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

There is a threat to Independence and Integrity. President Yushchenko addressed Ukrainian citizens.

Today on 21.00 the President of Ukraine Viktor Yushchenko has made an extraordinary address to the citizens of Ukraine, translated by all the national TV and radio channels.

“January the 17th may become the day, when country will be pushed to backward direction”, Viktor Yushchenko said. Among the main threats President mentioned “a threat of energy dependence and loss of the influence to the gas transit system”, “a debt load of tens of billions dollars”, “a threat of reconsideration and postponing the European direction”, and “a threat to the integrity and sovereignty” of Ukraine.

Also President has emphasized a threat of the falsification of voting results.

Viktor Yushchenko appealed to election commissions at every polling place (to respect the rule of law), to judges (“you will play the unique role”), and to the ‘shoulder-strap people’ (“your duty is to defend the people’s choice”).

The Lit-Crit. Reflections while reading the FT article ‘Yushchenko hits at Moscow ahead of poll’.

The Financial Times has published an article called ‘Yushchenko hits at Moscow ahead of poll’ on Monday, 14 of September. I’ve read this story only today, and couldn’t stand but to share my strong disagreement with some points, so categorically stated by the author. So, let me give some comments to this article.
‘Yushchenko hits at Moscow ahead of poll’
By Roman Olearchyk in Kiev
Published: September 14 2009 14:16 Last updated: September 14 2009 14:16
Viktor Yushchenko, the embattled Ukrainian president, complained of Russian meddling in Kiev’s domestic affairs ahead of a high-stakes presidential election, which the pro-western leader is expected to lose to a more Kremlin-friendly candidate.
---To be pro-Western doesn’t mean to be totally anti-Russian. I don’t think that the spoiled relationship with the official Moscow may be called as the advantage of the presidency of Mt. Yushchenko.
In a Financial Times interview, Mr Yushchenko said Moscow had waged a smear campaign against Kiev and could try to manipulate Ukraine’s electorate – claims that were also made in 2004 when Mr Yushchenko was propelled to power against a Kremlin-backed candidate. Voters remain split in an east-west axis between Russian and Ukrainian speakers.
--- It is wrong to state that the Ukrainian electorate is divided to Russian speakers and Ukrainian speakers. The author either have never visited East of Ukraine (but I hardly think so), or just wanted to make a witty statement to attract more attention of foreign readers. I would say that there are a lot of Ukrainian speakers in Eastern Ukraine, especially in a countryside: even my own relatives who are living near Donetsk are using Ukrainian as a language of family communication. Yes, there are lot of Russian speakers in the Eastern and Central part of Ukraine – mostly due to the labor migration from other regions of Soviet Union caused by the industrialization growth. But let me assure the respected author of the article that most of the Russian speaking people are feeling themselves as citizens of Ukraine, not servants of Russia as some people want to demonstrate.
The problem of the split of electoral preferences in Ukraine is not the question of language, but sort of a regional solidarity. People from Eastern Ukraine support Viktor Yanukovych and the Party of Regions, first of all, because they think he is going to support their interests, and to make their own regions more prosperous. Such an antagonism to other opponents of Mr. Yanukovych is a simple reaction to their rhetoric, which often sounds unfriendly to the Eastern regions of Ukraine – people from there had been called as thieves, extremists, betrayers, Russian henchmen and so on. The same situation we may see in Western Ukraine, when some politicians are trying to win extra-support, setting Ukrainians against each other.
The issue of Russian interference in Ukraine’s election emerged last month when Dmitry Medvedev, Russia’s president, accused Mr Yushchenko of waging “anti-Russian” policies by seeking membership in the Nato military alliance, and urged the country’s future president to be more friendly.
--- What is a problem with being friendly to your neighbors?
Mr Yushchenko said he expects Russia to stir up separatist sentiment on Ukraine’s Russian-leaning Crimean peninsula. But he ruled out escalation into a military conflict of the kind seen last summer in Georgia, another pro-western ally on post-Soviet turf. Moscow continues to firmly back the independence aspirations of two Georgian breakaway enclaves, one of which, South Ossetia, was at the centre of the war.
Many in Kiev fear a similar scenario in Crimea.“They will try to exploit the ‘Crimean Card’. But, I don’t see a risk that the situation in Georgia would repeat,” said Mr Yushchenko when asked if separatism or military clashes could erupt. “Ukraine is not Georgia,” he said, referring to the country’s larger population, military and geopolitical significance.“Strength today is not in a military position. Employing it would be complete stupidity,” he added.
--- I agree with the statement about the ‘Crimean Card”. Nevertheless, the military scenario in the Crimea is unfortunately possible, but rather in a form of a provoked inside disorder.
Referring to last January’s natural gas stand-off between Kiev and Moscow, which disrupted European supplies, and relentless Russian warnings that recession-battered Ukraine was unable to pay its gas bill, Mr Yushchenko said: “There are a lot of hidden and cynical schemes being played through information airwaves, aimed at discrediting Ukraine” in the eyes of Europe and the world.
Mr Yushchenko said: “We are witnesses of how the politics of totalitarianism is reaching its apogee against the principles of democracy, sovereignty and territorial integrity. Georgia is a sign of how, unfortunately, the Pan-European community did not stand up to defend these fundamental principles. It was a setback,” he said.
--- Nothing to say. Was the EU supposed to dig up the hatchet against Russia?
The Ukrainian president said he hoped soon to meet US President Barack Obama to discuss these and other issues and expressed solidarity with a plea to Western leaders made last week by members of Ukraine’s intelligentsia. In an open letter, politicians, artists and experts had called for western leaders to provide Ukraine with stronger security guarantees against an increasing threat from Russia.
--- ‘to discuss these and other issues’ – it’s rather strange interpretation of the interview with the President of a country.
Mr Yushchenko trails three frontrunners in the election who are actively seeking to harmonise relations with Russia. They include Yulia Tymoshenko, prime minister and erstwhile Orange Revolution partner, and ex-prime minister Viktor Yanukovich, the Moscow-backed candidate in 2004. Mr Yushchenko accused them of pandering to Moscow, selling out Ukrainian interests as “trading cards” to get Russia’s support for their candidacies.
--- Is it bad to seek to harmonize relations with a neighboring super-power? I think that the most preferable way for Ukraine to build its foreign policy and strategy of its implementation is making friends, not enemies. Russia will never disappear from Ukrainian border, and the smartest way is to try to build a system of checks and balances based on the multi-vector policy.

