WikiLeaks about UKRAINE: FIRTASH MAKES HIS CASE TO THE USG (December 2008)

Reference ID Created Released Classification Origin
08KYIV2414 2008-12-10 07:07 2010-12-01 23:11 SECRET Embassy Kyiv

VZCZCXYZ0000
RR RUEHWEB

DE RUEHKV #2414/01 3450752
ZNY SSSSS ZZH
R 100752Z DEC 08
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC 6884
INFO RUCNCIS/CIS COLLECTIVE
RUEHZG/NATO EU COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFISS/DEPT OF ENERGY WASHINGTON DC
RUEAIIA/CIA WASHDC

S E C R E T KYIV 002414

SIPDIS

DEPT FOR EUR/UMB
EEB/ESC/IEC FOR SGALLOGLY AND LWRIGHT
DOE FOR LEKIMOFF, CCALIENDO, RBOUDREAU
USDOC FOR 4231/ITA/OEENIS/NISD/CLUCYK

EO 12958 DECL: 12/10/2018
TAGS EINV, ENRG, EPET, PINR, PREL, POL, UP
SUBJECT: UKRAINE: FIRTASH MAKES HIS CASE TO THE USG
REF: A. KYIV 2383 B. KYIV 2294

Classified By: Ambassador for reasons 1.4 (b) and (d)

¶1. (S) Summary and Comment: Controversial Ukrainian oligarch Dmytro Firtash, best known as co-owner of gas intermediary RosUkrEnergo (RUE), called upon the Ambassador on December 8. Firtash did not explicitly state why he requested the meeting, nor did he ask the USG for anything, but he spoke at length about his business and politics in a visible effort to improve his image with the USG. The soft-spoken billionaire, arguably one of Ukraine’s most powerful people, expressed strong support for President Yushchenko and equally strong contempt for Prime Minister Tymoshenko. He claimed that he had thwarted a coalition between BYuT and the Party of Regions (PoR) at the last minute, and was now working to build a coalition between Yushchenko’s supporters and the PoR.

In a lengthy monolog, Firtash described his evolution as a businessman from his beginnings as a food trader to the creation of RUE. Firtash claimed that Tymoshenko was working with Russia to eliminate RUE, and cited examples meant to prove that she was making political concessions to Russia to gain its support to do so. He acknowledged ties to Russian organized crime figure Seymon Mogilevich, stating he needed Mogilevich’s approval to get into business in the first place. He was adamant that he had not committed a single crime when building his business empire, and argued that outsiders still failed to understand the period of lawlessness that reigned in Ukraine after the collapse of the Soviet Union. He said he cared truly about Ukraine, and saw Russian business interests overtaking the economy as the biggest threat to the country’s security. Comment: Firtash’s arguments and allegations are clearly self-interested; he sees Tymoshenko as a clear threat to his business. End summary and comment.

Firtash Seeks to Improve His Image
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¶2. (C) Ukrainian billionaire Dmytro Firtash, best known as co-owner of controversial gas intermediary RUE, sought a meeting with the Ambassador on December 8. Accompanying Firtash to the meeting was political consultant and AmCit Zev Furst, and Andras Knopp, the Hungarian-born number two at RUE. Firtash never specifically stated why he had sought the meeting, nor did he extend any specific requests to the Ambassador, but in the course of the conversation it was clear he tried to use the meeting to portray a positive image of himself. Furst said he was attending as a “friend and advisor” to Firtash and during the course of the meeting stated that the USG might have misperceptions about Firtash. At one point during the meeting, Firtash began to talk about “mistakes he might have made,” but diverted the conversation when Furst waved him off.

Firtash’s Support for President Yushchenko...
---------------------------------------------

¶3. (C) In the meeting, which lasted two and a half hours, Firtash told the Ambassador that he was not a public person, but had recently been pulled deeper into Ukrainian politics. He admitted that he has “loyally served” as an unofficial advisor to President Yushchenko during tense gas negotiations with Russia and political crises dating back to the Orange Revolution in 2004. He reported that he met with the Yushchenko at his dacha (cottage residence) three times in the last week at the President’s request. He described himself as a close friend and confidante of the President -- someone the President can trust totally. In his view, Yushchenko made a possibly fatal political error during the Orange Revolution in that he and Tymoshenko propagated the concept of two Ukraines -- an orange, more democratic Ukraine, and a blue Ukraine represented by the Party of Regions (PoR) and more focused towards the status quo. He added that this divisiveness throughout Ukraine is exactly what Russia hoped to cultivate in order to control Ukraine. Firtash felt the only way to unify Ukraine during the current political and economic crises was to form a coalition between the President’s supporters and the PoR in order to stop what he termed, “Tymoshenko’s plans to offer up the country to Russia on a silver platter.” (Note: On the evening of December 9, BYuT, Our Ukraine/People’s Self Defense Party, and the Lytvyn Block formed a coalition, keeping Tymoshenko in power and rebuffing Firtash’s hopes for a coalition between the President’s supporters and the PoR. End note.)

...And Contempt for Tymoshenko
------------------------------

¶4. (C) Firtash defined Tymoshenko as an accomplished oligarch who had made deals with Moscow that would leave Ukraine vulnerable to Russian oligarchs in the future -- something neither he nor Ukrainian billionaire and PoR backer Rinat Akhmetov could stand by and watch happen. Firtash referred to Tymoshenko’s title of “gas princess” as a misnomer; he explained that Tymoshenko did make lots of money off of a corrupt, perpetual gas debt scheme during the 1990s, but she knew nothing about the gas business. XXXXXXXXXXXX to give the false impression that she was not actively involved in business. He believed that Tymoshenko’s hatred for him stems from Tymoshenko’s missed opportunity to develop her own RUE back in 2005, when she was Prime Minister for the first time.

¶5. (C) Firtash stated that he felt Russia was strongly supporting a BYuT and PoR coalition and that such a coalition was about to be finalized on December 7, with only Regions leader Viktor Yanukovych needing to sign. He claimed that he torpedoed the coalition at the last moment by convincing Yanukovych that an alliance with Tymoshenko would never last. Firtash recounted that on December 6, Tymoshenko was on nearly every Ukrainian TV channel and in every newspaper, prophesying that a BYuT and PoR coalition agreement would be signed on the evening of December 7. Firtash was visibly delighted as he recounted how he used his television station INTER to air an interview in which Yanukovych refuted Tymoshenko’s claim that a BYuT and PoR coalition was a done deal (Ref A). Responding to a question by the Ambassador on whether he worked with Akhmetov to derail a BYuT/PoR coalition, Firtash said that they had worked separately, even if they were pursuing the same goal.

¶6. (C) Firtash said he and Akhmetov both wanted a coalition between the President’s supporters and the PoR. He claimed that he had brokered a subsequent meeting between Yanukovych and Yushchenko for the evening of December 8. He was not sure if Yanukovych and Yushchenko could form a new coalition, but saw it as the only way out of Ukraine’s prolonged political strife.

From Humble Beginnings...
-------------------------

¶7. (C) Firtash described himself as a simple person who grew up in the village of Synkiv in the Ternopil oblast in Western Ukraine. Firtash explained he had very humble beginnings -- his father taught driver education and his mother worked in a sugar factory. He added that since his parents hated communism, they did not benefit from valuable contacts that could have helped him get into a university, which was his childhood dream. Firtash said he shared his parents’ disdain for the Communist party and only agreed to join the Communist youth movement Komsomol after being locked in a party member’s office for two days without food or water.

¶8. (C) Firtash told the Ambassador he attended an occupational institute before be drafted into the army in 1986 and studied to become a fireman after completing his military service. In 1991, when the Soviet Union collapsed, Firtash stated his parents thought it was the end of the world and he was concerned about making a living during unpredictable times. He added that he felt he was “between two countries -- one that had ended and one that was beginning.” He described his future as unknown, stating he was “living in a country with no laws and no taxes.” Firtash also described himself as a “natural businessman” without a university education who “had a nose” for business opportunities, and who would make the best of the uncertainty.
¶9. (C) (Note: The Ukrainian newspaper “Ukrainska Pravda” researched Firtash’s life and reported that Firtash was not highly educated, but was a highly decorated soldier who had used his contacts to build a canned goods and dry milk business which shipped goods first to Uzbekistan. According to press reports, Firtash’s first wife and business partner Mariya Kalinovska was given credit for Firtash’s first business success. This business then turned into a profitable canned goods production factory and a transportation company registered in Germany. Firtash and Kalinovska were married from 2002-2005, with Kalinovska reportedly receiving a large divorce settlement, despite efforts by former Fuel and Energy Minister Yuriy Boyko to misrepresent the true scale of Firtash’s wealth. End note.)

...To Powerful Oligarch
-----------------------

¶10. (C) Firtash gave a detailed account of how he got into the gas business. Firtash explained that his food and commodities business, which he started in Chernivtsi in Western Ukraine with his wife Mariya, was first called KMIL, and later expanded into High Rock Holdings. Due to his commodities business, he became acquainted with several powerful business figures from the former Soviet Union. Firtash said he met Ukrainian businessman Igor Bakai in Turkmenistan who was selling cars in Ashgabat, but had bigger plans. According to Firtash, Bakai convinced then Ukrainian President Kravchuk to give him permission to buy gas exclusively for the Ukrainian market in Turkmenistan. Firtash noted that Bakai’s success also sparked Firtash’s interest in the gas business. (Note: In 1993 Bakai then formed the Respublika company, which later became Intergas, which set the precedent for profitable gas trading between Turkmenistan and Ukraine. Bakai would go on to be the first Head of Ukraine’s state oil and gas company Naftohaz from 1998-2001. End note.)

¶11. (S) Firtash also described the gas business in Ukraine during the mid 1990s as particularly dangerous. Firtash said that then Prime Minister Pavel Lazarenko had hired criminals to run the Ukrainian government and used his position as Prime Minister for corruption. He added that Tymoshenko headed Ukrainian Energy Systems, where she earned her fortune. Firtash claimed that Lazarenko, Tymoshenko, and Lazarenko’s Assistant Igor Fisherman divided and conquered the Ukrainian gas market. He stated that Lazarenko ordered the killings of Donetsk Governor Yevgen Scherban in 1996 and the head of Itera in Kyiv for not sharing Lazarenko’s gas business philosophy. (Note: Igor Fisherman was known in the Ukrainian press as Mogilevich’s right hand man who was also High Rock Holding’s financial director during the late 1990s. End note.)

