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Kyiv Post
Op-Ed
Plaited lady out on the offensive
Jan 25 2007
Myron Wasylyk

While in Jerusalem last week, Ukraine's chief oppositionist Yulia Tymoshenko
called on her fellow politicians to visit Holy Land religious sites to
cleanse themselves from the dirt of Ukrainian politics. The call was timely
given her surprising political support to Prime Minister Viktor Yanukovych's
successful efforts to overturn a presidential veto on the law on the Cabinet
of Ministers. The new law expected to go into effect soon strips the
president of key executive authorities and vests them in the hands of the
coalition government. 

Given Tymoshenko's opposition to the political reforms that weakened the
presidency during the height of the 2004 Orange Revolution, her early
January votes in the Rada caused many to question her true political
motives. In fact, Tymoshenko allies openly distance themselves from any
rational form of democracy and state they are interested in gaining total
control of state institutions with few checks and balances. This runs
contrary to the president's agenda of correcting the current political
asymmetry and refining a reliable system of checks and balances between the
presidency, parliament and coalition government. 

Yulia Tymoshenko's tactical alliance with the Party of Regions will not only
bring more chaos to governing institutions in the short term, but will have
grave consequences on the strategic development of Ukrainian democracy for
years to come. Luckily there are at least 11 procedural and other violations
of the existing Constitution within the recently passed Cabinet of Ministers
law that could be used by the courts to turn back the latest attempt to
usurp political power in Ukraine without a consultation with voters. 

However, until the courts hear the case, the law will have taken effect and
will have the following repercussions and consequences.

First, the law on the Cabinet of Ministers overridden by parliament strips
the president of almost all executive authorities and places them in the
hands of the prime minister. In essence, a voter's right to directly elect
the president has been violated. Direct elections to the presidency with one
set of powers have been replaced with a presidency of limited political
powers - that which former President Leonid Kuchma and his top aide Viktor
Medevedchuk couldn't get parliament to pass in the fall of 2004.
Tymoshenko's support of the Cabinet of Ministers law now fully nullifies the
guiding principles and values that formed the rationale for the hard-fought
2004 presidential election that brought about the Orange Revolution.

Second, Ukraine's existing balance of political powers between two directly
elected democratic bodies - the president and parliament - will under the
new law on the Cabinet of Ministers shift completely to the governing
coalition. Given the existing make-up of the parliament and the finances
concentrated in the Party of Regions, de facto all political powers shift to
Prime Minister Yanukovych. The president's earlier right to disband
parliament if a ruling coalition is not formed, a prime minister not
nominated, a budget and national government program not passed, is vested
absurdly with the parliament itself. The result is, again, a usurpation of
power without consultation with voters. 

Third, the draft law on the so-called "imperative mandate," which Tymoshenko
has fought so hard for, limits direct voter representation further by giving
political parties, and not the courts, the right to remove elected council
representatives. If not vetoed by the president, the new law will allow
party leaders to replace those local deputies who abandoned their party
lists in city and oblast councils. Most notably, this could have an impact
on the make-up of the Kyiv City Council. In effect, those elected deputies
who express independent views and do not follow the central party line face
expulsion from party ranks and removal from public office. While this
position may gain the support of strong party discipline advocates, the
protection of individual rights as guaranteed by the Constitution will be
violated and their adjudication and fair application would rest not with the
courts but with the central political committees of political parties - much
like the system that existed during the times of the Communist Party
Politburo. 

So where have the Tymoshenko Bloc's hasty actions steered Ukraine's nascent
democratic polity?

The Jan. 12 votes were brought about by a turn of events among the
radicalized political faction within the Yulia Tymoshenko Bloc. The latter
feared their further political marginalization by a stability pact that was
to be signed by President Viktor Yushchenko, Prime Minister Yanukovych and
Speaker Oleksandr Moroz in mid-February. The president's attempts to usher
in a political culture of party coexistence and political compromise as a
means toward reaching agreement on refining a democratic system of political
checks and balances is a direct threat to Tymoshenko. 

Given her strong showing during the 2006 parliamentary election, her
immediate political goal is to amass as much Orange electorate support as
soon as possible. This solidifies her positions in the Orange camp and
limits potential competition from rising democratic stars such as Yuriy
Lutsenko, Arseniy Yatsenyuk, Mykola Katerynchuk, Vitaliy Klitschko, and
others. 

