[Ohio UZO News] Ukraine: Note; FT; WP; EDM; KP (2); Jamestown

[Deychak, Orest]

(NOTE:  First, thank you for the feedback I receive from many of you who find the items I send on this list useful or interesting.  This informal list is not intended to be comprehensive.  The focus is on what major Western newspapers or specialized publications, and the US government/Congress/OSCE are saying regarding Ukraine.  On a few occasions, including recently, I've received feedback from readers who question the selection of some articles or specific authors.  Let me take this opportunity to emphasize that my intent is to send out articles or commentaries of general interest or different perspectives, without necessarily endorsing the views of the authors.  OD ) 

Financial Times

www.ft.com

Bond offer crucial to Naftogaz fate

By Roman Olearchyk in Kiev 

Published: September 25 2009 

A cash-strapped Ukrainian energy group whose solvency is critical to Europe's natural gas supply yesterday tried to avoid default by offeringto swap its $500m eurobonds maturing next week for fresh sovereign-guaranteed bonds with a 9.5 per cent coupon and five-year maturity.

The fate of the swap is being closely watched by European energy officials and bankers, and is crucial to Naftogaz's plan to roll over $1.6bn in debt owed to foreign creditors.

Naftogaz has had a number of spats with Russia's Gazprom, including a dramatic stand-off in January that disrupted gas supplies to Europe.

The new bonds, which fall due in 2014, give investors the incentive of a sovereign guarantee, although the interest rate offered is below that of Ukraine government bonds maturing a year earlier.

In a statement, the company said the government-backed debt restructuring attempts were meant to address "significant challenges", reduce "refinancing risk" and allow it to maintain sufficient liquidity to continue operations.

Naftogaz's finances have worsened in recent years mainly because it sells gas to domestic households at less than market prices even though Gazprom has sharply raised the price of gas exports to Ukraine.

Washington Post

UKRAINE

Babi Yar Hotel Plan

Sparks Outrage

Jewish groups have condemned a plan to build a hotel at Babi Yar, in Ukraine, the site of a Nazi massacre of tens of thousands of Jews.

Lawmakers said Thursday that Kiev's city council approved a plan last week to build dozens of hotels over the next decade, including a three-star hotel on nearby Babi Yar ravine. Historians say more than 33,700 Jews were rounded up and shot at the ravine's edge over two days in late September 1941. The Simon Wiesenthal Center in Israel said the plan shows "utter insensitivity" to the memory of the dead.

-- Associated Press 

Eurasia Daily Monitor

September 25, 2009

Russia's New Ukrainian Disinformation Campaign

Disinformation, or the planting of false information to deceive or smear an enemy, is now being regularly used by both government and non-governmental players in Russia and Ukraine in the fierce battles for control of power and assets in these countries. During the January 2009 "gas war" between Ukraine and Russia, the Russian leadership accused Ukraine of preventing Russian gas from reaching customers in the E.U. The charges were shown to be blatantly false, but were repeated by Russian spokesmen in order to discredit Ukraine as a gas transit country, while building up support within Europe for the North Stream and South Stream pipeline projects. In what might have been a possible retaliation for this, Ukraine launched its own stealth campaign, claiming that the Russian consulate in the Crimea was handing out Russian passports to Russians living in the peninsula. Ukraine was never able to prove these charges, but the idea took hold and many Ukrainians seemed convinced that these "passports" were meant to stir up the Crimean population and were a prelude to the forcible separation of Crimea from Ukraine by Russian armed might.

In September a new and apparently more elaborate disinformation campaign began. This time it was between competing Ukrainian political parties, one of which seemed to be aided by the Russian media. The campaign is centered on the poisoning of Viktor Yushchenko in 2004 during the hotly contested presidential election in Ukraine, which Yushchenko eventually won. Members of the pro-Russian Party of the Regions, led by Viktor Yanukovych, have long claimed that the poisoning of Yushchenko was concocted and that the United States played a key role in this "hoax," meant to win sympathy votes for the pro-Western Yushchenko and discredit Russian politicians who openly supported Yanukovych in 2004.

This conspiracy-disinformation attempt did not gain a significant following at first, and was apparently shelved, but with new presidential elections scheduled to take place in Ukraine in January 2010, the old charges surrounding the poisoning were resurrected, and new lurid details were added and set in motion. On September 18 the Ukrainian newspaper Segodnya published a sensational report stating that Larysa Cherednichenko, the former head of the department for supervision over investigations into criminal cases of the Ukrainian prosecutor general's office, claimed that high-ranking officials from the presidential secretariat and family members of Yushchenko had falsified evidence in his poisoning case (www.kyivpost.com, September 19).