¶12. (C) Another such businessman was Igor Makarov, who founded the Itera gas trading company in 1992, which provided Turkmen gas to former Soviet republics. Firtash claimed that Makarov hired a former KGB head as his security chief to direct Makarov’s gas trading empire in Central Asia. Firtash recounted that he gave Itera food commodities through High Rock Holdings, which Itera used to buy gas in-kind from Turkmenistan. Makarov then paid Firtash in cash with the proceeds of his gas sales. According to Firtash, Makarov refused to pay Firtash $50 million in 2001, which drove Firtash to explore his own gas trading business, ousting Makarov at the same time.

¶13. (C) According to Firtash, he hired Hungarian-born businessman Andras Knopp to negotiate new gas trading deals with Kazakhstan, Turkmenistan and Uzbekistan. Since these Central Asian countries trusted Firtash as a reputable businessman, they agreed to sign with Firtash’s EuroTransGas (ETG) company, leaving Makarov’s business in ruins.

¶14. (S) Firtash also recounted that Makarov invited him to dinner in Kyiv in January 2002, shortly after Firtash had signed the gas deals with Central Asia. Firtash added he went to that dinner not knowing if he would be beaten up or even killed for having taken Makarov’s business from him. According to Firtash, Makarov was there with his head of security, Semyon Mogilevich, Sergei Mikhas, from the Solnstevo Brotherhood, and a Mr. Overin when Makarov told Firtash he would regain his gas business as easily as Firtash had taken it away. Firtash walked away from the meeting alive, and credited his ability to keep his life and his gas business to his good reputation among Central Asian leaders.

¶15. (C) According to Firtash, by 2002, ETG was the sole transporter of Turkmen gas to Ukraine. (Note: According to media reports, by 2005 Firtash had already created a gas trading empire that allowed him to easily transition into RUE. In addition, Firtash owns majority shares in companies in Ukraine, Estonia, Russia, Germany, Switzerland, Italy, Tajikistan, and Austria all under the umbrella of the Group DF which he formed in 2007 (Ref B). He also owns 61% of the Ukrainian Inter Media Group which owns or co-owns 7 television channels and the Ukrainian News Agency. By 2006, Firtash’s estimated worth was over $5 billion, but most experts believe that Firtash had low-balled his true worth and estimated it was in the tens of billions. In his conversation with the Ambassador, Firtash gave no indication of the scope of his wealth. End note).

The Future of RosUkrEnergo (RUE)
--------------------------------

¶16. (C) When asked about Tymoshenko’s promise to rid Ukraine of RUE, Firtash responded by making a link between Tymoshenko and Russia. He argued that the Prime Minister was seeking Russian support to get rid of RUE, and was making concessions to Russia to accomplish this goal. He specifically cited what he said was her silence on the August events in Georgia, her avoidance of a stand on the Holodomor and the issue of the Black Sea Fleet in Crimea, as examples of the political concessions she was making to Moscow. Firtash acknowledged that he was having more and more problems with Russia. He alleged that the Russians had already excused a $600 million debt that she owed from her previous gas business that could be used as pressure to get concessions from her. If Moscow really wanted to get rid of RUE, Firtash added, it could do so as long as Tymoshenko was at the helm.

¶17. (C) Responding to the Ambassador’s question, Firtash said Ukraine’s current gas debt to RUE was near $3 billion, adding that the debt was owed directly to RUE and not to Gazprom. In his view, Ukraine could only clear the debt to RUE in gas since it didn’t have enough cash to pay outright. He added that according to the RUE charter with Gazprom, any shipments or supplies of gas to RUE must be confirmed by two signatures on a gas transfer document -- one signature from Gazprom -- the other from RUE (Firtash). Firtash argued that if he does not sign the gas transfer document, then legally there is no proof that gas has been supplied to RUE or Ukraine, so Gazprom forfeits its ability to demand payment from RUE, thus keeping RUE in the gas arrangement for some time. He estimated that Ukraine would have to pay RUE 12 billion cubic meters (bcm) of gas to settle the debt. This could be done by transferring Ukrainian gas already in storage to RUE, bringing RUE’s reserves in storage in Ukraine up to 23.5 bcm, since RUE already has 11.5 bcm in storage (Ukraine’s maximum storage capacity is 34 bcm). The gas would normally be exported to Europe at market prices, which despite falling world gas prices would still be very profitable. Firtash hinted that if RUE was removed with Russian approval, Ukraine would most likely attempt to take or steal all of RUE’s gas in storage.

Ties to Russian Organized Crime
-------------------------------

¶18. (S) The Ambassador asked Firtash to address his alleged ties to Russian organized crime bosses like Semyon Mogilievich. Firtash answered that many Westerners do not understand what Ukraine was like after the break up of the Soviet Union, adding that when a government cannot rule effectively, the country is ruled by “the laws of the streets.” He noted that it was impossible to approach a government official for any reason without also meeting with an organized crime member at the same time. Firtash acknowledged that he needed, and received, permission from Mogilievich when he established various businesses, but he denied any close relationship to him.

¶19. (S) Firtash’s bottom line was that he did not deny having links to those associated with organized crime. Instead, he argued that he was forced into dealing with organized crime members including Mogilevich or he would never have been able to build a business. If he needed a permit from the government, for example, he would invariably need permission from the appropriate “businessman” who worked with the government official who issued that particular permit. He also claimed that although he knows several businessmen who are linked to organized crime, including members of the Solntsevo Brotherhood, he was not implicated in their alleged illegal dealings. He maintained that the era of the “law of the street” had passed and businesses could now be run legitimately in Ukraine. He underscored the importance of unifying Ukraine politically in order to reduce the influence of Russian organized crime bosses on Ukrainian businesses.
TAYLOR

More pictures of Galyna Kolotnytska, Ukrainian nurse and alleged lover of Moammar Gaddafi (Segodnya newspaper, www.segodnya.ua)

WikiLeaks about Ukraine. UKRAINE: TOO EARLY TO WRITE OFF ROSUKRENERGO. Full text.

C O N F I D E N T I A L KYIV 002173

SIPDIS

DEPT FOR EUR/UMB,
EEB/ESC/IEC FOR SGALLOGLY AND LWRIGHT
DOE FOR LEKIMOFF, CCALIENDO, RBOUDREAU
DOE FOR NNSA: NCARLSON, CHUNSAKER, TKOONTZ
USDOC FOR 4231/ITA/OEENIS/NISD/CLUCYK

EO 12958 DECL: 10/30/2018
TAGS EINV, ENRG, EPET, PINR, PREL, UP
SUBJECT: UKRAINE: TOO EARLY TO WRITE OFF ROSUKRENERGO (RUE)
IN 2009

Classified By: Economic Counselor Edward Kaska for reasons 1.4 (b), (d)

¶1. (C) Summary. Prime Minister Yuliya Tymoshenko has repeatedly promised to remove all intermediaries in the gas trade with Russia, but Russia appears to be making direct gas dealings contingent upon obligations that Ukraine may not be able to fulfill. Tymoshenko and Russian PM Putin have signed a memorandum calling for direct gas trade, and the heads of state-owned oil and gas company Naftohaz Ukrainy and Russian energy giant Gazprom followed up with an agreement specifically removing shady intermediary RosUkrEnergo (RUE) from gas dealings between Russia and Ukraine. Ukraine must first pay off significant debts to Gazprom, however, which could be a tall order given the country’s current balance of payments crisis and its poor track record of paying its gas debts. The high level meetings did set some parameters for the 2009 gas trade, but no final agreement on price has been signed, and GOU sources tell us that Moscow may bide its time to see if snap parliamentary elections result in a new government more amenable to Russia. Hence, it is still too early to write off RUE, or the concept of shady intermediaries as a whole. Some commentators are speculating that the sides may even agree to replace RUE with another, recently established company called KazUkrEnergo. End summary.

Conditions Must be Met before RUE Removed
-----------------------------------------

¶2. (C) Gas intermediary RosUkrEnergo (RUE), could still play a role in Ukraine’s energy sector next year, despite the gas memorandum signed on October 2 by Ukrainian Prime Minister Yuliya Tymoshenko and Russian Prime Minister Vladimir Putin that calls for direct gas relations between Ukraine and Russia. Tymoshenko repeatedly has pledged to eliminate RUE and other gas intermediaries from the gas trade between the two countries. Gazprom owns 50 percent of RUE. Ukrainian businessmen Dmitry Firtash and Ivan Fursin nominally control 45 and 5 percent stakes, respectively, but Ukrainian media several times have reported that the circle of true beneficiaries of RUE is wider and includes Semyon Mogilevich, a Russian organized crime boss wanted by the FBI and currently in custody in Russia.

¶3. (SBU) The October 2 memorandum aims to establish direct, long-term gas relations between Naftohaz and Gazprom beginning on January 1, 2009. The memorandum makes no mention of intermediaries for cross-border sales, and Ukraine must fulfill several conditions: Naftohaz must pay its outstanding gas debt to Gazprom, Ukraine must commit to paying future gas supplies on time, and Gazprom subsidiary Gazprom Sbyt must be allowed to sell gas to Ukrainian consumers (Note: This is quite a tall order, given that Naftohaz reportedly owes Gazprom $1.8 billion in accrued gas debt, Kyiv has a poor track record for paying its gas bills on time, and Naftohaz reportedly owes Gazprom 11 billion cubic meters (bcm) of gas. End note).

¶4. (U) As a follow-up to the October 2 memo, Naftohaz Chairman Oleh Dubyna and Gazprom Head Alexei Miller last week concluded another agreement, which reportedly will remove RUE from Ukraine’s gas market and change the way Ukraine and Russia have conducted gas relations since 2006. So far, few details about the new agreement are known. Neither a 2009 gas import price for Ukraine nor the amount of money Naftohaz owes Gazprom for unpaid gas were specified in the new agreement.

¶5. (SBU) Both sides did agree that the amount of gas that Ukraine transports across its territory on Gazprom’s behalf in 2009 will be the same as this year’s. In 2007 Ukraine shipped 112 bcm of Gazprom’s gas through its pipelines, and 82 bcm during the first eight months of 2008, representing a 19 percent increase over the same period last year. Gazprom agreed to lower the cost of the 6.4 bcm of so-called “technical gas” that Ukraine annually uses to maintain its gas transport infrastructure. Naftohaz, on the other hand, has pledged to allow Gazprom Sbyt to sell no less than 7.5 bcm of gas in Ukraine to industrial customers and pay all outstanding gas debts, including RUE’s to Gazprom.