To ensure she stays relevant, Tymoshenko played tactically against
Yushchenko the tried and true populist trump cards of "the worse off the
better." Her only hope of achieving new parliamentary elections is to
further weaken the presidency and build up an encroaching opponent in
Yanukovych. This, she hopes, will push Yushchenko to call early elections,
which if held soon are likely to turn Ukraine from a multi-party democracy
to a political system dominated by two highly centralized political parties
with populist platforms and authoritarian tendencies: the Party of Regions
and the Yulia Tymoshenko Bloc. This turn of events would once again bring to
the fore the east-west divide and put Ukraine on the road to a long-term
internal struggle that could further push away prospects for Western or any
other form of international integration. 

Myron Wasylyk is Senior Vice President of The PBN Company, where he provides
political consultations to businesses, governments, NGOs and political
parties.

Eurasia Daily Monitor
Thursday, January 25, 2006
YUSHCHENKO, YANUKOVYCH BATTLE FOR CONTROL OF SECURITY SERVICES
Taras Kuzio

Last week the head of Ukraine's parliamentary committee on national security
and defense, Anatoliy Kinakh, accused the general prosecutor's office, the
Security Service (SBU), and law enforcement of beginning to act on the basis
of political orders (Ukrayinska pravda, January 19). Kinakh's concern was
related to the tug of war and institutional conflict in Ukraine during its
constitutional crisis, which is now spilling over into the field of
civil-military relations.

Kinakh, head of the Party of Industrialists and Entrepreneurs (PPPU),
defected from the Leonid Kuchma camp to Viktor Yushchenko during the second
round of the 2004 presidential elections after he himself obtained 1.98% in
the first round of voting. In the 2006 elections the PPPU joined the Our
Ukraine bloc, thereby strengthening the business component that preferred a
coalition with the Party of Regions to one with the Yulia Tymoshenko bloc.

President Yushchenko has been unsuccessful in his attempts to place the
security forces under democratic control. Under the reformed constitution,
the president controls the appointments of the SBU chairman, prosecutor
general, National Security and Defense Council (NRBO) secretary, and foreign
and defense ministers.

Surprisingly, the first two positions have been given to individuals who
turned out to be not fully loyal to the president or, in the case of
Svyatoslav Piskun (December 2004-October 2005), only there to defend the
granting of immunity to Kuchma and other high ranking officials. Foreign
Minister Tarasyuk was unconstitutionally dismissed in December (see EDM,
January 24) and the NRBO was given to the head of the Industrial Union of
Donbas, who has little experience in international affairs. President
Yushchenko lost control over the Interior Ministry (MVS) when his candidate,
Yuriy Lutsenko, was removed after Our Ukraine went into opposition to the
Anti-Crisis coalition.

The SBU never fully came under Yushchenko's control after he took office in
January 2005. The SBU's high involvement in corruption and its links to
local political and business elites undoubtedly prevented this smooth
transition to the Orange administration.

The presidential secretariat has understood the importance of reforming the
SBU yet been unable to put forward a concrete strategy (Ukrayinska pravda,
December 9, 2006). Parliament's ruling coalition is also proving to be
obstructive to reforms. Yushchenko has called for the creation of a
"National Commission on Reforming the SBU" (Ukrayinska pravda, December 11,
2006).

In an attempt to place loyal cadres in the senior ranks of the SBU,
Yushchenko appointed Hennadiy Moskal as its deputy head on January 9. This
is Moskal's fourth position in less than two years, during which he has
moved from governor of Luhansk and Trans-Carpathia, to deputy head of the
MVS, and most recently the president's representative in the Crimea.

The biggest blows to Yushchenko's authority have come in the Ministry of
Emergency Situations, the government, and the MVS, where personnel changes
have been approved that threaten the democratic gains of the Orange
Revolution. Nestor Shufrych, a leading member of the Social Democratic
Party-United (SDPUo), whose reputation is stained by corruption, election
fraud, and the use of antagonistic rhetoric against his opponents, was
appointed minister of emergency situations. Shufrych was brought back from
the political wilderness as a Crimean Supreme Soviet deputy after the SDPUo
failed to enter the current parliament.

