www.kyivpost.com: OP-ED http://www.kyivpost.com/news/opinion/op_ed/ OP-ED EU integration and Ukraine: next steps? http://www.kyivpost.com/news/opinion/op_ed/detail/122249/ OP-ED Fri, 10 Feb 2012 18:19:59 +0200
Until then, these agreements cannot give Ukraine the foundations for long-term reform and economic growth for which they are designed. Some of the steps are technical; others are political. To take them in turn:

(i) initialling the agreement. This is a technical process which does not require a political decision. Together with lawyers, translators and other experts going through the agreed texts to make sure that there is no scope for uncertainty or difference about what has been agreed, this process is likely to take a number of months.

(ii) The next stage is signing. Before this can happen, a political decision of the European Council, representing the EU member states, is required. Because the Council decision would be on signature of the whole package (ie the Association Agreement including the DCFTA), it would be what is known in EU jargon as a “mixed agreement”. This means that the Council decision would need to be taken by unanimity: every single member state would have to agree.

(iii) Once the Association Agreement has been signed, it will need to be ratified by 30 Parliaments: those of the current 27 member states; Ukraine; the European Parliament; and soon-to-be-member state Croatia.

The technical detail of how signature and ratification work is important because the EU and member states have expressed concern that the recent trials of opposition leaders inUkraine appear to be politically motivated and selective. They have said explicitly, including during the EU-Ukraine Summit on 19 December, that unless opposition leaders jailed as the result of flawed trials are freed and permitted to participate in politics, it is unlikely that the Association Agreement will be signed or ratified – ie stages (ii) and (iii) above.

The mechanisms for signature and ratification mean that all the governments of the member states need to be satisfied before the Association Agreement can be signed; and all the parliaments of the member states, plus Croatia and the European Parliament, need to be satisfied before it can be ratified. It therefore seems unlikely that either of these stages will happen while opposition leaders remain in prison and unable to participate in politics on the basis of flawed trials.

Thus, these important agreements, potentially the most powerful tool to help bring about Ukraine’s European integration, will not begin to work.

PS: I have seen suggestions in some quarters that even if it is not possible to sign or ratify the Association Agreement and DCFTA, some elements of the Agreement could be put into force provisionally. In practice, this, too, looks unlikely. I will blog about this shortly.



Leigh Turner has been the British Ambassador to Ukraine since June 2008. You can read all his blog entries at blogs.fco.gov.uk/roller/turnerenglish (in English) or blogs.fco.gov.uk/roller/turner/ (Ukrainian)]]> DigitalJournal.com: Is Putin the only way? http://www.kyivpost.com/news/opinion/op_ed/detail/122246/ OP-ED Fri, 10 Feb 2012 17:17:50 +0200 Read more here.]]> Back Story: Reporting fairly on the president http://www.kyivpost.com/news/opinion/op_ed/detail/122162/ OP-ED Thu, 09 Feb 2012 21:53:43 +0200 Michael Willard writes: When reality is bad, an accurate newspaper is going to show this in its stories.]]>
That is, it is difficult to report without the Kyiv Post appearing to be in opposition to the administration.

There are arguments that the ambitious Grigory Potemkin never constructed perfect village facades and dressed serfs as happy villagers to impress the 18th-century Empress Catherine. He was a showman, but not a charlatan.

The same cannot be said about the information cranked out by the administration of Viktor Yanukovych. One often wonders if the purveyor and the public reader are on the same planet.

Potemkin got a bad rap from jealous courtiers. The current regime is judged in the here-and-now by the multitudes. The president’s polls have tanked, and the people are saying that they are not better off than they were two years ago.

For the record, witnesses from Catherine the Great’s 4,000-mile epic journey down the Dnipro River – which included foreign ambassadors, no less – testified of flourishing communities. However, the false “Potemkin village” legend entered common lore.

Fast-forward to the 21st century: In Yanukovych-land, that which is gloomy and sad is rather gloomy and sad, though portrayed with a kind of Alice-in-Wonderland doublespeak suggesting that all is peaches and cream.

This is true whether one measures national well-being on a corruption, economic or freedom index. These, in my view, are the Big Three.

A few months ago, I posed the question: Is the Kyiv Post an opposition newspaper? I answered that question in the negative. I could almost hear giggles from every quarter. Great belly laughs, really.

Readers raised the old saw, paraphrased here: If it looks like a duck, walks like a duck and quacks like a duck, it ain’t a hippopotamus. Hence, the Kyiv Post must be an opposition publication.

I prefer a more practical explanation.

Most issues of the Kyiv Post carry stories that would be rated negative by the administration. No argument there. However, my recollection is that Presidents Leonid Kuchma and Viktor Yushchenko felt the velvet glove of the newspaper as well.

That’s political life. It’s rough and tumble. It goes with the territory.

Also, we at the Kyiv Post are smart enough to know that our words will not cause anyone to storm the barricades. We are, in large part, communicating with expatriates. In other words, we’re talking among ourselves.

We do hope, however, that our columns and editorial observations – and we strive to present all sides – contribute to honest and healthy dialogue.

The fact is that a sitting president will always get more scrutiny by a free media. Yulia Tymoshenko, the jailed former prime minister, had no invisible media protection shield during her head-spinning government.

Though I come from a political background, I left that suitcase at the border when I stepped into Ukraine in 1994. In business – and when representing multinational companies – I felt no compulsion to alienate any political side unnecessarily.

In fact, I took on all comers: The company of which I am chairman, Willard, has conducted speech and media training for representatives of three Ukrainian presidents and several parliamentary factions (We were not yet on the scene during the Leonid Kravchuk years).

I don’t have a favorite Ukrainian politician. I am an expat, and can’t vote. My geopolitical view, however, is that this nation should look both east and west. I am not sure that the basket-case economies of Europe offer great economic role models or tremendous opportunities for Ukraine

As for our chief editor, Brian Bonner, I really don’t know his Ukrainian political view. I do know him to be a liberal on most things, as am I.
I think we both support a man named Barack Obama. We both also believe passionately in freedom, and in a democratic, rather than an autocratic, government. I don’t believe that this is a partisan view, even in Ukraine.

In a recent meeting, Kyiv Post publisher Mohammad Zahoor noted that people generally believe most opinions expressed on the editorial page are his by virtue of the fact he is the publisher.
However, this is not necessarily so.

As owner, Zahoor has a right to influence editorial policy, but has not chosen to do so. He is, however, head of the editorial board and can step in and decide at his discretion. He is, indeed, a benevolent publisher. I have known editorial tyrants in that position.

In the dozen years that I have known Zahoor, I have not heard him express a preference for any politician. However, he did insert an important line into the Kyiv Post editorial policy:

“If any Kyiv Post reporter, editor or, in fact, CEO pushes a partisan political agenda, he or she will be fired.”
Not to put too fine a point on it, but that’s a pretty definitive statement.

Kyiv Post CEO Michael Willard can be reached at Willard@kyivpost.com ]]> US, EU may want to consider visa bans http://www.kyivpost.com/news/opinion/op_ed/detail/122160/ OP-ED Thu, 09 Feb 2012 21:43:54 +0200 Editor’s Note: The following is a Feb. 1 statement by former U.S. Ambassador to Ukraine Steven Pifer before the U.S. Senate Foreign Relations Committee-Subcommittee on European Affairs, in Washington, D.C.]]> Steven Pifer writes: It may be time for U.S. and EU officials to consult as to whether it is appropriate to consider lists of Ukrainian individuals who would be denied visas to visit the U.S.and EU member.

... Regrettably, the first two years of President [Viktor] Yanukovych’s tenure in office have seen a significant regression in democratic practices within Ukraine. That is unfortunate for the Ukrainian people, and it is blocking the strengthening of Ukraine’s relations with the European Union and the United States. EU officials have made clear, for example, that the signature of an EU association agreement with Ukraine depends on Kyiv taking certain steps, such as releasing former Prime Minister [Yulia] Tymoshenko from prison.

…It remains in the U.S. interest that Ukraine develop as a stable, independent, democratic, market-oriented state increasingly integrated into Europe and institutions such as the European Union … Democratic regression within Ukraine, however, impedes that country’s ability to draw closer to the West … with weaker relations with the West, Kyiv will find that is has less room for maneuver in its dealings with Moscow. Tough negotiations will likely become even more difficult.

Yanukovych only has to look north to Belarus and what happened to President [Alexander] Lukashenko once he had burned his bridges with the European Union and the United States following the December 2010 crackdown on opposition leaders and demonstrators. Facing a dire economic situation and with no hope for help from the West, Lukashenko struck a deal with Moscow that secured a lower price for gas and a loan from Russia—at the price of surrendering control of the Belarusian gas pipeline system to Gazprom.

…The U.S. government’s priority with regard to Ukraine now should be to encourage the Ukrainian government to make the right choices regarding the country’s democratic development. …To promote this objective, the U.S. government should, first of all, continue to underscore to Kyiv U.S. concerns about democratic regression and continue to remind the Ukrainian leadership that its internal political policies have a negative impact on its relationships with the United States and the West.

Second, the United States should keep the door open for a more positive relationship with Ukraine should Kyiv heed the message on democracy…Third, the United States should coordinate closely with the European Union so as to maximize the impact of Western policy on decisions by Yanukovych and the Ukrainian leadership…

What do these policies mean in practice? As one example, the Ukrainian leadership greatly desires high-level contact with Washington, which gives it a degree of political legitimacy. Yanukovych would dearly appreciate an invitation to the White House or the chance to host President [Barack] Obama in Kyiv.

The U.S. government should continue what appears to be a de facto policy of minimizing high-level meetings with Yanukovych. U.S. officials should inform Ukrainian officials that, as long as Kyiv imprisons opposition leaders and regresses on democracy, no meetings at the highest level will be possible.

…This approach does not mean freezing ties across the board. Normal diplomatic interaction should continue at most levels. The target should be the most senior leadership in Kyiv, those who are responsible for Ukraine’s democratic regression.

As for assistance programs, the U.S. government should carefully consider its priorities, especially as budget resources for Ukraine will be limited. U.S. assistance should aim to sustain civil society in Ukraine, which has made dramatic gains over the past 20 years. In this context, exchange programs that bring Ukrainians to the United States and Europe can play a major role. The U.S. government should also continue assistance programs to promote energy security, so that Ukraine can become less dependent on imported energy.

It may be time for U.S. and EU officials to consult as to whether it is appropriate to consider lists of Ukrainian individuals who would be denied visas to visit the United States and EU member states. Even the threat of this could send a forceful message to Kyiv and have a powerful effect on Yanukovych and the elite around him.

This is not a call for the type of isolation that the West has applied to Belarus. Ukraine has not yet regressed to that point. But the United States and European Union should seek effective ways to disabuse Yanukovych of the notion that he can pursue a more authoritarian course at home without repercussions for Kyiv’s relations with the West.

… Some Ukrainian officials likely will warn that this kind of approach by the United States and European Union will cause Ukraine’s leadership to turn toward Russia. Western officials should not be taken in by this. If Ukraine truly wants to join Europe, then its leadership must accept the democratic values that prevail in Europe. If the leadership is not prepared to adopt such values, then how can Europe and the West integrate Ukraine?

Moreover, Kyiv does not wish to fall too closely into Moscow’s orbit. Yanukovych does not want to compromise Ukrainian sovereignty; he wants to be the leader of a fully independent state. The Ukrainian elite and public likewise overwhelmingly support an independent and sovereign Ukrainian state. For the Ukrainian oligarchs—who control so much of the Ukrainian economy—the Russian model holds little appeal.

The overall goal of U.S. and European Union policy thus should be to crystallize in Yanukovych’s mind the following choice: He can have a more authoritarian political system, more difficult relations with the West, and a greatly weakened hand in dealing with Russia, or he can return to a more democratic approach and have a stronger relationship with the West and a balanced foreign policy. In the end, Yanukovych has reasons to opt for the latter course. The West should face him with the choice as clearly as possible.

Steven Pifer, a senior fellow at the Brookings Institution, is a former U.S. ambassador to Ukraine. The full transcript of his testimony can be found at http://www.kyivpost.com/news/opinion/op_ed/detail/121746/]]> Ukraine’s energy business ‘optimized for corruption’ http://www.kyivpost.com/news/opinion/op_ed/detail/122159/ OP-ED Thu, 09 Feb 2012 21:38:48 +0200 Editor’s Note: The following is testimony given by Edward C. Chow on Feb. 1 to the U.S. Senate Foreign Relations Committee-Subcommittee on European Affairs on Feb. 1 ]]>
Until the discovery and major development of West Siberian gas fields in the 1970s, Ukraine was a net exporter of gas to the Soviet Republic of Russia. Ukrainian gas production peaked at 69 billion cubic meters in 1975 … Today Ukraine’s domestic gas production has stagnated below 20 billion cubic meters and it is two-thirds dependent on gas imports from Russia.

… If proper policies and investment conditions were in place, domestic gas production can easily increase by 50 percent in a few short years. Together with energy efficiency improvements, Ukraine can be more than 50 percent self-sufficient in gas. However, today, Ukraine … consumes two-thirds as much gas as Germany does, while its gross domestic product is less than 5 percent of Germany’s.

Ukraine’s oil and gas sector is operated in a totally dysfunctional manner. This, as they say in this part of the world, is not accident. Various state energy assets have been hijacked by rent seekers for their private gain.

Regulation and pricing are left deliberately murky in order to benefit private interests. This is not a particular indictment of the current government of Ukraine. In fact these conditions of Ukraine’s incomplete transition from its Soviet command economy have remained through the terms of four different presidents and many more prime ministers and cabinet of ministers. Franchises on control of energy assets may shift, but the business model never changed.

In fact, if you were to design an energy system that is optimized for corruption, it might look very much like Ukraine’s.

You would start with a wholly state-owned monopoly that is not accountable to anyone except the head of the country who appoints the management of this company. It would operate non-transparently without being held accountable by shareholders (who might demand legal rights as owners) or capital markets since its chronic indebtedness is periodically repaid by the state treasury.

Domestic production would be priced artificially low, ostensibly for social welfare reasons, leading to a large grey market in gas supply that is allocated by privileged access rather than by price. Low gas prices suppress domestic production and energy efficiency improvement, thereby necessitating the import of large volumes of gas which coincidentally is controlled by the same state monopoly or its chosen middleman company.

The opaque middleman is frequently paid handsomely in kind, rather than in cash, which allows him to re-export the gas or to resell to high-value domestic customers, leaving the state company with the import debt and social obligations.

Similarly Ukraine has eroded its major advantages as a major oil and gas transit country between Russia/Central Asia and European markets from its geographic location and Soviet legacy pipeline infrastructure.

Ukraine inherited Soviet gas transit pipelines, which had a nameplate capacity of 175 billion cubic meters per year, as well as ample and ideally located gas storage capacity. Oil transit pipelines also have a capacity of more than one million barrels per day, linking Russian and Central Asian oil production with landlocked markets in Central Europe.

Yet today Russian gas transit amounts to less than 100 billion cubic meters from a post-Soviet average of 120 billion cubic meters and Russia is busy building and planning pipelines that bypass Ukraine, namely Nord Stream and especially South Stream. When the second line of Nord Stream is completed by the end of this year, it will bring capacity to 55 billion cubic meters per year.

If Russia proceeds next year with South Stream at 63 billion cubic meters by 2016, it would have bypass pipeline capacity that completely replaces current gas transit through Ukraine, which represented about 80 percent of the gas Russia sells to Europe or 20 percent of European gas demand.

This developed because Ukraine has proven itself over the last 20 years as an unreliable transit partner for both Russia and Europe …The root causes of Ukraine’s energy insecurity are well known to all, as are their remedies…These recommendations basically come down to modernizing the business practices of this large and non-transparent sector of the Ukrainian economy, which has served as an exclusive playground for Ukrainian leaders for the past 20 years.

This means the end of rent seeking in this sector that leaks billions of dollars per year; transparent and fair rules of the game for investors in the sector that do not favor special and politically-connected interests; and above all energy pricing reform...

...For the moment, Russia and Ukraine are supposedly at an impasse in their gas price negotiations, after the disastrous decision Yanukovych and his government made on gas agreement with Russia signed in Kharkiv in April 2010 soon after his ascendency to the presidency.

Ironically, the Kharkiv agreement essentially confirmed and locked his government into the terms of the agreement made by then-Prime Minister Yulia Tymoshenko and Prime Minister Vladimir Putin in January 2009, the unfairness for which she is currently accused and jailed.

The most likely scenario is an agreement … that cedes partial control and or ownership of Ukraine’s international gas transit system to [Russia’s] Gazprom in exchange for another so-called discount on gas pricing. Concessions on penetration into Ukraine’s domestic gas market may also be made to Gazprom and/or its chosen middleman company.

…Russia may expect to gain full control of Ukraine gas transit system over time, as Ukraine continues to mismanage its energy sector, as it has already done in Belarus under rather similar circumstances…The result of this possible scenario is that Ukraine becomes an energy appendage of Russia’s.

Edward C. Chow is a senior fellow in the energy and national security program for the Center for Strategic and International Studies in Washington, D.C.]]> Tymoshenko’s daughter calls on Americans to speak out for democracy http://www.kyivpost.com/news/opinion/op_ed/detail/122158/ OP-ED Thu, 09 Feb 2012 21:22:30 +0200 Editor’s Note: The following is Feb. 1 testimony before the U.S. Senate Foreign Relations Committee-Subcommitte on European Affairs in Washington, D.C., by Eugenia Tymoshenko, daughter of imprisoned ex-Prime Minister Yulia Tymoshenko.]]>
My mother has been illegally imprisoned, maltreated and humiliated for six months by the regime which is trying to break her. This didn’t break her. Her spirits are high, I can say that emphatically, but her health is failing. When I see her I must lift her from her bed; she can barely walk. Yet she still works, and not only to fight all the legal mud that is being thrown at her, but to unify all of Ukraine’s democratic forces to challenge President Viktor Yanukovych and the repressive clan that rules with him.

