[Ohio UZO News] Ukraine: AP; WoE (Note); EDM

[Deychak, Orest]

Associated Press

Ukraine to help Naftogaz with debt, report says 

By MARIA DANILOVA 

Associated Press Writer

23 September 2009

KIEV, Ukraine (AP) - Ukrainian authorities on Wednesday sought to
reassure investors that the state energy company Naftogaz will not
default on its $1.6 billion loan and will be able to restructure the
debt, news reports said.

But analysts and creditors warned that a default by the troubled
company, which transports Russian natural gas to European consumers via
Ukrainian pipelines, was possible and could badly tarnish the country's
image. Previous debt problems at Naftogaz have contributed to
disruptions in European natural-gas supplies.

Prime Minister Yulia Tymoshenko's government is vowing to provide state
guarantees for the restructuring of Naftogaz's foreign debt this year,
which includes $500 million in Eurobonds that mature Sep. 30.

The Cabinet has instructed Naftogaz to reach an agreement with investors
by Oct. 20, but nervous bondholders are pressing for repayment by Sep.
30.

"We are meeting all the deadlines, an agreement will be reached," Fuel
and Energy Minister Yuriy Prodan told reporters, according to the Unian
news agency. "There won't be any default."

Prodan's spokesman Fent Di could not immediately confirm the statement.

Experts, however, say that a Naftogaz default on the $500 million
Eurobonds was a possibility.

"The company, the government (seem) to be trying to close a deal by
October 20, long after the Sept. 30 redemption date for the 2009
Eurobonds, and raising the specter of default," said Timothy Ash,
London-based head of emerging market research at Royal Bank of Scotland.

Ash added that the problems at Naftogaz bode ill for the sustainability
of the government's and private companies' debt. "Frankly I struggle to
be positive," Ash said.

A group representing financial institutions holding about 20 percent of
Naftogaz' Eurobonds dismissed Prodan's statement, saying it was certain
Naftogaz would default on the Eurobonds. Philipp Thomas, a spokesman for
the group, said Naftogaz and the Ukrainian government were too slow and
unprofessional in conducting restructuring talks and that it was now too
late to meet the deadline. Thomas said that bondholders would start
litigation against Naftogaz.

"They cannot possibly avoid default," Thomas told The Associated Press
by telephone. "Bondholders are totally angry at Naftogaz; Naftogaz is
very unprofessionally run."

Naftogaz declined to comment.

A price and payment dispute between Naftogaz and Russia's
state-controlled gas monopoly Gazprom led to disruptions in supplies of
Russian gas to Europe last winter, when Gazprom turned off the taps
carrying gas into Ukraine.

AP 

Interview: Yushchenko optimistic about NATO 

	

 

September 22, 2009 

By STEVEN R. HURST

NEW YORK - Ukraine President Viktor Yushchenko says he is optimistic
that his country will join NATO, declaring the tide of public opinion in
the former Soviet republic is swinging in favor of membership in the
Western military alliance. 

Yushchenko, who faces a tough re-election battle in January, also
disputed reports that only about 5 percent of Ukrainians support his
re-election in January, saying his poll numbers show about 10 percent
backing with the number rising.

The embattled Ukrainian leader spoke Monday with The Associated Press
shortly after arriving in New York for the United Nations General
Assembly. He said NATO membership, which the United States supports, was
not a matter for outsiders, like Russia, to decide.

The Kremlin, smarting over NATO expansion into its former Baltic
republics and Central and Eastern European satellites after the Soviet
Union broke apart in 1991, has put extreme pressure on Ukraine not to
join the alliance.

But Yushchenko declared he was determined to bring Ukraine into the
Western alliance, which was established after World War II to counter
Soviet expansionism in Europe.

"I would like to underline that if you analyze the history of Ukraine in
the 20th century," Yushchenko said, "you will see that from 1917 to 1991
Ukraine declared its independence six times and five times we lost it."

He blamed the Soviet Union for the reversals.

Yushchenko, who looked well after he was poisoned under suspicious
circumstances as he successfully fought for a first term as president in
2004, declared that 33 percent of Ukrainians support NATO membership
while the number opposed has slipped to 27 percent. He said that
contrasted with figures four years ago of only 14 percent favoring
alliance membership with 30 percent to 37 percent opposed. Independent
polling in the country still shows a majority against joining NATO.