What’s up, Ukraine: a headless Foreign Ministry and new talks on early presidential race.

The Prime Minister of Ukraine Yulia Tymoshenko declared she is in favour of the early presidential election in her country. “The sooner there will be presidential election in Ukraine, the better it will be politically cured”, she said in the column for French Le Monde, published today. Today Mrs. Tymoshenko is on the travel to France, where she’s meeting with French President Nicolas Sarcozy.

Yulia Tymoshenko thinks that the biggest mistake of the President of Ukraine Viktor Yushchenko is that he used some dirty weapon against her. “I always offered him my hand. I was only person during the Orange revolution he could rely on. I had never betrayed him. The struggle will end with his political suicide”, she added. When asked what could stop her from becoming president in the near future, she said: "Nothing!"

Meanwhile, The Minister of Foreign Affairs of Ukraine was sacked yesterday. 250 Members of Parliament of Ukraine voted in favour of the dismissal of Mr. Ogryzko: the oppositional Party of Regions, the Communists, and 49 lawmakers from the parliamentary Block of Yulia Tymoshenko. As the authoritarian rule inside the Prime Minister’s faction is a well-known fact, the result of this vote means that Mrs. Tymoshenko was in favour of the dismissal. “Ohryzko did not suit me as a minister,” PM said. “He is not professional, he is a person who has been making provocations against the government.”

Mr. Ogryzko, always loyal to Viktor Yushchenko, recently was in a center of scandal with Russian foreign ministry: he warned the Ambassador of Russia in Ukraine, ex-Prime Minister of Russia Viktor Chernomyrdin that he may become persona non grata in Ukraine for his critical statements. Before his dismissal, Volodmyr Ogryzko addressed Parliament on the recent ruling of the U.N. court, establishing the maritime border between Ukraine and Romania – it is considered as a big fiasco of Ukrainian diplomacy, as Ukraine in fact lost a big part of its territory inside the Soviet Union border (the UN-court decision may become a dangerous precedent for future attempts to change existing post-Soviet borders).

The press-secretary of President Iryna Vannikova said the dismissal of Ohryzko “was untimely and ungrounded.” “It makes absolutely no sense to weaken the country’s foreign policy, and to create new source of tensions in the middle of the economic crisis,” she emphasized.

Some Western media say that the dismissal of Ogryzko may shift Ukrainian foreign policy from pro-Western to pro-Russian. I would not agree with that. I’d better say that the Ministry of Foreign affairs was clearly not friendly to Russia, and also was often acting against the interests of its own country – Ukraine – moving the domestic political quarrels on the international stage. However, taking to the account the recent statements of Mrs. Tymoshenko in Le Monde, the last tendency mentioned above is not going to change.

Jaap de Hoop Scheffer: "If there is a Russian-Ukrainian dispute on energy security I think NATO allies should pick that up".

Let me not to tell anything about Ukrainian politics today. Everything is going well here in Kiev, the politicians are going on with presidential campaign, claiming each other in all the possible sins. The main topics of discussion: gas contracts (Presidential secretariat has issued a new research, making the conclusion that the papers signed in Moscow are not good for Ukraine and may - and possibly should - be revised), the date of Presidential election (December 2008 or January 2009), and a couple of dismissals and appointments - current and prospective. Instead of Ukrainian domestic politics saga, I propose some NATO-reading for today: Transatlantic Leadership For A New Era: Speech by the NATO Secretary General at the Security and Defence Agenda - 26 January 2009. This speech, followed with questions and answers session, really worth to be read. I will give here the words of NATO Secretary General Jaap de Hoop Scheffer, which were concerning directly Ukraine and its geopolitical role in global processes.