My mother went into politics and put on her small shoulders the great task to free her country of injustice, absence of rule of law and corruption left from Soviet past, so that we, young Ukrainians, would not need to devote our lives to do the same. She, unlike many young entrepreneurs in newly independent Ukraine, managed to build a big, successful corporation that helped restore the lost production and trade ties between ex-Soviet states. By doing that she uncovered most major failures of the old system. One of the major failures was and now remains - corruption. She chose to go against the system, refused to be part of corrupt schemes and, ended up facing the system alone, letting it destroy her business, putting her, her family and friends behind bars and again on falsified charges.

Ten years ago, when my mother was vice prime minister for the energy sector, she managed to remove corruption in oil, electricity and gas trading and restored financial functioning in this sector. When the country’s leadership resisted her reform efforts she organized massive protest movements. These protests later grew into the [2004] Orange Revolution, which she helped to lead and supported a person for president she believed would lead the country into democratic victory.

While prime minister, even though she had limited control but big responsibilities, she fought for major reforms and country’s well-being. After she had removed the gas trading monopolist RosUkrEnergo she became enemy number one, to those who were trying to monopolize the energy market and who are in power now. She ended up illegally imprisoned, convicted and tortured for not playing by the rules of their game, not complying with their orders that were detrimental to Ukraine.

…I have no doubts that the verdict against my mother was sought and approved by President Vikotr Yanukovych. She is, according to recent polls, his main political opponent and more popular than him.

But I don’t want you to think that this is only about my mother. It is not. Others are being repressed and unjustly imprisoned. Unfortunately Ukraine turns into an authoritarian regime with leaders of the opposition sitting in jail.

…Yanukovych and his team are trying to do everything possible to charge my mother with corruption. They hope the smallest hint of corruption will confuse Western politicians and make them turn their back on Ukraine and on her. And that’s what Yanukovych’s administration is trying to achieve. They spent millions of US dollars hiring American audit companies in hoping they can find traces of her corruption. Hundreds of her ex-co-workers were summoned for questioning. They were looking hard, but never found anything and they never will.

The current government’s activities are not only ruining the image of Ukraine, and Ukraine as a united nation, but also the profitable sectors of the economy, that become paralyzed and eventually abandoned, when the rule of law is ignored. Successful people prefer to leave Ukraine and our population is declining.

…I am here today to answer your questions … but also to plead that America do all that it can to preserve democracy in my country. My mother’s plight has united many great, strong nations and amazing people, true heroes of our time who are trying to get her and other political prisoners out of jail. We are hoping for your support. It is paramount for Ukraine to have free and fair elections this fall, but it would be impossible without major opposition leaders.

… The enemies of democracy and freedom should not be welcome in a democratic society unless they correct their mistakes. I ask you to consider all possible ways to influence them and to explain to them the consequences of their actions. But most of all, I ask you to speak out, loudly and clearly, so that the people of my country do not feel abandoned and lose hope.

Eugenia Tymoshenko's full testimony can be read at http://www.kyivpost.com/news/opinion/op_ed/detail/121742/]]> Vox Populi with Mark Rachkevych: How has the worsening of relations between Ukraine and the West affected your life in general, personally or professionally? http://www.kyivpost.com/news/opinion/op_ed/detail/122157/ OP-ED Thu, 09 Feb 2012 21:01:53 +0200 The Kyiv Post asked expats at Arizona’s BBQ before the Super Bowl on Feb. 5: How has the worsening of relations between Ukraine and the West affected your life in general, personally or professionally?]]> Charles Roston,
IT engineer



“The worsening relations have led me and my Ukrainian wife to consider leaving Ukraine. “







Daniel Aspleaf,
regional head of an engineering and environmental consultancy



“It’s not affecting me personally. It’s affecting me as a business owner. Things have gotten worse. The political situation is discouraging. I wish that Western countries would take a more pro-active stance, especially the U.S. and European Union.”





Jeff Howley,
independent telecommunications consultant



"It’s a recycling of the same old thing. I’ve lived here for 16 years. It’s not the end game yet. Nonetheless, life goes on and people make due.”





Curtis Bjelajac,
chief financial officer



“The situation is making it difficult to stay here.”






Jay Boling,
aviation company owner



"The basic financial and political uncertainty is causing investments to move away. It’s adversely affecting business relationships. Many of my expat friends who own service venues have noticed a dip in clientele. Look at Arizona’s today. It’s not as full as it used to be. I worry about Ukraine’s future after the Euro 2012 soccer championship.”




Vox Populi is not only in print, but also online at kyivpost.com with different questions. If you have a question that you want answered, e-mail the idea to kyivpost@kyivpost.com.
]]> EurActiv: A win-win for EU and Ukraine http://www.kyivpost.com/news/opinion/op_ed/detail/122132/ OP-ED Thu, 09 Feb 2012 16:33:36 +0200 Read full report here.]]> Digital Tonto: Why I still think the New York Times paywall is stupid http://www.kyivpost.com/news/opinion/op_ed/detail/122064/ OP-ED Wed, 08 Feb 2012 16:24:53 +0200 first results of its paywall last week and showed that it gained 390,000 digital subscribers between the Times and the International Herald Tribune.]]>
I wrote before that I thought the paywall was a stupid idea and I still think so. While the subscription numbers are impressive, the business itself is worse off and falling further behind. Some, like Henry Blodget, think the answer is to simply fire more journalists. I believe the solution lies in the NY Times learning how to build a digital business.


The golden rule

As I’ve written before, media has a golden rule: Marketers are willing to pay more for consumers than consumers are willing to pay for content. Of course, there are exceptions and some are important ones, but generally the rule stands.

What I don’t understand is why people think that for some reason it wouldn’t apply to the NY Times. It certainly isn’t a niche product, nor does it give any time sensitive information that isn’t widely available (although the Wall Street Journal does, which is why their paywall works). They have never made money on print and distribution, so “free” shouldn’t bother them.

The problem is clearly shown on this chart from Henry Blodget’s Silicon Alley Insider:



Clearly, the increase in subscription numbers has barely made a dent in their revenues. Moreover, the haven’t improved their product, so it’s hard to see how they will grow from here if they can’t win advertising or e-commerce dollars. (Mathew Ingram makes a similar point in a recent post).

Falling further behind

The New York Times digital ad revenues didn’t fall last year, as some suspected, but actually increased by 10%, which helped mitigate their shrinking print revenue. Many are saying that’s a positive result, but I think not. That figure actually reflects the fact that the NY Times has fallen further behind.



While a 10% increase in revenues might be great for a newspaper business, it’s pretty crappy for digital, which grew at 23% last year. In reality, they didn’t pull ahead, but lagged the market by 13%. As online growth eventually slows, how will they ever become sustainably profitable by keeping the current course?

And that’s not all. The digital business they bought, About.com, did even worse. Due to a change in the Google algorithm About.com’s revenues dropped 67% which caused overall digital revenues for the entire enterprise to actually drop by 0.8%! Not exactly a digital juggernaut.

With results like these, how can anyone call the NY Times digital strategy (of which the paywall is the most prominent part) a success?

How to fix the New York Times

By now it should be clear that the paywall is certainly no solution to the NY Times’ problems. Rather than trying to boost revenues temporarily to stem the tide, they need to learn how to effectively run a digital business, which has considerably different logic than a print business.

Here are some suggestions:

Stop Building Stupid Things: While a lot of people think that the NY Times got into trouble because they ignored the Internet, nothing can be further from the truth. Much like I previously wrote about Blockbuster, they are actually a technologically forward company.

The problem is that they build the wrong things, like an incredibly complex hierarchical tagging system for articles that was outdated almost as soon as they built it and their reference search feature, which allows you to double click on any word and get reference information. Impressive, but useless.

Integrate blogs: Another thing they can do is integrate blogs. Lots of people would love to write for the NY Times for free, why not let them? Huffington Post has made a lot of money that way. As I’ve written before, professional journalism and blogs are complimentary as much as they are competitive.

Leverage Inventory: Print media is about space. Electronic media is about inventory. That makes all the difference in the world and there are a number of ways inventory can be leveraged and optimized.

One of my favorites is to syndicate satellite brands that build communities in key verticals. The NY Times has deep content in a number of niche areas such as theatre, books and local New York politics. They can use this content to fuel separate brands that focus on those areas and augment it with community building features.

Incidentally, the Wall Street Journal does this very well with brands like All Things Digital, Market Watch and WSJwine.

Innovate: Creating satellite brands would also have another ancillary benefit – it would help them innovate. Probably their biggest problem is that its very difficult to innovate on their enormous scale (AOL and Yahoo! have similar problems). Having a stable of smaller brands will help them take more chances.

Most of all, they need a greater spirit of innovation. Instead of yearning for a lost age and wasting time with paywalls, they should be looking to the future. While they tell themselves that they the last great hope for quality journalism, the truth is that there is no worse betrayal to quality journalism than running a media business poorly.



Greg Satell is a U.S.-based independent media analyst. You can read his blog entries at http://www.digitaltonto.com.]]> People First: The latest in the watch on Ukrainian democracy http://www.kyivpost.com/news/opinion/op_ed/detail/122013/ OP-ED Tue, 07 Feb 2012 20:23:48 +0200
The performance of the Ukrainian legal system throughout 2011 betrays the real attitude of Ukraine's authorities to the people and society.

Football fans who dared to shout slogans or sing songs of a vaguely political nature during matches in Ukraine were the first to receive the hard end of this judgmental bias. One football fan was officially charged with hooliganism delivering the sentence of potentially up to four years imprisonment. A member of parliament has now filed a draft law suggesting penalty measures for anyone voicing political songs or slogans during or around Euro-2012 matches).]]>
The court case over the death of a young student Igor Indylo, who died under suspicious circumstances in police custody, resulted in a very mild punishment without any imprisonment for the militia officers who are implicated in the student’s death. In fact, this is part of an ongoing trend where Ukrainian courts refuse to deliver serious punishments to law enforcers known to be responsible for the mysterious deaths of young people in their custody.

Ukrainian justice was also particularly cruel upon the political opposition, with perfect examples being the cases against former Prime Minister Yulia Tymoshenko, former Interior Minister Yuriy Lutsenko and many others.

According to Human Rights Watch the public trust in Ukrainian courts has fallen dramatically. The organisation's annual report concludes that the guilty verdicts delivered to Tymoshenko and other former government officials have shattered public confidence in the independence of the courts.

Entrepreneurs have also felt the sting of the judge’s gavel, with tax-protest activists being accused of damaging paving stones on Independence Square where protests were held.

Relatives of high state officials who commit crimes with indisputable evidence against them somehow receive special treatment in the courts. They do not account for fatal road accidents they cause whilst children with wealthy parents feel free to beat up ordinary citizens. In January a deputy's son was found guilty for beating a young woman and sentenced to three years of imprisonment with a probation period of two years. He was immediately released. Provided he does not get caught breaking the law over the next two years, he may well go free.

Representatives of the European Union have on many occasions publicly condemned the selective nature of Ukrainian justice).This was one of the reasons why the association agreement between Ukraine and EU was not ratified last year.

Decreasing public confidence in the legal system creates some distinct risks for the governing authorities. Ukrainian sociologists report that citizens are choosing to blame the situation in the country on President Viktor Yanukovych.

At the same time, the government makes occasional claims to an understanding of problem with the system of justice in Ukraine. For example, the president recently announced a new Criminal Code, to be adopted in Ukraine in the nearest future. Yanukovych believes the code will positively influence the development of Ukraine as it introduces the principle of competition between prosecution and defense.

Balance, rule of law, presumption of innocence and proper protection of human rights are allegedly just around the corner. The president of Ukraine is confident that the new Criminal Code will be an important step towards creating an efficient system of state administration, creating balance among all the branches of power and establishing democratisation.

Let us hope that the governing authorities realize the danger of the court system losing its independence, as should it happen, it will utterly undermine the balance of the whole political system of the country.

People First Comment: On a warm summer’s afternoon in central Kyiv last year, a young judge’s assistant mounted the curb in her Mercedes 4x4 and proceeded to drive down the sidewalk looking for a place to park. In any other European city, a driver doing this would attract the attention of the public and, if available, the police. In Kyiv however, it is common practice; with pedestrians having to squeeze their way past cars parked half, or often fully, on the pavement.

Sadly this story doesn’t end with one girl’s disregard for the Ukrainian traffic code. In what local police believe to have been a momentary confusion between the brake and accelerator pedals, Nataliya Solovey lost control of her vehicle, running down and killing Svitlana Teterevkova; a married mother of three.

When the case went to court in November, a verdict was delivered that might shock readers who are unfamiliar with the ways of the Ukrainian legal system: freedom from prosecution, return of impounded vehicle, return of driving licence and no entry into criminal record – which would have otherwise impacted her job at the state judicial service.

Judge Volodymyr Bugil explained that the amnesty was granted on compassionate grounds – Miss Solovey being a mother with two young children; a compassion contrasted by the fact that the victim’s family will see neither justice nor compensation.

Apparently Ukraine’s judiciary can be as selective in its compassion as it can in its wrath: one need only cite the case of Lutsenko, a key political opponent to the government, who was jailed for 6 months, before even a case against him was submitted to court, and has remained there for a further 7 months as new allegations periodically materialize.

Optimistic hopes that these are but freak-cases are to no avail – they embody what in Ukraine is common knowledge: a connection to Ukraine’s ruling political and business elite, which are largely one and the same, effectively bestows immunity from prosecution; whilst outsiders must choose between compliance or pseudo-legal persecution.

Whether it is a councilor’s son crushing a motorcyclist with his Bentley, or a deputy’s son beating a 20-year-old woman in the middle of a crowded restaurant (as witnessed by thousands since the CCTV footage was leaked to YouTube), or even the theft of an entire shopping center from its international owners, the elite know that by carrot or by stick they have the means to generate near-enough whatever verdict they like.

Aside from the damage such a partisan judicial service does to the injured parties, attention should be paid to the impact its toleration by the Ukrainian people has upon the notional relationship between justice and the rule of law.

Despite the Ukrainian Prosecutor General’s office having a 98 percent conviction rate, making it perhaps the most effective legal body in the world, trust for it and other state arms, such as the militia and secret service, exists in only 10-16 percent of the population.

The divorce between the legal system and the public sense of social security is a manifest threat to the organizational fabric of the nation itself: as the power of the state and the institutions that support it are perceived as oppressors to the common man; echoing the totalitarian aspects of the bygone Soviet era.

Though calls from European neighborrs for a strengthening of the rule of law might seem constructive, until the public believe that the laws and law makers act in the national interest, rather than their own, stricter enforcement will only have a further destabilizing effect at the social level.


If politicians can get away with murder, the public will see no shame in testing the rules themselves, such as driving on the pavement or perhaps rising in violent protest.

Viktor Tkachuk is chief executive officer of the People First Foundation, which seeks to strengthen Ukrainian democracy. The organization’s website is: www.peoplefirst.org.ua and the e-mail address is: democracywatch@peoplefirst.org.ua
]]> The Economist: Gas in Europe. Spiked http://www.kyivpost.com/news/opinion/op_ed/detail/121939/ OP-ED Mon, 06 Feb 2012 19:44:28 +0200 Read full story here.]]> Black gold mixed with blood http://www.kyivpost.com/news/opinion/op_ed/detail/121910/ OP-ED Mon, 06 Feb 2012 14:46:21 +0200
According to Kostyantin Ilchenko from the Solidarity Labour Movement, the fire on Feb. 2 at one of the kopanki [illegal mines] in the village of Pavlovka was unusual only in the fact that it could not be concealed and that fire engines and rescuers turned up.

“The people of Donbas know that such things happen often enough but the authorities, the police and prosecutor prefer to stay silent, trying to conceal cases of terrible injury or deaths of workers.” As mentioned, this can entail literally filling in mine shafts or simply abandoning miners underground to die, like at the Zakhidna Mine.

It is no small matter to oppose illegal mining in the Donbas area. In July 2010, Gennady Fimin from the civic organization Our Choice was beaten with baseball bats, ended up in intensive care, nearly died and needed several operations. Prior to this, Fimin had approached the police, prosecutor and SBU [Security Service of Ukraine] demanding that the illegal mining be stopped and those responsible for such mines be prosecuted.

The Solidarity Labour Movement is also untiring in its efforts to stop the mining. Last year, Prystyuk came up with a new line. All the illegal mines had been closed, and only those which had “received licenses” were now working legally.

Ilchenko is scathing: the illegal mines are destroying the environment and undermining the economy, and any license must be based on serious permits following safety checks, geological surveys etc. It is inconceivable that a license would be issued to mines regularly using illegally obtained explosives. Just in one Sverdlovsk kopanka in 2011, the police, responding to a report from the nongovernmental organization Our Choice, removed 150 kilograms of illegal explosives.

Ilchenko says that back in September last year, his organization filmed the mine which went up in flames on Feb. 2, as well as the miners who died. In September, it was all quite different: the territory was guarded and various measures were used to conceal the fact that coal was being extracted. He asserts that the camouflage appeared after the governor and Minister of Fuel and Energy Yury Boiko flew over the area in a helicopter, and suggests that they didn’t like what they saw.

Solidarity suspects that powerful businesspeople and politicians are controlling the business.

The allegations are extremely serious and should not be taken lightly. Public attention is needed to force real measures against illegal mines and effective slave labour so that men can provide for their families without facing the ever-present risk of being left to die when shoddy illegal structures cave in.

Halya Coynash is a member of the Kharkiv Human Rights Group.]]> Digital Tonto: Looking for support rather than illumination http://www.kyivpost.com/news/opinion/op_ed/detail/121909/ OP-ED Mon, 06 Feb 2012 14:34:14 +0200
Such people are very much like drunkards who use a lamp post for support rather than illumination. I can empathize, because I like to drink and, when I’m drunk, I get all sorts of crazy ideas which I am unfailingly certain are brilliantly profound. Happily, the effect wears off when I’m sober.

