -- In another sign of the cooling of Ukraine's pro-Western zeal, the
new prime minister said his country is putting efforts to join the North
Atlantic Treaty Organization on hold because of a lack of public support for
the move. 

"We have to take a pause," Prime Minister Viktor Yanukovych said yesterday
after meeting with NATO's chief in Brussels. He said Ukraine would formally
launch its bid to join the alliance, but only after a referendum on the
issue. 

Ukraine's backtracking on its NATO aspirations -- which emerged after the
nation's popular uprising known as the Orange Revolution at the end of 2004
-- is a defeat for the Bush administration, which hoped a quick entrance
would tug the former Soviet state decisively Westward. 

The Kremlin has lobbied hard against Ukraine's entry. The Kremlin said that
as a NATO member, Ukraine would be a threat to Russian security and warned
Kiev that any movements toward membership would worsen relations. 

Mr. Yanukovych, who was named prime minister last month after a pro-Western
coalition of politicians fell out over how to divide government posts, has
been advocating closer relations to Moscow. He said that few Ukrainians --
maybe 12% to 25% -- support joining NATO, and that Ukraine shouldn't be
forced to choose between steering either a pro-Russian or pro-Western
course. "We should build a reliable bridge between Russia and the European
Union," he said. 

Besides many trade ties with Russia, Ukraine must worry about its dependence
on Russian natural-gas deliveries. Ukraine is in the midst of negotiations
with Russia for next year's shipments. 

Ukrainian President Viktor Yushchenko, who was swept to power in the Orange
Revolution, has said Ukraine wouldn't "veer one iota" from plans to join
NATO. Before agreeing to name Mr. Yanukovych prime minister, he pushed him
to sign a so-called memorandum on national unity that preserved tenets of a
Western-oriented agenda -- including NATO membership. But the pact appears
to be nonbinding and too vague to force Mr. Yanukovych to any concrete
action. 

State Department
Daily Press Briefing

Sean McCormack, Spokesman

Washington, DC

September 14, 2006

INDEX:

[...]

UKRAINE

Two Sides to the Relationship Between NATO and Ukraine / 

Established Links Should Remain Open

TRANSCRIPT:

12:45 p.m. EDT

[...]

QUESTION: Okay. And also the fact that the Prime Minister, the Ukrainian
Prime Minister, today said that his country wants to make a pause in its

relations with NATO. Do you have any --

MR. MCCORMACK: Wants to take a --

QUESTION: To make a pause.

MR. MCCORMACK: Oh, to make a pause?

QUESTION: Yes.

MR. MCCORMACK: Well, look, there are two sides to this in terms of any --
it's common sense -- any relationship. One side of it is NATO as a whole and
an organization which comprises different member-states with different
points of view, so NATO has to decide how it wants to approach its
relationship with the Ukraine. And then there's the Ukrainian side. At what
rate are they ready to develop and move forward on a relationship with NATO?
There's already the NATO-Ukraine Council that meets on a fairly regular
basis. So there's already a kind of relationship.

Now, how that relationship develops and the depth of that development is
going to be up to the two sides. And I think right now with a new government
in the Ukraine that we're talking with the Ukrainians, other members of NATO
are talking with the Ukrainians about that very matter. So it's going to be
a two-way street in terms of how that relationship develops. We certainly
want to keep those links that we have already established with the Ukraine
open, but Ukraine is a country that is in the process of democratic
transition. We've seen that over the past couple of years. So they are going
to have to decide, you know, how comfortable they are in moving that
relationship forward, as is NATO.

Thank you.

(The briefing was concluded at 1:17 p.m.)

Eurasia Daily Monitor

Friday, September 15

PUTIN PRAISES YUSHCHENKO WHILE GAZPROM LOOKS SET FOR DEEPER INROADS IN
UKRAINE

Russian President Vladimir Putin has bestowed rare praise on Ukrainian
President Viktor Yushchenko for agreeing to the gas deals with Gazprom and
RosUkrEnergo. Addressing an audience of prominent Western experts at
Novo-Ogarevo for the latest Valdai Discussion Club meeting, Putin said of
Yushchenko, "He was right to make this decision, he proved to be a serious
and responsible politician and did not get bogged down in details"
(Kremlin.ru, Interfax, September 9, 13). The praise reciprocates
Yushchenko's praise of Putin's "help" and "wisdom" eight months ago in
connection with the gas agreements.