"We have good dynamics, and month by month the number of NATO supporters
is growing," he said. "I'm a great optimist. I'm sure Ukraine will
follow the path of Latvia, Estonia, Lithuania, Poland, Czech Republic,
Slovakia, Romania, Hungary, Bulgaria."

He pointed also to the Russian invasion of Georgia, another former
Soviet republic, in August 2008 as a strong selling point for NATO
membership, which includes a guarantee that an attack on any member
state will be viewed as an attack on the alliance as a whole.

The Russians swept into Georgia, also a candidate for NATO membership,
after it sought to bring the breakaway region of South Ossetia back
under central government control.

After the invasion, Russia declared that South Ossetia and Abkhazia,
another breakaway region in Georgia, were independent states under
Moscow's protection.

Appearing unfazed by his lack of support with the January election just
four months away, Yushchenko said: "I plan to win."

"I have done some things I can be proud of," he said. "In the last four
years our GDP grew 7 to 7 1/2 percent (annually). ... We made
considerable social changes. We took care of orphans. ... Unemployment
is the lowest of the 18 years of our independence. Living standards are
the best in 18 years. We've instituted free speech, free press, free
elections."

But this year Ukraine's economy is among the worst suffering in Europe
from the global economic recession and the country has relied on an
emergency loan from the International Monetary Fund to avoid a complete
meltdown. The IMF has predicted that Ukraine's economy will shrink by 14
percent this year.

In June, parliamentary auditors reported that unemployment had risen to
879,000 people since last year as the metals and chemical industries
laid off thousands of workers.

Independent polling shows Yushchenko likely to lose the presidential
election. Polls have the incumbent trailing both Moscow-aligned Viktor
Yanukovych, whom Yushchenko overwhelmed in the so-called "Orange
Revolution" in 2004, and Prime Minister Yulia Tymoshenko. She was a
close ally of Yushchenko in the last election, but they have become
bitter enemies and do not speak to each other.

Window on Eurasia: Ukraine's Options Limited as Russia's Time Runs Out,
Kyiv Experts Say

 

Paul Goble

 

            Vienna, September 22 - Russia has only a limited window of
time in which it can hope to achieve its maximum hopes in Ukraine, and
Ukraine has only a limited number of options to develop its relations
with the Russian Federation in order to ensure its survival as an
independent state, according to two leading Kyiv specialists on
international relations.

 

            In the current issue of "Zerkalo nedeli," Academician
Vladimir Gorbulin, director of the Kyiv Institute of Problems of
National Security, and Aleksandr Litvinenko, his advisor, provide a
detailed 4,100-word discussion of the security trap in which both the
Russian Federation and Ukraine find themselves
(www.zn.ua/1000/1600/67194/).

 

            Russia's domestic problems, including demographic decline,
ethnic and religious challenges, and regional separatism ethnic and
non-ethnic, have been compounded by its return to authoritarianism and
the impact of the global economic crisis, the two say, forcing Moscow to
"concentrate on the resolution of questions it can't put off of a
primarily regional nature."

 

            "Key among [Russia's] foreign policy tasks must be
considered the repression of Ukraine," Gorbulin and Litvinenko write,
noting that by means of "the subordination of Ukraine or at least its
southeaster part, the Kremlin [could] essentially improve the situation
in the Russian Federation."

 

            Such an achievement would "reduce [Russia's] demographic
problems, guarantee reliable transit of energy carriers to Europe,
significantly increase its economic potential in machine tools
(including military) and in agriculture, make impossible for the US to
use [this area as a base] and neutralize the potential of an ideological
threat to its authoritarian regime."

 

            Those considerations, they continue, demonstrate that "the
aggressive policy of the Kremlin relative to Ukraine is the result not
of the actions of Kyiv but of the requirements of Russia as the current
leadership of [that] state understands them." And that means a change of
course in Ukraine's policies "will not lead to a significant correction
in Russian policy."