"We have seen how the need for reliable energy supply is transforming from a mainly economic question into a central security issue. For many nations, being cut off from energy is a matter of national survival. The recent quarrel between Russia and Ukraine was only the latest reminder of this. This latest crisis showed how a bilateral dispute can have a powerful knock-on effect, both in terms of the heat in houses and a chill in international relations".

"Clearly, no one gets a veto over NATO enlargement. That process is central to our aim of consolidating Europe as an undivided and democratic security space and it is not negotiable. The pace and direction will be of our choosing. But the NATO-Russia relationship is too valuable to be stuck in never-changing arguments. We need a positive agenda, one that befits the importance of both Russia and NATO".

"Considering the political, security and energy issues that run through Central Asia and the Caucasus, I believe we need stepped up focus on those regions as well. I think NATO should consider its role in energy security much more seriously. There is, to my mind, clear added value for the Alliance".

"It is simply not enough to have Heads of State and Government provide NATO with a mandate in energy security, yet to have Allies hesitate to use NATO as a forum for discussion during crises".

"The Bucharest decision was rather clear, or was very clear, I should say, and as I said in my introductory remarks, we will set the pace and we will decide upon the moment. But the moment is performance-based. So I cannot give you a timeframe. It is not around the corner, I would say, as we speak, as far as, of course, Ukraine and Georgia are concerned. We are intensifying our relationship, as you know, through the NATO-Ukraine Commission, the NATO-Georgia Commission, but I do think that enlargement in this sense is not around the corner, but I can't be more specific here in that regard".

"If there is a Russian-Ukrainian dispute on energy security I think NATO allies should pick that up. Not because we have any ambition, or we pretend to play any role. Please, no! There was a Czech presidency which immediately was proactive and involved. That was the European Union involved. Other people were involved. Certainly not NATO. But that does not mean that those subjects are irrelevant for NATO, if you agree with me that NATO is a political military organization".

"I think Russia cannot afford to have a non-dialogue with NATO, and NATO cannot afford to have a non-dialogue with Russia".

"Of course I'm discussing protecting pipelines in times of crisis. I said protecting pipelines is first and foremost a national responsibility. And it should stay like that. NATO is not in the business of protecting pipelines. But when there's a crisis, or if a certain nation asks for assistance, NATO could, I think, be instrumental in protecting pipelines on land".

"NATO is not in the energy business. So if in a situation like we had over the past weeks NATO allies are totally deprived of gas you will not see a NATO Secretary General stepping forward, raise his finger and tell the Europeans or the Russians or the Ukrainians for that matter, listen, guys, you have to stop this. We have other international organizations, other people to do this, and certainly not a NATO Secretary General, the European pres... the European Union presidency, rather, or others.
So we are not in the energy business, but of course when a nation is for a long time deprived of all gas, or all energy, in the North Atlantic Council, and quite rightly so, when a nation raises its finger and says, Secretary General, we would like to discuss the energy situation, should NATO then say no, that's none of our business? I don't think so. Although you'll not see us in the forefront in the energy business because we are not in the energy business. We're in the security business.
And I say again, we usually use the word energy security. And that's our business".

High Treason – II. Some conclusions from the Cold War started by Russia-Ukraine gas dispute.

The Gas Cold War 2009 caused by the Russia-Ukraine gas dispute has not finished yet, but we can already make some important conclusions. Sitting in the cold Kiev flat (we’ve got very low pressure in central heating system), I will try to give my point of view as briefly as possible.

Conclusion 1. The indisputable winner of the Gas Cold War 2009 is Russia and Russian Gazprom.
I would not agree with some observers who say that the image of Russia as a reliable gas supplier and the Gazprom as a relevant business partner suffered a lot. Europe and Europeans may think and feel whatever they want, but it is really impossible to replace more than 160 billion of cubic meters of Russian gas with some alternative source of energy. So, Europe will stay dependent on Russian gas supply, whatever the image of Russia will be.
Actually Russian Gazprom has already received a lot of profits from the Cold War:
1. Gas prises. European consumers were predicting the Russian gas average prices for Europe to fall to around $320 per tcm (thousand cubic metres) in 2009 due to the low oil prices level. New Cold War led to rise of the oil demand in Europe as of the alternative energy resource, and this will prevent the significant fall of gas prices.
2. Alternative pipeline projects. Gazprom currently has two new gas pipelines projects: the Nord Stream pipeline, which runs under the Baltic sea from Russian Vyborg to German Greifswald, and the South Stream, which will cross the Black Sea to Bulgaria and then split in the direction of Austria and Greece. Both pipelines will definitely get bigger support of the European companies, as the alternative for “non-adequate” Ukrainian route. (Though Ukrainian route cannot be eliminated as it transports around 80% of Russian gas export to Europe).
3. Punching Ukraine. Undermining the image of Ukraine and its President Viktor Yushchenko was a “pleasant revenge” of Russia and its top-authorities for Orange Revolution, support of Georgia, and Holodomor festivities. After this crisis nobody (except of some ultra-pro-Ukrainian-idealists) in Europe would think seriously about the possibility for Ukraine to join the EU earlier than in 100 years, and nobody in NATO would seriously consider future Ukrainian full membership in the Alliance.
4. Extra money. The crises appeared to become the real opportunity to rise gas prices for Ukraine and to get extra-profits.