That seems to be an advantage I have over some others I’ve met who not only come up with crazy ideas, but then go in search of evidence to back them up. That’s a big problem. Ours is a messy world, with lots of seemingly contradictory data and confusing logic. To glean the truth, we need to be careful.

Cargo cult marketers revisited

I described the problem before in a post about Cargo Cult Marketers which was based on a famous speech given by Richard Feynman about Cargo Cult Scientists.

He got the name from islanders in the South Pacific who saw military cargo planes landing at airfields during World War II. After the war, they built their own mock airfields in the belief that the Gods would smile on them as well. Alas, no cargo ever came, no matter how closely they followed the rituals of a military airfield.

His point was that insight takes discipline. As he said, “The first principle is that you must not fool yourself—and you are the easiest person to fool. So you have to be very careful about that.”

Michio Kaku makes a similar point in this video:







Ideas can be dangerous things. They can take us places we really shouldn’t go. Often, what we “know is true” can be patently false.

Where ideas come from

As I noted in an earlier post, we don’t have much control over where our ideas come from. Some are based on fact, others on intuition, still others based on upbringing and genetic makeup. Sometimes, we have good reason for thinking what we do, but often we don’t.

One example is priming. In a landmark paper, Nobel laurettes Daniel Kahneman and Amos Tversky found that when subjects were shown a spinning wheel that randomly generated a number between 0 and 100, the outcome would affect their answers to factual questions such as how many countries there are in Africa.

Similar results have been found in other studies. When subjects are asked to write down the last two digits of their social security number, those with higher numbers will bid more in an auction. When people are told a bottle of wine costs more, they like it more. We’re very susceptible to subtle cues and our thoughts are not entirely our own.

The priming effect can have long term consequences because of confirmation bias. We tend to favor information that confirms our ideas (however we arrive at them) and ignore data to the contrary. Once an idea takes root, we seek to defend it.

Funny numbers

Of course, just any idea won’t do in a professional setting. You have to have numbers to back them up. Unfortunately, numbers can lie.

Take the idea that smaller schools educate better than large schools. It makes a lot of sense. Students get more attention, there are not as many distractions and so on. Do a little research and you’ll find that the highest achieving schools are, in fact, smaller than average.

But wait, small schools have disadvantages too. They tend to have less resources and offer a smaller curriculum. So maybe you think smaller schools are worse. No problem, go to the same research and you will find that the worst schools are also small ones.

The problem, in actuality, isn’t small schools but small numbers. Smaller samples are more likely to result in extreme values. If you are merely seeking data to prove a preconceived belief, little statistical quirks will pass right by you. As Feynman said, you have to be very careful.

Funny logic

We not only have math to worry about, but logic as well. For instance, when social media came on the scene, traditional media took a beating. Many assumed that the the first caused the second, but that logic fell flat when traditional media made a comeback.

This is known as a post hoc fallacy. Just because something preceded something else doesn’t mean it caused it.

Another common error is affirming the consequent, which confuses necessary and sufficient causes. For instance, if it rains, the streets will be wet, but wet streets don’t mean that it rained. There are lots of things that can make the street wet. In much the same way, just because digital is growing doesn’t mean TV is dying (it’s not), although many people think it does.

These are pretty simple examples which seem easy enough to avoid, but when we’re hot on an idea, we tend to overlook pesky little details like logic and math. That’s why we need to discipline ourselves to look for uncomfortable facts that do not jibe with what we want to be true.

Sobering up

As Shakespeare once wrote, “Life is a tale told by an idiot.” It’s a messy world, with lots of stuff around to lead us astray. Cognitive bias, funny math and logic, as well as our own emotional need for certainty, all conspire. There are many more ways to get it wrong than to get it right.

So what to do? Over the years I have come up with a few principles that help me eliminate the most egregious analytical errors:

Data First: Do your best to approach research without preconceptions. That’s easier said than done but, with some effort, you can make some real progress. Also, look at raw data yourself, rather than simply reading an executive summary or a PowerPoint deck. If you’re not using Excel, you’re not doing a thorough analysis.

Null Hypothesis: Always assume that there is nothing there unless you have a very good reason to believe otherwise. This is known as the null hypothesis. The data never “says” anything, we interpret it one way or another. As David Hume pointed out, even our belief that the sun will rise tomorrow is mostly a convenience.

Bayes Theorem: Continually update your information and factor that back in to your analysis in the spirit of Bayes. The earliest information is not necessarily the best.

Expand Your Network: Probably the best thing you can do is continually strive to connect with people of varying perspectives. As Asch showed, local majorities can be incredibly persuasive.

We all have a tendency to marry our ideas. Passion and integrity require a certain constancy. However, being a professional entails testing our beliefs. If we don’t, the market will.



Greg Satell is a U.S.-based independent media analyst. You can read his blog entries at http://www.digitaltonto.com.]]> Ukrainian-American group: 'We support regime change in Ukraine' http://www.kyivpost.com/news/opinion/op_ed/detail/121883/ OP-ED Mon, 06 Feb 2012 09:34:07 +0200 Editor’s Note: The following is a letter to two U.S. senators from the International Conference in Support of Ukraine.]]>

The Honorable Jeanne Shaheen
Chair of the Senate Foreign Relations Committee
The Honorable John Barrasso
Ranking member of the Senate Foreign Relations Committee

Dear Senators:

We are in possession of a copy of the February 1, 2012 letter addressed to you by Ukraine’s Ambassador to the United States [Oleksander Motsyk]. We are certain of your capacity to scrutinize the contents of that letter critically and independently. However, some of the statements made therein were replete with such egregious untruths and half truths, primarily in the area of democracy building and human rights, that we feel compelled to respond, least you mistakenly assume that the Ukrainian American community is unaware or, even worse, is indifferent to such assertions by the ambassador.

It is our position that under the regime of President Victor Yanukovych the situation in Ukraine has deteriorated to a point where the rule of law and civil society is undermined.

Even in the area of energy independence, Ukraine has regressed under Yanukovych by actually increasing its dependence on Russian gas, suggesting an increase in the gas quota in return for a minor price discount.

In the economic sphere, Ukraine essentially hit bottom in 2010 under Yanukovych and in the midst of the global economic crisis. Its somewhat ambiguous, certainly negligible economic growth in 2011 was largely inevitable and the result not of economic reforms but due to the global demand for aluminum and other metal resources, but certainly, not any manufactured products. Ukraine’s exclusion from the Financial Action Task Force’s Blacklist is not an achievement. The Blacklist has become defunct.

Nevertheless what should concern you most is Ukraine’s record in democracy and human rights. It’s improvement on the World Press Freedom Index for 2011 is specious at best, as it ranks 116 out of 179 countries just ahead of such human rights pariahs as Venezuela.

An important, objective and authoritative analysis that addresses many of the Ukrainian Ambassador’s assertions can be found in a resolution on Ukraine passed only a few days ago by the Parliamentary Assembly of the Council of Europe. Allow us to submit for your consideration several pertinent excerpts:

“The Assembly expresses its concern with regard to the criminal proceedings initiated under Articles 364 (abuse of office) and 365(exceeding official powers) of the Criminal Code o Ukraine against a number of former government members…The Assembly considers that Articles 364 and 365 of the Ukrainian Criminal Code are overly broad in application and effectively allow of post facto criminalization of normal political decision-making. This runs counter to the principle of the rule of law and is unacceptable…The Assembly regrets the numerous shortcomings noted in the trials against former government members and considers that they may have undermined the possibility for the defendants to obtain a fair trial within the meaning of Article 6 of the European Convention of Human Rights…the Assembly takes note of the fact that the European Court of Human Rights decided to fast track an application of Ms. Tymoshenko concerning her detention in which she alleges violations of Articles 3,5 and 18 of the Convention…the Assembly reaffirms its deep concern about the lack of independence of the judiciary…the Assembly regrets that the reform of the Prosecutor’s office in line with Council of Europe standards, which is one of Ukraine’s accession commitments, has yet to be carried out. As a result, the Prokuratura remains an excessive centralized institution with excessive powers…The Assembly welcomes the systematic requests by the authorities for the opinion of the Venice Commission on draft laws which they prepare. However, it notes that, on several occasions, the draft laws on which opinions have been asked are subsequently withdrawn and that the recommendations of the Venice Commission are not taken into account in the laws ultimately adopted by the Verkhovna Rada…the Assembly regrets that its main recommendations, namely the adoption of a Unified Electoral Code, and the adoption of a regional proportional election system, were not implemented...”


These alarming findings are particularly important since the Ambassador’s letter concludes with the assertion of seeming confidence in U.S. support of Ukraine’s European aspirations. We too support Ukraine’s European aspirations. However, to this end, ultimately we support regime change in Ukraine as the only viable way for Ukraine to return to its democratic course that is severely undermined by the Yanukovych regime.


Thank you for your kind consideration of our comments.

Respectfully,

For the International Conference in Support of Ukraine




Askold S. Lozynskyj, chair.
Borys Potapenko, secretary]]> Damon Wilson: Ukraine's economy suffers from 'widespread, top-down corruption' http://www.kyivpost.com/news/opinion/op_ed/detail/121750/ OP-ED Thu, 02 Feb 2012 23:13:31 +0200 Editor's Note: The following is testimony by Damon M. Wilson, executive vice president of the Atlantic Council, before the Senate Committee on Foreign Relations in Washington, D.C., on Feb. 1.

Ukraine at a Crossroads: What’s at Stake for the United States and Europe

Subcommittee on European Affairs
Senate Committee on Foreign Relations

February 1, 2012

Testimony by Damon M. Wilson
Executive Vice President Atlantic Council]]> speak before your committee on the situation in Ukraine.

Ukrainian democrats and their supporters share a vision of an independent, sovereign
Ukraine with strong democratic institutions, rule of law, and a prosperous free market,
embedded in Europe, a partner of the United States, and at peace with Russia.

Yet 20 years after independence, Ukraine's young democracy, cultural identity, and
weak institutions face political manipulation and its fragile economy is subject to massive
distortions from widespread, top-down corruption. In short, Ukraine's sovereignty is not
guaranteed, its democracy is not inevitable, and its market is not free.

Today, Ukraine teeters between Eurasian malaise and an ambivalent Europe. Indeed,
Ukrainefs future is in play. Decisions taken now and in the coming year by President Yanukovych
and his government, the Ukrainian political opposition, civil society, media, and youth . as well
as the United States and Europe will determine whether Ukraine evolves into a European
democracy or descends into a post-Soviet authoritarian kleptocracy.

Indeed, Ukraine is at a crossroads. And there is much at stake for transatlantic interests.

President Viktor Yanukovych and the Ukrainian government are pursuing contradictory
policies: they seek to integrate Ukraine into Europe, while emasculating their domestic
opposition. In their first two years in office, they have made progress on both, eliminating his
key challenger from politics and negotiating a landmark deal with the European Union. Yet
ultimately, they must choose.

The choice is not between Russia and the West. In many respects, this is a false choice.
The choice is whether Ukraine sees its future in the European mainstream or relegated to the
borderlands. The outcome rests on whether Yanukovych and his government decide their
political preservation is more important than anchoring Ukraine in Europe.

Ukraine's difficult situation today is a direct result of the failure of political leadership in
the wake of the Orange Revolution. Orange leaders, while allowing political pluralism to thrive,
disappointed the Ukrainian people by failing to govern effectively. Their infighting opened the
door to Yanukovych's rehabilitation and election in 2010 as president in free and fair elections,
Ukrainefs fourth set of free elections in a row at the time.

When President Yanukovych came to power, he began to centralize authority. His
advisors offer a compelling explanation: after years of political chaos and economic
mismanagement under Orange leaders, Ukraine's new leaders consolidated power in order to
be able to govern more effectively and to implement long-needed reforms. And in many cases,
the government has pursued difficult economic reforms necessitated by the global financial
crisis, including for example raising the retirement age.

At the same time, under Yanukovych, Ukraine has been a responsible international actor,
advancing practical negotiations with the European Union, agreeing with the United States to
eliminate highly enriched uranium, and managing more normal relations with Russia.
However, President Yanukovychfs first two years in office provide a sufficient record to
sound the alarm on the state of democracy. We have witnessed selective prosecutions of
opposition figures, a more restrictive media environment, disturbing involvement of the
security service (SBU) in domestic politics, a seriously flawed local elections in October 2010,
pressure on civil society, an erosion of speech, consolidation of executive influence over the
judiciary, manipulation of the electoral code in advance of parliamentary elections this fall, and
continued rampant corruption. In essence, the ruling Party of Regions has centralized authority,
governing all of Ukraine much as it governed its stronghold oblasts like Donetsk, while
weakening Ukrainian societyfs checks and balances.

The vision of a democratic, European Ukraine is not lost however. Yanukovych and his
government value their domestic standing and their international reputation; therefore
Ukrainian popular opinion and Western policy matter. Furthermore, Ukrainefs political and
cultural diversity is a bulwark against any one force dominating the political landscape.
As we look forward, Ukraine faces three key tests: its handling of political prosecutions, the
October parliamentary elections, and its energy security.

First, despite protests to the contrary, Ukrainian authorities have pursued selective
prosecutions against political opponents, most notably former Prime Minister Yuliya
Tymoshenko. She is not an isolated incident, but is illustrative of a disturbing pattern that is
corrosive to democracy. If those in power believe that the price of losing an election is prison,
they are unlikely to ever relinquish power. Through its own actions, the Party of Regions has set
this dangerous dynamic in play. After months of various officials telling many in the West that
the president would find a way within the law to end the prosecution of Tymoshenko, she has
been sentenced to seven years in prison and is now facing a set of new charges. Ukrainefs
leaders seem to have calculated that threat she poses politically outweighs the cost of the
international opprobrium.

The United States and Europe have spoken out forcefully on this issue, and the
European Union has delayed signing an association agreement over this issue. Both the United
States and Europe should keep this issue at the top of their agenda with Ukraine, not allowing
the passing of time to diminish the Ukrainiansf calculations of the costs of their actions.
Washington and Brussels should consider additional measures to raise those costs.
Second, the most critical test is whether Ukraine is able to conduct free and fair
parliamentary elections in October. I already have serious concerns about Ukrainian authorities'
actions to tilt the scales in their favor through changes to the electoral code and influence over
the judiciary. After free and fair parliamentary elections in 2006 and 2007, there was no
compelling need to revise the electoral code in advance of these elections. The ruling party's
singular focus to do so raises concerns about those in power changing the rules of the game to
their advantage.

Nonetheless, these elections are in play. Recent polling indicates that, while the
opposition remains weak, the ruling Party of Regions has lost tremendous support throughout
Ukraine, including in its political base in the east. Given there is a genuine possibility for
competitive elections, authorities may be tempted to take extraordinary measures beyond
administrative means to maintain their majority in parliament.

Therefore, now is precisely the time to shine a spotlight on Ukraine. The United States
and Europe need to work together closely to help ensure a level playing field through support
for measures that can counteract fraud. This includes helping independent civil society to
observe elections, monitor media, and conduct exit polls and parallel vote counts.

Furthermore, the European Union can make clear that ratification of any Deep and
Comprehensive Free Trade Agreement depends not only on the issue of political prosecutions,
but also on the conduct of these elections. Similarly, the United States should make clear that
the conduct of these elections will determine the possibilities in our bilateral relationship.
Ukraine has been a valued partner given its commitment to hand over all of its highly
enriched uranium as part of President Obama's nuclear security initiative.

My concern, however, is that the Ukrainians will perceive they can cooperate on this strategic priority, and
in return earn a pass on democracy issues. Washington needs to continue to send clear,
consistent messages to Kyiv about the costs of poor elections in October.
A third key test for Ukraine is how it handles its dismal record on energy security.

The energy sector in Ukraine is opaque and corrupt. More importantly, the government's
management of energy is corrosive to Ukraine's democracy and sovereignty. The scale of
corruption in the energy sector threatens to undermine Ukraine's democracy, as it provides an
incentive for those in power to perpetuate their rule both for personal enrichment and to avoid
prosecution once out of power. Corruption in the energy sector is also a national security threat
as it allows unscrupulous interests to manipulate Ukrainian officials and policy. The best way to
strengthen Ukrainefs sovereignty, and to mitigate Ukraine's dependency on Russia for natural
gas, would be to pursue an aggressive energy efficiency program and to liberalize its antiquated
energy sector inviting in investors and promoting transparency.

As we judge Ukraine's performance on these three tests, US and European objectives
should be clear.
First, in the near-term, our policy should aim to check democratic backsliding and help
Ukrainians demand a free and fair election this fall.

Second, we should continue to promote Ukraine's genuine European integration by
fostering societal level contacts while government-to-government negotiations stall. While
some European nations seek to tether Ukraine to the European Union, many would prefer that
Ukraine have no future home in Europe. US policy should state that a democratic Ukraine that
pursues reforms can earn its place in Europe's institutions.

Third, we should continue to help Ukraine increasingly integrate its markets into the global
economy, reorienting its economy away from Soviet era patterns of trade. As Ukraine's
economic interests increasingly value their credibility in western markets, these forces will
support rule of law at home and some will value Ukraine's democratic credentials abroad.

Finally, the United States and our transatlantic partners should continue to support
Ukraine's sovereignty and independence. As Vladimir Putin plans his return to the Russian
presidency, we are likely to hear about more ideas along the lines of his proposal for a Eurasian
Union. While cooperative, constructive relations between Ukraine and Russia are healthy,
Russian efforts to exert a sphere of influence, if unchecked, will lead to greater demands and
ultimately greater instability over time. Our engagement with Ukraine through good times and
bad will bolster Kyiv's ability to determine its own future.

Holding Ukraine to account on democracy, however, will not send Ukraine into Russiafs
arms. Whether it is Ukrainians in the west of the country whose reference is Poland rather than
Russia, Ukrainian oligarchs who fear economic domination by their Russian counterparts, or
Ukraine's political elites who have grown accustomed to managing their own nation, Ukrainians
will play the lead role in preserving their sovereignty.

