Ukrainiana

Thursday, March 16, 2006

Ukraine-Russia Relations
Letter 8

Lalulu,

Ukrainian citizenship does imply rights and responsibilities. Ditto for Russian or US citizenship, for that matter. We don’t need the double standard, do we?

For more than a century, millions of Ukrainians have mastered Russian and English to become productive citizens of their host countries. If I were a member of the largest minority in Russia or America, would I be able to get a decent job without speaking the language of my host country?

Kuchma’s claim to fame started in a village where hardly a person spoke Russian. He quickly absorbed Russian in college and later on would trace himself as Russian. He rediscovered his Ukrainian roots only when he became Prime Minister. And he barely spoke Ukrainian at the time. But motivation moves mountains. He relearned Ukrainian and, in the twilight of his presidency, begot an international bestseller in Ukrainian:)

That’s why I just don’t believe that mastering Ukrainian, a Slavic language that has so much in common with Russian, creates a linguistic challenge for goodwilling Russians. The 2001 census did show a slightly stronger standing for the Ukrainians. Still, it was not a distant cry from the 1989 Soviet census to validate suspicions of rampant Ukrainization. In the good old Soviet times, many Ukrainians would dress themselves as Russians. What was the trick? Once they buried their ethnic identity and couched their credentials in the language of cultural superiority, they could gain access to better jobs. That’s how millions of Ukrainians unlearned their mother tongue. I doubt that the Russians would entertain the sort of cultural transition experienced by millions of Ukrainians.

In fact, learning Ukrainian never implied unlearning Russian. When Ukraine became independent, the Ukrainians did not retaliate by stigmatizing the Russians culturally. Had they done so, the Russians would have either walked away en masse or crammed themselves with Ukrainian. If all-out Ukrainization happens to be the case, then why do they have just a couple of Ukrainian schools in the entire Crimea and in Donetsk?

Ukraine does vote along ethno-geographic lines to a high degree. But other patterns also come into play. In December of 1991, the Ukrainians were not alone in voting for Ukraine’s independence. In July of 1994, the Russians living in Ukraine were not alone in voting for a pro-Russian Kuchma. In October and December of 2004, large numbers of Russian-speaking intelligentsia voted Yushchenko. And Yushchenko defeated Yanukovych in a total of two rounds — round 1 and 3. The March 26 parliamentary election does not promise a landslide victory for any single party.

I reject nazism in any form. I’m not a fan of KUN/UNSO extremist escapades, and I don’t think they are as active in Ukraine as skinheads are in Russia. At the end of the day, actions speak louder than words: On March 6, an elderly Cuban was murdered in Moscow.

http://www.mosnews.com/news/2006/03/06/cubaman.shtml

Can anybody recall a single Russian slain in the streets of Lviv by Ukrainian nationalists, given the fact that Russian troops slaughtered and deported their fellow people by the tens of thousands? It’s still the other way around. A famous Ukrainian songwriter was slain in Lviv by a Russian who didn’t like Ukrainian songs.

http://www.guardian.co.uk/international/story/0,3604,393658,00.html

Can anybody imagine a Ukrainian who would demand that a famous Russian songwriter stop singing Russian songs in a Moscow café, let alone assault him? What would be the consequences for the Ukrainian community? No Russians were killed in revenge, and that makes the Ukrainians different.

Kyiv rejects the idea of a referendum in the Crimea for exactly the same reasons why Moscow would reject one in Kaliningrad. Neither Ukraine nor Russia exhibits much interest in promoting separatism on its own soil.

More than 8 million Russians live in major Ukrainian cities: Kharkiv, Odessa, Donetsk, Dnipropetrovsk, Luhansk, Kyiv, Lviv. Almost 3 million Ukrainians live all across Russia: St. Petersburg, Moscow, Kursk, Stavropol, Khantymansiysk, Komsomlsk. Have all the Ukrainians living in Russia mastered Russian? Yes. Have all the Ukrainians living in Ukraine mastered Russian? Yes. Have all the Russians, or at least younger people, living in Ukraine mastered Ukrainian? As of today, the answer is no.

http://www.ukrcensus.gov.ua/results/general/nationality
http://www.perepis2002.ru/ct/html/TOM_04_01.htm

The best way to promote unity and uniqueness is to treat people as linguistically capable and responsible individuals. It means individuals who are neither forced to forget their mother tongue nor are loathe to learn the mother tongue of their host country.

Monday, March 13, 2006

Ukraine-Russia Relations
Letter 7

Dan,

Building an orange coalition in pre-election mode was like herding cats. Building an orange-blue coalition in post-election mode would be like cross-breeding cats and dogs — their voters watching in disgust.

This parliamentary election features too many variables to arrive at a precise forecast of the new Rada’s makeup.

Echelon 1. The Big Three: RoU, NSNU, BYT. The combined firepower of NSNU and BYT matches that of RoU. These elite echelons will set the tone.

Echelon 2. The Small Two: the Socialists and Communists. Equal firepower. The Socialists will join us. The Communists won’t. Each of these players boasts a guaranteed-entry ticket.

Echelon 3: The Do-or-Die Ones: Ne Tak, pro-blue; Vitrenko, pro-blue; Plyushch-Kostenko, pro-orange; Pora-PRP, pro-orange; Lytvyn, neutral; Vitche, neutral. The last echelon in Ukraine’s electoral matrix is the most enigmatic. Whoever makes it past the 3 percent magic mark, their affiliation will count. They might have a balance-altering capacity.

Absent a Gallup-caliber polling service in Ukraine, poll credibility remains a sticky issue. Different strokes from different services. The numbers they post keep dancing a statistical salsa, with variances as wide as the Gulf of Mexico. Experts treat these phenomena as smoking gun evidence that some parties simply stick to their “hired guns.” In summary, until all the votes are in, all bets are off.

Amid hopes of a reasonably fraud-free election a “whistleblowing war” already rages on. Both sides claim that mass fraud is in the making. Both zero in on the southeastern region. The blue ones charge the orange ones with translating the Russian name registries into Ukrainian. What does it look like? Кузнец (Russian) > Коваль (Ukrainian). Linguistic nonsense? Absolutely. In fact, representatives of the Central Electoral Commission have confirmed such incidents. But the Regions are reading more into it. Performed accidentally on purpose, this “registry revolution,” they say, is intended to plant a bureaucratic booby trap aimed at preventing the blue folks from voting blue. Some even go as far as to declare that entire housing projects have been purged from the registry.

The orange ones refute the allegation and charge the blue ones with “dead soul” mining and chain voting. What’s the trick? Re-enfranchising an army of deceased persons and having them vote your way. Vote of mass destruction. NSNU maintains that the local electoral panels are dangerously “understaffed” with their members.

Who’s responsible? The blue ones fault the local police and administrations appointed by the orange “carpet baggers.” The orange ones slam the local legislatures run by the local chapter of the “KKK.”

Interesting 19th-century America analogy, if you dig into it. Hopefully, Ukraine won’t have to wait another hundred years to have its surrogate “Jim Crow” ways abolished. In the meantime, both parties have urged their voters to check their registry records before coming to the polls on March 26.

Last Friday, a poll was taken on Svoboda Slova, the exiled talk show with Savik Schuster, the Russian freedom of speech guru. Q: “Do you believe that an orange comeback coalition will contribute to a stable in Ukraine?” Surprisingly, 59 percent answered yes, while 41 percent answered no. All of it on ICTV, a channel allegedly controlled by Kuchma’s son-in-law, Viktor Pinchuk, the #2 man in Forbes’ Ukraine section. Hadn’t he had his toy trophy Kryvorizhstal removed from him last fall by Yushchenko? That said, Savik insisted that the audience does represent the overall population. An independent polling service does selection, he said. Can anybody imagine such a rich media smorgasbord served under Yanukovych the chef?

Could it be that the KP outsourced their HR function to Donetsk? Joking aside, Donetsk probably did outsource their campaign management to GOP talent. (They say Paul Manafort is in town.) Next, they picked on the Clintonesque “It’s the economy stupid!”, injected some hyperbole, and shaped it into something of a drag queen. An anti-American party tapping into American talent. Or did I get it wrong?

Ukraine has become a fishing pond for PR wizards of all creeds — and a funny convergence point for libs and cons. Now see this: Guys who quietly support federalism and plutocracy trying to get us hooked on demand-side economics and equal opportunity.

Of course, some sort of bipartisan consensus will emerge from time to time. Short of these contingencies, a blue-orange coalition would be rejected viscerally by the grass roots. If attempted, it would result in transplant failure — loathed by both sides. The North and South, the East and West will never come to terms as long as cheating remains the norm. March 26 will be another litmus test for this country.

Lalulu,

For the sake of our “open-book” financial and political management, I think we should walk the extra mile. As a native speaker of Ukrainian and Russian living in Kyiv since 1980, I’ve been a voracious consumer of the local media. If need be, I can enrich Dan’s account by several degrees of magnitude. So, at the risk of posing as a fig leaf for the anatomy of Yushchenko’s pre- and post-Revolution failures, let me unearth a few more geological layers.