Conclusion 2. The Gas Cold War was artificially organized.
Of course, Ukraine could sign the gas supply agreement with Russia before the New Year and prevent the crisis. Gazprom proposed the price of $250 per tcm, which is acceptable for Ukraine and its economy (in case of proper management of the State Oli and Gas Company Naftogaz Ukraine and fair distribution of up to 18 billion cubic meters of gas the Ukraine is producing by itself every year. The price of $250 is logical: last year Ukraine was paying $179,5 per tcm, and there is an agreement that the price will raise gradually to the European level during three years. It is approximately plus $70-80-90 every year, so, Russians should charge $250 or even more, and it was predictable.

But the gas agreement with Russia was not signed, and the Ukrainian officials who refused to sign the documents were consciously provoking the gas crisis. No agreement – no supplies, even a schoolboy may predict such a situation. Some Naftogaz officials said that the President of Ukraine Viktor Yushchenko prohibited signing of this agreement. It sounds unconvincing, as at that time nobody, including the Prime Minister of Ukraine Yulia Tymoshenko, made any rough statement on this point. It is also very naïve to think that the Gazprom and Naftogaz Ukraine really have communication problems and cannot reach a deal on gas supply to Ukraine. It’s unbelievable even if we take to the account the fact that the Head of Naftogaz Oleg Dubyna is flying in one plane with his Gazprom counterpart Aleksei Miller.

So, the gas crisis was surely staged by Kremlin and by some high authorities in Ukraine. Viktor Yushchenko is not among them, though he didn’t do anything (he could do a lot) to prevent the Gas Cold War. I would also add that the Head of Naftogaz Ukraine Oleg Dubyna was appointed to his position by the Yulia Tymoshenko’s quota, and that he is in very close relations with the Industrial Union of Donbass business group, which has permanent conflict of interests with “gas trade middleman” Dmytro Firtash who controls half of the “RosUkrEnergo” intermediate company.

Conclusion 3. In frames of Ukrainian domestic politics the gas crisis played not in favour of President Yushchenko.
Everyone might notice that the President of Ukraine was trying not to be involved into the gas crisis from the very start. He was mentioned a lot by all the participants of the negotiations (in positive and negative manner), he made some phone calls to his counterparts in Europe and to Russian President Dmitriy Medvedev, but he was avoiding to get inside the negotiations and discussions by himself. Why? It seems that he has a very vulnerable position, when one is talking about the gas supply question. During his Presidency, Mr. Yushchenko has been accused a lot of times in having some profits from the work of the RosUkrEnergo. In particular some people were accusing Mr. Firtash in paying some bills for Kateryna Chumachenko, the wife of the President. These accusations were never proved, but also never dishonoured, though Viktor Yushchenko could for example appeal to courts. If these accusations were true (even semi-true), Viktor Yushchenko is going to lose one of the main sources of his financial support before the Presidential election. By the way, some of the money may be re-transferred in favour of Mrs. Tymoshenko, if we just hypothetically assume that the Itera Company of Igor Makarov may come back to the big gas-supply scene as some people say.

Conclusion 4. The main loser of the Cold War is Ukraine as a country, its economy, and the State oil and gas company Naftogaz Ukraine (but not the current management of this company).
In the geopolitical sense the image of Ukraine as a country (and as a democratic country in particular) has suffered a lot. The New Cold War has demonstrated that Ukraine is totally unpredictable, since the actions of its authorities and state companies are based on the today’s interests of domestic politics, rather than on long-term programmes or interests of the country. Despite of the declarations about the dedication to the democratic ideals and the European course of current leaders of Ukraine, they showed up as a real threat to Europe, European economy and even to the health of the citizens of the European States.

The State Oil and Gas Company Naftogaz Ukraine is close to bankruptcy today. Though I am sure that with normal management this company may easily become a mail financial supplier of Ukrainian budget. (I was trying to make some calculations earlier, and maybe will publish the results here one day, of course, after careful self-proof-reading).

Conclusion 5. The intermediate gas supply company RosUkrEnergo may seem to be a loser, but is not.
The intermediate company RosUkrEnergo also may be considered as a loser in the New Cold War as it will probably be eliminated from Russia-Ukraine gas trade scheme. But I don’t think this statement is true, taking to the account billions dollars of profit RosUkrEnergo had received during the last four years, operating in the sphere of the re-export of gas from Russia to Ukraine and Europe (Hungary, Romania, Poland and Slovakia) and gas trade inside the domestic market of Ukraine. Half owned by Gazprom, RosUkrEnergo was founded as a temporary source of profits, and now it’s just a time for something new. I will not be surprised if Mr. Firtash would be among founders of a new gas trade company who will operate on European – and Ukrainian – markets in coming years.