As members of Congress, you have much on your plate. The United States' interests are
global so why should US policymakers concern themselves with Ukraine. I would offer three
reasons.

First, as a nation with as many people as Spain and as much land as France, and with shared
borders with the European Union, NATO, and Russia, Ukraine is a major actor and of significant
importance to Euro-Atlantic security and prosperity. Much of the history of conflict in Europe is
about insecurity in the land between Germany and Russia; as long as Ukrainefs future remains
uncertain, there is a risk of instability.

Second, Ukraine's success or failure as a free market democracy will reverberate far beyond
its borders. Ukraine can help anchor a region plagued by uncertainty, moving the region closer
to European norms, and advancing the vision of a Europe whole, free, and at peace.
Alternatively, its failure will set back reform in the broader region and undermine the goal of
gcompleting Europe.

Third, change in Ukraine may be among the best hopes for change in Russia. Most analysts
think about how developments in Russia will impact Ukraine. I tend to believe that
developments in Ukraine can influence Russia. First, failure in Ukraine would validate Vladimir
Putinfs narrative to the Russian people that experimentation with democracy in the former
Soviet Union leads to political chaos and economic instability; gdemocracy is dangerous.h
However, Ukrainefs success as a market]oriented democracy with strong ties to Europe would
challenge those assumptions. For so many in Russia who have been taught to think of
Ukrainians as their backward cousins, progress in Ukraine would underscore the viability of
progress in Russia.

Madam Chairman, Ukraine is indeed at a crossroads. Its democracy is in play. Its place in
Europe is in play. And its reliability as a partner of the United States is in play. Western policy
can help sharpen the choices facing Ukrainian leaders.

A President Yanukovych who ceases political prosecutions, presides over fair parliamentary
elections, combats corruption, achieves a ratified association agreement with the European
Union, and advances a top US nonproliferation objective has the opportunity to remake his
image in the world and in his own nation.

Thank you Madam Chairman, Ranking Member, and Members of the Committee. I look
forward to answering your questions.]]> Steven Pifer: US, EU should consider visa bans in protest of Yanukovych's anti-democratic policies http://www.kyivpost.com/news/opinion/op_ed/detail/121746/ OP-ED Thu, 02 Feb 2012 23:00:56 +0200 Editor's Note: The following is a statement before the U.S. Senate Foreign Relations Committee in Washington, D.C., by former U.S. Ambassador to Ukraine Steven Pifer on Feb. 1.

Statement before the Senate Foreign Relations Committee
Subcommittee on European Affairs

Developments in Ukraine and Implications for U.S. Policy

Steven Pifer

Senior Fellow, Center on the United States and Europe
The Brookings Institution

February 1, 2012]]>
Introduction

Madam Chairwoman, Senator Barrasso, distinguished members of the Committee, thank
you for the opportunity to appear today to testify on developments in Ukraine and the
implications for U.S. policy and U.S. policy goals in Europe.

When Victor Yanukovych became president of Ukraine in February 2010, his first foreign
policy priority was to repair what he regarded to be Ukraine’s badly frayed relationship
with Russia. At the same time, his government indicated that Ukraine would seek a
balance between its relationship with the West—particularly the European Union—and that
with Russia. This seemed a sensible course for Ukraine in its current circumstances.

Regrettably, the first two years of President Yanukovych’s tenure in office have seen a
significant regression in democratic practices within Ukraine. That is unfortunate for the
Ukrainian people, and it is blocking the strengthening of Ukraine’s relations with the
European Union and the United States. EU officials have made clear, for example, that the
signature of an EU association agreement with Ukraine depends on Kyiv taking certain
steps, such as releasing former Prime Minister Tymoshenko from prison.

Mr. Yanukovych’s domestic policies are seriously undermining his ability to balance
Ukraine’s relationships between the West and Russia. That will complicate Ukrainian
foreign policy, leaving it less connected to Europe and in a weaker position to deal with
Russia on issues where Ukrainian and Russian interests do not coincide.

It remains in the U.S. interest that Ukraine develop as a stable, independent, democratic,
market-oriented state increasingly integrated into Europe and institutions such as the
European Union. That kind of Ukraine promotes the U.S. objective of a wider, more stable
and secure Europe. Democratic regression within Ukraine, however, impedes that
country’s ability to draw closer to the West.

The U.S. government should continue to underscore to Kyiv U.S. concerns about
democratic backsliding and remind the Ukrainian leadership that its internal political
policies have a significant impact on its relationships with the United States and Europe;
keep the door open for a more positive relationship with Ukraine should Kyiv heed the
message on democracy; and coordinate closely with the European Union to maximize the
impact of Western policy on decisions by Mr. Yanukovych and the Ukrainian leadership.

While engaging Ukraine at most diplomatic levels, the United States and European Union
should continue what appears to be a de facto policy of minimizing high-level contact with
Mr. Yanukovych until he alters his internal political policies. The West should seek to
crystallize in Mr. Yanukovych’s mind the choice between a more authoritarian political
system and a strong relationship with the West, and make clear that he cannot have both.

Ukraine’s Foreign Policy—A History of Balance

Developing an independent foreign policy has posed one of the key challenges for Kyiv
since the collapse of the Soviet Union in 1991. Ukrainian presidents have generally sought
a balance in their foreign policy relationships between the West and Russia. Europe and
the West are attractive to many Ukrainians. Ukraine ought to be able to develop stronger
relations with the European and trans-Atlantic communities without rupturing relations
with Russia, which are also important to many in Ukraine.

Given the large space that Russia occupies on Ukraine’s border, the long, complex history
between the two countries, cultural links between Ukrainians and Russians, and economic
ties that have continued since the end of the Soviet era, it is natural that Ukraine seek a
stable relationship with Russia. At the same time, Russia is not the easiest of neighbors.
Ukrainian presidents thus have sought to develop relationships with the United States,
Europe and institutions such as NATO and the European Union. Ukraine’s leaders have
been motivated in part by a desire to gain greater freedom of maneuver vis-a-vis Russia.

For example, Ukraine’s first president, Leonid Kravchuk, moved immediately after
Ukraine regained independence to build strong relationships with the West. When he could
not reach agreement with Moscow on the terms for the elimination of the strategic nuclear
weapons on Ukrainian territory, he involved the United States. The resulting trilateral
process successfully brokered a deal in early 1994.

President Leonid Kuchma, who took office in July 1994, established a strategic partnership
with the United States, concluded a partnership and cooperation agreement with the
European Union, and agreed to a distinctive partnership with NATO. As Ukraine’s
relations with the West strengthened, Moscow softened its approach toward Kyiv. In May
1997, Ukraine and Russia resolved the long-standing issue of basing rights for the Russian
Black Sea Fleet in Crimea on terms acceptable to Kyiv, and signed a bilateral treaty that
incorporated a clear and unambiguous recognition of Ukraine’s sovereignty and territorial
integrity—something Ukrainian officials had sought since 1991.

President Victor Yushchenko assumed office in 2005 following the Orange Revolution.
While seeking stable relations with Moscow, he made no secret of his desire to integrate
Ukraine fully into institutions such as the European Union and NATO. Kyiv opened
negotiation of an association agreement with the European Union and asked for a NATO
membership action plan. Other Yushchenko policies—including expanded use of the
Ukrainian language, seeking to have the Holodomor recognized as genocide, and support
for Georgian President Saakashvili—plus disputes over gas purchase contracts further
angered Moscow. Relations between the two countries hit a low point in 2009. But the
president failed to build elite or public support for his course; many Ukrainians grew
concerned over the downturn in relations with Russia.

Mr. Yanukovych’s Foreign Policy

Victor Yanukovych became Ukraine’s fourth president in February 2010. He believed that
“normalizing” relations with Russia should be his first foreign policy priority.

President Yanukovych met with Russian President Medvedev in Kharkiv less than two
months after taking office. At the meeting, the Ukrainians agreed to extend the Black Sea
Fleet’s basing lease for an additional 25 years. In return, Russia’s Gazprom agreed to
reduce the price that it charged Ukraine for natural gas by $100 per thousand cubic meters
for the remainder of the multi-year gas contract signed in 2009. Mr. Yanukovych and other
Ukrainian officials praised the arrangement for significantly reducing Ukraine’s energy
costs, though independent energy experts question whether Kyiv might not have negotiated
a better deal, perhaps without having to extend the Black Sea Fleet’s lease. The
government rammed the agreement through the Rada (parliament) within just a few days of
signature and with no substantial parliamentary discussion, despite opposition by the
Rada’s foreign affairs, European integration and national security committees.

At the same time, Kyiv dropped other policies that had generated Russian complaints: it
downgraded the program to promote use of the Ukrainian language, ended the campaign to
get the Holodomor recognized as genocide, and toned down relations with Georgia. While
expressing interest in maintaining cooperative relations with NATO, the Yanukovych
government made clear that it sought neither membership nor a membership action plan.
With these policies, Kyiv swept the bilateral agenda with Moscow clear of most issues that
the Russians had considered problematic.

Even before the Kharkiv meeting, however, Ukrainian officials indicated that, while their
first foreign policy priority was repairing the relationship with Russia, Kyiv planned to do
so in the context of an overall policy that pursued balance between Ukraine’s relationship
with the West and that with Russia. Senior Ukrainian officials made clear that Ukraine
remained very interested in concluding an association agreement, which would include a
deep and comprehensive free trade arrangement (FTA), and a visa facilitation agreement
with the European Union as the vehicles to strengthen Ukraine’s integration into Europe.

Ukrainian officials also indicated that they wanted a robust relationship with the United
States. By all accounts, President Yanukovych was delighted with the opportunity that he
had for a bilateral meeting with President Obama on the margins of the April 2010 nuclear
security summit in Washington.

One could see Kyiv’s outreach to the West and effort to strike a balanced foreign policy in
several developments in May and June 2010. The Rada voted overwhelmingly to approve
the annual plan for military exercises on Ukrainian territory, most of which involved
NATO forces. Ukrainian officials ruled out the possibility of joining a customs union with
Russia, Belarus and Kazakhstan, as that would be incompatible with an FTA with the
European Union. Kyiv declined to join the Russian-led Collective Security Treaty
Organization, which Moscow billed as a Eurasian counterpart to NATO.

Western diplomats in 2010 also reported that the Ukrainian government was doing its
homework to prepare an association agreement and FTA with the European Union in a
more serious manner than had been the case during the Yushchenko presidency. A number
of Western diplomats expressed the view that President Yanukovych wanted to be seen as
the one who “brought Ukraine into Europe.”

Other reports suggested that senior Ukrainian officials were becoming unhappy with
Russia’s policies. For example, Ukrainian officials questioned why Moscow continued to
pursue the South Stream gas pipeline, which would run along the Black Sea bottom and
circumvent Ukraine, when the Ukrainian gas transit system had considerable excess
capacity. As the Russians had no new gas to flow into South Stream, the pipeline, if
constructed, would only divert gas from pipelines through Ukraine.

Kyiv’s frustrations grew in 2011 as senior Ukrainian officials asserted that the price for
Russian gas—even with the Kharkiv discount of $100 per thousand cubic meters—was too
high and “unfair.” Gazprom showed no sign of budging. Ukrainian complaints increased
at the end of the year, and Kyiv informed Gazprom that it would import only 27 billion
cubic meters of gas in 2012. Gazprom officials responded that Ukraine had a “take or pay”
contract and was obligated to take—or in any case pay for—41.6 billion cubic meters.
These issues are currently unresolved. Press reports in December suggested that the
Ukrainians were considering plans that would give Gazprom significant control of the
Ukrainian gas pipeline system. Gazprom has long coveted Ukraine’s gas transit
infrastructure, but there likely would be significant resistance in Kyiv to ceding control.

Democratic Regression

Mr. Yanukovych was elected president in 2010 as the result of a process that domestic and
international observers found to be free, fair and competitive. Ms. Tymoshenko, who lost
in the run-off round by about three percent of the vote, briefly challenged the result but
offered no compelling evidence of major fraud. Western governments quickly recognized
the result, which was Ukraine’s fifth consecutive nationwide election following the Orange
Revolution to win plaudits from election observers.

Unfortunately, questions soon arose about the Yanukovych government’s commitment to
democratic principles and practices. Over the course of 2010 and 2011, concern grew
about the government’s authoritarian tendencies. Some of the most troubling examples:

.
Widespread reports began to emerge in spring 2010 of inappropriate activities by the
Security Service of Ukraine (SBU), including approaching university officials for
information and reporting on students who had taken part in anti-government protests.
SBU officers also reportedly approached non-governmental organizations to seek
information on their activities.
.
On September 30, 2010, the Constitutional Court of Ukraine invalidated the changes to
the constitution approved by the Rada in December 2004, after the replacement of four
judges who opposed the decision by four new judges who supported it. The result was
to revert to the constitution that had been in effect prior to the Orange Revolution,
which gave the president significantly stronger powers and weakened the authority of
the Rada. The European Commission for Democracy through Law (Venice
Commission) issued a report the following December which raised numerous questions
about the Constitutional Court’s action. The report noted “it is clear that a change of
the political system of a country based on a ruling of a constitutional court does not
enjoy the legitimacy which only the regular constitutional procedure for constitutional
amendment and preceding open and inclusive public debate can bring.”
.
Ukraine held nationwide local elections in October 2010. Observers found significant
flaws, and both the European Union and U.S. government expressed concern. The
Congress of Local and Regional Authorities of the Council of Europe observer group
issued a report in March 2011 noting concern over “a newly adopted local election law
which created politically unbalanced electoral commissions, discretionary registration
of candidates and overly complicated voting and counting procedures.” The report
concluded with the assessment that “overall, the local elections of 31 October 2010 in
Ukraine met neither the standards that it wished to see, nor the standards set by the
presidential elections [in Ukraine] in January and February 2010.” The conduct of
these elections raises concern about the Rada elections to be held in autumn 2012.
.
Attracting the most attention, former officials who served in the cabinet under Ms.
Tymoshenko have been arrested on charges that appear, to most observers, to be
politically motivated. Among those arrested have been former Interior Minister
Lutsenko, former First Deputy Justice Minister Korniychuk, former Acting Minister of
Defense Ivashchenko, former First Deputy Chairman of Naftogaz Ukrainy Didenko,
former Head of the State Customs Service of Ukraine Makarenko and former Economy
Minister Danylyshyn (Mr. Danylyshyn sought and received political asylum in the
Czech Republic). Then there is the case of Ms. Tymoshenko herself. She was charged
in December 2010 with abuse of state power stemming from her conclusion of the 2009
gas purchase contract with Russia. Her trial began in June 2011, and she was jailed in
August for disrupting courtroom proceedings. In October, she was convicted and
sentenced to seven years in prison—a verdict immediately condemned by the United
States, European Union, most major EU member states and Russia. The Parliamentary
Assembly of the Council of Europe, in a report issued in January, criticized the charges
against former government officials as amounting to “post facto criminalization of
normal political decision-making.” Although Ukrainian officials maintain that these
arrests were legitimate and do not represent selective prosecutions, no comparable
members of the current government have been arrested or charged, despite the general
view that corruption has increased significantly under Mr. Yanukovych.

In 2006 Freedom House rated Ukraine as the first post-Soviet state other than a Baltic
nation to achieve a “free” ranking. In January 2011, given the democratic problems within
Ukraine, it became the first post-Soviet state to lose the “free” ranking when it was found
to be only “partly free.” Freedom House reaffirmed that ranking last month.

Democratic Regression and Ukraine’s Relations with the West

The authoritarian tendencies within Ukraine have affected Kyiv’s relations with the West.
European and U.S. officials have long expressed concern about democratic regression,
including warning senior Ukrainian officials as early as January 2011 not to carry forward
the charges against Ms. Tymoshenko, whose case has come to epitomize the problem of
selective application of the law within Ukraine.

Following her jailing in August, some deputies in EU member-state parliaments stated that
they would oppose ratification of the association agreement and FTA with Ukraine unless
Ms. Tymoshenko was released. This is no surprise. The European Union has long
regarded commitment to democratic principles as an important element of the association
agreement process. In September 2011, Swedish Foreign Minister Bildt, EU
Commissioner for Enlargement Fuele and European Parliament member Brok had a
lengthy meeting with President Yanukovych and warned him of the damage that the
Tymoshenko case was doing to EU-Ukrainian relations.

The Rada passed up an opportunity to end the case in October when it examined the
Criminal Code. Despite suggestions that it might annul the article on which the charge
against Ms. Tymoshenko was based, it did not. Days later, the court convicted her. The
European Union responded by postponing a planned Yanukovych visit to Brussels.

EU officials continued to state that Ms. Tymoshenko should be released and allowed to
return to normal political life. In November meetings with President Yanukovych,
Lithuanian President Grybauskaite and Polish President Komorowski reiterated warnings
that Ms. Tymoshenko’s imprisonment would damage EU-Ukraine relations and prevent
signature of the (now completed) association agreement and FTA at the planned December
EU-Ukraine summit in Kyiv.

Although a number of European countries reportedly favored canceling the summit, EU
President Van Rompuy and EU Commission Head Barrosso went to Kyiv and held a short
meeting with President Yanukovych. They signed no agreements and made clear that
signature would depend on Ms. Tymoshenko’s situation.

Thus, at the beginning of 2012, EU-Ukraine relations are at a standstill. It is not clear what
will happen with the association agreement and FTA, which were to provide the basis for a
new stage in the relationship between Brussels and Kyiv.

U.S.-Ukrainian relations are at a quiet point. Washington has few major issues on its
bilateral agenda with Kyiv, reflecting the fact that many of the problems that troubled the
relationship earlier have been resolved. More broadly, given everything else on the foreign
policy agenda, Ukraine barely registers on the radar. Ukrainian officials have over the past
18 months actively sought to arrange meetings for President Yanukovych with President
Obama or Vice President Biden, but without success. The lack of enthusiasm to meet with
Mr. Yanukovych undoubtedly reflects the U.S. government’s critical attitude toward the
democratic developments that have taken place the past two years in Ukraine.