Let’s go back to 1992-94. Who was who when hyperinflation hit Ukraine? Kravchuk: President, 1991-94. Kuchma: Prime Minster, 1992-93. Zvyahilsky: Acting Prime Minister, 1993-94. Yushchenko: Governor of the National Bank, 1993-99. Notice Yushchenko’s undercapitalization in terms of time horizons.

Kuchma came to office as a man with no plan. His famous parliamentary address quote: “Tell me what to build, and I’ll build it.” However, his lack of vision did not prevent him from enjoying Goliath-like powers. His decrees became the law of the land the moment he inked them. In this prolific role, he churned off a score of loophole-laden ones that, experts believe, contributed to a saga of bigtime Ponzi schemes of the mid 90s.

After Zvyahilsky had stepped down, he spent some time in Israel as charges of embezzlement were filed against him in Ukraine. Surprisingly, on his return, the prosecution dropped the charges. He has been a member of the Regions Party for the last couple of years and is running for reelection.

When the summer 1994 presidential campaign arrived, Kuchma tanned himself as a pro-Russian, Soviet-style exec struggling to rescue the Ukrainian economy from the throes of stagflation and isolation from Russia. Despite his less-than-stellar track record as Prime Minister, he made a home run, because the incumbent-intellectualizer Kravchuk just couldn’t help himself. His immortal quote: “We only have what we have.” In the current episode, Kravchuk is on a mission to get his parliamentary groove back–as the anti-NATOrange face of the guerilla brand Ne Tak. Chances of success? Modest.

Should these veteran policymakers be taken into account, Yushchenko’s financial footprint would pale by comparison. In those early days of Kuchma’s officialdom, covering budget deficits by printing money was considered a panacea. And the money-printing machine was not entirely Yushchenko’s business.

Yushchenko would keep a low profile all the while. By the end of 1994, hyperinflation had been harnessed. On September 2, 1996, the hryvnia went into circulation. Initially equal to the Deutsche mark, it became a store of value with unparalleled staying power throughout Ukraine’s independence. All of a sudden, the Russians, who had long poked fun at our hyperinflated karbovanets, had the tables turned on them. The ruble no longer ruled in Ukraine. And when Russia defaulted in 1998, Ukraine experienced a softer blow.
Do the math:

Ruble: 27,0 (1999), 20,65 (1998), 5.960=5960 (1997), 5.121=5121 (1996)
Hryvnia: 5,44 (1999); 3,9264 (1998); 2,0385 (1997); 1,848 (1996).

http://www.trud.org/guide/rossia.htm
http://www.trud.org/guide/ukraina.htm

Besides internal failure, a new dimension came to light in that crisis. Yeltsin’s Russia reached out into the world economy only to have its stock market crash — a year after the Asian contagion had erupted. In contrast, Kuchma’s Ukraine carried on a more cocooned existence and had no stock market to start with.

But as Governor of the NBU, Yushchenko made the right call, keeping away from the money-printing machine. At the end of the day, it saved Ukraine a lot of grief.
God bless the hryvnia, the ruble, the euro, and the almighty dollar.
P.S. Of those polled in the 2001 census, 67 percent considered Ukrainian their mother tongue. A total of 78 percent considered themselves Ukrainian. The Ukrainians are a majority of the population everywhere except for the Crimea.

Virtually every Ukrainian speaks Russian, while only a fraction of Russians speak Ukrainian. Many of them have been living here for decades. It appears that in this mall we call Ukraine a lot of Russians prefer shopping for Russian, while boycotting Ukrainian. I have every reason to doubt that Russian Americans could command the same kind of privileges in America, let alone Ukrainian Russians in Russia.

Therefore, I still have a dream that one day Russian Ukrainians will enjoy their linguistic rights without eschewing their responsibilities.

Saturday, March 11, 2006

Ukraine-Russia Relations
Letter 6

DLW,

Thanks for your cordial and longstanding support. No, I'm not Taras Kuzio. Taras is my real name, though, and I’d been using it long before I realized the association. Yes, I tried posting on Blogger, but it didn't work out. The Internet offers a wealth of reputable sources on neo-Nazism and Stalinism. Assuming your request concerned English-speaking sources, here’s my selection:

Neo-Nazism

Stalinism

Please do not consider this a pure act of grandstanding or a striptease show of Russia’s flaws. By confronting their past and present, Ukraine and Russia will open the road to a better future.

Thursday, March 09, 2006

Ukraine-Russia Relations
Letter 5

A dollar collapse would mean a lot more people losing their job — billions, probably. Russia and the US would not stand alone in this apocalypse. There’s nothing intellectually unique about the Russian policymakers, as one can hardly find a major Asian currency divorced from US debt.

Nor does the Blue metallurgic sector portray the proletariat alone. Rinat Akhmetov, one of the front runners on the Regions ticket, remains Ukraine’s richest man, according to Forbes magazine.

Tuesday, March 07, 2006

Ukraine-Russia Relations
Letter 4

In the world of professional debate, people base their arguments on issues, not people. Rule of thumb: Every time you label a person you’re arguing with, you lose the argument. It’s called argumentum an ad hominem and belongs in the counter-culture of debate. Yes, I know I sound condescending but the facts of life will be here to stay.

No, I’m not a Russophobe. I have never experienced panic attacks while speaking Russian, my co-native language. And I do not recall having called you a Russophile either. Please be more attentive interpreting my editorials.

Ukraine and Russia have a right to live without fear of being blackmailed, annexed, or partitioned in any way. Do you agree with me? What makes them different is transactional analysis. Ukrainian troops never ventured into Russian territory. Ukraine never ruled Russia. Ukraine never breached agreements with Russia. It was always the other way around.

Good neighbors are always welcome. Bad neighbors are not. What does it take to be a good neighbor? Just a little common sense and good will. Creating a mutually beneficial modus vivendi based on a level playing field. Laying to rest the paradigms of the past. Searching for win-win solutions and a place under the sun in the 21st century. Master-slave relationships mean retardation for both.

What would be a win-win solution for the crisis at hand?

1. Trans-Dniester businesses register in Moldova.
2. Moldova does not burden them with double taxation.

That’s it. Trans-Dniester has been a de facto autonomy for more than a decade. Unless the conflict escalates out of control, it will maintain the status quo indefinitely.

Both China and Taiwan have prospered from free trade. Of course, Taiwan businesses do not have to register with mainland authorities. That said, China would not tolerate a hornet’s nest of smuggling near its shores.

For most countries, the one-China policy does not preclude economic relations with Taiwan.
If China opts for non-peaceful reunification measures, it will lose. If Taiwan rocks the boat, it will lose. In a sense, the same applies to Moldova and Trans-Dniester.

Michael, I have to disappoint you. I’m not the real McCoy:) I’m an independent label under my original name.

Saturday, March 04, 2006

Ukraine-Russia Relations
Letter 3

Lalulu,

Flaming seldom creates fireproof arguments. I did not intend to make you feel insecure. I did not mean to patronize you. And I'm not afraid to put in an extra effort to keep this debate professional and forward-looking. Could we keep it that way?

Back to the substance, I think the "blockade" decision, which involves the Ukrainians on the other side, does have its rough edges. Speaking in Cold War terms, I would say that Ukraine has made a tough call in order to contain the Kremlin’s “divide-and-conquer” policy.

Whenever the Kremlin fuels kingsize separatist ambitions, the price is always paid by common folks. In fact, as you know, Moldova (former Moldavia) had become a fully-fledged Soviet republic overnight — with a stroke of Stalin’s pen. Ukraine never had a quarrel with Moldova, except for a minor border fracas in 2004. Moldova’s major quarrel came from within, but the Kremlin did pull a few strings.

That’s why managing potentially disastrous ambitions — to prevent a repeat of the 1992 bloodbath — is worth the effort. When your backyard becomes a hotbed of geopolitical activity, fence-sitting doesn’t always work. However, great care and flexibility should be exercised in resolving this crisis.

Finally, no liberals posed as firestarters in the 1992 episode. And I do remember a refugee girl who came to our class when the Cold War had already ended and a hot war began there.