Conclusion 6. The Europe, still suffering from lack of gas supply, may be considered as a loser also, and the object of manipulation as well.

Conclusion 7. The Cold War is an evidence of a betrayal of the interests of Ukraine by its highest authorities – President, Prime Minister, and Head of State Oil and Gas Company. Their actions and failure to act as well may be called as a high treason with all the consequences it should cause.

What’s up, Ukraine? 15-21 December 2008.

Falling currency . On Thursday, 18 December the Ukrainian hryvnia dropped to its historical low against the US dollar – 10-10.5.
Less than a half of the year ago US dollar cost around 4.8 hryvnias. The Prime Minister of Ukraine Yulia Tymoshenko declared that the hryvnia’s value felt down due to “a special speculative operations planned at the currency market of Ukraine, and organized with the assistance of the National Bank (Central bank) and some other banks of Ukraine”, in particular, Nadra bank.
“The bank that was just bought for 600 million dollars, received from the National Bank financial resources of 7 billion 100 million hryvnias”, Yulia Tymoshenko said, adding that “the bribes made up from 3% to 7% of the total amount of financing”. Yulia Tymoshenko pointed out that Ukrainian businessman Dmytro Firtash (owner of the Group DF holding, which is famous also for a scandal around the financial support of the British Conservatives) and the Presidential Secretariat are standing behind the Nadra bank. “They need to tumble the hryvnia’s value to dollar”.

Getting closer. The U.S. Secretary of State Condoleezza Rice and Ukrainian Foreign Minister Volodymyr Ohryzko signed the U.S. – Ukraine Charter on Strategic Partnership.
The joint U.S. – Ukrainian declaration called a “Charter on Strategic Partnership”, signed in Washington on 19 December, appeals for the expanding of the economic and security ties between two countries, and strengthening of the cooperation in energy, trade and other areas.The document does not have a legally binding status.
The declaration states that the United States intends to open a diplomatic post in the Autonomy Republic of Crimea, a region that is highly influenced by Russia (there are many ethnic Russians and Russian-speaking people with Russian passports), and is hosting Russia's Black Sea fleet in Sevastopol (under a lease agreement until 2017). ”Ukraine welcomes the United States' intention to establish an American diplomatic presence (American presence post) in Simferopol, the capital of Crimea”, said the joint declaration.
State Department spokesman Sean McCormack has already said the Crimean diplomatic post would be a small one, dedicated to the organising of cultural events and doing political reporting. Mr. McCormack denied any intentions to provoke Russia by establishment of this post. ”This is about U.S.-Ukraine bilateral relations. If the Russian government chooses to be upset by ... my stating that we're considering opening up… a one-person or two-person American presence post, well, there's not much I can do about that,” he added. Russian officials haven’t made any statements on this point, but analysts are saying that this answer may be given in more sharp position of Moscow in gas-trade dialogue with Ukraine. Minister Ohryzko told reporters the post “probably will be done next year”.
Also Washington promised to help to strengthen the candidacy of Ukraine for NATO membership, which is another painful question for the official Russia. Nevertheless, U.S. would work within the NATO-Ukraine Commission to agree on a plan for training and equipping Ukrainian armed forces. “We plan to undertake a program of enhanced security cooperation intended to increase Ukrainian capabilities and to strengthen Ukraine's candidacy for NATO membership,” the document said.
Washington also promised to help Ukraine with “rehabilitating and modernizing the capacity of Ukraine's gas transit infrastructure”, cooling down Russian dreams to fort a consortium for the exploiting of Ukrainian gas lines.

Fitch Ratings: The credit outlook for the Ukrainian energy and utility sector during 2009 is negative.
The report issued on Thursday 18 December lists the main problems of the Ukrainian energy and utility sector: a funding crisis in the state-controlled power generation sector, downward pressure on regulated tariffs due to a severe recession, restricted access to bank lending and debt capital markets, and continued turmoil at NJSC Naftogaz of Ukraine (‘B’/Rating Watch Negative). Fitch expects an economic recession in Ukraine in 2009 to drive down power demand, providing only temporary respite to falling capacity reserve margins.
Fitch expects liquidity and refinancing risk to remain high for the Ukrainian energy and utility sector through most of 2009, as foreign banks and markets remain effectively closed to Ukrainian issuers. Naftogaz will continue to confront major challenges in 2009, including a lack of transparency, potentially insufficient state subsidisation for its loss-making residential business, higher import prices, accumulating gas payables and restricted access to external financing. However, Fitch continues to view Naftogaz as an important strategic asset for the Ukrainian government (Ukraine rated at ‘B+’/Outlook Negative) and factors state support into the company’s rating.
The 2009 credit outlook, entitled "Ukrainian Energy and Utilities – 2009 Outlook”, is available on the agency's public website http://www.fitchratings.com/.