GOU: Moscow May Wait for New Government
----------------------------------------

¶6. (C) EconOff spoke with Naftohaz Deputy Chairman Vitaliy Gnatushenko on October 27 regarding the GOU’s plans to eliminate RUE from the gas arrangement. Gnatushenko affirmed that Ukraine still intended to sign a long-term gas contract with Gazprom that did not involve gas intermediary RUE. Naftohaz would sign a contract now, but Gnatushenko’s contacts at Gazprom told him that Moscow first wanted Naftohaz to pay its outstanding debts, and was waiting for the outcome of snap parliamentary elections, which may or may not take place in December. EconOff also spoke with Deputy Minister of Fuel and Energy Volodymyr Makukha who acknowledged that RUE would most likely be part of the gas arrangement until Naftohaz had satisfactorily cleared all its outstanding gas debts either with cash or in-kind payments. Makukha could not explain how Naftohaz would quickly clear those debts. Makukha agreed that Moscow was waiting for Kyiv to elect a new parliament before it would sign anything. He added that with falling oil prices, Naftohaz’s bargaining position for a cheaper gas price was strengthened, but he did not believe any new gas contracts would be signed until the end of December or the beginning of 2009.

KUE To Replace RUE?
-------------------

¶7. (SBU) While details are few, local press has reported that a new gas intermediary called “KazUkrEnergo AG” could take RUE’s place and sell Central Asian gas to Ukraine, possibly after snap elections lead to a new government more amenable to Moscow. Like RUE, KazUkrEnergo (KUE) appears to be a “mailbox” company and could be waiting in the wings until a new Ukrainian PM is confirmed who may be more receptive to the idea of retaining gas intermediaries in Ukraine’s gas relations with Russia and Central Asian producers. KUE was registered in May this year in Zurich with a statutory capital of 200,000 Swiss Francs ($194,870) and 20 shares. KazUkrEnergo reportedly is owned by Korlea Invest Holding AG (Switzerland), a company that exports Ukrainian electricity primarily to Central Europe.

Comment
-------

¶8. (C) Although media report that Tymoshenko -- by concluding this latest gas agreement -- has achieved her long held goal of removing RUE from Ukraine’s energy sector, Gazprom could still retain the right to maintain its own contracts with the gas middleman. Ukraine would struggle to pay back $1.8 billion of debt in the best of times, and the current balance of payments crisis will make it even more difficult for Ukraine to settle the debt before negotiations for gas prices in 2009 begin in earnest. In addition, the country’s unstable politics make it impossible to gauge whether Tymoshenko will be in power, or strong enough, to truly rid Ukraine of RUE in the coming months. Hence it remains too early to write off RUE. End comment. TAYLOR

WikLeaks about Ukraine. FIRTASH USES CRISIS TO EXPAND INTO BANKING. Full text.

C O N F I D E N T I A L KYIV 002294

SENSITIVE
SIPDIS

DEPT FOR EUR, EUR/UMB, EEB/OMA
TREASURY PASS TO TTORGERSON

EO 12958 DECL: 11/21/2018
TAGS EFIN, EREL, ETRD, PGOV, PREL, XH, UP
SUBJECT: UKRAINE: FIRTASH USES CRISIS TO EXPAND INTO BANKING
REF: A. A) KYIV 02080 B. B) KYIV 02207

Classified By: Acting Economic Counselor William Klein for reasons 1.4 (b) and (d)

¶1. (C) Summary. Dmitry Firtash, one of Ukraine’s most wealthy and notorious oligarchs, plans to buy a controlling stake in Nadra Bank, Ukraine’s seventh largest bank. The acquisition of Nadra, which will join Firtash’s international holding company (Group DF) when the deal is final, would be Firtash’s first foray into Ukraine’s banking sector. The purchase of Nadra Bank continues a recent trend on Firtash’s part to diversify his asset base beyond Ukraine’s politically risky energy sector. He may also hope to use Nadra to service Group DF subsidiaries, or he may simply see the bank as a financial investment, bought on the cheap in a time of crisis, that can be sold once economic conditions improve. Before establishing himself as a billionaire gas trader in the late 1990s, Firtash managed a failing food processing company. He later broke into the gas trade and established himself as an intermediary through connections to key Ukrainian officials and reportedly to Russian organized crime figure Semyon Mogilevich. As co-owner of gas intermediary RosUkrEnergo (RUE), Firtash is widely believed to be serving as a front man for far broader interests. In the case of Nadra, Firtash is sufficiently cash-rich to finance the purchase on his own, but the suspicion remains that in his major business dealings he remains at least politically indebted to the forces that helped him rise so quickly. End Summary.

Despite Crisis, Firtash Moves Into Banking
------------------------------------------

¶2. (C) Firtash’s international holding company Group Dmitry Firtash, or Group DF, in early November announced intentions to acquire a controlling stake in Nadra Bank, marking Firtash’s first bank acquisition. The National Bank of Ukraine (NBU) propped up Nadra with a UAH 3.6 billion ($609 million) loan after a run on its deposits ostensibly caused a liquidity crisis at the bank. Various explanations as to the cause of Nadra’s problems have circulated in the media, but an Embassy contact told us on November 17 that Nadra Bank did not actually have any liquidity problems until its competitors began spreading rumors about Nadra’s financial stability. In any case, a liquidity crunch at Nadra ensued and the NBU pressured Nadra to sell a controlling stake of its shares. No final terms of the Group DF deal have been concluded -- it is scheduled to be completed within the next few weeks -- but Group DF reportedly could pay as little as $50 million for an 86.7 percent stake in Nadra. According to one Nadra Bank stakeholder, Nadra Bank could have been sold for UAH 21.3 billion ($4.23 billion) before Ukraine’s recent financial problems began.

¶3. (SBU) Nadra is the second Ukrainian bank after Prominvestbank (Ref B) to change hands in the weeks since the financial crisis erupted in Ukraine. In both cases, stakeholders in the banks and many other market participants claim that the runs on the banks were orchestrated. In addition, in both cases cash-rich Ukrainian business interests with no significant banking holders got the NBU nod to take a controlling stake in the bank (brothers and Party of Regions deputies Sergei and Andriy Kluyev are universally assumed to have bought Prominvestbank, although they have yet to openly acknowledge the purchase.) While many market commentators question whether such investors are ideally suited to introduce the management and banking know-how that the banks need to restructure in difficult times, it is acknowledged that the NBU did not have much choice if it wanted to sell the banks quickly. Other banks, both foreign and domestic, are struggling with their own problems, and foreign banks in particular would have needed far more time to conduct a thorough due diligence. Many of our banking contacts also criticize what they say is the non-transparant manner in which the NBU sold off the two banks.

¶4. (SBU) Group DF’s CEO, Robert Shelter-Jones, has said that Nadra Bank complements Group DF’s strategy to diversify its asset base and that Group DF’s businesses probably will become important Nadra Bank customers. Nadra Bank could also help Firtash develop his Ukrainian businesses. Although Nadra mainly is geared toward retail business, it could be restructured to service corporate clients, such as Group DF’s current subsidiaries, according to some experts. Others, however, contend that because Nadra specializes in servicing small clients, Group DF is unlikely to use Nadra for Group DF subsidiaries. It is also possible that Firtash sees Nadra Bank as a pure financial investment, bought on the cheap at a time of crisis in the hope of reselling it once conditions in Ukraine’s banking sector improve.

What Exactly is Group DF?
-------------------------

¶5. (C) Established in June 2007, Group DF is an international holding company comprising energy, chemicals, real estate, and construction firms in Eastern and Central Europe. Combined revenues of Group DF’s subsidiaries in 2006 totaled $4.6 billion. The most infamous of Group DF’s assets is RosUkrEnergo (RUE), the non-transparent natural gas intermediary that handles gas transactions for Russia and Ukraine. Gas intermediaries, such as RUE and its predecessors EuralTransGas (ETG) and Itera, have benefited well-connected businessmen such as Firtash and have not always served an obvious economic purpose. (Note: In 2002, ETG was established with four employees in a Hungarian village. ETG that same year replaced Itera and secured exclusive rights to supply Turkmen gas to Ukraine, reportedly clearing $760 million in profits in 2003; Firtash later claimed to be ETG’s founder. RUE replaced ETG and reportedly generated more than $7 billion in 2006. End note.)
¶6. (C) Gazprom owns 50 percent of RUE, while Firtash and fellow Ukrainian businessman Ivan Fursin -- through Group DF company Centragas Holding AG -- control 45 and 5 percent stakes, respectively. Ukrainian media have reported, however, that Semyon Mogilevich, a Russian organized crime (ROC) figure wanted by the FBI and currently in custody in Russia, has long been linked to Firtash’s business activities.

Firtash’s Ascent, the Mogilevich Connection
-------------------------------------------

¶7. (C) The Ukrainian media have reported widely on how Firtash got his start in energy through a network of personal connections to some of the biggest players in Ukraine’s gas sector. These included Ihor Bakay, founder and former Chairman of Naftohaz Ukrainy, Yuriy Boyko, the Party of Regions deputy and former Fuel and Energy Minister, and Oleksandr Volkov, a former Prime Minister and Kuchma advisor. Before entering the gas trade business Firtash with his spouse reportedly owned a canned food company called KMIL. By the end of the 1990s KMIL was in deep financial trouble. Firtash subsequently broke into the gas trade business as “food for gas” barter schemes between Ukraine and Turkmenistan increased when Ukraine did not have sufficient foreign exchange to pay for its gas imports. Firtash’s firms delivered food products to Central Asian suppliers and received gas in return. They subsequently sold the gas on Ukraine’s domestic market for domestic currency, or through other, often complex barter schemes.

¶8. (SBU) This barter business established Firtash as a gas trader, and the subsequent growth in the business brought to light his reported ties with Mogilevich. The two have been linked through ostensible joint holdings in off-shore vehicles, and through mutual personal relationships. In May 2000, for example, Firtash’s KMIL received a license to sell natural gas at unregulated prices. A company called Highrock Holding Ltd was registered in Cyprus in 2001 to facilitate this business. Firtash and his spouse together reportedly owned 33 percent of Highrock. About 34 percent of Highrock was owned by a firm called Agatheas Trading Ltd. Semyon Mogilevich’s ex-wife, Galina Telesh, reportedly was the director of Agatheas Trading from 2001 to 2003. Firtash in 2003 became the director of Agatheas Trading. In addition, Firtash and Mogilevich also have shared the same lawyer, Zeev Gordon, also known as Vladimir Averbukh, to represent their business and personal interests. Moreover, Ukrainian media report that former Hungarian Minister of Culture Andras Knopp XXXXXXXXXXXX became business partners with the Firtashs when Dmitry Firtash periodically resided in Germany during the 1990s. Knopp reportedly is the managing director of EuralTransGas.