Previously SBU chairman, MVS head, and NRBO secretary, Volodymyr Radchenko
was appointed deputy prime minister on January 12 after five months as Prime
Minister Yanukovych's adviser. Radchenko told parliament that he would
assist in coordinating the security forces, a step that would bring him into
conflict with the NRBO, which has the same function at the president's
behest.

Radchenko's background was in the Soviet KGB, which he joined in 1972 at a
time of widespread arrests of Ukrainian dissidents and purges of cultural
elites following the dismissal of Communist Party of Ukraine secretary Petro
Shelest. Former dissident Volodymyr Malynkovych described Radchenko as
somebody who "repressed dissidents, those who fought for human rights,
democracy, and Ukraine's freedom" (Ukrayinska pravda, January 12).

The Socialist Party (SPU) in the governing coalition agreed to support the
removal of Lutsenko as MVS head only if it obtained this ministry. Lutsenko
was a long time SPU member until his resignation from the party in protest
of its defection from the Orange camp to Yanukovych.

MVS head Vasyl Tsushko has installed new deputies who have poor reputations
from the Kuchma era while also demanding that regional MVS chiefs with
Orange sympathies be transferred to other duties. These include Mykola
Plekhanov who, as head of the Sumy oblast MVS, sent police units against
students marching on Kyiv in summer 2004, and Vasyl Marmazov from the
Communist Party (Ukrayinska pravda, December 12, 2006, January 18).

The most criticized appointment as deputy head of the MVS and head of the
MVS General Staff has been that of Serhiy Popkov, who was commander of MVS
Internal Troops from November 2004-February 2005.

On November 28, 2004, Popkov, on the instructions of then-president Kuchma,
Prime Minister Yanukovych and MVS Minister Mykola Bilokin (who remains in
exile in Russia after fleeing criminal charges) dispatched MVS troops with
live ammunition to central Kyiv to suppress the Orange Revolution. MVS
troops only returned to their barracks after high-level diplomatic
intervention from the United States, encountering blocked roads leading into
Kyiv, and open support given to the protestors by military ground forces.

In a rare display of unity the Tymoshenko Bloc, Our Ukraine, and Yushchenko
protested the return of Popkov to the MVS. Parliamentary speaker Moroz
warned that public opinion should have been taken into account when making
this decision (Ukrayinska pravda, January 11, 12).

Prime Minister Yanukovych meanwhile, described Popkov as "an expert of the
highest kind who commands great respect." Yanukovych continued, "There was
never any infringements on his part throughout his entire career during
which he worked in a qualitative manner" (Ukrayinska pravda, January 12).


RFE/RL Belarus Ukraine Report
Ukraine: Odesa-Brody Pipeline Potential Still Unused 
By Roman Kupchinsky
January 12, 2007 (RFE/RL) -- EU ministers are asking the same questions they
asked in January 2006 when Russia halted supplies of gas to Ukraine: Is
Russia a reliable fuel supplier, or is it using energy as a weapon to
reestablish hegemony over the former Soviet space?

But the question that is not being asked is why Russia's crude-oil customers
within the EU find themselves so heavily reliant on the Druzhba pipeline.
Have no alternative routes been considered in the past, and if there were,
why were they rejected?

A case can be made that Russian skullduggery, combined with European
miscalculations and inactivity, set the stage for recent events. This is
best illustrated by the case of the Odesa-Brody pipeline in Ukraine. 

Origins Of A Pipeline

Ukraine built the 674-kilometer Odesa-Brody pipeline in the hope of
competing with other routes for the lucrative job of moving Caspian oil to
the West. Azerbaijani and Kazakh crude oil, a high-quality blend, needed to
avoid being transported by Russian pipelines where it could mix with the
sour Urals blend. 

Constructing the Odesa-Brody route, which runs from the Black Sea to the
Polish border, was seen as the ideal solution. The pipeline's first phase
was put into operation in May 2002. It boasted a throughput capacity of 9
million tons with the capability to reach 14.5 million tons yearly. 

This pipeline was intended to transport Caspian oil from the newly built
Pivdenny terminal to the existing Druzhba pipeline for transport to European
refineries. From there it would be sold to distributors in Europe and
elsewhere. Both projects came under the direct jurisdiction of the Ukrainian
state-owned oil and gas monopoly, Naftohaz Ukrayiny, and its subsidiary
company, UkrTransNafta, the manager of oil pipelines in Ukraine. 