"As [Davyd] Zhvaniya [member of the Our Ukraine People's Self-Defense faction of the Ukrainian parliament, who has more than once denied Yushchenko's poisoning] said, the victim had blood samples taken from him in September-October 2004 with help from an Austrian doctor. However, the samples were not studied in Ukraine or another European country. They were secretly taken to the U.S., where they were enriched with dioxin and were later taken to the U.K. with help from the U.S. special services."

The scenario provided by Zhvaniya was elaborated upon in the Russian newspaper Kommersant Daily on September 24. Kommersant quoted a report in its possession that Cherednichenko ordered a forensic test of a conversation recorded between two persons speaking primarily in English interspersed with occasional Ukrainian.

The conversation was about an unnamed American intelligence service whose agents were due to take Yushchenko's blood sample to Austria. Furthermore, the investigation claimed that one of the voices on the recording belonged to Kateryna Yushchenko, the wife of Viktor Yushchenko and the other voice to Roman Zvarych, a former Ukrainian justice minister and close supporter of Yushchenko (Kommersant, September 24).

What the paper failed to mention was how and where this alleged recording was made and by whom?

Both Kateryna and Zvarych were born in the United States and belonged to the same Ukrainian nationalist organization until moving to Ukraine in the 1990's where they eventually obtained Ukrainian citizenship. After Yushchenko's election as president, Kateryna was often accused in the Russian media of being a U.S. CIA agent.

According to a report on the BBC on January 28, 2005, "In 2001, the Russian television presenter Mikhail Leontiev, known for his controversial pro-Kremlin sympathies, accused Kateryna Yushchenko of being a "CIA agent" sent to Ukraine to bring her husband to power. Kateryna Yushchenko subsequently won a libel case in a Ukrainian court against Leontiev and his "Odnako" [However] program."

Austrian doctors responsible for examining Yushchenko several months after the poison was reportedly administered said the Ukrainian politician had ingested a concentrated dose of dioxin. The powerful toxin caused bloating and pockmarks on Yushchenko's face, giving his skin a greenish hue and adding a macabre note to a tumultuous political season culminating in the mass Orange Revolution protests in December 2004.

For unexplained reasons, the current disinformation campaign fails to name who poisoned Yushchenko and why.

--Roman Kupchinsky


Kyiv Post


www.kyivpost.com <http://www.kyivpost.com> 


Ukraine, Eastern Europe worried about losing clout in Washington


September 24, 2009

The U.S. decision to revoke plans to build a missile shield in Eastern Europe provoked speculations that it will strengthen Russia's position in the region, enabling it to push its interests in Ukraine more aggressively.

The U.S. decision to cancel plans to build a missile shield in Eastern Europe has provoked concern that Russian may be emboldened to push its interests in Ukraine more aggressively. The decision, announced on Sept. 17, has been interpreted in Ukraine as a sign of waning U.S. support for pro-Western allies in the region, a tradeoff to help U.S. President Barack Obama win Russian cooperation on more pressing American foreign policy priorities.

Speaking at the Council on Foreign Relations in New York on Sept. 21, President Victor Yushchenko obliquely criticized the decision. "To make defense stronger and make it more efficient is always good.  And this gives more benefits than the policy of risk balances, because risk management ... is not a stable policy," he said.

Yushchenko also stressed Ukraine's vulnerability to moves from Moscow, particularly on the Crimean peninsula, and the need for protection by the West. "We don't want to lose our independence like we did many times in the 20th century.  NATO membership and Ukrainian independence ... are synonymous," he said.

But polls show that most Ukrainians - about 60 percent - are against joining NATO, and would prefer a different security arrangement, according to Ilko Kucheriv, head of the Democratic Initiatives Foundation, a think tank.

The $56 billion anti-missile system to be stationed in Poland and the Czech Republic was the brainchild of the previous administration of U.S. President George W. Bush. It was perceived by Russia as a direct threat and was a major sore point in relations. Obama's cancellation was seen as an attempt to secure the Kremlin's cooperation on a number of issues, including Iran and nuclear disarmament, by removing a system that may have been ineffective anyway due to technical shortcomings.

But while Russia and U.S. taxpayers may cheer the decision, it was booed by governments and people of Eastern and Central Europe, including Ukraine. Some said Russia would interpret the U.S. decision on the missile shield as a sign of weakness.