Group DF’s Assets, Besides RUE
------------------------------

¶9. (C) After establishing a presence in Ukraine’s non-transparent gas trade, Firtash and his associates began acquiring assets outside of Ukraine’s energy sector. Group DF probably recognized that while the gas intermediary business is very lucrative, the need for diversification in Ukraine is key, given that the political risks involved are very high. Prime Minister Yuliya Tymoshenko, for example, has called for the elimination of all gas middlemen and Gazprom Press Secretary Sergei Kuprianov on November 17 said that Gazprom next year would supply gas to Ukraine directly, suggesting gas intermediaries could be on their way out.

¶10. (C) In Ukraine’s chemicals sector, Group DF subsidiary OstChem Holding AG owns a little less than half of Crimean Titan, one of Europe’s largest titanium dioxide producers that has distributors throughout the world, including Iran, Russia, Belarus, Kazakhstan, and the U.S. OstChem this year has struggled with the Ukrainian State Property Fund -- the owner of the controlling stake in Crimean Titan -- for management control. In August, however, OstChem on Crimean Titan’s behalf successfully secured a 31 million euro ($45.7 million) loan from Commerzbank (with a guarantee from the German state export insurance agency) to build a new sulfuric acid plant. Firtash also reportedly owns the Kyiv Basketball Club and television channels K1, K2, and Megasport; his real estate assets in central Kyiv alone include the Arena business complex and the Mandarin shopping center, both high-end commercial objects in prime locations.

¶11. (C) Comment. Like other Ukrainian oligarchs, Firtash’s holdings are doubtless suffering from the severe economic downturn. The purchase of Nadra Bank, however, indicates that he remains sufficiently cash rich to expand in spite of Ukraine’s economic and financial troubles. The extent to which Kyiv powerbrokers or underworld figures benefit from Firtash’s business empire is unclear, but Embassy interlocutors have told us that Party of Regions recently has turned to close Firtash associates, instead of Ukrainian oligarch and Regions deputy Rinat Akhmetov, to finance Regions’ political campaigns (Ref A). Given Firtash’s swift ascent from failing canned foods company manager to multi-billionaire dollar gas magnate, he might still be beholden to the forces that helped him rise so quickly. End comment. TAYLOR

SPIEGEL ONLINE: In Russian Hands. US Forced to Change Course in Relations with Ukraine

The US wants to lure the Ukrainians toward the West -- but how? The victors of the Orange Revolution have failed, and US diplomatic cables show that dealing with the new president has been far more difficult. The country has become the stage for a proxy conflict with the Kremlin.

When seeking a productive working relationship with an undesired newcomer, it is best to have a plan. On Feb. 23 of this year John Tefft, the American ambassador in Kiev, was preparing a plan for the arrival of US National Security Advisor James Jones. On the occasion of the inauguration of the new Ukrainian President Viktor Yanukovych, Jones was to convey a generous offer of friendship: The administration of US President Barack Obama "looks forward to working with you across the full range of issues," Tefft's brief suggested Jones tell the new Ukrainian leader.

Jones, who had fought against Moscow's allies in the Vietnam War, was seeking to strike a diplomatic blow against the Kremlin, by making Yanukovych into a US partner.

The Ukrainian was to bring his nation closer to the West. Tefft, above all, wanted to see Ukraine's security and economic policies brought into line with Western ideas. Financially, the highly indebted country would have to tighten its belt. "Encourage Ukraine to work with the International Monetary Fund to cut government expenditures."

An analysis of leaked diplomatic dispatches shows how the US had long been trying to loosen Russia's grip on Ukraine. For years, however, they had been throwing their support behind Yanukovych's political rival, Ukrainian President Viktor Yushchenko. Now, though, Yanukovych was in power. And he was a well-known friend of the Russians. The US wished to prevent the nation of 45.8 million inhabitants from re-establishing close ties with its giant neighbor.

Staggering to the Election

In a run-off ballot for the presidential elections on Feb. 7, 2010, the populist Yanukovych had defeated his opponent Prime Minister Yulia Tymoshenko, the flamboyant icon of the Orange Revolution. Incumbent Yushchenko had already been knocked out of the running during the first ballot in January when he only attracted 5.4 percent of the votes.

Yushchenko, a former chairman of Ukraine's central bank, was first elected to the presidency during the 2004 Orange Revolution with 51.9 percent of the vote -- thanks in part to millions of dollars from the US.

But his plan to lead the country as quickly as possible into NATO lacked the support of a majority of Ukrainians. Furthermore, he made Russia his enemy. And the power struggle with Tymoshenko also weakened his position.

The parliamentary elections in 2006 saw Yushchenko's bloc win less than 14 percent of the votes. Two months before the ballot the US Embassy had heard from someone close to the president that his party organization "was in complete shambles" and "would stagger to the election."

After the Russia-Georgia war of 2008 the Bush administration tried to give their chosen ally Yushchenko fresh political impetus by demonstrating their support for him. In September of that year, Vice President Dick Cheney traveled to Ukraine.

'Reputation as a Visionary'

In a dossier prepared for Cheney, the US Embassy in Kiev praised the beleaguered Ukrainian leader. "President Yushchenko has a reputation as a visionary and is the one Ukrainian leader who has had a solid unwavering commitment to seeing Ukraine in NATO and the European Union," the dispatch reads.

After Barack Obama succeeded George W. Bush, however, the new leadership at the US State Department began to have doubts about the "visionary" Yushchenko. According to a memo from May 22, 2009, the new US Secretary of State Hillary Clinton was alarmed.

A member of the National Security Council had returned from Kiev and reported that his impression was "that the government lacked the political will to solve Ukraine's economic problems." Clinton noted that Ukraine's "political and economic instability was playing into Russian hands."

Ambassador Tefft knew, from private conversations with the Ukrainian ambassador to Moscow, Kostyantyn Hryshchenko, that the Kremlin did not have any favorites for the Ukrainian presidential elections in 2009/2010. According to a US dispatch, the former employee of the Soviet Foreign Ministry had said that "Putin likes Tymoshenko, but doesn't trust her; the Russians trust Yanukovych more, but they don't especially like him."

Wasting Opportunities

The US had its own doubts about Tymoshenko. They were confirmed after Ambassador Tefft received a Feb. 22 visit from retired Finance Minister Viktor Pynzenyk, a political ally of Tymoshenko's, who complained that Tymoshenko was a "destructive force." He said she "simply wanted to consolidate power in her own hands" and accused her of "wasting the opportunity for reform that came with the economic crisis."

The more apparent it became that Tymoshenko was going to lose, the closer Tefft tried to get to Yanukovych, a man formerly regarded as persona non grata by the US. At a friendly meeting with the US ambassador, Yanukovych -- a man the West had long considered to be a slave to Russia's interests -- made vague indications that he was open to US advances. "In a private discussion with Ambassador Tefft, Yanukovych held open the prospect of continued military cooperation with NATO and spoke of cooperation with Ukraine's military industrial sector," the diplomat reported on Jan. 29.

Tefft hoped that his informant Hryshchenko might become foreign minister under Yanukovych, which he did. That "would indicate a pragmatic approach that would seek to put relations with Russia on a positive footing without burning bridges to the West," he wrote.

The Americans had already written off their long-time favorite Yushchenko -- a man who then-US Secretary of State Madeleine Albright smiled widely at during a 2000 meeting as a grandmother would her favorite grandchild. In his classified dossier for National Security Advisor Jones, Ambassador Tefft only devoted one line to his political obituary: "He is widely blamed -- not least by many who voted for him in 2004 -- for his poor management, incessant quarrelling with Tymoshenko at the expense of national interests, needless antagonizing of Russia and his penchant for seeking declarations of membership from NATO and the EU."

http://www.spiegel.de/international/world/0,1518,732276,00.html

Real picture of Galyna Kolotnytska, Ukrainian nurse and alleged Gaddafi lover

Libyan leader Moammar al-Gaddafi never travels without his Ukrainian nurse Galyna Kolotnytska , reveal documents released by WikiLeaks.

S E C R E T SECTION 01 OF 02 TRIPOLI 000771

NOFORN
SIPDIS

STATE FOR NEA/MAG AND INR.

E.O. 12958: DECL: 9/29/2019
TAGS: PREL PGOV LY PINR
SUBJECT: A GLIMPSE INTO LIBYAN LEADER QADHAFI’S ECCENTRICITIES

CLASSIFIED BY: Gene A. Cretz, Ambassador, U.S. Embassy Tripoli,
Department of State.
REASON: 1.4 (b), (d)


¶1. (S/NF) Summary: Recent first-hand experiences with Libyan
Leader Muammar al-Qadhafi and his staff, primarily in
preparation for his UNGA trip, provided rare insights into
Qadhafi’s inner circle and personal proclivities. Qadhafi
appears to rely heavily XXXXXXXXXXXXX reportedly cannot travel
without his senior Ukrainian nurse, Galyna
Kolotnytska. He also appears to have an intense dislike or fear
of staying on upper floors, reportedly prefers not to fly over
water, and seems to enjoy horse racing and flamenco dancing.
His recent travel may also suggest a diminished dependence on
his legendary female guard force, as only one woman bodyguard
accompanied him to New York. End Summary.

QADHAFI’S PERSONALITY REFLECTED IN HIS PHOBIAS

¶2. (S/NF) Muammar al-Qadhafi has been described as both
mercurial and eccentric, and our recent first-hand experiences
with him and his office, primarily in preparation for his UNGA
trip, demonstrated the truth of both characterizations. From
the moment Qadhafi’s staff began to prepare for his travel to
the United States, XXXXXXXXXXXXXXXXXX of
his 40-year rule, various proclivities and phobias began to
reveal themselves in every logistical detail. When applying for
Qadhafi’s visa, XXXXXXX asked whether it was necessary
for the Leader to submit a portrait of himself that fit consular
application regulations, noting that his photo was displayed
throughout the city and that anyone of hundreds of billboards
could be photographed and shrunken to fit the application’s
criteria. When the rule was enforced, XXXXXXXXX
reluctantly conceded to take a portrait of the Leader
specifically for the visa application.