 

            At the same time, Gorbulin and Litvinenko argue, "in the
Kremlin, they recognize that the historical 'window of opportunity'
relative to Ukraine for Moscow is quite short and may close already
sometime after 2015 at which time there will be created a new generation
of Ukrainian elites" and when the West may have changed its approach to
Moscow and Kyiv.

 

            All these considerations mean, the two Ukrainian security
analysts argue, that a Russian "'attack on Kyiv' will develop in the
nearest future and will be decisive and pitiless."

 

            Gorbulin and Litvinenko then examine more specifically
Russian policy toward Ukraine and Ukraine's possible response.  With
respect to the former, they make six points.  First, they say, Moscow
has repeatedly made clear that it recognizes the borders of Ukraine but
demands that Ukraine defer to Moscow on issues like possible membership
in NATO.

 

Second, they argue, "the contemporary Russian state both legally and
ideologically and in institutional terms is a direct heir of the USSR,"
a reality that involves in the first instance "institutional memory"
regarding "the mechanisms for the development and adoption of
decisions," in the first instance those involving "strategic" questions.

 

Because of that continuity, they continue, it is very likely that the
Kremlin has not developed "a precise, clearly formulated program of
actions relative to Ukraine" but rather is being guided by decisions on
"the main tasks, directions and [available] arsenal of instruments to be
used."

 

Third, the two analysts argue, this lack of a specific plan does not
mean that Moscow has not decided on its long-term "strategic vision" for
relations with Ukraine.  In fact, it has done so at the December 25,
2008, meeting of the Russian Security Council and State Council of the
Russian Federation.

 

That vision, subsequently made public by Konstantin Zatulin in May 2009
takes the form of "an ultimatum: the preservation of the territorial
integrity of Ukraine is ensured by its transition to 'special relations'
with the Russian Federation and in fact to a Russian protectorate over a
weak Ukraine."

 

            Fourth, on the basis of "almost 20 years of relations with
independent Ukraine," the Kremlin has become "convinced" of the
effectiveness of using "so-called pro-Russian elites" to advance its
cause in Ukraine and of the way in which a Russian protectorate will
ultimately lead to "the territorial division of Ukraine into three
parts," part of which will be absorbed by Russia.

 

            And fifth, the Russian political elite is divided into
"hawks" and "doves" as to how  best and how quickly to achieve these
goals, with some arguing that more pressure sooner is best and others
arguing for less pressure and a longer term approach as the best means
of gaining an upper hand for Moscow. In recent months, because of
economic problems, the hawks are on top.

 

            Moscow is using Crimea as its "basic polygon" for developing
relations with Ukraine and Russian security services for promoting its
goals, the two say. But if these services are unable to achieve Moscow's
goals and if the January 2010 presidential elections in Ukraine do not
give the result Russia wants, "one cannot completely exclude the
application of direct force."

 

            Given this Russian policy, one that places "the very
survival of the Ukrainian state in its current borders" at risk, Kyiv
must immediately adopt a number of "complex measures," Gorbulin and
Litvinenko argue, some of which involve its domestic arrangements and
others a new approach to its foreign partners.

 

            "Above all," they argue, "the protection of the
constitutional rights and freedoms of the citizens of Ukraine must
become the essence of state policy not only at the level of loud
declarations but in reality."  Kyiv must "immediately establish
political stability on the basis of elite and social consensus regarding
a European path of development."

 

            Among the things that will require is a new constitution
that will define Ukraine either as a presidential or a parliamentary
republic rather than combining the two, the reduction of corruption in
the state bureaucracy, the reform of the armed services, the development
of an effective intelligence and counterintelligence service, and better
propaganda of Ukraine's goals.

 

            In foreign affairs, the two analysts suggest, Ukraine must
continue its "strategic course" toward membership in NATO and the
European Community, but this drive "must take on significantly more
tactical flexibility," allowing Ukraine to "accentuate" positive aspects
of its ties with Russia as well. 

 

            Such ties cannot be developed in isolation. Instead, Ukraine
must use "the possibilities offered by international organizations" like
the CIS, OSCE, UN, and Council of Europe and must be willing to think
out of the box by considering such things as declaring the Black Sea a
demilitarized zone.