The Risk to Kyiv

Democratic regression most destructively sets back the ability of the Ukrainian people to
have a free, fair, robust and competitive political system. It also has a destructive impact
on Mr. Yanukovych’s professed foreign policy.

Democratic backsliding puts at risk Ukraine’s relations with the West, in particular with the
European Union. As the EU President has indicated, the European Union does not intend
to proceed with signature of the association agreement and FTA until political
circumstances within Ukraine change. Even were it prepared to do so, the association
agreement and FTA must be approved by all 27 EU member states, and a number of
deputies in EU member-state parliaments have already stated that they would oppose
ratification so long as Ms. Tymoshenko remains in jail.

Moreover, given the current difficulties within the European Union, such as the eurozone
crisis, a number of member states believe that the EU’s attention should be focused
internally and that the European Union should slow the pace of its engagement with
neighboring states, particularly those which say they aspire to become EU members. For
those EU member states, democratic regression within Ukraine offers a handy reason to
justify slowing down the pace of EU relations with Kyiv. Even Kyiv’s traditional
advocates within the European Union—such as Poland, Lithuania and Sweden—appear to
be flagging in their support for Ukraine.

Mr. Yanukovych’s internal policies not only pose a major impediment to his goal of
drawing closer to the European Union, they also endanger his goal of having a balance
between Ukraine’s relations with the West and with Russia. Although Kyiv sought to
repair its relations with Moscow in 2010, the two countries’ interests simply diverge on
some issues. Take natural gas: a lower price for Ukraine means less revenue for Gazprom.
Likewise, construction and operation of the South Stream pipeline would reduce the flow
of gas through Ukrainian pipelines. Russian Prime Minister and presumptive President
Putin has called for creation of a Eurasian Union to serve as a counterpart to the European
Union. It is not exactly clear what the Eurasian Union might be in practice—and few other
post-Soviet states have expressed enthusiasm for the idea—but it is almost certain that one
of Mr. Putin’s goals is to increase Russian influence in the post-Soviet space.

With weaker relations with the West, Kyiv will find that is has less room for maneuver in
its dealings with Moscow. Tough negotiations will likely become even more difficult. Mr.
Yanukovych only has to look north to Belarus and what happened to President Lukashenko
once he had burned his bridges with the European Union and the United States following
the December 2010 crackdown on opposition leaders and demonstrators. Facing a dire
economic situation and with no hope for help from the West, Mr. Lukashenko struck a deal
with Moscow that secured a lower price for gas and a loan from Russia—at the price of
surrendering control of the Belarusian gas pipeline system to Gazprom.

It is not clear why Mr. Yanukovych is putting himself and Ukraine in this position. He has
regularly expressed a desire for closer relations with the European Union and a balanced
foreign policy. He may be allowing personal hostility toward Ms. Tymoshenko and a
desire to sideline her politically to dominate his decisions. Ironically, over the past year,
the government’s actions against Ms. Tymoshenko have focused public attention on her,
and her poll ratings and those of her party have increased significantly.

Mr. Yanukovych may also calculate that the European Union and the United States will
overlook his democratic regression and accept Ukraine without his having to adjust his
domestic policies, believing that the West does not want to see Ukraine drift closer to
Moscow’s orbit. That would reflect a fair measure of wishful thinking and overestimate
the geopolitical importance that the West currently attaches to Ukraine.

U.S. Interests and U.S. Policy

Since the early 1990s, the United States has supported Ukraine’s development as a stable,
independent, democratic state, with a robust market economy and growing links to the
European and trans-Atlantic communities. Such a Ukraine is in the U.S. interest as it
would contribute to the goal of a wider, more stable and secure Europe. It could be—and
has been—an important partner in addressing critical questions such as proliferation
challenges. The nuclear question, which dominated U.S.-Ukrainian relations in the early
1990s, has been resolved as the nuclear weapons systems that were in Ukraine have been
eliminated and Kyiv has agreed to transfer its small stock of highly-enriched uranium.

Over the past two decades, the United States has provided several billion dollars in
assistance to Ukraine to promote democratization, economic reform and the elimination of
the strategic nuclear systems and infrastructure that Kyiv inherited following the end of the
Soviet Union. The United States has led in shaping a strong partnership between NATO
and Ukraine and has encouraged the European Union to deepen its relations with Ukraine.

The U.S. interest has not changed. However, the circumstances within Ukraine have, and
the Ukrainian government is moving in the wrong direction. On democracy, it is walking
back the gains that the Ukrainian people have made over the past 20 years, particularly in
the period of 2005-2009. The West cannot and should not ignore that.

The U.S. government’s priority with regard to Ukraine now should be to encourage the
Ukrainian government to make the right choices regarding the country’s democratic
development. This means releasing Ms. Tymoshenko and allowing her to return to normal
political life. But it does not end with Ms. Tymoshenko. The Ukrainian government needs
to end its manipulation of the judicial system for political purposes against other members
of the opposition. It should rein in agencies such as the Security Service of Ukraine. And
it should work with the broad political spectrum to ensure that the upcoming autumn Rada
elections are free, fair and competitive.

To promote this objective, the U.S. government should, first of all, continue to underscore
to Kyiv U.S. concerns about democratic regression and continue to remind the Ukrainian
leadership that its internal political policies have a negative impact on its relationships with
the United States and the West. Ambassador John Tefft and the U.S. Embassy in Kyiv are
working hard to convey this message. Washington should reiterate it as often as possible,
including when Senate and Congressional delegations visit Ukraine.

Second, the United States should keep the door open for a more positive relationship with
Ukraine should Kyiv heed the message on democracy. A Ukraine that returns to the
democratic path should be fully welcome in the European and trans-Atlantic communities.

Third, the United States should coordinate closely with the European Union so as to
maximize the impact of Western policy on decisions by Mr. Yanukovych and the Ukrainian
leadership. The joint letter sent to President Yanukovych last September by Secretary of
State Clinton and EU High Representative for Foreign Affairs and Security Policy Ashton
provides just such an example of coordination between Washington and Brussels. It is
especially useful for Washington to coordinate with the European Union now, as the
European Union may be better placed to influence thinking in Kyiv.

What do these policies mean in practice? As one example, the Ukrainian leadership greatly
desires high-level contact with Washington, which gives it a degree of political legitimacy.
Mr. Yanukovych would dearly appreciate an invitation to the White House or the chance to
host President Obama in Kyiv. The U.S. government should continue what appears to be a
de facto policy of minimizing high-level meetings with Mr. Yanukovych. U.S. officials
should inform Ukrainian officials that, as long as Kyiv imprisons opposition leaders and
regresses on democracy, no meetings at the highest level will be possible.

As a second example, Ukraine’s credit line with the International Monetary Fund is
currently suspended, because Kyiv has failed to meet the conditions of the IMF loan. In the
past, the U.S. government has on occasion weighed in with the IMF to support a more
lenient approach with Ukraine. Given the democratic regression in Ukraine, now would
not be the time for Washington to take such an approach with the IMF.

This approach does not mean freezing ties across the board. Normal diplomatic interaction
should continue at most levels. The target should be the most senior leadership in Kyiv,
those who are responsible for Ukraine’s democratic regression.

As for assistance programs, the U.S. government should carefully consider its priorities,
especially as budget resources for Ukraine will be limited. U.S. assistance should aim to
sustain civil society in Ukraine, which has made dramatic gains over the past 20 years. In
this context, exchange programs that bring Ukrainians to the United States and Europe can
play a major role. The U.S. government should also continue assistance programs to
promote energy security, so that Ukraine can become less dependent on imported energy.

It may be time for U.S. and EU officials to consult as to whether it is appropriate to
consider lists of Ukrainian individuals who would be denied visas to visit the United States
and EU member states. Even the threat of this could send a forceful message to Kyiv and
have a powerful effect on President Yanukovych and the elite around him.

This is not a call for the type of isolation that the West has applied to Belarus. Ukraine has
not yet regressed to that point. But the United States and European Union should seek
effective ways to disabuse Mr. Yanukovych of the notion that he can pursue a more
authoritarian course at home without repercussions for Kyiv’s relations with the West.

Crystallizing a Choice

Some Ukrainian officials likely will warn that this kind of approach by the United States
and European Union will cause Ukraine’s leadership to turn toward Russia. Western
officials should not be taken in by this. If Ukraine truly wants to join Europe, then its
leadership must accept the democratic values that prevail in Europe. If the leadership is not
prepared to adopt such values, then how can Europe and the West integrate Ukraine?

Moreover, Kyiv does not wish to fall too closely into Moscow’s orbit. Mr. Yanukovych
does not want to compromise Ukrainian sovereignty; he wants to be the leader of a fully
independent state. The Ukrainian elite and public likewise overwhelmingly support an
independent and sovereign Ukrainian state. For the Ukrainian oligarchs—who control so
much of the Ukrainian economy—the Russian model holds little appeal.

The overall goal of U.S. and European Union policy thus should be to crystallize in Mr.
Yanukovych’s mind the following choice. He can have a more authoritarian political
system, more difficult relations with the West, and a greatly weakened hand in dealing with
Russia, or he can return to a more democratic approach and have a stronger relationship
with the West and a balanced foreign policy. In the end, Mr. Yanukovych has reasons to
opt for the latter course. The West should face him with the choice as clearly as possible.

Thank you for your attention.]]> Eugenia Tymoshenko asks Americans 'to speak out, loudly and clearly' for human rights in Ukraine http://www.kyivpost.com/news/opinion/op_ed/detail/121742/ OP-ED Thu, 02 Feb 2012 22:44:04 +0200 Editor's Note: The following is testimony before the U.S. Senate Foreign Relations Committee in Washington, D.C., by Eugenia Tymoshenko Carr, daughter of imprisoned ex-Prime Minister Yulia Tymoshenko.

Testimony
Eugenia Tymoshenko Carr
Before the Senate Foreign Relations Committee
Ukraine at a Crossroads: What's at Stake for the U.S. and Europe?
Wednesday, February 1, 2012]]>
Thank you Senator [Jeanne] Shaheen. Thank you for granting me, a citizen of Ukraine, the privilege
of coming here to speak to the Senate and through you, to the people of the United States. It
is such an honor for me to be in this hallowed place, but I know that you are truly honoring
my country and my mother by inviting me here to discuss with you this moment of grave
danger for Ukraine’s liberty, and our independence as a nation.

I am very glad to see that you are from New Hampshire, Senator Shaheen. My mother has
always admired your state motto: “Live Free or Die.”

I hardly know where to begin in discussing what is happening in Ukraine, given the daily
threats to what is left of our democracy. Perhaps I ought to begin with the sad and amazing
words taken from the internet petition to free my mother, filed by Bishop Paul Peter Jesep,
where he quoted the French thinker Montesquieu, and it says, “There is no greater tyranny,
than that which is perpetrated under the shield of law and in the name of justice.”

My mother has been illegally imprisoned, maltreated and humiliated for six months by the
regime which is trying to break her. This didn’t break her. Her spirits are high, I can say that
emphatically, but her health is failing. When I see her I must lift her from her bed; she can
barely walk. Yet she still works, and not only to fight all the legal mud that is being thrown
at her, but to unify all of Ukraine’s democratic forces to challenge President Viktor
Yanukovych and the repressive clan that rules with him.

My mother went into politics and put on her small shoulders the great task to free her country
of injustice, absence of rule of law and corruption left from Soviet past, so that we, young
Ukrainians, would not need to devote our lives to do the same. She, unlike many young
entrepreneurs in newly independent Ukraine, managed to build a big, successful corporation
that helped restore the lost production and trade ties between ex-Soviet states. By doing that
she uncovered most major failures of the old system. One of the major failures was and now
remains - corruption. She chose to go against the system, refused to be part of corrupt
schemes and, ended up facing the system alone, letting it destroy her business, putting her,
her family and friends behind bars and again on falsified charges.

Ten years ago, when my mother was Vice Prime Minister for the Energy Sector, she
managed to remove corruption in oil, electricity and gas trading and restored financial
functioning in this sector. When the country’s leadership resisted her reform efforts she
organized massive protest movements. These protests later grew into the Orange revolution,


which she helped to lead and supported a person for president she believed would lead the
country into democratic victory.

While Prime Minister even though she had limited control but big responsibilities, she fought
for major reforms and country’s well-being. After she had removed the gas trading
monopolist RosUkrEnergo she became enemy number one, to those who were trying to
monopolize the energy market and who are in power now. She ended up illegally imprisoned,
convicted and tortured for not playing by the rules of their game, not complying with their
orders that were detrimental to Ukraine.

Her cell in Kachanivska prison outside of Kharkiv, far from her family and friends, is not a
dungeon you may be relieved to know. But the Yanukovych regime does not need to use
medieval surroundings to get medieval results. Instead, they are using the modern techniques
of sleep deprivation and intimidation to try and break her. They won’t succeed. They are able
to deny her a restful night’s sleep because her cell is kept lit and she is filmed and watched 24
hours a day. Lately, they have introduced a close up surveillance camera so that they can see
what she is writing to me, to her husband, to her supporters and to the world.

They say it is done for her protection but I doubt it. When she fell unconscious in her cell due
to a sudden mysterious loss of blood pressure, no help came, as her cellmate waited for 20
long minutes for a doctor to come in, who didn’t even call an ambulance. She could’ve died
that night. We found out about the incident three days later from her and her cellmate. Later,
they would “lose” the video archive and would make her cellmate re-write her witness
statement.

You will not be surprised to learn that since her incarceration and the constant pressure the
regime has placed on her, my mother has developed serious health problems, which have
gone untreated. The regime will say that this is my mother’s own choice. But can anyone
seriously expect her to trust her physical well-being to a regime that directs doctors to falsify
their diagnoses. Her only request is to be examined by her own doctors, or independent
doctors from abroad. That does not seem unreasonable. People who keep her behind bars
say: “of course, yes, yes”, then nothing happens. But no one should be surprised by that. As
European leaders have learned all too well over the past year, Yanukovych can’t be trusted to
keep his word.

The intimidation that my mother is enduring comes from the fact that the regime and its
prosecutorial henchmen keep piling criminal charge upon criminal charge, so that my mother
and her small team of lawyers are simply overwhelmed. Against all legal norms, she is
interrogated in her cell, sometimes for 12 or more hours consecutively. She is given
inadequate time to review the documents that will be used against her in the next court
hearing. It was clear at the first trial and at the appeal court that my mother was convicted
before the evidence was heard. She was even denied a closing statement and evidence that
would have proven her innocence was not admitted. Over 100 other motions made by the
defence team were denied.


I have no doubts that the verdict against my mother was sought and approved by President
Yanukovych. She is, according to recent polls, his main political opponent and more popular
than him.

But I don’t want you to think that this is only about my mother. It is not. Others are being
repressed and unjustly imprisoned.

Her former colleague, Minister of Interior Yuri Lutsenko has been imprisoned for over a year
on charges that would be laughable if they were not so tragic. He is charged with hiring a
driver past the retirement age and of spending $2000.00 over budget to mark Ukraine’s
national police day. I don’t know American political practice very well, but I can’t imagine a
former cabinet minister be jailed for over a year without trial on such charges.

And there are others. The son-in-law of a Supreme Court Chairman was arrested on the day
his wife gave birth, in order to intimidate that justice into resigning. Former Acting Minister
of Defence Valery Ivashchenko has been imprisoned for almost two years, with his health
severely deteriorating. They are all repressed and humiliated because of their political views.
They courageously stood up to the regime and the injustice and fear it is sowing.

Unfortunately Ukraine turns into an authoritarian regime with leaders of the opposition sitting
in jail.

What we are witnessing in Ukraine is the continuous abuse of the criminal justice system.
Politically motivated prosecutions of former government officials, civil society activists and
prosecutions of human rights defenders ignore the rule of law. I believe that the current
situation, as described in the recent European Parliament and Parliamentary Assembly of the
Council of Europe resolutions, requires urgent action.

To say that prosecution of the opposition is just a problem of the outdated legislation is to
miss the obvious. It's really not so much the law at fault but how it is enforced. Ukrainian
authorities cynically blame the law while everyone knows that the prosecution system and the
judiciary is under the complete control of the governing party via the so called High Council
of Justice, which is controlled by President Yanukovych. No law enforcement agency dares
to make a move to prosecute the political opposition without instruction from the President.

Numerous legal infringements of the European Convention of Human Rights were listed and
explained in three reports of the Danish Helsinki Committee, which was commissioned by
the EU, to find the truth in the political, so-called “criminal” cases. This shows a systematic
prosecution of the opposition or people close to it. And my mother is the main target.

What we are witnessing in Ukraine is such a twisting of the rule of law that it is impossible to
distinguish illegality from legality, hard to see the line between law and abuse of law. My
mother is imprisoned under an old Soviet Era Criminal code of 1960, that criminalizes
political decisions. Even as out-dated as they are, they have been applied illegally in her case.
It is important to know that there was no accusation or evidence introduced in the court that
my mother personally gained from negotiating the gas deals and ending the European gas
crisis in January 2009. Two letters filed by acting Minister of Justice, Mr. Lavrynovich and
ex-Prosecutor General, Mr. Medvedko, state the same. The state gas trading company
“Naftogas” has recently issued a statement, that calculation of losses that my mother is
charged with, was done under severe pressure from the General Prosecutor’s Office.

Politically motivated charges of which my mother was found innocent a decade ago have also
been reopened, with no legal basis. Past Supreme Court rulings are being ignored. The
statute of limitations is also ignored, as some of the charges now being brought against my
mother for her business activities stem from 15 and 16 years ago. They have been re-opened
for only one reason, to destroy her reputation in the EU and the USA.