¶3. (S/NF) When XXXXXXX began to search for proper
accommodations for Qadhafi, XXXXXXXX informed us that the Leader
must stay on the first floor of any facility that was rented for
him. (XXXXXXXXXX separately told U.S. officials in Washington that
Qadhafi could not climb more than 35 steps.) XXXXXXXX cited this
requirement as the primary reason that the Libyan residence in
New Jersey was selected as the preferred accommodation site
rather than the Libyan PermRep’s residence in New York City. XXXXXX also sought to find accommodations with room to pitch
Qadhafi’s Bedouin tent, Qadhafi’s traditional site for receiving
visitors and conducting meetings, as it offers him a non-verbal
way of communicating that he is a man close to his cultural
roots.

¶4. (S/NF) Qadhafi’s dislike of long flights and apparent fear of
flying over water also caused logistical headaches for his
staff. When discussing flight clearances with Emboffs,XXXXXXX
explained that the Libyan delegation would arrive from Portugal,
as Qadhafi “cannot fly more than eight hours” and would need to
overnight in Europe prior to continuing his journey to New York. XXXXXXXX also revealed in the same conversation that Qadhafi
does not like to fly over water. Presumably for similar
reasons, Qadhafi’s staff also requested a stop in Newfoundland
to break his travel from Venezuela to Libya on September 29.
[Note: The Government of Canada recently confirmed that the
Libyan delegation canceled plans to stop in Newfoundland. End
Note.]

DEPENDENCIES: RELIANCE ON A SELECTIVE GROUP OF INDIVIDUALS

¶5. (S/NF) Qadhafi appears to be almost obsessively dependent on
a small core of trusted personnel. This group includes
XXXXXXXXXXXXXXX coordinate the logistics of Qadhafi’s
visit. XXXXXXXXXX balanced the UNGA preparations between equally
frenetic preparations for the August 31 African Union (AU)
Summit and September 1 celebration of Qadhafi’s coup. XXXXXXXXXXXXXXX At large events such as the August 31 AU Summit and
September 1 celebrations, XXXXXXXXX every last
detail of these complex gatherings, ranging from the overall
program to the position of the press pool. At UNGA, XXXXXXXXX Qadhafi to the podium at the UNGA and XXXXXXXXXX his papers and props upon the conclusion of
the Leader’s remarks. Long-time Qadhafi Chief of Staff Bashir
Salah appears to play an equally important role in Qadhafi’s
personal retinue, and XXXXXXX via an
old-fashioned green phone XXXXXXXX. It is next to a
red phone, which presumably connects to Qadhafi himself. We
constantly hear that National Security Adviser and son,
Muatassim, also plays a key role as his father’s confidante and
handler during travel abroad. Muatassim also seems to have been
tasked with insuring that the Leader’s image is well-preserved
through the full array of carefully-planned media events.

¶6. (S/NF) Finally, Qadhafi relies heavily on his long-time
Ukrainian nurse, Galyna Kolotnytska, who has been described as a
”voluptuous blonde.” Of the rumored staff of four Ukrainian
nurses that cater to the Leader’s health and well-being,
XXXXXXXXXXX emphasized to multiple Emboffs that Qadhafi
cannot travel without Kolotnytska, as she alone “knows his
routine.” When Kolotnytska’s late visa application resulted in
her Security Advisory Opinion being received on the day
Qadhafi’s party planned to travel to the U.S., the Libyan
Government sent a private jet to ferry her from Libya to
Portugal to meet up with the Leader during his rest-stop. Some
embassy contacts have claimed that Qadhafi and the 38 year-old
Kolotnytska have a romantic relationship. While he did not
comment on such rumors, a Ukrainian political officer recently
confirmed that the Ukrainian nurses “travel everywhere with the
Leader.”

PREFERENCES - FROM DANCING TO HORSEMAN

¶7. (S/NF) In addition to the personality quirks revealed through
Qadhafi’s travel to New York, the Qadhafi’s preferences for
dancing and cultural performances were displayed over the last
month. The three-day spectacle of his 40th anniversary in power
included performances by dance troupes from Ukraine, Tunisia,
Algeria, Egypt, and Morocco, as well as musical performances by
bands from Mexico, Russia, New Zealand, and a number of other
nations. Qadhafi appeared particularly enthralled by Tuareg
horse racing during two of the events, clapping and smiling
throughout the races. The flamenco dancers that participated in
his celebratory events appeared to spark a similar interest, as
Qadhafi decided to stop in Seville (for a “personal trip”
according to the Spanish Ambassador here) on his way back to
Libya from Venezuela specifically to attend a flamenco dance
performance. [Note: That stop has reportedly been scrapped for
unknown reasons. End note.]

NO NEW YORK PHOTO OPS - QADHAFI LEAVES FEMALE GUARDS AT HOME

¶8. (S/NF) While Qadhafi’s reported female guard force has become
legendary, it played no role in his travels to New York. Only
one female guard was included among the approximately 350-person
strong Libyan delegation to New York. This is the same female
bodyguard who sticks close to Qadhafi in his domestic and
international public appearances and may, in fact, play some
sort of formal security role. Observers in Tripoli speculate
that the female guard force is beginning to play a diminished
role among the Leader’s personal security staff.

¶9. (S/NF) Comment: Qadhafi’s state visits and appearances at
various conferences and summits, both at home and abroad, have
revealed greater details about his personality and character.
While it is tempting to dismiss his many eccentricities as signs
of instability, Qadhafi is a complicated individual who has
managed to stay in power for forty years through a skillful
balancing of interests and realpolitik methods. Continued
engagement with Qadhafi and his inner circle is important not
only to learn the motives and interests that drive the world’s
longest serving dictator, but also to help overcome the
misperceptions that inevitably accumulated during Qadhafi’s
decades of isolation. As  XXXXXXX told us, pointing to a
larger-than-life portrait of Qadhafi, “When you have been
isolated for so long, it is important to communicate.” End
comment.


CRETZ

World Press and Bloggers about Ukraine. My new Facebook page.

Dear friends!
I would be pleased to see all the followers of my blog, and all the experts interested in Ukrainian politics, as readers and "likers" of my new Facebook page - World Press and Bloggers about Ukraine.

http://www.facebook.com/pages/World-press-and-bloggers-about-Ukraine-Svit-pro-Ukrainu/154942321217866

With kind regards,
Tetyana Vysotska.

Russia to occupy Ukrainian metallurgical sector. Vladimir Putin has already bought controlling interest of Zaporizhstal metallurgical giant

According to rumors, one of the biggest metallurgical plants of Ukraine – Zaporizhstal – is already under control of Russia. State-owned Vnesheconombank has recently bought the controlling interest of Ukrainian metallurgical giant. By the way, the Head of Supervisory Board of Vnesheconombank is none other but the President of the Russian Federation Vladimir Putin.

Some interesting piece of information: Rinat Akhmetov, famous Ukrainian multi-billionaire and member of the ruling Party of Regions, wanted to buy the Zaporizhstal, and even paid an earnest money of $50 million to previous owners (offshore company Midland Resources Holding Ltd, affiliated with some Dnipropetrovsk (Ukraine) and Canada-based Ukrainian businessmen). This information is also unofficial, of course it is.

Nevertheless, Vnesheconombank had practically stolen the victory from Mr. Akhmetov’s hands. The negotiations with Ukrainian businessman ended dramatically (in favor of Russian bank) almost on a stage of signature of the share purchase agreement.

This info is rather symptomatic, having regard to worsening relationships between the President of Ukraine Viktor Yanukovych and his rich party fellow.

Let me also remind you that we had another metallurgical rumor last year, also connected with Vnesheconombank. The rumor stated it bought a controlling package of shares in the Industrial Union of Donbass. The company owns Alchevsk Metallurgical Plant and Dniprovsky Metallurgical Plant, named after famous Felix Dzerzhinsky, the founding father of the Soviet secret service.

NO to NATO. The question of NATO membership is withdrawn from contemporary agenda for Ukraine – Foreign Minister.

The very idea of possible granting the NATO membership for Ukraine is aggravating the situation in security sphere of the region. Moreover, this idea is not supported by majority of Ukrainians. That’s why it sounds reasonable to withdraw question of possible membership of Ukraine in the North Atlantic Treaty Organization from the country’s foreign agenda. Such was the main message conveyed by the Minister for Foreign Affairs of Ukraine Kostyantyn Hryshchenko at the 11th Interdepartmental Meeting on questions of coordination of the executive power institutions in foreign policy sphere (27 May 2010).

“This idea is destructively influencing the effectiveness of foreign policy of our state, and the security situation in the region”, Mr. Hryshchenko said. Ukraine is going to develop its relationships with the Alliance, but only in frames of mutually beneficial co-operation, he added. But “the question of membership has been withdrawn from agenda”.

It was not his day indeed. The President of Ukraine Viktor Yanukovych had a funny accident during the visit of Russian President Dmitry Medvedev

Revenge or Justice? Old criminal case re-launched against ex-PM of Ukraine Yulia Tymoshenko.

Today, on 12 May 2010, former Prime Minister and current active oppositionist Yulia Tymoshenko visited the Main Investigative Department of the Prosecutor General’s Office of Ukraine. She was officially informed that the criminal case No4912-93 has been re-launched against her.

It is an old, but not very clear story. There is no official information yet on the content of a case, but it is said that the case concerns suspected bribes. I may only say for sure that the criminal case No4912-93 against Mrs. Tymoshenko was opened in May 2004, while she was in a strong opposition to President Leonid Kuchma. Current President Viktor Yanukovych had been serving as a Prime Minister that time.

According to the Prosecutor General’s Office information service, the proceedings were closed in January 2005 – after the Orange Revolution and the inauguration of President Viktor Yushchenko. The planned investigative actions were not completed, PGO press service claims, and the pre-court trial has been re-launched.

Yulia Tymoshenko states that the case No4912-93 was closed in 2004 (e.g. before she came to power). At the today’s press briefing near the office of the PGO Main Investigative Department, she said that the investigation was dismissed due to the absence of crime components. ‘Prosecutor General’s Office is a repressive instrument of Yanukovych”, she argues. “A big shadow project on privatization of state monopolies has been prepared, using the technology of foundation of joint ventures with foreign country. Our political team is the only one which opposes to that”.