Thursday, March 02, 2006

Ukraine-Russia Relations
Letter 2

Lalulu,

If a hypothetical rent re-evaluation carried no upside potential for Ukraine, then why would Russia resort to stonewalling? Why would the Russian Federation employ the border clause as the last line of defense? I think the jury is still out on the question of whether Ukraine has been shortchanged. In my previous post, I tried my best to pave the way for this question via a historical kaleidoscope based on extreme reductio ad absurdum. Anyway, thanks for calling me a dude/weirdo:) I really appreciate the title. When A applies ad hominem treatment to B in absentia — and in a conversation with C — that sequence may speak volumes to the audience. It might have broken someone’s heart to see the Russian tricolor go that pale — to the point of passing for a white flag:)

Now that we’ve traded shots, can we tackle the substance? Of course, neither Kaliningrad nor the Crimea will ever be on the geopolitical “swap market” again. The Molotov-Ribbentrop transaction cost humanity dearly and must not be repeated in any form. Immanuel Kant, a native of Konigsberg, would definitely have supported this categorical imperative if he had seen all the German soldiers who had met their death in the Crimea. Ditto for the Russians and Ukrainians they had killed; and the Crimean Tartars whom Uncle Joe had brutally banished as scapegoats.

Neither Moscow nor Tbilisi will bid to compensate Gulag and Holodomor graduates for the tortuous odyssey of their lives, directed by the mustached genius of genocide. Still, Moscow would clearly have an edge in this tender, in terms of bona fide qualifications and related experience. To keep the qualifications, Moscow should continue playing gaStalin/gasPutin to Georgia or whatever former Soviet republic it may pick for a playmate.

But as for the whole of Russia, the game of reinventing itself would push it much further up the learning curve. After all, Russia is more than just a clique of KGBremlins from the Kremlin and their business partners. More than a hundred million Russians do not run a single oil or gas well. They have to make a living other than pocketing the lion’s share of the country’s exports revenue.

If you put all Russians living outside major cities, struggling to make both ends meet, on the balance sheet, you will discover that the Kremlin’s imperial ambitions add no value to them. What does add value is the human capital of millions of Ukrainians who have contributed to upgrading the “evil empire” to the “energy empire” it is today. For centuries, the Ukrainians have been among the pioneers of Russia. How many Ukrainian schools do they have in Russia?
That’s why adopting a modernization strategy with a realpolitik component will add more value to Russia than carrying the torch of a retardation strategy with a hardline component.
Do I love Jewish ways? I love German ways! The Germans made no effort to disown their ways. They assumed responsibility for crimes against humanity committed by their fellow men. And they are making a good faith effort to help the victims and their relatives. Eleven countries have laws against denying the Holocaust. Ask David Irving, the British historian who is appealing his 3-year jail sentence in Austria, Hitler’s native land. Moreover, Austria, annexed by Germany in 1938, is looking forward to contributing its share of the compensation payments.

Of course, one might argue that rich countries simply can afford this type of noblesse oblige. In contrast, Russia, which prides itself on being a G8 member, cannot afford to do so. Good point. Despite sustained growth, Russia’s GDP per capita trails the rest of the G8 by a wide margin. Confession may open the floodgates of compensation claims that may dampen growth.
Where did things go wrong? In 1990, Yeltsin had set out to make the Russian Federation a prosperous democracy respected by the international community. By the end of 1999, all he left was a poor kleptocracy fighting a bloody war in Chechnya. His alcohol-powered, blowout privatization policy, along with its scorched-earth income distribution patterns, had led to the demise of the Russian Dream in its embryo. With the wrong pilots at the helm, transition from a paternalistic, command-and-control state eventuated in the birth of a socially Darwinist, crony capitalist monster — with a cavernous income gap and a values vacuum.

Not exactly. Russia’s identity crisis became fertile ground for Nazi–inspired hardliners. Sixty years after the victory in the Great Patriotic War, Der Fuehrer has established himself as a popular, customizable political brand around Moscow. In the streets of Moscow, Mein Kampf is sold as a souvenir; Africans, Asians, and Jews are assaulted on a regular basis.

Why does this keep happening in a country where every family had lost someone dear in the war? In a country that used to sponsor liberation movements in Africa, Asia, the Middle East, and Latin America and welcomed students from these faraway places? How could a country with galaxy of the world’s finest scientists, writers, and composers have its lights turned off?
Uncle Boris’ two terms of office left Russia poor and messed up; Uncle Vlad’s have done little to make it right, except making use of skyrocketing energy prices. Has the value of life appreciated accordingly? Kursk the submarine, 2000. Dubrovka the theater, 2002. Beslan the school, 2004. These benchmark episodes offer bloodchilling evidence to the contrary.

Oligarchs are as much of a problem for Russians as they are for Ukrainians. In this regard, these nations are brothers in distress. What makes the Russian oligarchs different? They are bigger and badder. They need more space. That’s why Ukraine has become part of their habitat. True, many of the top oligarchs are of Jewish origin. Scattered all over the Roman Empire and Christendom for centuries, the Jews always stuck together in order to survive. Wherever they found themselves, their business skills and goal-orientedness always came to prominence. Once successful, they would set up nepotistic networks probably in the same manner the locals did. These networks created reverse discrimination, amplified existing economic tensions, and brought the sociocultural climate to the boiling point. Branded as the “murderers of Jesus,” members of this tightly knit, geographically mobile, and highly visible ethnic group had their social sins stereotyped unlike any other nation on earth.

What’s right about Israel? After WW II, the Jews have pulled themselves together from all over the world and built Israel from scratch. How many Israelites spoke Hebrew at that time? How many freshly-minted Israelis would despise learning Hebrew in the 21st century? Israel and the Arab Street have been fighting a turf war since biblical times. For decades, America has locked itself in a close relationship with Israel, its longtime client state and, more recently, ally in the woebegone war on terror. Most Arabs view it as a tandem to be destroyed when in fact it’s often the case of the tail wagging the dog. What’s wrong about Israel? There will be no peace until the Israelis find a way to help the Palestinians produce something of economic value to hold on to — other than AK-47s and explosives.

As for the Jewish Russian oligarchs, a good many of them are having the “best of the two worlds.” Keeping their “hard-earned” billions in offshore banks, they cruise the world’s best resorts. Some bluntly admit to plotting to put Puttie out of business, and are willing to put their money where their mouth is. Others are in the British soccer business. Their lifestyle sparks outrage among millions of common folks left behind and cheated out of their future.
That’s why thousands of younger Russians have embraced Hitler, while millions of older Russians can’t let go of Stalin. The gruesome twosome who had slaughtered their fellow men by the tens of millions made a comeback. They are fighting the battle for their hearts and minds of Russia. Can anybody imagine a Jew praising Mein Kampf or an African American sporting a KKK white robe and hood?

As for me, I love being able to know my ways and the ways of others, without falling into the trap of self-serving bias. What are our ways? Crony capitalists and convicted criminals must go. They have no right to run the Ukrainian government — nor any other government, for that matter. That’s why we made it to Maidan, and still haven’t received those CIA paychecks. No anti-Russian folks showed up with us, pro-Ukrainian folks only. Amongst the myriad banners waving out there, one could spot a quite few Russian tricolors. The folks waving them spoke with a strong Moscow accent. Guess how many of them had their banners burned.

With all the ups and downs, we have not come to the end of the road. While convicted criminals have been held at bay, crony capitalists refused to go away. Sad to say, we became the laughingstock of our opponents and supporters because some of the crony capitalists looked orange. That was our fault. We should have worked harder. We should have sworn them to “off-duty mode.”

As we have our values challenged, they become more clear to us. We gain valuable foresights into the challenges lying ahead. One of the them is not losing what we’ve gained. Democracy. Freedom of speech. A better social contract. Convicted criminals riding their Trojan horse in this parliamentary race do not share these values. In 2005, the year the oranges “killed the economy,” it grew at a modest 2.4 percent while earnings rose 20 percent and the budget surged 63 percent. Ukraine received more value for a single state-owned enterprise than the combined value of all past privatization proceedings. If James Carville were to comment on the numbers, he’d probably come out with “It’s the shadowy economy, stupid.”

Finally, how does the WTO come into play? Ukraine is heading for the WTO’s door. And so is Russia. The assumption that the Kremlin sold out to the West makes little sense. Russia’s accession to the WTO will not be a zero-sum game. The Kremlin expects to improve its fortunes and keeps negotiating to get the best deal it can. Neither Ukraine nor Russia should crave jamming fingers in the doorway to extract some first-mover advantages. Synchronized accession could solve that problem.

The Ukrainian economy will not be sold for scrap. It’s the Ukrainian steel makers who will no longer have their sales scrapped by antidumping laws. And most of those steel makers are non-orange. Long-term benefits do outweigh short-term losses. Minimizing the latter and maximizing the former should be the goal. Free trade works better than free aid. Ask China. Of course, the “freer” the trade the better the aid.

That’s why Ukraine and Russia should keep their eyes wide open. And may neither one have its arms twisted — nor its mirrors.

Orange Coalition Dies in Pre-Election Miscarriage, Parents Share Blame

A Bestseller That Refused Sell
In the face of the past regime's rampant hydra, the idea of Maidan's reunion made a bestseller among its grass-root supporters. Somehow, the idea didn’t sell to the leaders. Somewhat impregnated with it, they didn’t deliver.