"Russia will perceive the move as a step back from the region," said Adrian Karatnycky, a senior fellow of the Atlantic Council of the United States. "Russia is going to test the U.S. in the coming months and years with probes and moves to see how far it is prepared to turn the other cheek." 

Karatnycky also predicted that "Russia will step up its pressure on Ukraine and try to reassert itself as the dominant force in the region." This is of particular concern in Ukraine with the Jan. 17 presidential elections approaching, given Moscow's overt interference in 2004. Russian President Dmitry Medvedev has already set out the Kremlin's vision for the new president's domestic and foreign policy in a forceful letter sent to Yushchenko in August, criticizing the president's "anti-Russian" policies. 

There are also fears that an emboldened Russia will step up its opposition to Ukraine's efforts for deeper integration with the European Union, alongside its continued hostility toward Ukraine's NATO ambitions. The Kremlin is also likely to press for the extension of the Black Sea Fleet's presence on Ukrainian territory beyond 2017, when the current agreement runs out. Observers in Kyiv are also concerned that Russia may go as far as using a provocation by pro-Russian groups in the Crimea as a pretext for intervention on the peninsula. A bill was recently passed in the Russian parliament to provide a legal basis for "defending" Russian citizens abroad using force.

"Russia will more and more think about real power in Eurasia. It can now demand a special sphere of influence including Ukraine," said Yuriy Shcherbak, a former Ukrainian ambassador to the U.S.

Although the Obama administration has repeatedly stressed its opposition to the whole concept of a Russian sphere of influence, Russia's intervention in Georgia last year revealed the limits of Washington's ability - and willingness - to support its allies in the region. Iran and Afghanistan remain overwhelming priorities for the U.S., and rapprochement with the Kremlin is seen as a way to secure support for Obama's positions.

"I remember a time when Ukraine occupied fourth of fifth place on the priority list for the U.S. administration. But now I don't believe we are even 20th or 30th on the list," said Shcherbak.

The blame for Ukraine's slide down the list of Washington's priorities, however, doesn't rest alone with the U.S. 

Ukraine-Russia relations have soured under the presidency of Yushchenko. As president, Yushchenko has admirably held firm to pro-democratic and pro-Western principles, but relations with Russia have noticeably soured. Some Yushchenko critics say he has been sucked into repeated confrontations with Moscow on a broad range of issues, which the Kremlin uses to meddle in Ukrainian affairs and could utilize as a pretext to intervene on a bigger scale.

Moreover, people who attended Yushchenko's appearance earlier this week at the Council of Foreign Relations privately said there was widespread consternation at his perceived detachment from reality. He opened with a speech on Ukraine's economic achievements, despite an estimated 18 percent plunge in gross domestic product in the first half of the year. "Many saw it as his last hurrah," said one attendee, adding that people know he is unlikely to be re-elected.

 


Kyiv Post


Editorial


Replay button


 

This year's presidential campaign gives off a strong dejа vu: same problems, same faces, with a few twists.

Is this 2009 or 2004? This year's presidential election campaign is starting out in disturbingly familiar ways to the campaign five years ago. Speculation persists about whether Victor Yushchenko was or was not deliberately poisoned by dioxin and who is to blame. The nation's voters are said to be split along an east-west axis. Russia is again meddling in Ukraine's elections. Accusations over the unsolved 2000 murder of journalist Georgiy Gongadze continue to fly in all directions.

That anyone in Ukraine's warped power structure thinks it is flattering for these issues to dominate the current public debate is a damning indictment of all of them. The corruption and murder cases should have been solved years ago. Instead, it is shocking to realize how little progress has been made in solving the nation's worst crimes, in making the government more transparent and democratic, in improving relations with Russia and, in general, with moving society ahead.

About the only improvement we expect over 2004 is that the intramural power struggle among the elite - otherwise known as the Jan. 17 presidential election - should help ensure a more democratic and honest vote in the same way that there is honor among thieves.

As the nation's leaders continue to fail to solve national problems and crimes, new ones pile up. One cannot help but wonder whether Ukraine's political elite are turning up the volume on old scandals deliberately to drown out tough questions about how they are refinancing banks and who is profiting. 

Interior Minister Yuriy Lutsenko on Sept. 23 called the National Bank of Ukraine's schemes part of one of the "the greatest financial frauds" since Ukraine's independence. Since Lutsenko is given to hyperbole, some of this words can be discounted. He has launched criminal investigations. But considering his subservience to Prime Minister Yulia Tymoshenko and his overall impotence as a law enforcer, perhaps we can expect results five years from now.