The same time some fresh cases have been opened against the team of Yulia Tymoshenko. The Vice Prime Minister of Ukraine Volodymyr Sivkovych has recently informed journalists that investigation of cases on stealing the budgetary funds by the Tymoshenko’s Government is planned to be finished by autumn 2010. By that time “the majority of opposition members will think on how to hide or escape”, he added. The alleged corrupt practices in a budget sphere are estimated to overcome 100 billion UAH (more than 12.5 billion USD).

Meanwhile, on 17-18 May the President of Russia Dmitry Medvedev will visit Ukraine again – to sign more documents, strengthening the ties between two countries. First of all, an agreement on the demarcation of Russia-Ukraine border is to be signed. Let’s see what Ukraine is granting to Russia in this field.

It is interesting to mention that on the day of Medvedev’s arrival to Kiev, Yulia Tymoshenko is invited to the PGO office again. Revenge or justice?

No losers, but Ukraine. The USA and Russia signed START II – a new Strategic Arms Reduction Treaty.

Today, on 8 April 2010 the Presidents of Russia and the United States have signed a new Strategic Arms Reduction Treaty, START II, which is to replace the Treaty between the USA and the USSR on the Reduction and Limitation of Strategic Offensive Arms (START), signed on 31 July 1991, and expired on 5 December 2009.

The new START has already been called as a new significant step in bilateral relations between the Russian Federation and the United States. But, despite all the words about strengthening the international security, the real needs of non-nuclear-weapon countries, and especially the states that unilaterally forswear the nuclear weapons, were left behind the scene. Neither Barack Obama, nor Dmitrir Medvedev hasn’t declared clearly the willingness of their countries to increase credibility of security guarantees for unprotected “little” members of the international community.

As a result, after the expiration of the old START, Ukraine, a pioneer state which performed a unilateral nuclear disarmament, is left de jure unprotected from possible outside aggression by any clear legal mechanism. For this moment Ukraine is not a party of any international legally binding document, which may for sure guarantee its safety.

“There are no losers and winners. All the international community has won”, Dmitry Medvedev said to journalists at the joint press conference with Barack Obama. I would not agree with Mr. Medvedev. There is at least one loser – as it usually happens, the loser is Ukraine.

Let’s refresh our memory. The role of Ukraine in the global nuclear disarmament process may serve as a great example for any country of P5, taking to the account the unilateral decision of the country to become nuclear-weapons-free in early 1990s (last nuclear weapon left Ukraine in 1996).

Following the collapse of the USSR in 1991, the nuclear armory heritage of Ukraine was estimated as the third-largest in the world. In 2002 Ukraine declared its willingness to forswear the nuclear arsenal (let’s not get into the details, why it was decided, and whether this decision was clear-eyed).

But in that early 1990s it was obvious that in return for forswearing one of the biggest nuclear arsenals in the world, Ukraine shall get significant security guarantees (including economy security). The providers of these guarantees should be Russia (as the recipient of the weapons) and the United States.

Such guarantees were impliedly (as Ukraine was one of the parties) provided by mentioned above and now expired Treaty on the Reduction and Limitation of Strategic Offensive Arms (START), signed by the USA and the USSR in 1991. To present a kind of extra-guarantees, after the Trilateral Statement by the Presidents of Ukraine, the USA, and Russia (14 January 1994), the Budapest Memorandum on Security Assurances was signed on 5 December 1994. This document was closely connected with the accession of Ukraine to the Treaty of Non-Proliferation of the Nuclear Weapons (NPT) in November 1994.

Budapest Memorandum was signed by Ukraine, Russia, United States, and United Kingdom. China and France assured their support and security guarantees for Ukraine in the diplomatic notes of 5 December 1994. No questions? There are a lot. The problem is that the Budapest Memorandum doesn’t contain the clear mechanisms of guaranteeing the protection for the country, its independence and territorial integrity from any threats. It presents only the mechanism of holding consultations, when such a threat may appear. Moreover, the decisions, taken during the mentioned consultations, may be vetoed by any member of the UN Security Council (for example, by Russia).

As a result, de jure Ukraine is not a member of any system of collective security today – and, de facto, is unprotected.

Years of efforts of Ukrainian diplomacy were dedicated to attempts to formalize the security assurances for Ukraine from nuclear weapons states. To accomplish this goal, a new comprehensive legally binding treaty shall be worked out, taking to the account the START Treaty expiration. This new Treaty shall be signed by all the nuclear states (P5), and should contain clear description of mechanisms of the implementation of security guarantees for Ukraine, including negative security assurances, as well as the responsibility of nuclear states for violation of these obligations. Such an approach will only enhance and strengthen the non-proliferation regime and global security, in particular in the context of establishment of nuclear weapon free zones.

The START II Treaty demonstrated that in can con be considered as such a document. The new document shows a kind of egocentrism of the super powers: the commitment of Ukraine, Belarus, and Kazakhstan to accede the NPT as non-nuclear-weapon states was only “taken into account” in the preamble of the START II. Cold War ended, but the negligence to needs of ‘small countries’ is still present not only in presidents’ rhetoric, but also in multilateral documents.

Besides, the President of Ukraine Viktor Yanukovych – during his first visit to Russia – proposed to sign the START II Treaty in Kiev, not in Prague. Such a decision could have served at least as a sign of respect to Ukraine as a country dedicated to global disarmament and non-proliferation. Unfortunately, this proposal was not taken seriously.

The next ‘point of hope’ for Ukrainian security is the NPT Review Conference, which is scheduled for May 2010 (New York). Hopefully, the new edition of the NPT Treaty will include some statements to guarantee peace and stability in one of the biggest states of European continent.

Two Hetmans and Defector. The coalition negotiations in the Parliament of Ukraine have reached a final stage.

There is a popular joke-proverb in Ukraine: among three Ukrainians there are two hetmans (hetman is the old Ukrainian Cossack chieftain) and one defector. The proverb reflects the main peculiarity of Ukrainian national character: it is very difficult for us to reach an agreement in political negotiations as every party has its own huge ambitions.

The ‘two hetmans – one defector’ formula is a great illustration of what’s going on inside the Parliament of Ukraine these days. After the inauguration of Viktor Yanukovych as the President of Ukraine, his faction has started negotiations to form a new coalition of majority in Parliament. The Party of Regions expected a kind of blitzkrieg. But the expectations failed. Even the dismissal of Prime Minister and a threat of snap parliamentary election have not led the MPs to consolidation.

The stumbling block of the ‘coalition saga’ hides in provisions of the Constitution of Ukraine, which have no clear regulation of the process of formation of the coalition in Parliament.

A bit of prehistory. Before 2004, Ukraine had a majority voting system, when each constituency elected its own Member of Parliament. (I still hope we will come back to this scheme one day). But in December 2004, at the peak of Orange Revolution, the Constitution of Ukraine was amended, changing the voting system from majority to proportional vote. The amendments came into force in 2006, when first ‘proportional’ parliamentary election was conducted.

The December-2004 amendments also introduced new terms ‘majority’ and ‘coalition’ in Ukrainian parliament. According to the amended Chapter 83 of Constitution, “basing on the consensus of political viewpoints the coalition of the MP’s factions shall be formed, comprising the majority of Members of Parliament of Ukraine from the constitutional membership of the Parliament of Ukraine”. If the coalition is not formed duting 30 days, the President of Ukraine has a constitutional right (not obligation) to dismiss Parliament.

The main question of today’s Ukrainian political discussions is whether the coalition of factions, which have the majority of seats in total amount of MPs, or the coalition of majority of MPs shall be formed.

If the constitutional way of formation of the coalition is a simple sum of factions, the Party of Regions can not form the coalition without the Our Ukraine – People’s Self-Defence faction. (Extra details on Ukrainian parliamentary arithmetic may be found in one of my previous posts)

Moreover, due to the current situation inside the OU-PS faction (which is divided to little groups of interest, and can not act as a monolith body), the formation of the coalition on the base of factions, not MPs individually, is totally impossible. Every part of the OU-PS faction tried to lobby the appointment of its candidate for the position of Prime Minister – the names of Arseniy Yatseniuk, Viktor Yushchenko, and some other variants were proposed. As a result, the Party of Regions ‘got tired’ and made a decision to propose the candidature of its member Mykola Azarov (ex-Minister of Finance and Vice-Prime Minister of Ukraine).

(Some rumors say that Azarov was planned for the PM position from the very beginning, and the negotiations on the ‘non-Party-of-Regions’ candidate were just a trick).

Nevertheless the fact is the following: tomorrow, on 11 of March 2010, the Party of Regions will form the coalition of MPs (based on its own faction, factions of the Block of Speaker Volodymyr Lytvyn, Communist Party, and some individual MPs from the OU-PS and even from the Block of ex-PM Yulia Tymoshenko plus independent MPs).

All the political forces who will be eliminated from acting power after the formation of a new coalition are claiming that such a coalition will be unconstitutional. Among them – Yulia Tymoshenko and her allies, Arseniy Yatseniuk, and even Viktor Yushchenko (who seriously hoped to become a PM by himself).

By the way, number 3 according to the results of the first round of Presidential election – 2010 Sergiy Tigipko has agreed to become a Vice-Prime Minister in a new Government (it is a result of his yesterday’s meeting with Viktor Yanukovych). Number 4, Arseniy Yatseniuk has decided to form its own opposition government. The same business is in plans of Yulia Tymoshenko who declared herself as the only leader of democratic opposition. (See the proverb about two hetmans).

The opponents of the ‘individually made’ coalition are referring to the decision of the Constitutional Court of Ukraine No 16-pn/2008 of 17 September 2008, which has interpreted the Constitutional provisions in favor of faction-based formation of the coalition.

Again a prehistory. The need in the interpretation of the coalition-building part of the Constitution was caused by decision of two MPs from the OU-PS and BYT factions (on 6 June 2008) to withdraw their membership in the coalition, formed by their factions. As the result, the coalition had less than 226 members (the majority of MPs).

The same time (it is what the opposition doesn’t mention it its rhetoric), in the decision No 16-pn/2008 the Constitutional Court stated that on that time the Parliament of Ukraine had no legitimate Rules of Procedure, which, according to the Constitution, shall regulate the process of formation and the termination of activities of the coalition: “The filling of such gaps (in legislation) is not the authority of the Constitutional Court of Ukraine. These questions shall be regulated in the Constitution of Ukraine and/or in the Law of Ukraine on the Rules of Procedure of the Parliament of Ukraine”.