 

            In its relations with the United States, Kyiv should shift
"the accent from the public and the official to the working level, above
all in the sphere of security," and in ties with the EU, it should move
from declarations to practical work, however limited that may appear to
be at any particular moment. 

 

            And Ukraine should, Gorbulin and Litvinenko argue, "increase
its dialogue with China, [again] in the sphere of security by making use
of the fact that China became the first state guarantor of Ukrainian
sovereignty and territorial integrity which it confirmed these
guarantees in 2006."

 

            Such policies, the two say, "can gradually if not lower
tensions between Ukraine and Russia then at least limit their risk of
conflict and also minimize the potential harm for the national interests
of Ukraine." Perhaps more to the point, such actions will help those in
Russia who want to organize their country "on the principles of
freedom."

 

[Note:  For Ukrainian and Russian readers, the entire interesting and
thought-provoking Horbulin/Litvinenko article is on the DzerkaloTyzhnya
(Zerkalo Nedeli) website - see link above. Permit me to elaborate on the
Fourth Point in the Russian Policy towards Ukraine mentioned in the
Window in Eurasia article based on my reading the full DT text:
Horbulin and Litvinenko argue that the experience of the nearly 20-year
relationship with independent Ukraine convinced the Kremlin as to the
non-effectiveness of indirect control through the so-called pro-Russian
elites.  Once they came to power, all the so-called "pro-Russian"
politicians  immediately changed their orientation and more or less
actively fulfilled a pro-Ukrainian, or, to the extent practical, a
pro-Western course.  Horbulin and Litvinenko further argue that one
cannot exclude that the establishment of a protectorate is viewed by the
Kremlin as just a transitional period for the further/eventual
territorial division of Ukraine into three parts, with the South and
East directly included into Russia, a puppet government in Central
Ukraine, and cutting off Western Ukraine as a "disturbance factor"  OD] 

Eurasia Daily Monitor

September 23, 2009

 Time to De-Mothball the Budapest Memorandum for Ukraine

A representative group of Ukraine's cultural elite has alerted Western
governments and public opinion to Russia's mounting threats against
Ukrainian independence. Alarmed by Moscow's latest moves, the
signatories of the appeal are also concerned by the failure of Western
governments to respond by using existing mechanisms. The appeal,
published in the Ukrainian media (UNIAN, Kyiv Post, September 10, 11),
has also passed unnoticed by Western media and the governments to which
it is addressed.

The signatories include some 30 senior scientists, scholars, and
artists. Most of them are the heads of research institutes and
university departments in fields ranging from mathematics, physics,
biology and medical sciences to economics and the social sciences. The
document proposes reactivating the 1994 Budapest Memorandum (signed
under OSCE aegis) on guarantees to Ukraine's security.

The document notes that Ukraine's independence was central to ending the
East-West conflict in Europe and remains a guarantee against its
resumption. Recently, however, "the Russian government has embarked on a
calculated policy to dismantle the existing system of international
security: "As part of this policy, the Russian leadership seeks "to
force Ukraine to serve Russia's geopolitical interests" (UNIAN, Kyiv
Post, September 10, 11).

Ukrainians are particularly concerned about Russian President Dmitry
Medvedev's latest initiatives, two of which are singled out in the
intelligentsia's appeal. One is the amending of Russia's Law on Defense
to create a wide range of possibilities for Russia unilaterally to use
military force beyond its borders, at short notice, and at the
president's full discretion. The Russian Duma adopted these amendments
on September 9, creating a wide range of potential casus belli
situations that Russia reserves the right unilaterally to invoke. This
initiative is meant to operationalize Medvedev's own ideas about
military intervention, enunciated by him after the invasion in Georgia
and dubbed as the "Medvedev doctrine." It justifies the use of military
force to protect the "rights and dignity" [undefined] of Russian
citizens and "Russian-speakers" in other countries. This excuse can find
a wider scope for application in Ukraine than in any other country.