Like the rivalry-laden fragmentation bomb that had shredded the orange camp to pieces last fall and poisoned the hearts of Maidaners, this fresh act of non-performance adds to the lengthy chronicle of lost opportunities. Each of them constitutes breach of the “Contract with Maidan.” This could have been avoided had Maidaners been smart enough to maintain a rapid-response camp on standby. The “Embassy of the Ukrainian People,” shall we call it? Any early signs of derailment coming through — a massive mobilization follows. Self-organized protest units storm the streets. Maidan reconvenes and puts the train back on the right track.

We never rose to the occasion, they never stayed the course. Maidan has become a mere shadow of its former self. Maidan’s roadmap has become a relic. We stayed home when we should have been there. And now we’ve come to resent our self-administered “cabin fever.” We opted for the wait-and-see, not-my-job approach. Kitchen table talk and no action. How did we expect to own success without owning the problem?

Will Baby Oranges Make It?
Nasha Ukraina, BYT, Pora-PRP, the Kostenko-Pliushch bloc, the Socialists — what did these parliamentary hopefuls lose? What was at stake? They lost a niche of supporters who had believed in them as a whole — synergy, not sectarianism. Turnout will be no small issue in this election. A vote lost by the Orange crowd is a vote gained by the other crowd. In the oligarch-oiled calculus of the Rada, every vote will count. Well, not exactly. Those who miss the 3-percent magic mark will not count. For baby oranges that shun the umbrella of the big league, striking out on their own comes down to a make-or-break decision. Ditto for voters who support them. Where do “broken votes” go? Down the drain.

B-class orange stars, as they may also be called, are barely making it. Pora-PRP, the YMCA of the Orange Revolution that dressed itself as the midwife to the coalition, is in limbo. Will Vitaliy Klychko, aka “Dr. Ironfist,” fight his way through the hearts and minds of the voters? The Kostenko-Pliushch bloc — welcome to the other cliffhanger B-class orange project. With all due respect, these oldtimers will probably have to throw the towel in, too.

A-class orange stars should have downgraded their king/queensize egos to a politically healthy level. Shipping them off to a b-school to hone their teamwork and negotiations skills would be worth every penny of the taxpayers’ money.

Cross-Orange Fighting
Meanwhile, they excel at heaping scorn on each other, equipped with a bundle of Stone Age PR tools. Witness the explosion of cross-orange smear campaigning. Tymoshenko has been the victim of guerilla attacks involving spoof artillery. Just take a look at those fake McDonald’s flyers apparently aimed to kill electoral appetite, and those fake Cotex testimonials that hit below the waistline. Having collected all this unsolicited memorabilia, she even chose to put a whole gallery on display on her site. A couple of revelations-packed brochures are also on the market. The first one dissects Yuliya’s moneyed associates, goes all the way down to her ethnic roots, and borders on anti-Semitism. Dmytro Chobit, a renegade man who had sat on her party’s ruling council, released this intimate material. He had cut his teeth on the pillars of the past regime. His scathing reports could cost him his life at the moment. He put the punchline in his second brochure. Chobit accuses Tymoshenko of conspiring to commit a coup d’état the night before Yushchenko fired her Cabinet. Rumor had it Tymoshenko and her loyalists had known what was coming and pulled an allnighter at SBU Director Turchynov’s dacha to think things over. It was during this unholy supper that they called US Ambassador Herbst. They asked his opinion on how the West would react to Yushchenko being impeached, the brochure says. Tymoshenko has denied role.

The President’s Public Relations Chernobyl
Editorials portraying Yushchenko as the semi-godfather of RosUkrEnergo have become the sport of his cross-orange opponents. All the more frequently, Yushchenko makes the bed and then has to lie in it. A few months ago he set off a chain reaction that generated a publicity bonanza for the non-orange opposition segment as well. He made the unfortunate suggestion that Chernobyl could become a world-class nuclear waste repository. As Russia jacks up spent fuel storage fees, Ukraine could save a lot of money and perhaps even make a few bucks, so the President’s logic went. Feeding this controversial vision to the media in an election year, and one that will mark the 20th anniversary of the disaster, was the recipe for a political suicide of sorts, a public relations Chernobyl. Unwittingly, the President has reopened the scars left by the world’s worst nuclear accident, adding credibility to his demonizers.

The area surrounding Chernobyl will be uninhabitable for centuries to come. There’s one exception: Some aging evacuees are coming back. These nostalgia-driven folks despise radiation. They are returning to the villages they deserted in the bitter spring 1986 exodus — to spend the “golden fall” of their lives there.
By now, there’s no count of all the children and clean-up personnel who died of thyroid cancer and leukemia. Gorby wouldn’t address the nation until the free world rang the alarm bell in ear-splitting mode. Even then he adopted a tongue-in-cheek attitude, offering no estimates of the accident’s extent.

Talk about a winnable nuclear war. We lost one with our government. Army rookies, fresh out of high school, were sent to their death. The Red Army relied on a very “generous” lethal exposure scale, unmatched by those found in Western democracies’ militaries. These kids Soviet Union were ordered to shovel the “funky” molten tar off the reactor’s roof. Heroes? Yes. Nuke fodder? Yes. They saved millions of lives in a country where a single life didn’t cost a thing. The Communist Party’s valuation model had exacted a heavy toll on the Soviet people. It was malignant. Chernobyl made an X-ray of it and thus became a catalyst for perestroika.

Two decades Chernobyl awaits a new sarcophagus to replace the ramshackle concrete structure assembled in a hurry immediately after the accident. Reportedly, it already has quite a few cracks in it. What if a major earthquake intervenes? We do have earthquakes here once in a while. Well, in that case, accession to the EU may become a moot question, due to bilateral destruction of subject matter.

The red flags do not end there. According to some sources, Holtec, the US company that won the tender to build a repository, boasts a trail of negative publicity at home. They argue that Holtec containers do not meet local safety standards. If that information happens to be factual, President Yushchenko should make no mistake. He should give the green light only if he succeeds in convincing Holtec to move its headquarters to Chernobyl, spouses and children included. Otherwise, a more reliable contractor should selected. Whatever the projected savings, Chernobyl’s proximity to Kyiv and the rest of the continent make it the wrong place for a commercial repository. Until man masters Mars and the state of technology makes uranium as manageable as a matchbox, the risk of 1986 repeating itself remains very real. President Yushchenko raised the specter of Chernobyl before he knew it. He should have given it more thought.

The Chernobyl scandal climaxed when David Sampson, US Deputy Secretary of Commerce visited Kyiv where, among other things, he discussed nuclear energy issues. Ne Tak, the trigger-happy B-class anti-orange taskforce, seized the moment to test its watchdog skills. Tymoshenko joined the show to parade her green streak. Meeting in a political jam session, this band broke the news. They claimed to have intercepted memos that outlined Uncle Sam’s master plan: dump nuclear waste in Chernobyl. If there’s something strange in your neighborhood, who you gonna call? Ghostbusters! That’s what democracy is all about — a system of checks and balances.

The Winner Takes It All?
A new chapter in Ukraine’s “crony capitalism” saga has been written. Word came out that Youth Affairs Minister Yuriy Pavlenko and NSC chief Anatoliy Kinakh had reinforced the Olympics delegation with their wife and daughter, respectively. When questioned by journalists about their relatives’ assigned roles, these top orange officials cited staff functions — interpreter and coordinator, respectively. Wow! No mission is impossible when hubby and daddy are big bosses at your beck and call. Why bother casting? Why outsource? Let’s keep it simple and stupid. Let’s keep it in the family.

That’s not the whole story. No sooner had the Olympics scandal subsided, than another one broke out. Pravda.com.ua, the premier orange blog, published some interesting speculations about the Kinakh family. According to the article, female members of the Kinakh family own the firm that has embarked on a trojan privatization scheme to take control of the Boryspil international airport, a major cash cow. Of course, Mr. Kinakh, a Nasha Ukraina running mate, refuted the charge. So what happened? Another false charge to clip NU’s wings in the election? Or a well-documented throwback to the “good old” times — “The Winner Takes It All” times? Hey, don’t you remember that beautiful song by the Swedish quartet ABBA, so often played at winter Olympics figure skating?

Kiss the Dust or Touch Base
In a brilliant act of one-upwomanship, Tymoshenko crafted an open-letter style coalition agreement, which she signed in full view of the media. For those interested in coming on board, her requirements: (1) back out of the gas accord with Russia, (2) swear not to collaborate with the Regions Party. The latter may be a good point. The former is pure propaganda. That’s the reason why she had trouble recruiting co-pilots.

With all the negative publicity accumulated, RosUkrEnergo has been a ball and chain for the Yekhanurov government. So far, attempts to get rid of RosUkrEnergo and do business with Gazprom directly have failed.

Pora-PRP has laid the blame of the coalition’s miscarriage at Tymoshenko’s door. “GI Julia” keeps the heat on Yushchenko’s inner circle while damning him with faint praise. After all, it was Yushchenko who had lavished accolades on her Cabinet days before giving her the axe.