I would also quote the Constitution of Ukraine here: “The basis for the formation, organization of operation, and termination of activities of coalition of deputy factions in the Parliament of Ukraine shall be established by the Constitution of Ukraine and Rules of Procedure of the Parliament of Ukraine”.

The Rules of Procedure of the Parliament of Ukraine were adopted (at last) on 10 February 2010. On 9 March 2010 Parliament adopted amendments to the Law on the Rules of Procedure, which permits to form the coalition of majority according to the individual membership principle.

So, the Rules of Procedure and the common sense say that it is possible to form a coalition, comprising 226 and more Members of Parliament of Ukraine (i.e. the majority of MPs).

Moreover, the individual way of formation of the coalition corresponds with the international standards and the rule of law. The European Commission for Democracy through Law (Venice Commission) has issued the Opinion on the amendments to the Constitution of Ukraine adopted on 8.12.2004 (adopted by the Commission at its 63rd plenary session in Venice, 10-11 June 2005).

The opinion of the Venice Commission states the following:

“It may be questioned whether such a formalised procedure for forming a parliamentary majority would contribute to enhancing political stability in Ukraine. Furthermore, it could hardly be seen as compatible with the freedom of the choice and decision guaranteed to political parties by the Constitution, in conformity with European standards in this field. Generally speaking, alliances between political parties depend on the free choice of the parties concerned, and will last as long as the governing bodies of the parties find it convenient to stick to the negotiated agreements. In addition, a coalition government may give disproportionate power to small parties and therefore be unrepresentative”.

Full version of the Venice Commission opinion may be read here.

For all intents and purposes, it is unconstitutional indeed to restrict the activities of Members of Parliament of Ukraine as representatives of citizens of Ukraine by the ‘will of the faction’. Besides, even in this convocation of Parliament only the Communist party faction consists of members of one political party. Other factions are political blocks of two and more parties’ representatives. So, it is not logical to push them into the borders of ‘united actions inside the faction’.

When I was discussing this question with my friend (ex-journalist of Yulia Tymoshenko newspaper) yesterday, she invented a very interesting idea. If the coalition is formed only by factions, there is no need in personal vote in Parliament at all, she said. Heads of parliamentary factions may single-handedly decide, which a faction’s position is, and all the decisions in Parliament shall be made by simple arithmetical calculations. Than, there is no need to keep a building of the Parliament, she added. What a great way to save money for a state budget in crisis times!

The Parliament of Ukraine has just passed a no-confidence motion against the Government of Yulia Tymoshenko.

Here are the results of the vote. 243 Members of Parliament of 404 registered today has voted in favor of Yulia Tymoshenko’s dismissal. Among them were:

172 MPs from the Party of Regions faction (whole faction)
7 MPs from Yulia Tymoshenko Block
15 MPs from Our Ukraine – People’s Self-Defense faction
27 MPs from Communist party faction (whole faction)
19 MPs from Block of Volodymyr Lytvyn (all except Lytvyn)
3 independent MPs

New lords, new laws.

The chapter about Holodomor has dissapeared from the official website of President of Ukraine.

Yushchenko or Yatseniuk – who will be the next Prime Minister of Ukraine?

Viktor Yanukovych was inaugurated as the President of Ukraine today. Yulia Tymoshenko still insists that he is not her President. Prime Minister and members of her faction have even ignored the official inauguration events. Looks not very smart, imho.

But who will be the next Prime Minister? Has Yulia Tymoshenko any chance to save her chair? Here is some news on the negotiations inside Parliament:

1. The Block of Yulia Tymoshenko (BYT) has started to gather signatures of MPs to justify the current parliamentary coalition, the existence of which is rather questionable. (The Speaker of Ukrainian Parliament Volodymyr Lytvyn has demanded to prove the existence of current coalition before 2 of March, otherwise a new coalition shall be formed, or in 60 days Parliament will be dismissed according to the Constitution).

2. The BYT will definitely fail to gather 226 signatures; it is obviously seen after today’s sitting of the Our Ukraine – People’s Self-Defense (OU-PS) faction. Not more than 10 MPs from the faction would support Mrs. Tymoshenko premiership.

3. To form a new coalition (in order to avoid the early election) the Party of Regions and its leader Viktor Yanukovych need support of the OU-PS faction.

4. According to the info from today’s OU-PS faction sitting, the majority of MPs may support the coalition with Yanukovych party, but only if the ‘democratic Prime Minister’ is elected (i.e. not-member of the Party of Regions).

5. The candidacy of ex-President Viktor Yushchenko has been actively lobbied, and is in general approved by the Party of Regions. But the OU-PS faction (ex-pro-Yushchenko monolith, now split to little groups of interest) has not approved the Yushchenko-PM-scheme. Yet?

6. Today OU-PS MPs had discussed the idea to nominate ‘number 4’ in the first round of Presidential election Arseniy Yatseniuk as a future PM. He made a speech, which did not inspire the majority of veteran MPs as was made in Yatseniuk’s habitual paternalistic and moralizing style.

7. On Monday, 1st of March, the OU-PS faction will have the next sitting to approve the final decision. Before that they are going to negotiate with Yanukovych, and also with Tymoshenko.

8. It sounds surreal, but I think Viktor Yushchenko has about 80% of chance to become next Prime Minister – he is the most convenient for all (as nobody wants to keep the rating of Yatseniuk).

9. Though the PM’s chair is not a convenient place to seat in these days, due to the total crisis of Ukrainian economy and state finances, when the declaration of default is a very realistic outcome.

The Court-Round. Hearing of the case on election of President of Ukraine to be broadcasted live this week, and the Inauguration ceremony – next week.

Presidents Obama, Medvedev, Sarkozy, and other world leaders has already congratulated Yanukovych on winning the presidential election, but Prime Minister Tymoshenko still fights. Tomorrow (on 16 February) she is going to take the election-case to the Supreme Administrative Court. The victory was fabricated, Yulia Tymoshenko claims. The same time Viktor Yanukovych is getting ready for the inauguration: Parliament is expected to approve the date – 25 February 2010 – during its tomorrow morning sitting (16 Feb).

On Sunday, 14 February, the Central Election Commission of Ukraine officially declared Viktor Yanukovych as a winner of presidential election in Ukraine (the results adopted by the CEC are here in Ukrainian language).

One day before the CEC decision, on 13 February, Yulia Tymoshenko made an appeal to the nation, saying she would not accept the victory of Yanukovych because the result of election was fraudulent. Saturday declaration was the first public appearance of Mrs. Tymoshenko after the Election Day (except of her televised opening speech at the Cabinet sitting, when she avoided mentioning election topic at all). ‘I want to declare very clear: Yanukovych is not our President. In whatever way the situation develops, he will never be the legitimately elected President of Ukraine’, she said.

So, the ‘court-round’ of election of the President of Ukraine – 2010 is inevitable. But it is most likely that the claim of Prime Minister will not be satisfied. The difference between candidates is to big (3.48 percent) to prove the falsifications and to change the winner’s name. Though the Tymoshenko camp (at least a part of it, as some personages, including, according to rumors, the Vice Speaker of Parliament Mykola Tomenko, Vice Prime Minister Grygoriy Nemyria, and even a top-lawyer of BYT and Deputy Head of Block of Yulia Tymoshenko faction Andriy Portnov were strongly against the court appeal) expects the cancellation of the election result and declaration of a repeat, third round of election, or even the roll-back to the new first round with a new nomination of presidential candidates.

Whatever the case, the show will surely be worth watching. I used a word ‘show’ as the First Vice-Prime Minister Oleksandr Turchynov has promised today that the Supreme Administrative Court sitting will be broadcasted live on TV.

Very interesting point is the possible involvement of some OSCE observers as witnesses during the court examination. Direct speech of Yulia Tymoshenko: ‘My convincement in the idea that we have to fight is supported also by the last evidences of some OSCE observers. They expressed a wish to testify in courts on our side with video materials, with their estimations that there was a system fraud at the Ukrainian election’. Oleksandr Turchynov also has said today that they will file to the court some video materials, which prove the fraud in favor of Yanukovych.

The same time the winner’s establishment prepares to the inauguration procedure. According to the law on election of the President of Ukraine, the inauguration shall take place during 30 days from the official declaration of the winner by the CEC (in this case – by March, 14). The first question in tomorrow’s order of business of Parliament is the establishment of the inauguration date on Thurthday, 25 February. This proposal is very likely to be approved by the majority of MPs.

The Inauguration Day is closer, and the negotiations inside Parliament are more and more active. As I mentioned in my previous posts, to dismiss Prime Minister a new coalition of at least 226 MPs (leading by the 172-seats Party of Regions) should be formed. Despite of some controversial Constitutional provisions on the procedure of coalition-building (some details on the formation of current, very questionable BYT-leaded coalition may be found here) the coalition of the Party of Regions, the Block of the Speaker Volodymyr Lytvyn, part of Our Ukraine – People’s Self-Defence faction, and maybe the Communist Party faction is likely to be formed, and Parliament will pass a no-confidence motion against the PM Tymoshenko. It is very probable that the no-confidence-vote will appear in the parliamentary agenda even next week.

By the way, the ex-presidential Our Ukraine – People’s Self-Defence (OU-PS) faction is demonstrating re-load tendencies. Some members of the faction has already mentioned that there are active negotiations on the formation of a new political movement (group, party) on the base of OU-PS, with the participation of members of other parliamentary factions (BYT, Party of Regions) and out-of-parliament political forces.

Who will be elected as a new Prime Minister? It may be a PM of a current ‘opposition government’, ex-Vice Prime Minister (2002-2005 and 2006) and ex-Minister of Finance (2006), Head of Viktor Yanukovych electoral headquarters Mykola Azarov. But some people say that the President of Ukraine Viktor Yushchenko may be appointed to this position due to some shadow pre-election agreement with Yanukovych. Let’s see. The scheme with the Prime Minister who is not a member of the Party of Regions is very convincing – in that case ‘democratic’ forces in Parliament will have a strong argument to explain to electorate their decision to join the anti-crisis coalition of Viktor Yanukovych.

In the meantime the phantom of snap parliamentary poll is still present in Parliament’s building. As it would be easy to link the early parliamentary election with the regular local elections, scheduled for this year, MPs are preparing the decision to postpone the local vote, scheduled on 30 May 2010 (the campaign shall be started on 23 February). Vice-Speaker Mykola Tomenko (BYT faction) has registered a project of law proposing to shift the local election date to 27 March 2011. MP from the OU-PS faction Oksana Bilozir proposed another (earlier) date in her law project – 26 September 2010. Parliament will discuss this question tomorrow. Show to be continued.