Medvedev's other recent move was his prosecutorial letter, addressed
formally to the Ukrainian President Viktor Yushchenko, but directed in
fact at the entire body politic in the run-up to the Ukrainian
presidential election. The letter sets markers and red lines with regard
to Ukrainian foreign policy and its internal national development in
accordance with Russian strategies. Medvedev's open letter
(Interfax-Ukraine, August 11, 12), which continues to be discussed in
Ukraine in the pre-electoral context, presumes to veto Ukraine's future
integration into NATO; asserts a droit de regard over Ukraine's
international relationships; seeks explicitly to criminalize
Ukrainian-Georgian military cooperation; accuses Ukraine of deviating
from the 1997 bilateral treaty (a veiled threat to rescind Russia's
recognition of Ukraine's territorial integrity under that treaty);
implies that Ukraine's gas transit system should be part of a unified
one with Russia; denounces (against all evidence) the "ousting of the
Russian language" from Ukraine's public life; and demands bringing
Ukrainian historiography into line with an officially backed Russian
view of historical events. Medvedev demands policy changes across the
board in accordance with Ukrainian-Russian "brotherhood."

The intelligentsia's representatives noted in their document that Moscow
misunderstands Ukrainian aspirations. Ukraine's western-oriented policy
is not directed against Russia, but serves Ukrainian interests. Russian
policy, however, aims to "turn Ukraine into a zone of Russian direct
influence and control." In that event, "subordination of Ukraine to
Russia's strategic objectives can bring back the division of Europe. It
could directly threaten the security of European Union member
countries." In this regard, Moscow's recent steps signify an escalation,
"a new phase in the attitude of Russia's power-center toward Ukraine"
(UNIAN, Kyiv Post, September 10, 11).

The Ukrainian signatories observed that the existing security framework
can no longer reliably protect Ukraine's sovereignty against pressure
and intrusion from outside. The document appeals to E.U. governments and
institutions "to take a clear and unambiguous stand regarding Ukraine's
sovereignty; to restrain Russia from intruding into Ukraine's internal
affairs."

Invoking the 1994 Budapest Memorandum, they also noted that the security
guarantees contained therein have diminished in their effectiveness, but
remain useful and need reaffirmation. Under that memorandum (signed
during the OSCE's summit that year), the nuclear powers extended
security guarantees to Ukraine after the latter had completely renounced
its arsenal of nuclear weapons. The intelligentsia representatives are
appealing to the U.S., British, French, and Chinese governments to call
a conference of the five nuclear powers -including Russia- with the aim
of reaffirming the security guarantees as stipulated by the Budapest
Memorandum. Those guarantees cover Ukraine's territorial integrity, the
inviolability of its borders in accordance with the OSCE's Helsinki
Final Act, and protection against other forms of external coercion on
Ukraine.

Given the growing uncertainties surrounding NATO and U.S. policies in
Eastern Europe, where Moscow is moving into a perceived grey zone, a
reaffirmation of the Budapest Memorandum would make sense at least as a
stop-gap measure. Although the implementing mechanism may be subject to
each signatory power's consent -or a Russian veto- discussion of this
issue at an appropriately high international level could focus much
needed attention on this major security issue in Eastern Europe. Beyond
Ukraine itself, such a step could also positively affect the security
environment in the Black Sea region.

The Budapest Memorandum retains its validity continuously since 1994.
Its de-mothballing could also help limit the intrusion of Russia's
strategic agenda into Ukraine's presidential election campaign. Such
intrusion demonstrated its explosive potential in Ukraine's 2004
presidential election. The security environment around Ukraine has since
deteriorated markedly, and at an accelerating rate in recent months. The
OSCE's upcoming year-end meeting would be the right venue for a
reaffirmation of the Budapest Memorandum, 15 years after the same
organization affirmed its support for the memorandum's signing.

--Vladimir Socor

Can President Yushchenko Disrupt the Presidential Election?

Ukraine's second most popular presidential candidate, Prime Minister
Yulia Tymoshenko, suspects that President Viktor Yushchenko -who is
running for a second term- of conspiring to disrupt the presidential
election scheduled for January 17, 2010. Yushchenko, to whom opinion
polls give no more than 2-4 percent of popular support, has appealed to
the constitutional court against several provisions in a new election
law. Tymoshenko's team suspects that he did so in order to find a
pretext to cancel the election -or at least postpone it in an attempt to
cling to power. While Yushchenko has not offered any comment to dispel
suspicion, controversial statements by Yushchenko's aides fuels such
speculation.