Things will change in the sobering post-election reality. Once the Regionalist juggernaut rolls into the Rada, cross-orange cat-and-dog fighting will be out of fashion. The orange ones will kiss the dust. Or touch base.

Sunday, February 26, 2006

Ukraine-Russia Relations
Letter 1

Lalalu, history check:

1. How about Russia having its borders rolled back to 1147, the year Moscow was founded by Yury Dolgoruki, Prince of Kyiv?

2. How about the Russian defense ministry kicking in a few gigabucks' worth of compensation for Kyiv's successful naval campaigns in 860 and 911?

3. How about the Kremlin confessing trademark infringement of the "Rus" brand, along with the centuries-long practice of cooking history textbooks?

4. How about the Russian finance and transportation ministries setting up a fund to compensate Crimean Tartar repats for their stolen property, perished relatives, and travel expenses?

5. How about Russia the self-appointed successor to the USSR paying damages for things like the Holodomor? In fact, G8 pal Germany is doing just that with regard to the Jews.

6. How about the EU sponsoring a plebiscite in Kaliningrad (former Konigsberg) on whether they want to stay in Russia or join the EU?

Make no mistake: Every stick has two ends. Why get stuck in yet another pot of "bubble Rush-ia" soup?

Monday, February 20, 2006

A Step Closer to WTO Memebership: US Grants Ukraine Market-Economy Status

Deputy Secretary of Commerce David Sampson brought the good news during his recent visit to Kyiv. The event comes as a long awaited achievement prerequisite to Ukraine's accession to the WTO, expected this year. A bilateral protocol on trade will be signed in the near term. Washington and Kyiv will continue their cooperation in nuclear energy. In 2006, a year that will mark the 20th anniversary of the Chernobyl disaster, Ukraine operates four nuclear power plants. However, they do not produce their own fuel. This leaves Ukraine, the country which gave up the world's third largest nuclear arsenal, vulnerable to pressure from Russia, the main supplier. Washington has frowned on Kyiv's pursuit of an in-house refuelling capability. As a compensating measure, US company Westinghouse supplies fuel to one of Ukraine's nuclear power plants.

Monday, February 13, 2006

Cabinet Caps Natural Gas Prices at $110, Concerns Persist

Economics Minister Arseny Yatseniuk recently stated that natural gas prices for manufacturers and consumers would not exceed $110 for a period of five years. A special commission would work out specific rates shortly, he added. This rather upbeat statement may somewhat cushion concerns over price uncertainty that have reverberated in Ukraine since New Year's Day. The last wave of concerns to hit the government involved a confidential protocol to the deal between Naftogaz and RosUkrEnergo. Allegedly, Naftogaz had agreed to have RosUkrEnergo rent its underground gas storage facilities at a heavily reduced rate.

The 95/230 quid pro quo deal may have put quite a few skeletons in the closet. The opposition will be there to do the counting. Any smack of a "sweet surrender" on the part of Ukraine becomes campaign fodder. A Rada investigative panel has already subpoenaed Naftogaz records.

Many analysts doubt that the $110 rate, which does not include VAT and transportation fees, will hold for five years. As energy prices climb worldwide by leaps and bounds, pinning hopes on a price break makes little sense. Naftogaz and RosUkrEnergo already offer different interpretations of the deal. At some point in the future, the genie will be out of the bottle. Russia will insist on a price increase, and Ukraine should be ready.

Even hypothetically speaking, a price lock-in would be a bane rather than a boon to Ukraine. It would kill the incentive to modernize and thus would bury the prospect's of Ukraine's economic development. With far too low a price for far too long, why invest in energy efficient technology, renewables, and cutting edge management techniques? The oligarchs would not move a finger.

Somehow, despite the government's best intentions, a low longterm price appears divorced from reality. And the oligrachs counting on "business as usual" are in the business of fooling themselves. A price hike is just a matter of time — and preparation.

Monday, February 06, 2006

Pricing and Pacing: What Does It Take To Modernize Ukraine's Industry Without Crippling It?

Immediately after UkrGazEnergo, the joint venture between RosUkrEnrgo and Naftogaz, came into being, both parties issued contradictory statements. Naftogaz prided itself on having clinched a deal that had fixed the $95/230 rate for five years. RosUkrEnergo countered that the rate would fluctuate starting with July 1, based on market conditions. So, the question still remains: What does the future hold for Ukraine? How long and how much?

The government struggles to keep the gas issue in good shape. A number of issues such as the deal's monopoly effect, price uncertainty, and corruption associated with RosUkrEnergo have become hot campaign issues. Critics argue that the government is trying to put a good face on what looks like a can of worms.

They say the government has been overgenerous in giving RosUkrEnergo the benefit of the doubt. A company pursuing profit maximization would be loath to burden itself with a 5-year price commitment in a market of rising prices. Those who aim to ride the crest of public opinion by promising a price rollback if "rapport" with Russia is reistablished go even further in misleading the public. As Russia's partners in Ukraine fish for votes, gas makes a good bait. But let's face it: Once the bait is swallowed, there will be no rollback. There need not be. Whoever swallows the bait will be toast, game over. Nor would a cheap price do Ukraine any good, except for the oligarchs.
In the "one company, two stories" puzzle, the question boils down to this: Will the price be high enough to hasten modernization and low enough not to drive the industry bankrupt? Several scenarios merit discussion.

"Too low, too long." An unlikely scenario, will have the oligarchs stick to their guns. Modernization will end up on the backburner. Little investment in energy efficient technology will be forthcoming. The good old boys will keep their old ways, and the whole country will suffer as a result, mired in economic retardation. The more inert the environment, the less innovative the enterprise. And the less innovative the enterprise the more vulnerable it becomes. Should the rug be pulled out from under it, this might be a ticket to the boneyard.

"Too high, too fast." Not an unlikely scenario, may drive the industry bankrupt. Friends come and go, but interests remain. Stabbed in the back, Russia's erstwhile friends, the oligarchs, will have to throw up a white flag. A blowout sale will follow, and Russia will stock up on Ukrainian industrials. Consider it a "scorched earth" policy to make up for Ukraine's impending NATO membership. The best hedge against this scenario is being ahead of the game. To stay in business tomorrow, the oligarchs should start modernizing today. Better safe than sorry.

Somewhere in between these two scary tales falls a relatively high but measured price. Neither amnesia nor paralysis will catalyze Ukraine's modernization. Without having its industry crippled, Ukraine needs core, not cosmetic, changes.

That's why a "sit-back-and-relax" price should not be toyed with, nor should a "swallow-and-die" price be waited for. Get up and go. Don't count on the dice to tell you the price. Set your pace before the price comes blowing in your face.

Wednesday, February 01, 2006

Joint Venture Yes, Joint Vulture No

A joint venture agreement between NAK Naftogaz and RosUkrEnergo AG will be finalized once RosUkrEnergo comes up with a presentation, Ukrainian Prime Minister Yekhanurov said recently. In a follow-up to the 95/230 deal ending the dispute between Ukraine and Russia, the agreement was supposed to be signed earlier but was postponed for further negotiations. Critics of the deal have openly questioned RosUkrEnergo's credentials, alleging connections to Kremlin associates and a man wanted by the FBI.

Washington has been studying the situation closely and State Department officials have already expressed their concerns. Sensing the buildup, Kyiv has gone out of its way to make sure the joint venture does not look like a "joint vulture." The government is trying to keep its hands clean and its country well supplied through a winter of historically cold temperatures and a torrid parliamentary campaign culminating Mar 26.

Ukraine's Antitrust Comittee gave the green light. The joint venture will be called UkrGazEnergo.

Tuesday, January 31, 2006

Trade War or Is There More?

A justified move by Russia to shield its market against doubtful quality imports from Ukraine, as it might have appeared initially, may escalate into a trade war between the two countries. Kyiv asserts it has done its homework, having acted rapidly to right the wrongs cited by Moscow. Yet appeals to lift the ban have had limited success. So far, sea food remains the only item Moscow has agreed to pardon. Despite claims by Moscow that officials responsible for the negotiations are out on business trips or sick leaves, a team of Ukrainian negotiators has left for that city.

With the Russian market sealed, Ukrainian farmers are losing millions of dollars on a daily basis, analysts believe. Agriculture Minister Baranivsky made it clear that Kyiv may retaliate if Moscow keeps the ban. Trade wars can hardly be won. They leave deep scars on both sides. It makes little sense to assume that the lesson of the Great Depression eludes Kremlin economists. This leads some analysts to believe that the Kremlin is up to something more than a trade war.

Caper after caper, gremlins from the Kremlin have been exploring Ukraine's political playground quite enthusiastically. Playing with gas is one. Fooling the farmers may be another one. What needs to be done? Shut them off and frame the orange administration for it. Call it "failure to keep friendly ties with 'beloved neighbor' Russia." Alas, a few extra farmer votes are yours for the taking. Siphon them to a tried and trusted candidate who will pay you off handsomely. Unless the Kremlin changes its behavioral patterns, this interpretation will not go away.