Eternal problem. Russia blocks Ukrainian famine-genocide resolution at the United Nations.
Russia blocked Ukraine-initiated UN resolution claiming Holodomor in the Soviet Union in early 1930s was famine-genocide aimed against Ukrainians, rather than a common tragedy of many nations in the country. “We succeeded to bloc the inclusion of the item into the agenda of the current UN General Assembly,” Russian Ambassador to the United Nations Vitaly Churkin said on Thursday, 18 December, according to the Russian media.
The Ambassador also added the United States and Great Britain backed the Ukrainian motion, which “ended in nothing.” Mr. Churkin said Russian representatives were active in explaining the history of Holodomor to foreign partners. As a result, nine EU countries did not sign the Ukrainian declaration, although “EU members usually act in a consolidated manner”.

What’s up, Ukraine? 23-30 November 2008.

Just in case. Viktor Yushchenko was elected as official leader of his party.
On November 29 Viktor Yushchenko was formally elected as a leader of the People's Union “Our Ukraine" party. From now he may appear as “number one” in the party list for early parliamentary elections, and will have a possibility to run for a position of Prime Minister. Previously President Yushchenko had been the party's honorary chairman.
Some experts think that there are possible problems with constitutional law, since article 103 of the Constitution of Ukraine states that “the president of Ukraine cannot have any other representative mandate, or occupy a position in institutions of executive power or associations of citizens.” The law “On Associations of Citizens” defines political parties as associations of citizens.

Last warning. Yulia Tymoshenko scheduled a deadline for formation of parliamentary coalition with "Our Ukraine" - 1st of December.
”If the democratic coalition is not formed until the end of this week, we will be looking for other options and opportunities,” Prime Minister said. She also made an offer to Volodymyr Lytvyn, leader of the faction of his name, to join the probable coalition of BYT-NU-NS “to form a strengthened variant of the democratic coalition.” The BYT faction was ready to support the candidature of Mr. Lytvyn for Speaker of the Verkhovna Rada.
Both Viktor Yushchenko and Volodymyr Lytvyn refused to join the proposed “democratic coalition”. Head of Presidential Secretariat Viktor Baloha noticed on Sunday’s news evening show that “today’s ultimatums of Yulia Tymoshenko is an evidence of one thing: inconsistency. Who may sit at the table for negotiations with BYT and say that the coalition is possible after that? It is not ethical to raise a question about the return, when it was she who did everything for this coalition not to exist”.

Another space. The Ukrainian Foreign Affairs Ministry accused Viktor Yanukovych in putting his leg on the President’s ground.
On 25 November Ukraine's Foreign Ministry issued a statement on the proposal of the leader of the Party of Regions Viktor Yanukovych to establish the single economic space with Russia. Viktor Yanukovych put forward this idea at a congress of United Russia party in Moscow last week. “Since the start of talks on a comprehensive and enhanced free trade zone with the European Union, the issue of establishing a single economic space has lost its relevance," the Foreign Ministry said in a statement. The ministry emphasized that only President Viktor Yushchenko and Parliament, not party leaders, decide foreign policy priorities.

In contrary to national interests. Ukrainian hryvnia reached a new historic low on Friday.
Ukraine's currency sank to a new historic low on Friday, 28 November, at 7.5-7.6 to the dollar on the interbank market, against a low hit the previous day of 7.25-7.5. One of the conditions of the IMF 16.5 billion loan was greater currency flexibility. The National bank of Ukraine linked its official rate of hryvnia with the interbank rate.
Meanwhile, the Head of the National Bank’s Council Petro Poroshenko has accused Ukrainian authorities of the inefficient use of an IMF loan. “I may officially state that IMF resources are used very inefficiently,” he declared at a Russian-Ukrainian forum in Kiev on Friday. He also criticized authorities that agreed with the policy worked out by the IMF experts. In the opinion of Mr. Poroshenko, this policy “does not take into the account national interests of Ukraine.”

Black hole? Blackstone will consult Ukraine for 1 million euro monthly plus another 3,5 million, and all-inclusive working conditions for its experts.
Blackstone has been appointed as a financial adviser to Ukraine, highlighting the US private equity group's ambition to become the consultant of choice for countries faced with financial crisis, informs Reuters. According to a Ukraine cabinet document seen by the Financial Times, Blackstone will be paid a monthly fee of €1m ($1.26m) and a further €3.5m on completion of the contract. It will be paid all expenses, including bodyguards for staff. The contract, dated November 17, says Blackstone will co-ordinate Ukraine's $16.4bn standby loan from the International Monetary Fund, mediate between the government, the IMF and the World Bank and work on the country's stabilisation plan. It is also responsible for handling talks with Ukraine's creditors and developing a communication strategy for the stabilisation plan. The contract says Blackstone is not responsible for implementing the stabilisation plan or for its success. Blackstone's team of advisers to Ukraine is being led by Martin Gudgeon.