Yushchenko vetoed a new version of the presidential election law, which
was passed on July 24, but parliament overruled the decision on August
21. Commenting on the development, Ihor Popov, the Deputy Head of the
Presidential Secretariat predicted that Yushchenko would appeal to the
constitutional court against several provisions in the new law. He
warned that the legitimacy of the election might be questioned if the
court outlawed those provisions (Ukrainska Pravda, August 21).

Yushchenko appealed on September 15. His representative in the
constitutional court Maryna Stavniychuk specified that he argued that
the new law limits the rights of Ukrainians voting abroad, fails to
ensure a transparent election process or offer mechanisms to improve
voter lists, and does not provide for control of the process by courts
(Ukrainska Pravda, September 15). Popov commented on the same day that
if the constitutional court pronounced the provisions rejected by
Yushchenko as unconstitutional, then the election could be disrupted. He
urged parliament to urgently correct those provisions. If it did so,
Popov said, the election would be held "in an organized and normal
manner." He suggested that parliament's failure to smoothly pass the
2010 state budget also threatened the election, because there would be
no money to organize the process (Channel 5, September 15). Parliament
may fail to pass the budget by the end of the year, due to a blockade of
the session hall organized by the opposition Party of Regions (PRU)
(EDM, September 16).

Popov's statement prompted an angry reaction from Tymoshenko's key ally,
First Deputy Prime Minister Oleksandr Turchynov. He accused Yushchenko
of trying to disrupt the election by both blocking the budget in
parliament (Turchynov apparently suspects that Yushchenko backs
parliament's blockade by the PRU) and appealing against the new law.
"This is his last chance to cling to power," explained Turchynov. He
warned that if the court rejected the new law, all the election
schedules and deadlines would be disrupted (Channel 5, September 17).
Tymoshenko echoed Turchynov's views the following day, warning about two
possible scenarios to postpone the election, which she claimed were
being prepared by Yushchenko's team. According to the first scenario,
the court would dump the new election law, consequently preventing an
election. While the second scenario involved, "the economy being brought
to collapse" through weakening the national currency and "a state of
emergency should be imposed." Tymoshenko recalled that no election may
be held during a state of emergency (Dnipropetrovsk Regional TV,
September 18).

The Central Electoral Commission (TsVK), the constitutional court and
Yushchenko's team flatly dismissed the allegations by Turchynov and
Tymoshenko. TsVK Deputy Head Andry Mahera said that parliament's failure
to pass next year's budget would not affect the election process, since
there are enough funds provided for the election in the 2009 budget to
start the process (Interfax-Ukraine, September 18). Andry Stryzhak, the
Chairman of the constitutional court said that even if the court
pronounced the entire election law as unconstitutional, the election
would be held according to the existing law. Stavniychuk, for her part,
dismissed the possibility of imposing a state of emergency. She noted
that the president would constitutionally require parliamentary
approval, and that the parliament is dominated by the supporters of
Tymoshenko and Yanukovych who would not agree to postpone the election
(Kommersant-Ukraine, September 21). Yushchenko's secretariat head Vira
Ulyanchenko recalled that Yushchenko had not appealed against the entire
law, but only several of its provisions, meaning that no court verdict
could possibly disrupt the election (ICTV, September 20).

The PRU, whose leader Viktor Yanukovych is likely to be Tymoshenko's
main rival in the election, reacted calmly. Parliamentary Deputy Speaker
Oleksandr Lavrynovych, who is a PRU senior member, suggested that
Yushchenko's appeal would not affect the election. He agreed with
Ulyanchenko that Yushchenko appealed only against several provisions in
the election law, so the court could not pronounce the entire law as
unconstitutional (www.liga.net, September 21). Popov again suggested
that parliament should urgently amend the law, in order to meet
Yushchenko's demands. In this case, he said, Yushchenko would recall his
appeal from the court (Segodnya, September 21). Yanukovych's unofficial
spokeswoman Hanna Herman said that Yushchenko was not in a position to
set conditions as his political influence is waning. "The presidential
election will take place in any case," she predicted (Channel 5,
September 21).

 --Pavel Korduban

 

 

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