Saturday, January 28, 2006

Russia Bans Ukrainian Meat and Diary Imports: What’s the Beef?

Russia’s ban on meat and diary imports from Ukraine has experts split over motives. Some argue Ukraine has itself to blame. Ukrainian authorities have already admitted to a series of missteps, such as allowing passage of Indian-made meat to Russia while marked as Ukrainian-made. In today’s epidemic-infested world, as countries struggle to protect themselves from false identity food products, it appears that Russia did what it had to do. Ukraine should behave, or face the consequences.

However, others argue that Russia overreacted, with the punishment blown out of proportion to the crime. Acting on an isolated incident, Russia did what it wanted to do, they say. Now that the recent gas and beacon episodes have contributed to the Kremlin’s trigger happy condition, it has jumped at the opportunity to pull the trigger.

Anyway, Ukraine has pledged to correct the situation and put an end to the practice of reexporting third country meat products. Ukraine should follow through immediately: The beef-for-beacon row could cost an estimated $30-50 m in lost earnings for the industry. It takes two to trade. May neither one break the golden rule.

Sunday, January 22, 2006

Road Rage: President Plans Plebiscite, Tymo Explores Ufology, Yanuk Hires GOP Talent
Parliamentary Race Keeps Busy As Contenders Step on Gas and Forge Ahead

Following the controversial vote by the anti-orange majority in the Verkhovna Rada to fire the Cabinet, ostensibly for entering into a bad bargain with Russia, President Yushchenko has outlined his coping strategy. He has repeatedly declared the vote unconstitutional and thus non-binding. Legal experts point out that the vote contravenes the established parliamentary procedure. They also believe that, according to the newly-amended Constitution, the existing Cabinet stays in office until the parliamentary election.

Secure in this knowledge, President Yushchenko has called on the Rada to revoke its decision, or face possible disbandment. He has also withdrawn from the reconciliation pact signed with Yanukovych last year, known as the memorandum. By voting yes, the President said, Yanukovych breached the agreement in a way that destabilized the country. Harshly criticized, from day one, by Yushchenko supporters as an act of appeasement, the memorandum’s demise has produced no signs of mourning in Yanukovych. Performing a verbal autopsy, the leader of the Regions Party said that the deal’s useful life had long expired, due to, what he called, failure to abide by the terms on the part of the President.

To discuss the current state of affairs, President Yushchenko convened a national security council meeting. Meanwhile, in a bid to project the image of responsibility, the anti-orange majority abandoned its all-out ambition in favor of surgical strikes. The highlanders of the legislative branch trimmed their hit list down to several figures, on a floating basis: Naftogaz CEO Ivchenko, Energy Minister Plachkov, and Justice Minister Holovaty. They also resorted to stonewalling the appointment of Constitutional Court Justices needed to fill the vacant benches. President Yushchenko intends to seek the Court’s opinion on the vote.

The communists had their share of roof raising in the Rada: When in the Rada, do as the Russians do. Staying true to their tacit tradition, the communists had lashed out at Foreign Minister Tarasiuk and Defense Minister Hrytsenko, calling their conduct detrimental to relations with Russia and vehemently demanding their resignation. A major stress episode overwhelmed Lenin’s disciples when the recent “Battle of the Beacon” between Ukraine and Russia broke out. Ukraine has been trying to regain a set of coastline navigation facilities currently occupied by the Russian Black Sea Fleet, headquartered in Sevastopol under a leasing agreement. According to Ukraine’s Foreign Ministry, the leasing agreement signed in 1997 does not include the beacons. Russia’s Foreign Ministry and the spokesman for the Russian Fleet argue quite the opposite. Unwilling to sit idly by, until Kyiv and Moscow finally come to terms, Ukrainian youth activists have long assumed a role in the effort, staging pickets and attempting entry. In the recent “Battle of the Beacon,” which kicked up a storm of publicity, the Russian marines reinforced the facility with an armored personnel carrier, but later withdrew it. Ministers Tarasiuk and Hrytsenko, who came under attack afterwards, have been openly pro-NATO, a four-letter word in the communists’ vocabulary. They even went as far as to advocate the notion of reciprocity in relations between Ukraine and Russia: Should market forces prevail, an increase in gas prices should be matched with a corresponding increase in rent paid by Russia for using the Crimea naval base. They have asserted that any troop movements by the Russian forces outside the military base must be discussed in advance with Ukrainian authorities. Traumatized by Ukraine’s patriotic policy, the Communists decried what must have looked to them like a stream “diplomatic atrocities” committed by these Ministers. Moscow’s best friends have been paying lip service to Ukraine, the country in whose parliament they hold seats, while serving Russia, the country whose parliament, in 1993, resolved that the Crimea is part of its territory. If Russia nuked Ukraine, the comrades would probably fire Foreign Minister for appealing to the UN Security Council and Defense Minister for passing out hazmat suits in the Rada. As long as Moscow remains the patron, Ukraine’s brand of communism will blend Marxism-Leninism with masochism, to suit Moscow’s taste. It's a small world: In fact, Leopold von Sacher Masoch was Marx' contemporary. Born in Lemberg, Austria-Hungary (now Lviv, Ukraine), Masoch would owe a certain amount of his material to the melancholic theme in Ukrainian folklore that he had steeped himself in as a child. The Ukrainian communists would leave Masoch's gender masterpieces far behind in their genocidal acts, as Stalin's marionettes.

Despite the Rada’s rampage, the Cabinet continues working as normal. After an extra week in session to bring the pressure to bear on the President, the Rada went on recess this Friday. On Vodokhreshcha, Jan. 19, (Epiphany Day), the President and his entourage went ice cold swimming, an old-time ritual commemorating the baptism of Christ in the Jordan River. May the President recharge his batteries for the tough times ahead.

In an effort to defuse speculations of her anti-orange orientation following what many perceived as a telltale vote, Yuliya Tymoshenko employed humor. “Our merger with the Regions Party will only be possible if aliens take me onboard the flying saucer and perform illegal tests on me, depriving me of my memory and mental faculties. Short of this, no conditions for such a merger exist,” she quipped. Hilarious! Of course, her supporters would hate to believe such a thing could ever happen. But if Fox Mulder still “wants to believe,” he probably should consider an assignment to Ukraine. His “UFO skills” may prove indispensable in putting the Orange Revolution back together. Background: In December 2004, The X-Files star David Duchovny, along with Jack Palance, Robert Wise — a total of 130 Hollywood talent — had signed a petition in support of the Orange Revolution.

Far from toning down her criticism of the gas deal, Yuliya has been on the lookout for opportunities to burnish her orange record. An occasion presented itself on Den Sobornosti, Jan. 22, (Unification Day), a patriotic holiday celebrated in honor of the 1919 reunion between Ukrainian sister states — the Western Ukrainian National Republic, with the capital in Ivano Frankivsk, and the Ukrainian National Republic, with the capital in Kyiv. Known by their Ukrainian acronyms as ZUNR and UNR these states were soon overtaken by Poland and Soviet Russia, respectively. Now hear this! In the spirit of the holiday, Yuliya’s Party issued a statement urging the Regions Party to remove its leader, Yanukovych, and a number of top running mates from the ticket for organizing a breakaway witchfest in Sivero Donetsk. The statement obviously referred to the November 2004 “emergency” convention, where pro-Yanukovych extremists had championed the idea of an autonomous republic to be created in southeastern Ukraine. This ill-fated publicity stunt aimed at putting the brakes on Maidan had violated Ukraine’s Constitution and, following Yushchenko’s inauguration, had became the subject of an inquiry by the Prosecutor General, but had led to no indictments, so far.

Unbelievable. Never in their wildest dreams would Yanukovych supporters imagine their idol shopping for American talent. But that’s what “hired guns” are for: You pay, they play. In fact, Yanukovych strategists have increasingly drawn on the immortal Clintonesque theme “It’s the economy, stupid.” coined by Clinton strategist James Carville. Moreover, according to The Wall Street Journal, Paul Manafort — the man who helped conservative Bob Dole run for president in 1996, and worked for a score of African regimes — is bringing his bag of tricks to Ukraine. Paul, sorry for not wishing you good luck.

Addressing the nation on Jan. 23, a day that marked the first anniversary of his inauguration, President Yushchenko said he did accept the politreforma, the new constitutional amendment transferring core authority functions to the Parliament. Still, the President voiced concerns about the manner in which the politreforma had been passed, adding that “society should have a say.”