These new cases can take care of a few other problems for Yanukovych’s government. She
will stay in jail despite the European Court of Human Rights’ decision, if it is in her favour.
They put more psychological pressure on her by prosecuting and charging her husband, her
father-in-law and ex-colleagues.

Yanukovych and his team are trying to do everything possible to charge my mother with
corruption. They hope the smallest hint of corruption will confuse Western politicians and
make them turn their back on Ukraine and on her. And that’s what Yanukovych’s
administration is trying to achieve. They spent millions of US dollars hiring American audit
companies in hoping they can find traces of her corruption. Hundreds of her ex-co-workers
were summoned for questioning. They were looking hard, but never found anything and they
never will.

The current government’s activities are not only ruining the image of Ukraine, and Ukraine
as a united nation, but also the profitable sectors of the economy, that become paralyzed and
eventually abandoned, when the rule of law is ignored. Successful people prefer to leave
Ukraine and our population is declining.

Indeed, not even our constitution has survived Yanukovych’s contempt for law. To grab
more power for himself, he simply junked it. His first breach of the Constitution, was signing
a shameful Kharkov agreement with Russia which was nothing but a concession of Ukraine’s
national interests. The lease of Sevastopol naval base to Russia was supposed to give Ukraine
a major discount on Russian natural gas, but at the end of the day Yanukovych got a price
$100 higher than my mother did in 2009. By this standard, he and not my mother should be in
prison if the law was applied equally.

I know that Ukraine must seem like a faraway place, and that our problems must also seem
distant from the concerns of Americans at this difficult time for America. But just as no man
is an island unto himself, no democracy is an island. When one nation’s is allowed to be
hijacked, all democracies are threatened. Ukraine exists in a fragile neighbourhood, where
war broke out just a few years ago across the Black Sea in Georgia.

I am here today to answer your questions, Senator Shaheen, but also to plead that America do
all that it can to preserve democracy in my country. My mother’s plight has united many
great, strong nations and amazing people, true heroes of our time who are trying to get her
and other political prisoners out of jail. We are hoping for your support. It is paramount for
Ukraine to have free and fair elections this fall, but it would be impossible without major
opposition leaders.

I know my mother will not let Ukraine fall back into the Soviet past. She is strong enough to
do it and to win the elections if she is allowed to run. She has already succeeded in bringing
fractioned opposition into one united front.

The enemies of democracy and freedom should not be welcome in a democratic society
unless they correct their mistakes. I ask you to consider all possible ways to influence them
and to explain to them the consequences of their actions. But most of all, I ask you to speak
out, loudly and clearly, so that the people of my country do not feel abandoned and lose hope.]]> Who’s afraid of Tymoshenko? Two Viktors, that’s who http://www.kyivpost.com/news/opinion/op_ed/detail/121732/ OP-ED Thu, 02 Feb 2012 22:00:54 +0200
It’s the two Viktors, of course: Yushchenko and Yanukovych.

Most Ukrainians have very strong opinions about the former prime minister turned political prisoner, but it’s only the two Viktors who’ve let their feelings about her become borderline psychotic.

In the last three years of his presidency, 2006 to 2009, Yushchenko abandoned whatever reform aspirations that may have guided him during the Orange Revolution and concentrated almost exclusively on squabbling with and attacking Tymoshenko, never passing up an opportunity to denounce her, regardless of whether his audience was listening or cared.

I personally witnessed him bore two roomfuls in New York with hour-long attacks on Tymoshenko: the first group consisting of some 50 potential American investors who wanted to hear about Ukraine’s economy; the second, of some 100 Ukrainian-Americans who wanted to hear about Ukraine’s culture.

Just as Yushchenko let his obsession with Tymoshenko define, and ultimately destroy, his presidency, so too has Yanukovych. After she lost the presidential election of 2010, Tymoshenko was washed up as a national politician. All Yanukovych had to do to keep her that way was to ignore her.

Instead, by persecuting Tymoshenko, by jailing her at precisely the time that he’s ostensibly courting Europe and hoping to negotiate a gas deal with Russia, he’s given her the ethical stature she never had, undermined his standing at home and abroad, sabotaged Ukraine’s attempts to integrate more closely with the European Union, and provided the Kremlin with additional reasons for stonewalling Kyiv. Like that other Viktor, this one has let his obsession with Tymoshenko define, and ultimately destroy, his presidency.

So what gives? Although Yanukovych has moved toward many of Yushchenko’s positions in the last year, the fact is that the two are profoundly different presidents. Yushchenko was, despite his multitudinous faults, significantly more pro-democratic, pro-Ukrainian, and pro-market than the unabashedly anti-democratic, anti-Ukrainian, and anti-market Yanukovych.

They are also very different politicians, with Yushchenko preferring the safety of a podium and Yanuovych preferring the safety of a designer suit.
After [Yulia] Tymoshenko lost the presidential election of 2010, she was washed up as a national politician. All Yanukovych had to do to keep her that way was to ignore her.

Why would two such different policymakers share the same fear and loathing of Tymoshenko?

I suspect it’s because they’re the same kind of guys. It’s not Tymoshenko the politician they hate, but Tymoshenko the too-strong woman who knows they’re both pushovers and treats them as such.

After all, Yushchenko knows how to deal with male enemies. He bores them to death or, as in the case of Yanukovych, cuts a deal with them.

Yanukovych’s approach is even simpler, and usually involves a sock to the jaw. Neither approach works with Tymoshenko. She can run rhetorical circles around Yushchenko and knock Yanukovych off his leaden feet.

Tymoshenko, as the strong woman of Ukrainian politics, has exposed both fellas for the vain weaklings they really are. When Yushchenko lost his charms after being poisoned and disfigured in the summer of 2004, Tymoshenko not only threatened his authority and standing as president.

She also threatened his manhood and his sense of self as a ladies’ man. Moreover, she didn’t fall for his act precisely because she wanted what he only half-wanted: power. And she never failed to pursue it, for better or for worse, while Yushchenko never failed to let it slip out of his fingers.

Yanukovych is an even more transparently self-doubting male who is also burdened with the sense of inadequacy that comes from being a hoodlum-turned-honcho. Hence the big mouth and big talk and big fists.

Hence the absence of women in his prime minister’s cabinet. When wife Ludmilla went off the deep end during the Orange Revolution, Yanukovych could respond only by banishing her to Donetsk.

When political opponent Yulia claimed that he was a thug and a crook during the 2010 presidential campaign, he could respond only by banishing her to a jail. Small wonder that his leading female cheerleader, Hanna Herman, gets big bucks for her efforts.

Self-confident politicians and self-confident men would have treated Tymoshenko as just what she was—a strong-willed, tough, and ruthless politician—regardless of her sex. But neither Yushchenko nor Yanukovych can, evidently, see past that. And that obviously drives both fellas crazy, to the point of preferring political suicide to rational policymaking.

Tymoshenko’s inevitable comeback will be a traumatic defeat for both Viktors. When the queen bee returns, expect both of them to take up bee-keeping full-time.

Alexander J. Motyl is a political science professor at Rutgers University in Newark, New Jersey. His blog is published by World Affairs Journal here at http://www.worldaffairsjournal.org/blog/alexander-j-motyl/taxing-ukraine. It is reprinted with permission of the World Affairs Institute. Copyright 2012.



×èòàéòå îá ýòîì íà www.kyivpost.ua]]> Edward Chow: Ukraine's energy system 'optimized for corruption' http://www.kyivpost.com/news/opinion/op_ed/detail/121731/ OP-ED Thu, 02 Feb 2012 21:56:18 +0200 Editor's Note: The following is testimony given to the U.S. Senate Foreign Relations Committee on Feb. 1 by Edward C. Chow.

Senate Foreign Relations Committee
Subcommittee on European Affairs Hearing
“Ukraine at a Crossroads: What’s at Stake for the U.S. and Europe?”
Feb. 1, 2012

Opening Statement by
Edward C. Chow
Senior Fellow
Energy and National Security Program
Center for Strategic and International Studies]]> my fellow panelist, who served with distinction at the Department of State and
White House, I come to you as a simple oil and gas analyst and practitioner in the
international energy industry for more than 30 years. In the past dozen years, I
have observed the Ukraine energy sector, sometimes up close, and written on the
subject. I had the occasion to advise four separate cabinets of ministers of Ukraine
on energy, including those led by then-prime ministers [Viktor] Yanukovych and
[Yulia] Tymoshenko. It is this experience and knowledge that inform me for today’s
testimony.

I would start off my saying, with your forbearance, that as far as energy is concern
Ukraine – a country which seems perpetually at crossroads – is no longer in that
position. It may have been at crossroads in 2005, right after the Orange
Revolution, when there was a tremendous opportunity to shed its Soviet legacy and
incomplete economic transition; and to embark on a path of energy reform that
could have greatly enhanced its domestic energy condition and improved energy
security for both itself and Europe. However, infighting among the Orange
political forces, including over energy rents, and secondarily insufficient attention
and support from the West extinguished these prospects.

Since then, Ukraine has been on a dangerous path toward energy insecurity, which
has accelerated in the last two years. All the pity as Ukraine has enormous
potential as an energy producer, efficient consumer, and key transit partner for
Russia/Central Asia and Europe.

Until the discovery and major development of West Siberian gas fields in the
1970s, Ukraine was a net exporter of gas to the Soviet Republic of Russia.
Ukrainian gas production peaked at 69 billion cubic meters (bcm) in 1975, which
is almost as much gas as Italy, a country with a much higher population and gross domestic product,
currently consumes every year. Today Ukraine’s domestic gas production has
stagnated below 20 billion cubic meters and it is two-thirds dependent on gas imports from Russia.
Reliance on imports has diminished only because of the dismal performance of the
overall Ukrainian economy, not because of efficiency improvements or increased
domestic production.

I have not met a single Ukrainian or Western geologist who does not believe that
Ukraine has the geologic prospects to greatly increase its domestic oil and gas
production. If proper policies and investment conditions were in place, domestic
gas production can easily increase by 50 percent in a few short years. Together with
energy efficiency improvements, Ukraine can be more than 50 percent self-sufficient in
gas. However, today, Ukraine is the third largest gas consumer in continental
Europe (outside of Russia). It consumes two-thirds as much gas as Germany does,
while its GDP is less than 5 percent of Germany’s.

Ukraine’s oil and gas sector is operated in a totally dysfunctional manner. This, as
they say in this part of the world, is not accident. Various state energy assets have
been hijacked by rent seekers for their private gain. Regulation and pricing are left
deliberately murky in order to benefit private interests. This is not a particular
indictment of the current government of Ukraine. In fact these conditions of
Ukraine’s incomplete transition from its Soviet command economy have remained
through the terms of four different presidents and many more prime ministers and
cabinet of ministers. Franchises on control of energy assets may shift, but the
business model never changed.

In fact, if you were to design an energy system that is optimized for corruption, it
might look very much like Ukraine’s. You would start with a wholly state-owned
monopoly that is not accountable to anyone except the head of the country who
appoints the management of this company. It would operate non-transparently
without being held accountable by shareholders (who might demand legal rights as
owners) or capital markets since its chronic indebtedness is periodically repaid by
the state treasury.

Domestic production would be priced artificially low, ostensibly for social welfare
reasons, leading to a large grey market in gas supply that is allocated by privileged
access rather than by price. Low gas prices suppress domestic production and
energy efficiency improvement, thereby necessitating the import of large volumes
of gas which coincidentally is controlled by the same state monopoly or its chosen
middleman company. The opaque middleman is frequently paid handsomely in
kind, rather than in cash, which allows him to re-export the gas or to resell to high-
value domestic customers, leaving the state company with the import debt and
social obligations.

Similarly Ukraine has eroded its major advantages as a major oil and gas transit
country between Russia/Central Asia and European markets from its geographic
location and Soviet legacy pipeline infrastructure. Ukraine inherited Soviet gas
transit pipelines, which had a nameplate capacity of 175 bcm per year, as well as
ample and ideally located gas storage capacity. Oil transit pipelines also have a
capacity of more than one million barrels per day, linking Russian and Central
Asian oil production with landlocked markets in Central Europe.

Yet today Russian gas transit amounts to less than 100 billion cubic meters from a post-Soviet
average of 120 billion cubic meters and Russia is busy building and planning pipelines that bypass
Ukraine, namely Nord Stream and especially South Stream. When the second line
of Nord Stream is completed by the end of this year, it will bring capacity to 55
billion cubic meters per year. If Russia proceeds next year with South Stream at 63 billion cubic meters by 2016,
it would have bypass pipeline capacity that completely replaces current gas transit
through Ukraine, which represented about 80% of the gas Russia sells to Europe or
20 percent of European gas demand.

This developed because Ukraine has proven itself over the last 20 as an
unreliable transit partner for both Russia and Europe. Successive Ukrainian
governments have tried to use its transit leverage to extract below-market gas
prices from Russia. This persisted even though conditions that facilitated that
essentially barter trade, namely cheap Central Asian gas available to Russia,
disappeared about five years ago. Even when gas prices were low, Naftogaz (the
Ukrainian state company) is chronically indebted to Gazprom, leading to
commercial disputes, regular brinksmanship, and occasional gas cutoffs.

The gas crisis of January 2006 and January 2009 affecting gas supply for Europe at
the height of winter underscored for both the gas producer/shipper and gas
consumers at the end the pipe of Ukraine as a transit vulnerability. Consequently,
even the now famous EU-sponsored Nabucco pipeline proposal is as much a
diversification away from the risks of gas transit through Ukraine as a
diversification from over-dependence on Russian gas supply. Instead of
maintaining and enhancing the reliability of the Ukrainian pipeline system from the
transit revenue it has earned in order to attract higher volumes, Ukraine has raised
serious doubts in the minds of energy producers and consumers

The root causes of Ukraine’s energy insecurity are well known to all, as are their
remedies. They were well documented in an Energy Policy Review of Ukraine
conducted by the International Energy Agency and published in 2006. Successive
attempts have been made by international institutions including the International
Monetary Fund, World Bank, European Union, and U.S. Government to persuade
and support Ukrainian authorities to enact serious energy sector reforms.

These have been met generally by lip service, even as fundamental conditions
continue to deteriorate in the country. It amused me to read that two weeks ago
there was a conference in Kyiv on “Natural Gas and Ukraine’s Energy Future”
conducted by a well-known international energy consulting firm and attended by
senior Ukrainian officials. I dare say that most Ukrainian energy experts could
have written the policy recommendations by themselves without any foreign help –
they have heard them so many times.

These recommendations basically come down to modernizing the business
practices of this large and non-transparent sector of the Ukrainian economy, which
has served as an exclusive playground for Ukrainian leaders for the past twenty
years. This means the end of rent seeking in this sector that leaks billions of
dollars per year; transparent and fair rules of the game for investors in the sector
that do not favor special and politically-connected interests; and above all energy
pricing reform. Assuming the right business conditions, Ukraine possesses
sufficient conventional and renewable energy potential, and scientific and
engineering skills to both increase its domestic energy production and to
significantly improve its energy efficiency.

Foreign investment can also help in this regard. However, to date, foreign
investors have not been met with fair access to geologic data, open and transparent
tender process, or internationally-standard business terms. What small foreign
operators who have ventured into oil and gas production and achieved minor
successes in Ukraine have been met with corporate raids, absence of rule of law,
capricious regulations, and other hostile conditions.

Instead of fundamental reform and the immediate benefits that can be achieved,
this government and its predecessors would rather talk about fanciful projects that
are five years or further away in the future, such as shale gas or other
unconventional gas production, liquefied natural gas imports, and offshore
exploration – none of which can possibly work without fundamental energy
reform.

At best, this is a misplacement of policy priorities. At worst, it is deliberate
misdirection in order to change the topic and divert attention away from current
and future mischief in the energy sector.

For the moment, Russia and Ukraine are supposedly at an impasse in their gas
price negotiations, after the disastrous decision President Yanukovych and his
government made on gas agreement with Russia signed in Kharkiv in April 2010
soon after his ascendency to the presidency. Ironically the Kharkiv agreement
essentially confirmed and locked his government into the terms of the agreement
made by then-Prime Minister Yulia Tymoshenko and Prime Minister Vladimir
Putin in January 2009, the unfairness for which she is currently accused and jailed.

The most likely scenario is an agreement will be reached soon, perhaps before
Russia’s presidential election in March, that cedes partial control and or ownership
of Ukraine’s international gas transit system to Gazprom in exchange for another
so-called discount on gas pricing. Concessions on penetration into Ukraine’s
domestic gas market may also be made to Gazprom and/or its chosen middleman
company.

Despite such an agreement, Russia will likely continue to progress the South
Stream pipeline as important for its own interests or at least hold it in reserve.
Russia may expect to gain full control of Ukraine gas transit system over time, as
Ukraine continues to mismanage its energy sector, as it has already done in Belarus
under rather similar circumstances.

The result of this possible scenario is that Ukraine becomes an energy appendage
of Russia’s. What is then the geopolitical significance for the U.S. and Europe I
leave to my betters on this panel and to subsequent questioning by the
subcommittee, as I have already spoken long enough and prefer to stay within my
competence in energy.]]> Was justice served in Tymoshenko case? http://www.kyivpost.com/news/opinion/op_ed/detail/121730/ OP-ED Thu, 02 Feb 2012 21:53:14 +0200 Viacheslav Pikhovshek writes: Ukraine’s courts have ruled, and no one is above law of the land.]]>
The Parliamentary Assembly of the Council of Europe does not think so. On Jan. 26, it approved a resolution that says that “Articles 364 and 365 of the Ukrainian Criminal Code are overly broad in application and effectively allow for post-facto criminalization of normal political decision-making.”
I am still in favor of the official Ukrainian point of view, and here are my arguments.

Whatever one thinks of articles 364 and 365 of the Criminal Code, it’s perfectly clear that they were never approved especially for Tymoshenko. In fact, the existing Criminal Code certainly was not approved for her personally.

This means that Tymoshenko, before agreeing to take charge of the country as a prime minister, had every opportunity to get familiar with her rights as well as responsibilities that ensue as a result of abusing those rights.