Charity first. Kateryna Yushchenko is on the visit to United States.
The first lady of Ukraine was visiting Pittsburgh hospitals at the end of last week – to gather some ideas that she can take back to her home country. Mrs. Yushchenko heads the supervisory board of the Ukraine 3000 International Charitable Foundation, which works with hospitals around the world to improve pediatric care in Ukraine. “She is coming basically to do work for her foundation, to see what can be done to help the hospitals in Ukraine,” said Luba Hlutkowsky, chairwoman of the board of directors of Pittsburgh Ukrainians, according to the local press.
More than 3,000 people in Pittsburgh – about 1 percent of the city's population – claim Ukrainian heritage. Kateryna Yushchenko, 47, was born in Chicago to Ukrainian immigrants. She moved to Kiev in 1991 and became a Ukrainian citizen in 2005, the year that her husband was elected president.

Bad association. EU to sign Association Agreement not only with Ukraine, but also with Azerbaijan, Armenia, Georgia, Moldova, and even Belarus

On 3 December the European Commission is going to present its draft communiqué on the Eastern Partnership (EP) policy. The EC is to propose pulling the six post-Soviet neighbours – Ukraine, Azerbaijan, Armenia, Georgia, Moldova, and Belarus – closer to the West, to recognize their “European aspirations” and to create a new “European Economic Area”. This decision ruined the Ukrainian dream to establish “special relationship” with the European Union.
Previously, a mutual consent to call a new enhanced document to be signed by Ukraine and the EU “the Association Agreement” was interpreted in Kiev as a great achievement of Ukrainian diplomacy.

Our top officials are still talking about the Association as an essential step on the way to membership in the European Union. Most of them, including President, Prime minister and Foreign Affairs Minister use even a word combination “Associative membership in the EU” to emphasize the importance of the document. Now they should feel at least uncomfortable for saying that: the Eurocomission proposes to sign Association Agreements not only with its close and democratic neighbour Ukraine, but also with Azerbaijan, Armenia, Moldova, Georgia, and Belarus with its semi-dictator Lukashenko.

So, instead of “special relationship” Ukraine is to receive a marginal status of “Eastern partner” of the European Union. “The conclusion of Association Agreements will be without prejudice to the partners' European aspirations”, the EU is declaring. Even the negotiations on Free Trade Area or free visa regime will be conducted in frames of the Eastern Partnership policy.

The EUObserver’s article with quotations of draft Commission communication on the EP may be read here.

What's up, Ukraine? (8-14 November 2008)

1. The Headless Parliament. Arseniy Yatseniuk is dismissed from the post of Head of the Verkhovna Rada of Ukraine.
My point of view on a situation you may read in one of my previous posts here.

2. President announces the government change. The results of 4th Baku Energy Summit.
On 13-14 November the President of Ukraine Viktor Yushchenko visited Azerbaijan to take part in 4th Energy Summit. Unfortunately, the main news from the Summit for Ukraine can not be put in frames of energy issues.
In his interview to journalists Yushchenko said that switching of the Odesa-Brody pipeline to avers (forward) mode has been blockading because of political motives. He expressed opinion that such attitude is explained by “political promises and obligations” of the Prime Minister Yulia Tymoshenko. “The consultations, the Prime Minister had before September in certain capitals and the decisions, the government made after that… blocked transportation of Caspian oil”, the President said.
Viktor Yushchenko also mentioned that “starting from the end of the first half of the 2009, we will be supplied with amounts of oil needed to start the avers mode. I am assured that that time we will have a new Government, which will be able to realise a healthy politics that corresponds to the national interests”.

3. NATO: yes, but not today. On 13 November 2008 the Minister of Defence of Ukraine Yuriy Yekhanurov took part in the high-level NATO-Ukraine meeting in Tallinn, capital of Estonia.
The main conclusion of the Summit: Ukraine has a lot to do before it will be ready to become member of the NATO. Ukraine was hoping to join the bloc’s Membership Action Plan (MAP) at the NATO Summit in December with the US support. But other influential members of NATO (like Germany and France) are thinking that to start the MAP with Russia’s neighbour is not a good idea as for today.
“Let me remind you that at the Bucharest Summit earlier this year, NATO heads of state and government welcomed Ukraine Euro-Atlantic aspirations for membership in NATO and agreed that Ukraine will become a member of the alliance,” stressed NATO secretary general de Hoop Scheffer. US Defense Secretary Robert Gates also emphasiced his country’s support for Georgian and Ukrainian membership. Estonian President Toomas Hendrik Ilves said that “the fact that Ukraine is here today with NATO ministers of defence should convince everyone that NATO understands Ukraine's importance to European security… We should consider how to move beyond the current deadlock over timelines and political symbols.”
So, everyone is thinking positively. It means that Ukraine will become member of NATO in future. May I remind that the EU leaders also promised that Turkey will become member of the European Union. The question is about time-frames. Ukrainian NATO membership bid is really very complicated by internal political crisis and – what is more important – a lack of public support. It seems to me, we do have time to change the situation for better.