Saturday, January 14, 2006

Great Actress Gone Bad: “Erin Brockovich” on the Wrong Side of the Vote
All Is Fai®lure in Love, War, and Elections

Last Tuesday, many observers believe, ought to be a date which will live in infamy for Ukraine's most famous woman. Yuliya Tymoshenko joined forces with the enemies of the Orange Revolution on a vote to sack the Yekhanurov government, linking the decision to the government's failure to resolve the gas dispute in Ukraine's best interests. Mrs. Tymoshenko, who argued her case with the passion of Erin Brokovich, the Oscar-winning movie character played by Julia Roberts, may now have to wear an egg-proof vest, should her campaign tour include western Ukraine. Many Ukrainians still recall presidential candidate Victor Yanukovych, who became the victim of an egg attack masterminded by a freshman college student in the western Ukrainian city of Ivano Frankivsk, a region known for its strong patriotic sentiment.

In stark comparison to the fall 2004 campaign, when they had stood on different sides of the barricade, this year parties led by Yanukovych and Tymoshenko formed the backbone of the anti-orange alliance in the Ukrainian parliament. In fact, the stakes are just as high in the upcoming parliamentary election as they were in fall 2004. The so-called politychna reforma (political reform) effective Jan. 1, 2006, shifts power from the president to the prime minister, whose cabinet will be formed based on the results of the March 2006 parliamentary election. The almighty Russian lobby, which at the onset of the crisis held that Russia had a right to demand a higher price for gas, was uniform claiming that the newly negotiated price would be the kiss of death to Ukraine's industry. Their solution: Chum up with the Kremlin, earn a price cut. And no NATO, please. In other words, the best preventive for Russia's gasmanship is Ukraine's full and unconditional yesmanship.

Such chameleon behavior injects a masquerade dimension into the election, as parties scramble to position themselves in sexy political lingerie to attract voters with unmet erotic needs. Now that the orange guys have “screwed up” Ukraine so bad it has a sluggish economy, Russia tops the exhibitionist charts.

In this noisy publicity jungle — with mating season in full progress, presenting spectacular scenes — the 'helicopter mom” of Ukraine's democracy veered off course and made a crash landing. Her political compass betrayed her, and she now has to cope with the surrounding fauna and flora. She hit the danger zone, and it's unclear whether her PR consultants' "search-and-rescue” teams will reach her before her rating gets cannibalized any more than it already has.

What happened? To add insight to injury, excellence took a back seat to ego. By letting her steam off on a vote of no consequence, she marginalized herself in her electoral base. Most legal experts believe that the Yekhanurov government will be here to stay until the election. It means that Tymo has gained little from her demarche, but lost a lot.

At Maidan's first anniversary celebration, many, if not most, folks chanted her name, embracing the “orange queen” as the bolder alternative to Yushchenko, who had floundered in a series of cronyism scandals. Some of those folks may now have second thoughts about her. She lost her colors at a time when Yushchenko has made a good faith effort to contain Moscow’s gasmanship. Forums that once praised Yuliya as a talented troubleshooter now lambaste her as a treacherous troublemaker — a prodigal sister with her own agenda, who consorted with the local bad boys and subscribed to Putin's “pipe dream.” Themed “hall of shame” posters have already decorated the streets.

To fare well in this election, Yuliya needs to repent and reposition. She needs to restore her unique selling proposition — and she better start right away.

Thursday, January 12, 2006

'Cause This Is Thriller: “GI Julia” Persona Grata on Channel 5
Makeup Gasfest Dispels Fears of Big Brother

A specter is haunting Channel 5 — the specter of censorship. Or is it? On balance, it’s now more likely that fans of Yuliya Tymoshenko and media activists may heave a sigh of relief. The sort of terror with which they digested Ukraine’s No 1 open-minded news channel last Sunday may safely be shelved.

The bitter “flashback” pill presented itself last Sunday night when Yuliya Tymoshenko didn’t make it to the Chas Pik (Rush Hour) talk show on Channel 5 as announced. Regardless of the incident’s root cause, among many viewers it did evoke not-too-distant memories of a sheepish media community in the heyday of the Kuchma regime, when the notorious temnyku ruled supreme. On a night which concluded a week of holidays in Ukraine, Tymoshenko’s appearance promised to gather a wide audience: Few would want to miss the Lady of Maidan in a rhetorically rich ritual of torching Naftogaz for the deal it has signed with Gazprom to end the pricing dispute. Expecting to gain a few extra rating points, the channel had hyped the show all through the day, running alerts in its text line. But when, as the superhit of the 80s has it, “Darkness falls across the land, the midnight hour is close at hand,” something else actually happens. Tymo shows up at the door only to be told that the show is off the air. “‘Cause this is thriller, thriller night,” Jacko would sing.

Following the incident, Yuliya Tymoshenko issued a statement describing it as an act of censorship. She also expressed empathy for the talent, who, she noted, had no say in the decision. Channel 5, the glorious icebreaker of the Orange Revolution — in what had been a North Pole’s worth of Big Brother-style propaganda — responded with a press release of its own. Clinging to its Kanal Chesnykh Novyn (News You Can Trust) brand, Channel 5 took pains to redeem its image and discount Yuliya’s side of the story. The statement cited “matchmaking” failure as the cause. According to Channel 5, within minutes of the show’s airing, no counterpart could be found for Yuliya to comply with the show’s one host/two guests format. Not the strongest of arguments, if you apply a healthy degree of skepticism to it. Aren’t they supposed to have a backup counterpart should any such contingency arise? In fact, they had one at the ready: Naftogaz CEO Ivchenko, who had represented Ukraine in the negotiations. But the problem was, he could only be reached by phone, which would have created an unfair publicity advantage for Tymoshenko had the program been aired, the press release warns This would have put Channel 5 out of tune with its policy and in conflict with a recent piece of election legislation. Nevertheless, struggling to build goodwill, Channel 5 reissued its invitation to Yuliya Tymoshenko, welcoming her as early as Monday. That says it all. Or does it?

Just a few more thought-provoking facts, figures, and speculations. Few observers believe that no link exists between Channel 5 and Petro Poroshenko. (He has repeatedly denied ownership.) Poro and Tymo, then-NSC chief and then-PM, respectively, clashed in breathtaking turf battles, multiplying the cabinet's economic policy flaws. Ultimately, a toplevel whistleblowing act set off in the “orange big bang,” — when Yu the umpire exercised the “all out” option, firing the cabinet last September. Poro’s status as a key figure in Yushchenko’s inner circle and a major campaign contributor made cronyism the talk of the town, costing the Yushchenko administration dearly in terms of approval ratings. (The court has found no evidence of corruption.) However, at the Nasha Ukraina (NU) convention last November, a group of party members acutely aware of his political karma made an attempt to purge him, without gaining enough support, though. Poroshenko entered an emotional “not guilty” plea with the convention and vigorously set out to reinvent his image. With no love lost between former allies and a perilous parliamentary campaign approaching, Yuliya Tymoshenko's archrival called for reunion. Perhaps a mixture of regret and common sense, he launched a series of serenades but failed to captivate the audience. By and large, the electoral benefits of reunion were lost on both sides of the “orange curtain,” for the road from family to factionalism was paved with unbridled ego. The unshed blood of Maidan turned out no thicker than the upcoming vote, and the heroes went their separate ways.

Meanwhile, the enemies of Maidan have been getting together, inspired by the refreshening swing of Ukraine's pendulum of public opinion. Santa (Moscow, Russia) smiled on the bad boys, “You guys did a fantastic job writing letters. I'm cutting off those gas supplies now. So when your chimneys freeze over, it means I'm coming to your town. Ho-ho-ho!”

The gas impasse and its resolution presented a publicity windfall for all interest groups out there who had been scanning the political horizon for campaign fodder. Once the details of the deal surfaced, Yuliya Tymoshenko mounted a vicious attack on Naftogaz. “GI Julia” — as she may be called based on GI Jane, a blockbuster starring Demi Moore — fired sound bites round after round, blasting the deal as “betrayal of Ukraine's interests” made evident by its grossly unfair terms: (1) failure to secure a decent long-term price, while locking into a long-term transit fee; (2) lack of transparency in RosUkrEnergo’s credentials, and (3) the agreement's monopoly effect. Her retrospective solution: Stand tall, sue the bastards. Given Yuliya's “energy empress” background and her “intra-orange opposition” experience, Channel 5 — whose freedom-of-speech record is unmatched by any other media outlet — could hardly resist her charms and brilliance. Her watchdog agenda has magnetized Maidaners who became alienated and disenchanted by a firestorm of scandals engulfing Yushchenko’s inner circle. Building on this “orange blues” movement, she has blossomed into a force to be reckoned with and a barometer to be looked at. Having her weigh in on the issue in a live broadcast would score a hit. That said, her grasp of energy issues, amplified by the artistic and militant quality of her discourse, posed quite a bit of challenge to a man’s world, threatening to unleash an Armageddon on Naftogaz CEO Ivchenko, who trumpeted the deal as a coup.