The West demands that we should alter the Criminal Code. But is anyone really entitled to send future politicians a message like this: Go ahead and break the law, but make sure to join the pro-Western opposition beforehand to make sure that they could change the law when it’s time to be held responsible?


Members of the European Parliament in Strasbourg, France, speak on Jan. 18 as T-shirts with a portrait of Ukraine’s former Prime Minister Yulia Tymoshenko are displayed. The shirts read “Free Yulia.” The seven-year prison sentence being served by Tymoshenko has worsened Ukraine’s relations with the West, whose politicians view her conviction as a politically motivated attempt by President Viktor Yanukovych to remove her from politics. (AFP)

The whole political career of Tymoshenko has been a bright example of acting on the basis of political expediency and proving that she is her own law.
For example, on Jan. 24, 2007, the then prime minister publicly announced her decision that the tax and customs authorities were given the right to “not fulfill the court decisions and orders that are illegal a priori.” But, of course, she failed to explain who’s to decide which court decisions and orders fall into this category.

Her aim, which is clearly absolute power, was always to be achieved by any means. But in my opinion, Tymoshenko has to bear responsibility for many of her other actions.

In May 2004, Ukraine faced a scandal related to the statement of Volodymyr Borovko, Tymoshenko’s assistant. In a report to the general prosecutor, Borovko said that “Tymosheko requested that compromising material be collected on [ex-President Leonid] Kuchma, [Prime Minister Mykola] Azarov, [former Presidential Administration head Viktor] Medvedchuk and [President Viktor] Yanukovych, and was prepared to pay $500,000 for it.”

Turchynov claimed that Borovko made the story up, and Tymoshenko said she cannot remember all of her assistants.

I would suggest that as a result of that situation, Tymoshenko can be held responsible for organizing that provocation under an article [of the Criminal Code] that sets responsibility for fabricating false evidence.

Tymosheko could not have known about the abuse during the recapitalization of Rodovid and Ukrprombank. The media have printed what effectively are confessions by Tymoshenko’s former deputy Bohdan Hubsky, who directly accused ex-Deputy Prime Minister Oleksandr Turchynov, the right hand of Tymoshenko, that he doled out money for recapitalization on an ad hoc basis.

An assumption that Turchynov could act irrespective of Tymoshenko’s wishes would be ridiculous. Neither Turchynov nor Tymsohenko commented on the issue.

Finally, what needs to be explained is Tymoshenko’s role in the so-called “flu epidemic” in autumn of 2008. The destiny of 70 billion hryvnias spent on its elimination needs to be explained to the public. This kind of money is not a needle in a haystack.

Tymoshenko has never commented on the issue, while people from her camp accused Zynoviy Mytnyk, a person close to Azarov, of involvement in dubious schemes. He was a deputy health minister under Tymoshenko.

Viacheslav Pikhovshek is a former news editor at 1+1 channel and a former speechwriter for ex-President Leonid Kuchma.]]> Yanukovych is guilty of judicial tyranny, cowardly behavior http://www.kyivpost.com/news/opinion/op_ed/detail/121728/ OP-ED Thu, 02 Feb 2012 21:39:39 +0200 http://www.change.org/petitions/free-yulia-tymoshenko#.

The reason for its creation is simple. “There is no greater tyranny,” the French thinker Montesquieu wrote, “than that which is perpetrated under the shield of law and in the name of justice.” President Viktor Yanukovych has perpetrated tyranny against a political adversary while cowardly hiding behind the law. It has ramifications for all Ukrainians including those who are Yanukovych supporters.

Viktor Fedorovych has mocked justice, compromised democracy and damaged Ukraine’s standing in the world. His self-serving behavior has indefinitely delayed the country’s entry into the European Union. It has undermined Ukraine’s ability to grow its economy and create good paying jobs.

In addition, if Tymoshenko, an internationally recognized leader, can be treated with such vulgar political spitefulness then no one in Ukraine is safe from judicial tyranny.

In the long-term, the misuse of justice enables a corrupt culture to fester long after he’s out of office. Today, Tymoshenko is the victim of political retribution. Tomorrow it may be an ordinary citizen not as well known as Tymoshenko.

So long as Tymoshenko is in prison, no one, including Yanukovych supporters, can be assured of justice. Viktor Fedorovych has co-opted the judiciary, a branch of government that should be fair, impartial, and independent for everyone no matter their politics.

Tymoshenko was indicted, tried, and convicted under a law that by its very nature had no basis in sound legal theory. Assuming, only for discussion purposes, that Tymoshenko did not negotiate a gas deal with Russia beneficial to Ukraine, later punishing her for it suggests that any public official can be put in jail for any perceived misstep. Whether Tymoshenko negotiated the best deal is politically subjective.

If Western democracies used such a legal system they would collapse into chaos. If there is any chance that an elected official can be put in jail for poorly negotiating an agreement then why would anyone want to serve in public office?

Poor performance in office should be determined at the ballot box not a criminal trial.

So long as Tymoshenko is in prison, no one, including Yanukovych supporters, can be assured of justice.


Based on Yanukovych’s support for such an arcane, illogical and Stalin-like law, perhaps it should now be asked: Did the president negotiate the best deal to allow the Russian fleet to stay in the Black Sea? Wasn’t the treaty supposed to be tied to lowering natural gas prices?

Yanukovych complains that Ukraine’s natural gas problems stem from Tymoshenko’s time in office. Instead, they may stem from the last natural gas negotiations that his administration handled.

Three questions arise regarding the agreement negotiated by the Yanukovych administration concerning Russia’s Black Sea Fleet. Was it in the best interest of Ukraine’s sovereignty? Is the lease a fair price? And since it was supposed to be tied to natural gas prices why has no benefit been realized?

Should a criminal investigation be opened into Yanukovych’s handling of the matter? If so, then the flawed theory in doing so would be consistent in the one used against Tymoshenko.

No matter how much time passes , Viktor Fedorovych must be reminded at every opportunity that Tymoshenko will never be forgotten. Complacency or indifference toward this injustice is as egregious as the president’s unethical and immoral behavior. Vigilance must be maintained to free Ukraine’s Iron Lady no matter how long it takes.

It also should be underscored that the petition on behalf of Tymoshenko is about more than her freedom. As in any democracy, strong or fledgling, liberty is never dependent on one person. The issue that confronts Ukraine is much larger than the travesty suffered by Tymoshenko. Democracy cannot survive if its laws are not fair, impartial and grounded in logic and common sense for all citizens.

The “Free Yulia Tymoshenko Petition” http://www.change.org/petitions/free-yulia-tymoshenko# is not only about the gross injustice shown to one individual, but also its potential impact on average citizens. It’s about the kind of Ukraine parents want for their children and grand children.

Would anyone want what happened to Tymoshenko, regardless of whether they like her, happen to them or their children? This is why the petition is important. It’s an effort to stop the tyranny taking hold in Ukraine. Stopping the tyranny benefits all Ukrainians no matter their political views or alliances.

Bishop Paul Peter Jesep is a New York attorney and Metropolitan Myfodii’s U.S. designated spokesperson and government liaison for the Ukrainian Autocephalous Orthodox Church-Kyiv Patriarchate, one of the three major Orthodox churches in Ukraine. The views expressed here are solely his own and in no way reflect those of his church.]]> Vox Populi with Brian Bonner: What could Yanukovych do to signal a better investment climate? http://www.kyivpost.com/news/opinion/op_ed/detail/121726/ OP-ED Thu, 02 Feb 2012 21:27:51 +0200 The Kyiv Post attended the American Chamber of Commerce in Ukraine’s annual members' appreciation reception on Jan. 31 at the InterContinental Hotel. We asked: What could President Viktor Yanukovych do tomorrow to signal a better investment climate?]]> Vox Populi is not only in print, but also online at kyivpost.com with different questions. If you have a question that you want answered, e-mail the idea to kyivpost@kyivpost.com.


Daniel Bilak,
lawyer

“Stop the stealing. I worked inside the government for 10 years. I know how the system works better than most Ukrainians. It’s a rich country and it’s very easy to steal from. Ukrainians have proven themselves amenable to manipulation.”






Ivan Mishch­chenko,
lawyer
“A complete reform of litigation is needed so foreign investors can trust Ukrainian courts. I want the judges to be independent or elected, just like in America.”










Alexandra Globina,
real estate

“Of course, release Yulia Tymoshenko. It’s not fair. He should make some changes with social policy, improve the pensions, so people could be more comfortable in the country. He should improve transparency in lending, documents and ownership.”







Roman Zaika,
insurance broker analyst

“I believe the future of politics belongs to a fresh generation with fresh ideas. Either Sergiy Tigipko or Arseniy Yatseniuk. They came from the old system, but they have a new way of thinking.






Oleksandr Bytsko,
travel agent

“Everybody should live according to the law. Everybody. It’s never happened in my life.”]]> EBA: Agriculture, IT and fast-moving consumer goods show investment promise http://www.kyivpost.com/news/opinion/op_ed/detail/121703/ OP-ED Thu, 02 Feb 2012 16:13:48 +0200
Despite the continuous demand in respective products and services, these three spheres are far from being well regulated and still need some clarity and transparent legislation to function properly.]]> Land and agriculture


Land policy lies at the heart of an active and successful market economy and has a tremendous impact on country’s competitiveness and investment attractiveness. This sphere has always been a pearl and Ukraine’s unique selling point. Completing land reform agenda is impossible without competitive and well-functioning land market. The analysis of the draft law on land market has revealed a number of inconsistencies. The EBA in conjunction with the leading agricultural market players proposed a practical and coherent set of rules aimed at rebalancing land market, land tenure and land tenancy rights. The changes introduced by the lawmakers to the land market regulation set hurdles on the road to installing a healthy and competitive land market and harm agricultural sector development.

This is the only way to balance the rights of all market players, and architect productive and efficient rural market. Importantly, refined law on land market shall help Ukraine boost its agricultural productivity and increase its agricultural sector competitiveness which still lags behind other countries.

IT

In 2011 due to the retention of taxation privileges, the IT (information technology) sector in Ukraine displayed an unprecedented growth of 40 percent. IT companies managed to help Ukraine cross the digital divide by suggesting draft legislation on IT education and support of IT sector, which were supported by the government. Still, reform path this year may lead into the reverse direction unless the state continues to support IT companies and bring into place efficient taxation regime and clear and transparent approach to market players. The European Business Association has already voiced the necessity to deploy a special preferential taxation regime for IT sector. Information technology industry and software export is rightfully considered to be a goldmine for Ukraine’s economy, as Ukraine holds the TOP 10 list of world’s leading software exporters. Global experience of India and China, world’s leading software manufacturers, shows that taxation benefits and special tax regimes are the key to uphold IT industry and reach record productivity levels.

With all that in mind, EBA IT Committee proposes to set alternative tax rates – 5 percent for income tax, 5 percent for personal income tax and 5 percent for the single social contribution. Thorough economic research conducted by EBA IT Committee has showed that in case all proposals are duly taken into account, IT companies will ensure additional budget inflow in the amount of Hr 180 million.

FMCG and retail sectors

It will come as no surprise when we join the majority saying that FMCG (fast-moving consumer goods) and retail sector will undoubtedly stay afloat provided that legislative provisions are brought into accordance with common sense and fair economic rationale.

Currently the EBA retail committee is advocating for an amended draft law of Ukraine on internal trade, which contains provisions hampering the healthy functioning of internal market. The draft law should be significantly improved taking into account the reasoning of business community. Adoption of the draft law in the current wording would have negative impact on competition, as long as it contains conflicting provisions with other legislative acts of Ukraine regulating contractual relationships between suppliers and chains, special products (alcohol and tobacco, etc.) as well as overregulated procedures for new sites establishments.

There is far more to explore than just what has been mentioned, such vectors as energy efficiency projects and alternative energy supply will be also high on investors’ agenda this year. Needless to say that development of the abovementioned sectors and Ukraine’s economy on the whole is impossible without fixing the main problems of the system such as corruption, court reform, VAT refund, currency regulation, customs procedures, technical barriers to trade and land reform.

Anna Derevyanko is the executive director of the European Business Association which brings together about 900 European, Ukrainian and multinational companies.]]> Digital Tonto: Why Windows 8 will put Microsoft back on top http://www.kyivpost.com/news/opinion/op_ed/detail/121691/ OP-ED Thu, 02 Feb 2012 14:06:54 +0200
What a difference a decade makes. Their stock is at 30, right where it was 5 years ago. Their price/earnings ratio is about 10, or roughly half the average of the S&P 500. Rumors are rampant that Steve Ballmer will be fired. Goliath has become David.

So what’s the future for Microsoft? Possibly very bright due to their new Windows 8 platform and that’s not because I love it. In fact, I wrote in an earlier post that it’s bound to piss PC users off. However, Microsoft has proven before that strategy can trump product and, in this case, their strategy is dead on. What’s more, it shoots straight at Apple’s Achilles heel.

A dire situation

No strategy can be understood without its context and, in the case of Microsoft, that context is one of extreme woe. Roger McNamee pointed out that their share of connected devices has dropped from 95% to under 50% in less than 3 years. Last quarter, Apple’s iPhone garnered more revenues than all of Microsoft.

That’s not just because of snazy gadgets. As this article explains, Microsoft has been losing share of the enterprise market as well. A lot of those people toting around iPhones and iPads are using them for work and want the seamless ecosystem that Apple provides. Macbooks have been gaining on PC’s in the workplace.

Microsoft was blindsided by mobile. Back in 2007, Steve Ballmer blustered that he didn’t think the iPhone was all that big of a deal. Needless to say, he got it very, very wrong.

Yet Microsoft has been here before. Back in 1995, the Internet took them by surprise and they responded quickly with Internet Explorer (which became the major issue in the antitrust suit). They’ve been slower to react this time around, but Windows 8 might just put them back on top again.

The Windows 8 strategy

Take one look at Windows 8 and it quickly becomes clear that it’s a “mobile first” platform.



When you boot it up, you don’t see folders on the desktop, but apps. The experience is optimized for touch and, with the launch of Kinect for Windows this year, voice and gesture as well. The toolbars are hidden on the sides of the screen, which makes it difficult for a mouse, but ideal for the newer modes of interface.

In short, Microsoft is betting against their consumers. The PC market is shrinking, nobody else will fight for it and consumers have nowhere else to go. So Microsoft is going to where the action is: tablets and smartphones.

Sure, people who have invested years learning how to use their products will be put out, but the truth is that Microsoft doesn’t really care. That’s a horrible thing to say, but I suspect it’s true. Even worse, it’s probably the right course for them to take.

The Apple vulnerability

As strange as it may seem now, it wasn’t so long ago that Microsoft reigned supreme and Apple was on the ropes. Every computer manufacture in the world courted them and even other software developers clamored to become Microsoft partners.

Apple, on the other hand, created both their own hardware and software. They had no need for manufacturer relationships and, because of their low installed base, weren’t especially popular with developers (the recently Jobs/Adobe feud was fueled in part by the fact that Adobe was one of the first companies to drop Apple in darker times). Lately, the lack of relationships has been a plus for Apple. New technology favors a fully integrated product and Jobs built an ecosystem beyond compare. However, as I explained in an earlier post about Steve Jobs and Bill Gates it also represents a weakness that Jobs himself noticed. He said:

" You know, because Woz and I started the company based on doing the whole banana, we weren’t so good at partnering with people. And, you know, actually, the funny thing is, Microsoft’s one of the few companies we were able to partner with that actually worked for both companies. And we weren’t so good at that, where Bill and Microsoft were really good at it because they didn’t make the whole thing in the early days and they learned how to partner with people really well.

And I think if Apple could have had a little more of that in its DNA, it would have served it extremely well. And I don’t think Apple learned that until, you know, a few decades later."

And that’s what lies at the heart of the Windows 8 strategy. They intend to leverage their decades old expertise in building partnerships with manufactures to put a wide array of competitive smartphones and tablets on the market that will compete with Apple’s formidable ecosystem.



What about Android? Of course, this isn’t a strictly two-way battle between Microsoft’s Windows and Apple’s iOS. As this chart from the Silicon Alley Insider shows, the current reigning champion in the mobile operating system market is actually Google’s Android.






However, I don’t think Google can compete with Microsoft in this arena. They have not had a great track record in partnering with manufacturers. Google TV has been a bust and Android’s success is mainly due to the fact that they have been the only alternative to Apple. If they are to continue to produce a mobile operating system, they will have to seriously pick up their game.

The thing is, I don’t think they really want to. The core of their business is advertising, not managing partner relationships. Do they really want to take their eye of the ball to compete with a company with vastly greater resources (Microsoft has nearly double their cash and a 30% higher market cap) in their primary competency?

Why Microsoft will win



Will Microsoft’s Windows 8 be a better product than Apple’s iOS. I highly doubt it, but that’s not really the question at hand. They will win, strangely enough, because they will play the role of the disruptive innovator in the market.

To see what I mean, take a look at this chart based on Clayton Christensen’s classic The Innovator’s Dilemma.



Apple, of course, is represented by the top line. They are an integrated company that created an interdependent architecture that greatly improved performance. Microsoft is seeking to create an alternative, modular architecture by partnering with every other manufacturer in the world.

Moreover, since they are basing their product on HTML5, developers won’t be beholden to a native environment. Their platform will be the most open and thousands of innovative minds across the world will be able to add to it. They won’t have to fight the “app wars.”

So the question isn’t whether Windows 8 be the best platform, but whether it will be “good enough” and there is every indication to suspect that it will be. That might not be heroic, but it probably will be enough to put them back on top.