Breaking News. Yulia Tymoshenko decided not to recognize the victory of Viktor Yanukovych and to contest the result of election in court.

The press conference of Yulia Tymoshenko was announced and cancelled two times today. Instead of making public speeches, Prime Minister held a closed sitting of her parliamentary faction. Yulia Tymoshenko, who, according to preliminary calculations of Central Election Commission, is 3.20 percent behind Viktor Yanukovych, had to make a vital decision: what to do next?

The result of today’s evening sitting couldn’t stay hidden from journalists (that’s what democracy is, by the way!). Ms Tymoshenko declared that she will not recognize the victory of head of the Party of Regions Viktor Yanukovych, and ordered her lawyers to start legal proceedings to contest the result of the election. The main goal is to repeat voting, i.e. to have the third round of presidential election as it was in 2004.

According to the latest CEC data (99.44 percent of electronic ballot-count records counted), Viktor Yanukovych has 48.81 percent of the vote, and Yulia Tymoshenko – 45.61 percent. 4.37% of Ukrainians voted against all. 1.19% of ballots were declared invalid.
The turnout on 7 February was 69.07%.

To be continued tomorrow.

The Guesstimation. Who (and when) will be the next President of Ukraine? And what comes next?

It is my first post here after the first round of presidential election in Ukraine. Obviously, the result was predictable. But nevertheless every Ukrainian needed time to think over in order to understand, what happened. After January, 19, at least one simple thing is clear: there will be no miracle for Ukraine. And no hope for a big change. We’ve got a choice without choice – between two well-known faces.

The results of the first round of Presidential vote in Ukraine demonstrated a confident priority of leader of the opposition Party of Regions, anti-hero of times of the 2004 Orange revolution Viktor Yanukovych, who received a support of 35,32 percent of voters.

The Prime Minister of Ukraine Yulia Tymoshenko has got only 25,05 percent (a gap between two leaders is 10,27 %, which is a big challenge for the PM).

The 7th of February will be a day of a totally hopeless choice for Ukraine. President Viktor Yushchenko had mentioned recently that both candidates are almost equal. Yes, I must confess that there is not much difference between Tymoshenko and Yanukovych. First of all, they’ve got very similar programmes, mostly based on social promises and well-written slogans (it reflects a wider problem of absence of big ideological parties in Ukraine – all the main political forces differ by names of their leaders and oligarchic sponsors). Secondly, they have almost the same origin – East of Ukraine. It is very popular these days to say that Viktor Yanukovych represents Eastern and ‘pro-Russian’ (I don’t agree with that formulation) Donetsk region, and that he has a lot of difficulties with communication in Ukrainian language (though he’s not a good speaker at all). But lot of experts prefer to forget that only a decade ago Yulia Tymoshenko had a nickname “ a gas princess from Dnipropetsovsk”, and that she learned Ukrainian only at the beginnign of 2000th.

The choice between Viktor Yushchenko (who did represent Ukrainian mentality and traditions) and Viktor Yanukovych in 2004 was really a choice between values – Western and Eastern. But the current choice is totally different. It may be said that it is a choice between importers and exporters (as there are more representatives of the biggest export-oriented enterprises are accumulated around Viktor Yanukovych, and Yulia Tymoshenko’s biggest supporters are making their profits on import operations). but it’s not a clear statement at all. I would say, it is just a fight for power between two politicians and their establishments – it is naïve to expect the revolutionary breakthrough from any of them.

Who will win?

Most probably, Yanukovych.

Is it for better, of for worse? I don’t know what to say. No comments for this moment.

Let’s count. (It will be just a ‘guesstimation’ as the percentage strongly depends on the voters’ turnout. Besides, the less turnout we will have in the second round, the better it will be for Mr. Yanukovych, as he proved to have a very stable electorate).

Starting position:
YANUKOVYCH – 35,32 %
TYMOSHENKO – 25,05 %

Both the pretenders are fighting now for votes of supporters of other political heavyweighters.

First of all, it is Sergiy Tigipko who (with a help of a French political technologist Jacques Segela) showed the third result – 13,05 percent. Here I would like to mention that I don’t agree with experts who call Mr. Tigipko a kingmaker. Yes, he may become very and very influential, but only after the parliamentary election. As for now, Mr. Tigipko may hardly influence his electorate to vote for this or that candidate – it’s a specifity of Ukrainian voter, and especially of a well-educated urban voter, than he makes his own decisions, some times unpredictable.

Most of Ukrainians who voted in favor of Tigipko didn’t actually support him as a politician, but were hoping for change and the renovation of Ukrainian politics. On 7th of February a big part of them will stay at home, some will vote against all, and others will divide between Yanukovych and Tymoshenko. I would suppose that at least half of supporters of Tigipko will vote for Yanukovych as they represent Eastern, Central and Southern part of Ukraine.

So, we are adding 6,5% to Yanukovych – subtotal result 41,82 percent. Let’s also give around 4% to Tymoshenko – subtototally 29,05 percent.

Arseniy Yatseniuk with a very unsuccessful advertising campaign, mostly created by Russian team of PR-professionals, has gained only 6,95 percent. Some of his voters will also demonstrate the absenteeism, but the active part will surely vote for Yulia Tymoshenko. Let’s say it will be 5%. (YANUKOVYCH – 41,82 %, TYMOSHENKO – 34,05 %.)

The voters of the President of Ukraine Viktor Yushchenko (5,45 %) are also rather unpredictable. Taking to the account the rough fight between PM and President during last months, we may predict that part of them will not show up at the polling places. But I hope Yulia Tymoshenko may count on additional 4,5 percent. (YANUKOVYCH – 41,82 %, TYMOSHENKO – 38,55 %.)

It is for sure that the electorate of a Communist party leader Petro Symonenko (3,54%) will vote for Yanukovych. At least, 3 percent. (Subtotal result: YANUKOVYCH – 44,82 %, TYMOSHENKO – 38,55 %.)

In favor of Prime Minister may be also around 4 percent of voters, who supported other candidates – like Speaker of the Parliament of Ukraine Volodymyr Lytvyn (total 2,35%), radical right politician Oleh Tyahnybok (1,43%), and ex-Minister of Defense Anatoliy Hrytsenko (1,2%).

So, the forecasting figures look like YANUKOVYCH – 44,82 %, TYMOSHENKO – 42,55 %. (The gap is 2,27 percent).

But taking to the account the probable growth of the level of absenteeism, my own style of the vote-count, very favorable to the Prime Minister, and also the fact that Ms. Tymoshenko represents the acting power, I would predict that in reality the gap may be not 2, but 3-4 percent or even more.

Anyway, both candidates are preparing to challenge the result of election in courts. And here comes the next important question:

Is there any chance to have an inauguration in March?

According to the Law on Election of the President of Ukraine, the official results of second round should be declared not later than 17 February. But the court proceedings (which will be long and difficult in case of 1-2-3-percent gap between candidates, or in case of a high level of ‘against all’ votes) may postpone this date even for a month.

The inauguration shall be held in frames of 30 days after the declaration of official results, and some influential off-going forces may try to postpone this date. The elected President shall take the oath during the special parliamentary sitting, which may also be wrecked.

So, there is a chance that the inauguration of nobody-knows-who will be held in March 2010, but as I am informed the headquarters of both candidates has received the instructions to be ready to work till the summer. Maybe, to prepare for the early parliamentary elections, who knows.

Early parliamentary election: to be or not to be?

Analyzing the current alignment of political forces in Ukraine, I am 99 percent sure there will be no early parliamentary election on 30 of May 2010, despite of all the ‘promises’ of the top-politicians.

(The day of 30 of May is widely discussed as a possible date for early parliamentary vote as is an officially established day for the local elections).

The argumentation is simple: there is no parliamentary party in Ukraine, which would be really very interested in early election in 2010. Though, it is very possible that the early parliamentary poll will take place in 2011, even in January 2011, – about one year before the scheduled time.

Why the current composition of Parliament seems to be very livable? First of all, because two biggest factions wouldn’t run the risk of losing the precious parliamentary seats.

The party of Regions is again in the most confident position. In comparison to the results of last parliamentary election of September 2007, Viktor Yanukovych slightly strengthened the ranks of his supporters – on 1 percent (from 34,37%). But it is not clear, how Ukraine will vote for the ‘Regions’ in half of the year, especially if Yanukovych win the presidential position (Ukrainians are predisposed to give less support to the ruling authorities).

Yulia Tymoshenko, to the contrary, has lost more than 5 percent – in 2007 she had 30,71% of votes. And 5 percent is about 20-27 seats in Parliament (it depends on the quantity of parties, which will overcome a 3% threshold).

All the other political parties, presented in Parliament now, including the members of so-called ruling coalition, have very illusive chances to enter the Parliament after the early vote. The block of Viktor Yushchenko Our Ukraine – People’s Self-Defense has already been falling into pieces, and ex-and-current-pro-presidential MPs are seriously thinking about their political future and risk not to become MPs again in case of the early election. Communist Party understands that it will never win 27 seats in Parliament which they have now. The block of Volodymyr Lytvyn (currently having 20 seats) seems as totally not able to pass the 3% threshold, so, the Speaker would surely form a coalition with a winner of Presidential fight, whoever it will be.

Does a new coalition already exist?

The vote in favor of dismissal of the Interior Minister of Ukraine Yuriy Lutsenko on Thursday, 28 January, has showed that a new coalition (pro-Yanukovych one) already exists in Ukrainian Parliament.

Who voted in favor? Here is the list, ahich may be considered as a draft of a 'new coalition':

The Party of Regions faction – 171 vote (out of 172 members of the faction)

The Block of Yulia Tymoshenko faction – 1 vote (out of 153 members of the faction)

Our Ukraine – People’s Self-Defense faction – 11 votes (out of 71).
I have to add that part of these MPs represent ex-Head of Presidential Secretariat Viktor Baloha. A brother of Viktor Yushchenko Petro and a godmother of President’s child Oksana Bilozir also voted in favor of Minister’s dismissal.

The Communist Party of Ukraine – 27 (out of 27).

The Block of Lytvyn – 19 (out of 20 – as the Speaker decided not to vote).

Independent MPs – 2 (out of 6).

As the proverb says, we shall see how the cat jumps.