Bank insiders are suspected of making piles of money by cashing in on their privileged status to buy dollars at the low NBU rates and selling higher. Others are suspected of engaging in wildcat speculation and currency manipulation by trading on their insiders' knowledge of the timing and size of NBU interventions designed to stabilize the value of the battered hryvnia, lately trading at Hr 8.5/$1.

Now we are gaining a much better understanding of what critics mean by a central bank that is secretive and lacking in independence. Unfortunately, Ukraine's international bankrollers, the International Monetary Fund and the World Bank, are seeing nothing wrong. Perhaps these officials could care less about the fate of Ukraine's ordinary citizens, as long as the taxes of the nation's downtrodden are used to repay the billions in misspent international loans?

It seems clear that Ukraine's citizens are not going to trust their banks - or their government - anytime soon. This is bad news for the economy. One place to start cleaning up the mess is to make sure the central bank is independent, public and transparent, and to set up a separate regulatory agency for commercial banks.

This new mess Ukraine finds itself in happened on the watch of the current trio of leaders, ex-Prime Minister Victor Yanukovych,  Prime Minister Yulia Tymoshenko and President Yushchenko. They have all proven they are unfit to rule. But it looks like one of them will win the presidency. And that means the nation may be in for another five years of the same old, same old.


Jamestown's Eurasia Blog


September 24, 2009


What is President Yushchenko Doing? <http://jamestownfoundation.blogspot.com/2009/09/what-is-president-yushchenko-doing.html>  


by Tammy Lynch

I stood on the Maidan in Kyiv for the 17 days that became known as the Orange Revolution. I am an American, but I listened to the speeches, talked to the "campers," joined the chanting and waved my orange flags and creased, worn streamers. I watched as a million people soared on the wings of a collective euphoria. 

During these 17 days, presidential candidate Viktor Yushchenko railed against corruption, promised to solve politically-motivated murders and vowed to involve "the people" in the process of state building. 

And then .... he took office. Five years later, those million-strong euphoric expectations have crashed to the ground. Corruption has not decreased. Political crimes have not been solved. And few in Ukraine believe that "the people" matter. 

The blame for this must not solely be laid at President Yushchenko's door. One thing is clear, however - in five years, Yushchenko has proven unable to work efficiently with any government, any prime minister, or any political bloc to pass his stated reform agenda. 

This week, in an apparent attempt to undermine Prime Minister Yulia Tymoshenko, President Yushchenko attacked her government - again. In the process, he also perhaps unwittingly launched an attack on Ukraine itself. 

On 17 September, Yushchenko announced that the IMF is being too lenient with Tymoshenko's government, implying that the Fund should suspend disbursement of the remaining tranches of a $16.4 billion loan. "I am very disappointed," Yushchenko said, "that the policies in 2009 departed so far from the memorandum [of understanding with the IMF]," as his aide warned that the IMF had said it would not disburse more money this year. So far, the country has received over $10 billion from the Fund. The government quickly disputed these statements.

Yushchenko is correct about one thing - the IMF has been very lenient. A majority of agreed reforms have not occurred. However, President Yushchenko should look in the mirror to see one of the reasons. A number of reforms have been enacted by the Prime Minister's direct decree. PM Tymoshenko was forced to rely on decree power after Yushchenko's parliamentary allies refused to vote for IMF-supported changes to the pension fund and Naftohaz gas company funding. Yushchenko made no attempt to rally his troops on behalf of these policy alterations. 

Yushchenko also has avoided campaigning personally for the implementation of the IMF's toughest reform requirement - higher gas prices for consumers. With an election four months away, it is unlikely any politician will board that reform train. 

The biggest problem with Yushchenko's critique of the IMF's leniency is not whether it is true. Rather, his comments undercut his own government's work with an international lending organization, while signaling to other investors that they should stay away. He has spotlighted a potential problem but done nothing to fix it - a common event during his presidency. In the process, a president who is supposed to represent his country has undermined it.

So, what if the IMF listened? Would the situation in Ukraine improve? Hardly. In fact, a suspended IMF loan could have a fatal effect on Ukraine's bond yields, further destabilize the currency, squash Naftohaz's attempts to restructure its Eurobonds and freeze Foreign Direct Investment indefinitely. Is President Yushchenko too concerned with undermining his prime minister - and presidential campaign opponent - to understand this? 

 

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