It seemed evident from the outset that the January 4 and February 2
agreements were designed to set the stage for gradual Russian takeover in
one form or another of Ukraine's gas transport system by using three tools:
first, manipulation of Turkmen gas supplies to Ukraine; second, takeovers of
Ukrainian assets in lieu of payments for Russian-delivered gas; and, third,
forcing a revenue-starved Ukrainian energy sector to invite Russian
investments in the overdue modernization of Ukraine's energy infrastructure,
resulting in transfers of control.  These trends were set in motion during
this year's first quarter, but were obscured by the presidential team's and
Party of Regions' spoils-dividing scrambles during the second and third
quarters. Those trends are now dangerously accelerating, and the approaching
winter adds to the Kremlin's leverage against Ukraine.

On September 5 Gazprom agreed to Turkmenistan's demand for a steep price
hike on Turkmen gas delivered to Russia: from $65 to $100 per 1,000 cubic
meters as of October 1. Russian-bought Turkmen gas forms the lion's share in
the gas mix delivered by Gazprom and RosUkrEnergo to Ukraine at $95 per
1,000 cubic meters. Thus, the Kremlin can now authorize a correspondingly
steep price hike on the gas to be delivered to Ukraine. Alternatively, the
Kremlin can "allow" Ukraine to accumulate debt and/or to hand over Ukrainian
assets for Russian-delivered Turkmen gas.

During the second week of September, Gazprom chairman Alexei Miller and
Ukraine's Fuel and Energy Minister Yuriy Boyko agreed in principle to
maintain the existing $95 price until the end of 2006 and to renegotiate the
price upward for 2007. Gazprom seems prepared to hike the price only
"moderately" in return for some form of direct or indirect control over
Ukrainian pipelines, gas distribution companies, and possibly other energy
enterprises in Ukraine.

When Yushchenko and his energy team presented the gas agreements to the
Ukrainian public earlier this year, they not only looked away from the traps
in the discounted price of $95, but also insisted that the price had been
set for five years, when in reality it is subject to annual renegotiation.
>From February to August, they seemed to ignore the warning signs from Moscow
and Ashgabat that any price increase for Turkmen gas would necessarily raise
the price on Russia-mediated gas supplies to Ukraine. What the January
agreement does set for five years -- and far below European or even regional
levels -- is the transit charges for Gazprom's use of Ukraine's transit
system for gas exports to Europe. Thus, Kyiv is unable to offset the price
hike on gas supplies by raising the charges on gas transit.

Putin and his prime minister, Mikhail Fradkov, made clear to Ukrainian Prime
Minister Viktor Yanukovych last month at their meeting in Sochi that Ukraine
must prepare for a price hike to come in 2007.  On September 13, departing
on his first visit to Brussels, Yanukovych announced that the government
intends to create a $600 million "stabilization fund" in the 2007 state
budget in order to cover at least part of the anticipated price hike. He did
not specify possible sources for such a fund in a situation when the
projected state budget already has a built-in deficit and the state oil and
gas company, Naftohaz Ukrainy, is loss-making and debt-ridden after 15
months of management by members of the presidential team.

RosUkrEnergo has already announced plans to buy stakes in the gas
distribution systems of seven of Ukraine's oblasts (out of 26) as part of
its intentions to create a wide distribution network (Action Ukraine Report
[AUR], September 14). Management of these stakes is to be delegated to the
joint venture UkrGazEnergo, fronting for RosUkrEnergo, which is itself a
front for Gazprom.  

--Vladimir Socor


Eurasia Daily Monitor
Thursday, September 14

WHAT NEXT FOR THE UKRAINIAN OPPOSITION?
   
Tables have turned in Ukrainian politics as a result of the March
parliamentary election and the ensuing formation of a broad coalition in
parliament. There is no longer a strong left-wing opposition: the Socialists
have been entrenched in the government since early 2005, and the Communists
are no longer in the opposition to the government either. Our Ukraine (NU)
is not yet part of the majority in parliament de jure, but it remains part
of the ruling elite de facto, having delegated its members to Prime Minister
Viktor Yanukovych's cabinet and controlling several regional councils. The
Yulia Tymoshenko Bloc (BYT) has replaced its main opponent, Yanukovych's
Party of Regions (PRU), in the niche of the main opposition party. It is set
to become a magnet for smaller parties, so a bigger opposition force may be
formed, with an ideology yet to be defined.
   