As these projects were under construction, "Alexander's Oil And Gas" on June
9, 2000, reported that U.S. Energy Secretary Bill Richardson said the U.S.
government supported Ukraine's plans to build the new Pivdenny oil terminal
and the Odesa-Brody oil pipeline. Richardson added that the new terminal
would help Ukraine diversify its energy sources and thus make the country
less dependant on Russia. 

The Ukrainian side was encouraged by the European Union and the United
States to build the Odesa-Brody pipeline. However, after it was completed,
Ukraine did not have the money required to fill it with Caspian crude and
none of the European states were willing to build the connecting pipelines
needed to link Odesa-Brody to refineries. As "Stratfor Commentary" noted on
September 8, 2003, "The end result was that Kiev found itself saddled with a
white elephant rusting picturesquely in the Ukrainian countryside."

A New Direction

But serious doubts were also expressed as to the direction oil in the
Odesa-Brody would take. Matthew Sagers of Cambridge Energy Research
Association was quoted by Interfax on August 15, 2003, as saying that there
was no demand for Caspian oil in Northern Europe due to its high price and
that there would be no problems if the pipeline were to transport oil south,
to the Pivdenny terminal and then via the Bosporus. Sagers claimed that an
additional 9 million tons of oil per year would not overburden the heavily
trafficked straits. 

At this time the Russian-British firm TNK-BP began a massive lobbying
campaign in Kyiv to reverse the flow of the Odesa-Brody -- sending its oil
south to the Black Sea. 
Despite a decision by Ukraine's Cabinet of Ministers to send oil in the
northerly direction, Ukrainian President Leonid Kuchma suddenly began
agreeing that Russian oil should be put into the pipeline and pumped south. 
On April 29, 2003, the head of Kazakh state oil firm KazMunaiGas announced
that Kazakhstan would start filling the Odesa-Brody pipeline in the second
half of that year and that a deal had been made with other members of the
Tengizchevroil consortium that included ChevronTexaco, ExxonMobil, BP, and
LUKoil to supply 6 million tons per year to the pipeline. The only matter
that needed clarification was the price the Ukrainians would charge. 

The Astana headquarters of Kazakhstan's KazMunaiGas (official site)"The
Moscow Times" quoted the Kazakh official as saying that the interested
Western companies were completing commercial negotiations with oil
refineries in Southern Europe to receive their oil from Odesa-Brody and that
initial agreements had been reached. 

But despite a decision by Ukraine's Cabinet of Ministers to send oil in the
northerly direction, Ukrainian President Leonid Kuchma suddenly began
agreeing with Russian oil majors that Russian oil should be put into the
pipeline and pumped south.

Russia Gets A Boost

The TNK-BP lobbying effort was apparently making progress. On April 28,
2003, Interfax-Ukraine announced that Kuchma said at a press conference that
"the shipment of Caspian oil via the Odesa-Brody pipeline is unlikely to
take place because it would be a money-losing proposition, so Ukraine must
reconsider the use of the pipeline for Russian oil shipments from Brody to
Odesa." This view was rapidly seconded by Deputy Prime Minister for Fuel and
Energy Andriy Klyuyev.

Interfax quoted the Ukrainian president as saying that "the fact is that, as
of today, there is neither a Caspian oil seller nor a buyer. Visit Baku and
speak to analysts and learn if there is Caspian oil. There is none and there
will not be any. As for Russian oil, it exists, and we can earn $90 million
in profits from the reversed use of the pipeline." 

The following day, U.S. Deputy Assistant Secretary of State for European and
Eurasian Affairs Steven Pifer strongly contradicted Kuchma's statement and
said that Ukraine had not done anything to insure Caspian supplies that
could fill the Odesa-Brody pipeline. Pifer reminded the Ukrainian president
that Germany and Slovenia both had refineries working with Caspian oil and
that Ukraine was in an excellent position to utilize its pipeline to send
Caspian oil to these refineries. Interfax-Ukraine, which reported Pifer's
statement, also added that Pifer went on to say that if Ukraine wanted to
integrate into Europe, "this is a wonderful way to unify its energy system
with the European one."