Beauty is in the eye of the beholder. In Ukraine, beauty is also a well-recognized acronym that aptly mimics the word beauty — Blok Yuliyi Tymoshenko. In the eyes of discerning viewers, Yuliya’s “armed and dangerous” persona carried the risk of a credibility blow to the Nasha Ukraina campaign. Therefore, the Sunday incident may have raised suspicions of an attempt by Channel 5 management to blacklist her. A case for a conflict of interest between her newsworthiness and “welcomeness” on Channel 5 could be made, should the party affiliation of the presumptive owner be taken into account.
Anyway, the cold breeze of Big Brother's reincarnation on Channel 5 has now subsided. With a makeup “gasfest” show aired on Monday night, the whole thing turned out to be a false alarm, or, at worst, a calculated misstep with a 24-hour expiration period.

As expected, the show pitted the “unemployed” PM, live in the studio, against Naftogaz “loyalist” CEO Ivchenko, speaking on the phone, in a heated debate on how the Yushchenko administration had handled the gas dispute.

The show kicks off with a surprise: NU Member of Parliament Kseniya Lyapina, who heads the Cabinet Council on Entrepreneurship, joins the show in videoconference mode. And here comes the funny part: Actually, Kseniya hails from an adjacent studio! Roman Skrypin, the cool, calm, and collected host of the show, explained that she had been scheduled to appear on Monday and Channel 5 simply kept the promise. However, he did not hesitate to mention that it was an aide toYuliya's who had stated that she would only share the studio with the highest ranking official in the gas talks. (One queen, one castle.)

For a moment, the smell of disaster filled the air. Just a little trick by the host, and there she was: in a nasty ego trap, getting herself painted as a narcissistic prima donna. Yuliya made a faint attempt to regain her composure, saying that she valued Kseniya's contribution to small business development in Ukraine, but in order to have a real discussion of the gas issue she would prefer key figures involved. Anyway, “GI Julia” swallowed the bullet, and it showed.

But it didn't take long for her to recover. Being a skilled and seasoned fighter, she dusted herself off and staged a counteroffensive. She scalped the agreement's Byzantine wording and tackled the crux of the matter. Paraphrased, her arsenal of arguments appeared as follows:

1. The deal stipulates that the $95/230 per 1000 cubic meters rate paid by Ukraine can only be changed subject to mutual agreement. However, it also makes clear that the $95/230 rate holds for a mere 6 months in the year 2006, set to fluctuate later on based on market conditions. This caveat translates into a time bomb of sorts. Should gas prices rise in summer, Russia has the full right to drag Ukraine back to the negotiation table. (What a hot July!) At the same time, Ukraine has kindly agreed that the transit fee will be $1.6 per 100 km, effective until 2011. No caveats here.
Bottom line: Rip-off. Russia has upward potential, Ukraine doesn’t.

2. Domiciled in Switzerland, RosUkrEnergo, the intermediary company responsible for producing the “cocktail” rate, fuels transparency concerns. Observers have long referred to it as a secret old boys’ club, in which the Kremlin and members of Ukraine’s former administration have a stake. Some even trace it to Semion Mogilevich, a mystery of a man wanted by the FBI for racketeering, securities fraud, and money laundering. Legend has it he made his fortune as a Soviet mafia boss of global scope. After the Orange Revolution, the Ukrainian intelligence service thoroughly probed RosUkrEnergo. Then-SBU Director Oleksander Turchynov, a Tymoshenko confidant, briefed the President on the probe, but the President chose no specific course of action. Back in the late 90s, Bill Gates proclaimed, “If you’re not on the Internet, you don’t exist.” As of today, Google yields no immediate web site results for RosUkrEnergo. (Welcome to a billion-dollar company that doesn’t have a corporate web site.)
Bottom line: Rejoice! If you're not on the Internet, you still can make a few bucks and get away with it.

3. According to the deal, Russia effectively absorbs Ukraine’s contract with Turkmenistan as well as would-be contracts with Uzbekistan and Kazakhstan, establishing itself as a monopoly in the Ukrainian market. In what looks like a déjà vu of the roaring 90s, the feeding tube of Ukraine’s economy is left at Russia’s mercy. The matrix reloads.
Bottom line: Way too heavy a price to pay for compromise.

Among viewers who have been following Yuliya chapter and verse, these gloomy conclusions clearly earned Naftogaz a black eye. Circling around the RosUkrEnergo issue, she emphasized that energy contractors should be selected in open tender bids, not backstage arrangements.

In his retaliatory remarks, Naftogaz CEO Ivchenko emphasized the “mutual agreement” clause, saying it was the best deal Ukraine could get. He then proceeded to rain on Yuliya’s parade, accusing her of lobbyism for Itera, the energy intermediary Ukraine had worked with a few years ago. Displaying signs of unease, Yuliya chose not comment on the double standard charge. (Interestingly enough, Itera’s web site does exist on the Internet.) Instead, she reiterated that as Prime Minister she had been committed to the open tender principle in awarding energy contracts. Following her cabinet’s dismissal, she has publicly agonized over a presidential directive that, as she said, tied her hands with regard to the energy sector.

Somewhere in that nuclear duel, Roman, the agent provocateur host of the show, took Yuliya on by asking her upfront whether she had a political axe to grind in the gas dispute. That question obviously caught her off guard. The shock and awe that crossed Yuliya’s face for a split second indicated that Roman hit the right chord.

Yuliya switched gears and made Stockholm her destination. She maintained that Ukraine had a valid contract with Russia set to expire in 2009, and should Ukraine sue for breach of contract, it stood every chance to win. Her parting shot for Ivchenko, whose Congress of Ukrainian Nationalists Party had been headed by the late Yaroslava Stetsko, the widow of the legendary commander of the Ukrainian Insurgent Army: If that wise lady were alive today, she would be very upset by his betrayal of Ukraine’s interests in the gas talks. (The Congress of Ukrainian Nationalists Party has allied itself with Nasha Ukraina.)

As the show was nearing the end, Kseniya Lyapina, who had maintained a low profile, confined to her “separate but equal” videoconference mode, spoke up. She apparently thrived on her “second-class” studio citizenship, unwilling to get into a fish fight with star performer Yuliya Tymoshenko. Kseniya assumed a positive thinker role, praising Yuliya's “barter buster” record and claiming that the deal did just that — put the barter scheme of all times out of business. When Yuliya asked Kseniya if she considered RosUkrEnergo a transparent business, Kseniya had a hard time trying to find a politically correct answer.

All in all, the show was fun. The bedrock of democracy is an informed citizenry. And the more diverse the points of view, the broader the vision. Many would agree that the deal Ukraine has signed offers a mixed blessing. Besides the already mentioned faults, it has a dangerous loophole, which entails a change of venue from Stockholm to Moscow, a number of legal experts maintain. Because no court of arbitration was spelled out, should any disputes arise, by default, they will be litigated in Moscow, hardly an impartial jurisdiction.

Still, it's not the worst of deals. When Russia picks its battles in winter, it rarely loses any. Faced with sharp supply shortages, the initially empathetic Europe would have probably turned a cold shoulder on Ukraine, had its government engaged in a protracted court battle with an uncertain outcome. What could be a better prize for the Kremlin than having Ukraine worsen its relations with the EU amid parliamentary elections? The wake up call has arrived: Ukraine must pay its way and modernize. As the Ukrainians hear both sides of the story and read between the lines, they will get it right.

Friday, January 06, 2006

After-Action Review: Condi Blasts Puttie Put on Gasmanship

Following the deal between Ukraine and Russia to end the gas dispute, Secretary of State Condoleezza Rice has criticized the Kremlin's role in geopolitical terms. An longtime authority on Russia, Rice deplored the lack of responsibility in Russia's hardline act at a time when this country assumes leadership of the G8.As long as oil and gas remain the lifeblood of Putin's matrix — perforated as it is with the Ukrainian pipelines — there's hope of a balance of power of sorts in Europe's energy equation. Keeping an eye on Russia and framing a hands-on energy policy provide the best deterrent to gasmanship.

Thursday, January 05, 2006

Gas Impasse Resolved, Yu May Kiss the Bride

Do you believe in market-based miracles? It's about time. You pay $95, she gets $230. What remains to be seen, though, is how long the honeymoon will last. Hopefully, the Kremlin's gas injection will spur Ukraine to waste no time in modernizing its energy guzzling industry. In the meantime, diversification is back on the table in the EU, a burning issue propelled by the "energy empire's" evil conduct.

Geopolitical Calculator: Gas-to-Democracy Ratio
Tip of the Day

How do you calculate the residual value of the Orange Revolution?

Step 1: Accept the Russian media at face value.
Step 2: Discount it at rates found in the Western media.
Step 3: Praise Ukraine’s democracy by learning that Russia’s doesn’t exist.

Now don't it always seem to go
That you don't know what you got till it's gone?

— Counting Crows "Big Yellow Taxi"

Surf Russian. Savor Ukrainian.

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