The BYT was the only one of the five parties elected to parliament in March
that did not sign the national unity declaration offered by President Viktor
Yushchenko on August 3. The declaration formulated the main principles for a
new coalition government, so by refusing to sign it Tymoshenko made it clear
that her party would henceforth be firmly in opposition the government.
   
Tymoshenko does not conceal that her ultimate goal is to win the
presidential election due in 2009. In the meantime, she urges an early
parliamentary election, maintaining that the current parliamentary majority
does not represent the people, but "clans and bandits." Another declared
goal is the reversal of the constitutional reform of 2004, which came into
force in 2006, boosting the authority of parliament at the expense of the
president. Tymoshenko prefers a stronger presidency and a weaker
legislature. Speaking in an interview with Vysoky zamok daily, she said that
the PRU wants to further entrench the reform by passing to parliament,
rather than the right to elect the president. "This would make them
uncontrollable," she warned.   
   
As parliament reconvened after summer vacation on September 4, Tymoshenko
launched a campaign there and in the media against utility hikes planned by
the cabinet and against what she sees as the monopolization of the domestic
natural gas market by the "oligarchs" linked to the RosUkrEnergo
intermediary in gas supplies from Russia and Central Asia. This may not be
enough to stir large-scale popular protests against the government, but this
should certainly make Tymoshenko more popular in a country where utilities
have been traditionally cheap.
   
The BYT faction in the 450-seat parliament numbers 120 members, but it may
grow at the expense of those individuals who, for various reasons, fell out
with the government camp. Ukrainian laws do not allow them to formally join
the rival camp, so they can join forces with the BYT only informally, by
voting in concert with the it. Tymoshenko has suggested building an
opposition inter-faction association, which those members of Our Ukraine,
the Socialist Party, the PRU and, theoretically, the Communist Party, who
disagree with their parties' policies, would be welcome to join. Deputy
Mykhaylo Pozhyvanov has said that 10 people who represent his People's
Movement of Ukraine (Rukh) in NU may join the association.
   
Another party that may join the BYT, if only for next elections, as it is
outside parliament, is the liberal Reforms and Order (RiP) party of former
finance minister Viktor Pynzenyk. RiP announced that it would go into the
opposition on September 11, and Volodymyr Filenko, a leading member of RiP,
told Ekonomicheskie izvestiya that RiP has been in unification talks with
the BYT. RiP used to be part of Our Ukraine; in 2005 it drifted towards the
BYT, but its talks on forming a bloc with Tymoshenko for the March 2006
election fell through, and RiP, running in the election as partners of the
radical youth Pora party, did not make it into parliament.
   
Another former element of NU, the nationalist Ukrainian People's Party of
Yuriy Kostenko, which also lost the election, has chosen a different tactic.
In a series of newspaper interviews in August and September Kostenko
advertised his party as the nucleus of a new right-wing force being formed.
Just like the BYT, Kostenko's party demands the dissolution of the current
parliament as it "represents the interests of big capital, rather than the
nation," he told Stolichnye novosti. But Kostenko rules out a union with the
BYT because it is a left-of-center force, so its ideology is fundamentally
different. Kostenko also has ruled out a union with the dissenters from Our
Ukraine (see EDM, September 7).
   
On September 12 yet another loser in March, the Popular Party of former
parliament speaker Volodymyr Lytvyn -- formerly the Agrarian Party --
announced it was going into the opposition. It remains to be seen whether it
will join Tymoshenko or remain independent, making Ukraine's opposition more
fragmented.
   
(Stolichnye novosti, August 15; Interfax-Ukraine, September 5; Vysoky zamok,
September 10; Ekonomicheskie izvestiya, September 12; Channel 5, September
12, 13)

--Oleg Varfolomeyev

Link to Helsinki Commission Co-Chairman Rep. Chris Smith (R-NJ) statement on
15th anniversary of Ukraine's Independence:  www.csce.gov <www.csce.gov> 

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