A pressing issue over the years was where Kazakh oil would be routed. The
United States and Europe were placing their money into the construction of
the $3 billion Baku-Tbilisi-Ceyhan (BTC) pipeline. This pipeline, when
finished, would have a throughput capacity of 1 million barrels per day. But
for it to be commercially viable, it would need Kazakhstan to send its oil
through it. 

Kazakhstan Comes Up Short

A few weeks after the KazMunaiGas announcement, the Kazakh ambassador to
Ukraine made an unexpected statement contradicting the head of his country's
gas and oil monopoly. Speaking to reporters in Kyiv on May 19, 2003,
Interfax-Ukraine quoted him as saying that Kazakhstan, in fact, did not have
the required oil to fill Odesa-Brody. Why this rapid about-face took place
was not explained. 

It is inconceivable that the Kazakh ambassador would make such a statement
without the approval of Kazakh President Nursultan Nazarbaev and without the
knowledge of KazMunaiGas. In effect, the revelation that there was no oil
available for Odesa-Brody from Kazakhstan immensely strengthened TNK-BP's
(and Kuchma's) hand and seemed to deal a serious blow to the effort to
diversify Caspian oil-transit routes. 

In mid-June 2003, Russian Industry and Energy Minister Viktor Khristenko
traveled to Kyiv, where he met with Serhiy Tulub, the Ukrainian minister for
fuel and energy. A few days after this meeting, Khristenko sent a letter to
Tulub explaining his government's position on the Odesa-Brody pipeline.
According to Interfax on June 18, 2003, the Russian minister wrote that
Russia was not interested in seeing Odesa-Brody flow in a northerly
direction -- to Brody. Khristenko explained this by saying that there were
no markets for Russian light oil in Northern Europe and that sending oil
north to Brody would destabilize the markets in Southern Europe for Russian
and Kazakh light oil.
Khristenko said Russia was still interested in seeing the Odesa-Brody
pipeline used in reverse mode, but at lower volumes than originally planned.
In effect, he was telling the West that Odesa-Brody was off-limits. 
At the same time, Khrystenko noted that Russia was still interested in
seeing the Odesa-Brody pipeline used in reverse mode, but at lower volumes
than originally planned. 

In effect, Khristenko was telling the West that Odesa-Brody was off-limits
to them. The argument that Russian light crude did not have a market in
Northern Europe was somewhat exaggerated since most Russian crude is Urals
blend. Khristenko also chose to speak on behalf of the Kazakh oil industry,
which had already agreed to supply oil to fill the Odesa-Brody pipeline. 

The Yuzhny terminal of the Odesa-Brody pipeline (TASS file photo)Writing in
"The Wall Street Journal Europe" on October 10, 2003, former Reagan-era
national security adviser Robert McFarlane noted: "When Ukrainian Prime
Minister Viktor Yanukovych was in Washington this week, certainly one issue
for discussion was last week's decision by Ukraine's state pipeline company
to move forward toward reversing the use of the Odesa-Brody oil pipeline in
Russia's favor.... Russian oligarchic interests, however -- with Britain's
BP unfortunately in tow -- wish to use that pipeline themselves, in the
opposite direction.... This would cancel all the hopes that had been vested
in the Ukrainian pipeline." 

Return To Sender

David O'Reilly, the head of ChevronTexaco, sent a letter to Kuchma on
January 29, 2004, in which he wrote, "We are prepared to continue to work
actively with UkrTransNafta and the other pipeline along the route to
implement this project and make shipment through Odesa-Brody to Central
Europe a reality." The letter has apparently gone unanswered. 

It was only in August 2005, with oil prices skyrocketing and Russian
behavior becoming more aggressive, that the EU realized the value of
Odesa-Brody as an alternative route for Caspian oil to reach Europe. The
European Commission agreed to award a contract to a consortium of European
companies to finalize the technical, economic, and legal studies required
for the construction of the pipeline to the Polish refinery in Plock,
Poland. 

The press release issued by the European Commission to Ukraine and Belarus
on August 8, 2005, noted, "The construction of the Black Sea-Ukraine-Poland
oil transportation corridor is a crucial infrastructure project in the
context of EU and Ukrainian policies for security of oil supplies."

According to the latest reports, little if anything has been done by this
consortium of European companies to further the project to completion.







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