4. Holodomor: Distorted History. On 17 November the President of Russian Federation Dmitry Medvedev wrote a letter to the President of Ukraine Viktor Yushchenko.
I’ll just give English translation of the most interesting parts of this letter. No comments:
“In response to your messages concerning the so-called Holodomor as well as the steps taken by the Ukrainian leadership on the issue, I consider it necessary to elaborate on our views of and approaches to the issues at hand. We clearly see that in recent years this topic combined with persistent attempts to receive a NATO «membership action plan», have become a central element of Ukrainian foreign policy.
In our opinion, the tragic events of the early 1930s in Ukraine are being used to achieve immediate short-term political goals.
The famine in the Soviet Union in 1932-1933 was not aimed at the destruction of any one nation. It was the result of a drought, forced collectivization and de-kulakization [campaign of political repressions of the better-off peasants and their families] and affected the entire country, not only Ukraine. Millions of people in the middle and lower Volga regions, northern Caucasus, central Russia, southern Urals, western Siberia, Kazakhstan and Belarus died.
I do not consider it possible to participate in the activities surrounding the 75th anniversary of the «Holodomor» in Ukraine”.
Full text of this letter (translated to English) you may read on the official website of the President of Russia here.

5. Yulia Tymoshenko met George Soros.
As Ukrainian media have informed, on 8 November Prime Minister of Ukraine Yulia Tymoshenko met with famous billionaire George Soros. The meeting took place in Kiev, but not in a center, but in a restaurant near Boryspil airport. Ukrainska Pravda informs that the meeting was confidential, and a role of the interpreter performed the Vice-Prime Minister of Ukraine Hryhoriy Nemyria (who previously worked as a head of Soros Foundation's institution in Ukraine). One of the main reasons of a meeting is future presidential election in Ukraine, journalists think.
President Victor Yushchenko is also tapping the same door. On 14 November we held a phone conversation with the newly elected President of the USA Barack Obama (George Soros was among his financial donors). Victor Yushchenko and Barack Obama agreed to hold a bilateral meeting shortly after the inauguration ceremony of the new President of the USA.

Holodomor in Ukrainian foreign policy

This week the President of Ukraine Viktor Yushchenko has three working visits abroad – on Monday he was in Lithuania, yesterday, on Tuesday, – in Israel, and today he departed for the United Kingdom with a two day visit. Agenda of every visit is obviously different, except one part. In every country Mr. Yuschenko has at least one little event (exhibition, lecture, conference or else) dedicated to Holodomor (death by hunger) 1932-1933.

On 12 May in Latvia Victor Yushchenko - together with his wife Kateryna Yushchenko and President Valdas Adamkus of Lithuania - took part in an opening of exhibition dedicated to Holodomor in Vilnius Genocide Victims' Museum. On 13 May in Israel he asked the President of the state Shimon Peres to support the Ukrainian initiative to appeal to the United Nations with a document concerning the Holodomor issue. On 15 May in London Ukrainian President will be present at the opening of the exhibition commemorating the victims of the 1932-1933 hunger.

Until a recent time, my personal opinion on this issue was dual. From one side, Holodomor was a real tragedy for Ukraine, and it surely have to be called as genocide against Ukrainian nation. But, from the other side, there is really too much of Holodomor in Ukrainian news and politics. The amount of official information, declarations, statements and appeals concerning the hunger which had place in Ukraine at the beginning of 1930th has reached – as for my point of view – a critical point, after which the total misconception has place.

Mr. Mario Santos David, Member of Parliament of Portugal, has helped me to put an end to the dualism in understanding of this situation. In his speech on the conference “Parliamentary cooperation between Ukraine and the EU” (to which my previous post was dedicated) he – very clearly – defined the main problem of Holodomor issue in Ukraine.

“Holodomor is a tragedy, but it is a history,” Mr. Mario Santos David said. “It can not be a priority of Ukrainian foreign policy”. The Member of Parliament of Portugal emphasized that it is necessary to show respect for victims of Holodomor, to remember about this tragedy – but “to put it as a key issue of foreign policy is definitely wrong”.
"We shouldn't look that much into the past", the MP thinks, "we should better look into the future".

Reaction of some Ukrainian MP’s (I prefer not to tell names) to this speech was not very favorable. I think because of misunderstanding or troubles with translation as the idea is very easy to understand. Ukraine – of course – should not forget about such a big tragedy as Holodomor was. And furthermore, Ukrainians have (pleno jure) a right to inform international community, the entire world about one of the largest national catastrophes in the modern history of the Ukrainian nation. But the promotion of Holodomor outside Ukraine should not be turned into a kind of fetish, into an artificial, exaggerated national interest. Ukrainian diplomats, politicians, their speechwriters and other professionals have a lot of other things to do on the way of the country towards the integration into the European democratic family.