Greg Satell is a U.S.-based independent media analyst. You can read his blog entries at http://www.digitaltonto.com.]]> EurActiv: 'Occupy monopolies' through social media http://www.kyivpost.com/news/opinion/op_ed/detail/121625/ OP-ED Wed, 01 Feb 2012 15:07:45 +0200 Read the report here.]]> RIA Novosti: Russia, Ukraine consider EU role in gas talks http://www.kyivpost.com/news/opinion/op_ed/detail/121614/ OP-ED Wed, 01 Feb 2012 13:00:28 +0200 Read the text here.]]> Oil Voice: European gas chess http://www.kyivpost.com/news/opinion/op_ed/detail/121502/ OP-ED Mon, 30 Jan 2012 18:56:45 +0200
Read more here.]]> Why Tymoshenko must be free http://www.kyivpost.com/news/opinion/op_ed/detail/121484/ OP-ED Mon, 30 Jan 2012 15:43:43 +0200 http://www.change.org/petitions/free-yulia-tymoshenko#.]]>
Viktor Fedorovych has mocked justice, compromised democracy and damaged Ukraine’s standing in the world. His self-serving behavior has indefinitely delayed the country’s entry into the European Union. It has undermined Ukraine’s ability to grow its economy and create good paying jobs.

In addition, if Tymoshenko, an internationally recognized leader, can be treated with such vulgar political spitefulness then no one in Ukraine is safe from judicial tyranny.

In the long-term, the misuse of justice enables a corrupt culture to fester long after he’s out of office. Today, Tymoshenko is the victim of political retribution. Tomorrow it may be an ordinary citizen not as well known as Tymoshenko.

So long as Tymoshenko is in prison, no one, including Yanukovych supporters, can be assured of justice. Viktor Fedorovych has co-opted the judiciary, a branch of government that should be fair, impartial, and independent for everyone no matter their politics.

Tymoshenko was indicted, tried, and convicted under a law that by its very nature had no basis in sound legal theory. Assuming, only for discussion purposes, that Tymoshenko did not negotiate a gas deal with Russia beneficial to Ukraine, later punishing her for it suggests that any public official can be put in jail for any perceived misstep. Whether Tymoshenko negotiated the best deal is politically subjective.

If Western democracies used such a legal system they would collapse into chaos. If there is any chance that an elected official can be put in jail for poorly negotiating an agreement then why would anyone want to serve in public office? Poor performance in office should be determined at the ballot box not a criminal trial.

Based on Yanukovych’s support for such an arcane, illogical and Stalin-like law, perhaps it should now be asked: Did the president negotiate the best deal to allow the Russian fleet to stay in the Black Sea? Wasn’t the treaty supposed to be tied to lowering natural gas prices? Yanukovych complains that Ukraine’s natural gas problems stem from Tymoshenko’s time in office. Instead, they may stem from the last natural gas negotiations that his administration handled.

Three questions arise regarding the agreement negotiated by the Yanukovych administration concerning Russia’s Black Sea Fleet. Was it in the best interest of Ukraine’s sovereignty? Is the lease a fair price? And since it was supposed to be tied to natural gas prices why has no benefit been realized?

Should a criminal investigation be opened into Yanukovych’s handling of the matter? If so, then the flawed theory in doing so would be consistent in the one used against Tymoshenko.

No matter how much time passes , Viktor Fedorovych must be reminded at every opportunity that Tymoshenko will never be forgotten. Complacency or indifference toward this injustice is as egregious as the president’s unethical and immoral behavior. Vigilance must be maintained to free Ukraine’s Iron Lady no matter how long it takes.

It also should be underscored that the petition on behalf of Tymoshenko is about more than her freedom. As in any democracy, strong or fledgling, liberty is never dependent on one person. The issue that confronts Ukraine is much larger than the travesty suffered by Tymoshenko. Democracy cannot survive if its laws are not fair, impartial and grounded in logic and common sense for all citizens.

The “Free Yulia Tymoshenko Petition” http://www.change.org/petitions/free-yulia-tymoshenko# is not only about the gross injustice shown to one individual, but also its potential impact on average citizens. It’s about the kind of Ukraine parents want for their children and grand children. Would anyone want what happened to Tymoshenko, regardless of whether they like her, happen to them or their children? This is why the petition is important. It’s an effort to stop the tyranny taking hold in Ukraine. Stopping the tyranny benefits all Ukrainians no matter their political views or alliances.

Bishop Paul Peter Jesep is a New York attorney and Metropolitan Myfodii's U.S. designated spokesperson and government liaison for the Ukrainian Autocephalous Orthodox Church-Kyiv Patriarchate, one of the three major Orthodox churches in Ukraine. The views expressed here are solely his own and in no way reflect those of his church.]]> Russian, Soviet nationalism is the biggest threat to democracy, ethnic stability in Ukraine http://www.kyivpost.com/news/opinion/op_ed/detail/121480/ OP-ED Mon, 30 Jan 2012 15:15:09 +0200
The Party of Regions, when it has been in opposition and since the 2010 elections when it has had control of parliament and the presidency, has been by far the most aggressive and violent political force in Ukraine. This is evident from violence it has undertaken inside and outside parliament against opposition parliamentary deputies and journalists and its campaign of political repression against Yulia Tymoshenko and her supporters.

On Dec. 16, 2010, Party of Regions deputies violently attacked opposition deputies sleeping overnight in parliament who were protesting against political repression. Stephan Shulman, drawing on his surveys, concluded that ethnic Ukrainian nationalism provided higher levels of support for democracy than eastern Slavic identity which was more supportive of authoritarianism. Dominique Arel, chair of Ukrainian studies at the University of Ottawa in Canada, pointed out that the ‘‘political culture in eastern Ukraine is based on intimidation. [Ex-President Leonid] Kuchma in the late 1990s tried, and ultimately failed, to institute the ‘blackmail’ state. Yanukovych learned nothing from the [2004] Orange Revolution and everything from Vladimir Putin that to stay in power, you have to bully your opponents.”

Arel believes: “Western commentators have often been suspicious of its (Ukrainian nationalism’s) intent and possible consequences. Nationalism is the desire to have one’s state or to make an existing state ‘national’ (and what “national” means is generally quite contested). It can have its ugly side, and the rise of Svoboda in Galicia is not pretty.”

Arel continues:

“But let the record show that Ukrainian nationalism, in the empirically verifiable field of Ukrainian politics of the last 20 years, has been the driving force behind democracy, while Ukrainian anti-nationalism, for lack of a better word, a.k.a. the political forces grounded in eastern Ukraine, have aimed at the dismantlement of democracy. Rukh in the 1990s, Our Ukraine and the Tymoshenko Bloc in the 2000s had serious flaws (rule of law, historical memory), but they were, in their actions, not just in words, for free elections and a free media. Political culture in Central-Western Ukraine is rowdy, exasperating in its incomprehension of the law, but open.”

Russian nationalism in Ukraine has been far more of a threat to inter-ethnic peace and democracy in Ukraine. Agent’s provocateurs hired by the authorities provoked nationalist violence in March 2001 in Kyiv during anti-Kuchma protests. Russian nationalists were permitted to travel to Lviv in May 2011 to celebrate victory in the Great Patriotic War (World War II), ensuring violence would be inevitable between Russian and Ukrainian nationalists in which a Ukrainian nationalist was shot and wounded. Two Ukrainian activists were murdered by Russian nationalists and no Russian nationalist or activist has died at the hands of Ukrainian nationalists. On May 8, 2000, Ihor Bilozir, a composer, was murdered in Lviv and on April 17, 2009, Maksym Chaika, a 20-year-old student of Odesa National University and member of the patriotic youth movement Sich, was murdered in Odesa.

Russian and neo-Soviet nationalism remains influential and popular in the Crimea where neo-Soviet and Russian nationalist publications and groups fan anti-Tatar xenophobia and Ukrainophobia. Mykhailo Bakharev, editor of Krymskaya Pravda, has repeatedly said there is no Ukrainian language and that it is an “artificial language” of the uneducated part of population invented by bard Taras Shevchenko and others. Bakharev believes no Ukraine nation exists and that the Ukrainian State has no future. A higher number of monuments and placards dedicated to historical figures and national tragedies have been defaced and vandalized in eastern Ukraine and the Crimea than have Soviet monuments to World War II been defaced in western Ukraine. Antagonism to Ukrainian history and national identity draws on a Soviet legacy of “anti-nationalist” tirades against World War II Ukrainian nationalists, dissidents and Ukrainian emigres. Russian nationalist and arsonist Vladimir Pogruzhalsky was sentenced in 1964 for setting fire to the Soviet Ukrainian Academy of Sciences library that destroyed countless unique historical manuscripts.

Pro-Russian groups in the Crimea play on anti-Tatar sentiments and racial stereotypes that have nurtured the highest degree of xenophobia found in any Ukrainian region. The U.S. Embassy in Kyiv reported that Russian nationalists in the Crimea, “attempt to maintain a constant level of interethnic tension for political reasons.” The Party of Regions alliance with Russian nationalists in the Crimea since the 2006 elections (when they formed the joint “For Yanukovych!”) has stoked inter-ethnic conflict and exacerbated anti-Tatar xenophobia among Party of Regions leaders. An example of a xenophobic Party of Regions leader is former head of the Crimean Interior Ministry and Crimean Prime Minister Anatoliy Mogiliov. Crimean Tatars protested at Mogiliov’s appointment because of his reputation for ruthlessness in suppressing Tatar protests.

Mogiliov had written a xenophobic opinion commentary for Krymskaya Pravda supporting Stalinist ethnic cleansing of the Crimean Tatars after they were accused of being “Nazi collaborators." Xenophobic views of Crimean Tatars views are common in the Crimea. Crimean Parliamentary Chairman Anatoliy Grytsenko told U.S. Ambassador William Taylor that Crimean Tatars “betrayed” the USSR in World War II and that, “a majority of Crimea’s inhabitants viewed Tatars as traitors.” Xenophobic views are regularly fanned by Krymskaya Pravda and other media outlets in the Crimea. On Inter, a television channel owned by oligarch and Minister of Finance Valeriy Khoroshkovsky, well-known Crimean lead anchor Yuri Pershykov has a long record of producing anti-Tatar xenophobic reports.

Ukrainian surveys have also shown higher levels of anti-semitism in eastern and southern Ukraine and the Crimea than in western Ukraine. The US State Departments 2011 report on human rights practices in Ukraine recorded anti-Semitic violence and vandalism in Kyiv, Pavlohrad, Sumy, Korovohrad, Dniproperovsk, Cherkassy, Melitopol, and Mykolayiv, in central, eastern and southern Ukraine and Sudak and Sevastopol in the Crimea. The Academy of Personnel Management (MAUP) private university produced a large volume of anti-Semitic materials but this has now ceased, according to the U.S. State Department report. U.S. Embassy cables reported anti-Semitic attacks, vandalism and inflammatory articles in local newspapers in Odesa. The U.S. State Department’s 2011 report on human rights practices in Ukraine reported on anti-semitic programs aired by the radio show Vik on Kherson National Television and Radio Broadcasting Council. Russian nationalist group ZUBR (For the Union of Ukraine Belarus and Russia) published anti-Semitic articles in its party newspaper ZaZUBRina. The one anti-Semitic incident in western Ukraine listed in the U.S. State Department’s 2011 report on human rights practices was against a Jewish cemetery in Ternopil.

The Mykola Melnychenko tapes show eastern Ukrainian Kuchma to have been an anti-Semite and xenophobe. The tapes include anti-Semitic curses and rants by Kuchma against his political and business supporters and adversaries. Kuchma, discussing Heorhiy Surkis and Kievskie Vedomosti newspaper with State Tax Administration head (and current Prime Minister) Mykola Azarov, says, “blya (fuck), why do we need a Jew, blya.” In another taped episode, Azarov asked Kuchma to approve an illegal scheme in which he could trade his 50-square meter apartment in Kyiv for one three times the size in a more desirable building. The scheme included the eviction of a Jewish family occupying the larger apartment. Playing on Kuchma’s anti-Semitism, Azarov said to him: “Well, there the Jews would have to be taken out …” Kuchma gave his permission to throw the family out so that Azarov could have the apartment. Kuchma and Azarov made anti-Semitic remarks when discussing the takeover of Sloviansky Bank owned by director Boris Feldman and in anti-Semitic slurs against other Jewish directors.

Objective studies of nationalism in Ukraine should not focus too much on western Ukraine and groups such as Svoboda. The Party of Regions is the greatest threat to democracy and most violent political force in Ukraine. There would be no Svoboda without the Party of Regions. Last year, two reports by the pro-Yanukovych American Institute in Ukraine condemned the Party of Regions financial support for Svoboda. The overwhelming majority of instances of racism, xenophobia and anti-Semitism in Ukraine take place outside western Ukraine in regions where the Party of Regions holds a monopoly of power.

Taras Kuzio is a non-resident fellow at the Center for Transatlantic Relations, Johns Hopkins University in Washington, D.C., and a visiting professor at the Center for Slavic Research Center, Hokkaido University in Sapporo, Japan.]]> People First: The latest in the watch on Ukrainian democracy http://www.kyivpost.com/news/opinion/op_ed/detail/121474/ OP-ED Mon, 30 Jan 2012 14:36:48 +0200 A new gas deal approaches

2012 was welcomed with intense gas negotiations going on between Ukraine and Russia. The current state of play appears to be heading toward a considerable decrease of the Russian gas price in exchange for control of a chunk of Ukraine's energy assets including the gas pipeline network and gas reserves. Both teams of negotiators have brought rather powerful arguments to the table.

President Viktor Yanukovych, Prime Minister Mykola Azarov and Energy Minister Yuriy Boiko underline that -- even with a discount -- the current gas price: $416 per 1,000 cubic meters in the first quarter of the year is unreasonably high. Ukraine can also search for alternative lower cost energy sources, increase the development of domestic gas to 22 billion cubic meters per year and thereby minimize consumption of Russian gas in 2012 down to 27 billion cubic meters.

The Russian side, represented by Prime Minister Vladimir Putin and Gazprom chief Alexiy Miller, threaten to impose penalty sanctions due to Ukraine’s low consumption of gas in 2011. Experts say Ukraine could be charged $8 billion. Russian negotiators say that a reduction of consumption down to 27 billion cubic meters is impossible, due to the pre-existing contract, which provides for the possibility of a reduction in 2012 to minimum of 41.6 billion cubic meters. Russia has also received a permit for the construction of the South Stream Gas Pipeline from Turkey.

With a new gas agreement between Russia and Ukraine coming, the EU has reminded Ukraine of its obligations under the Energy Community Treaty, which the country joined on Feb. 1. Gunther Oettinger, EU commissioner for energy, stated that the EU has agreed a joint strategy for the further integration of the Ukrainian energy market with EU and they plan to start implementation in the nearest future.

Thus, once again a gas issue is the determining factor for Ukraine’s future. This issue may decide whether Ukraine falls into political dependence on Russia or if its economy will collapse. History shows that gas negotiations often lack transparency. Ukrainians might well wake up to find out that they lost key energy assets, and that it is too late to change anything.

People First Comment: One has to ask the question why Ukraine is paying so much more for its gas than anybody else. Ukraine is Russia’s third largest customer, yet Ukraine is paying approximately $216 per 1,000 cubic meters (52 percent) more than China and $66 per 1,000 cubic meters (16 percent) more than the EU. The price that Ukraine pays does not include the transit costs and therefore the real differential with Europe is appreciably higher. Ukraine is Russia’s only client that is paying at this level, while all the rest are closer to the price being paid by the EU. Whilst serious questions need to be asked as to why Yulia Tymoshenko, as prime minister then, agreed to be tied into such a one-sided contract, it would also seem logical to ask who is benefiting from such a high gas price today.

Gas has been the foundation of many a fortune in both Russia and Ukraine and, without any degree of transparency, it would be acceptable to believe that this contract is as dirty as all the rest. If this is the case then who, since Tymoshenko’s imprisonment, is now benefitting and is this the real reason why Gazprom appears to be playing such hardball.

It is much quoted that Gazprom has its sights set on the Ukrainian gas transit system but this does not make sense as Europe is set to cut its consumption of Russian gas from 80 percent to 30 percent by 2020 and this is precisely the volume capacity of the brand new Nord Stream pipeline. So one has to ask why Russia would want an aging pipeline network that needs billions in investment when, by the time the refurbishment is completed, there is unlikely to be a customer at the other end. Perhaps this is just another diversion to stop people asking too many questions.

Eastern Ukraine holding politicians to account

Early in January, the people of Donetsk, natural comrades of the president and the Party of Regions, again demonstrated that their attitude towards the current government has substantially changed. This time they have been distributing posters in public places that list unfulfilled election promises with “not executed” stamps. Every poster has a verdict on the bottom: “fire this official on grounds of incompetence.” Some posters read “stone is the weapon of the proletariat,” hinting perhaps, that the protection of rights requires the use of force. The people in of eastern Ukraine are starting to prove their civic awareness. They have started to compare promises with actions, putting aside regional solidarity. Activists distributing posters say on the Internet that their goal is to break through the unquestioning support of current government by the people of Donetsk.

Donetsk authorities are worried, not because of the anti-governmental posters directly, but because they do not know who the initiators are. They encourage open dialogue with the government. The Committee of Voters of Ukraine has stated that more and more civic groups in Ukraine are demanding that the governing authorities be held to account for the election promises they made. Back in 2010, the High Administrative Court of Ukraine refused to declare unlawful Yanukovych’s inactivity regarding his election promises; a case that arose from an action filed by an opposition member. The court overruled the action against the President as nothing more than agitation. At least we can commend the people of eastern Ukraine for pushing through regional solidarity and starting to voice criticism of parliamentary actions.

People First Comment: You can fool some of the people some of the time, but you can’t fool all of the people all of the time… Unfortunately for the president and his team, he was too convincing in his speeches to the good people of Donetsk and they followed his every word believing that their man would lead them to nirvana. Today the reality is slowly sinking in. There is no nirvana… there is no golden future. It was all just a front designed to enable Yanukovych to win the presidency.

The people of Donetsk are, as a woman scorned, not going to accept excuses or apologies. He has betrayed their loyalty and their trust and that is unforgivable. Donetsk, like any mining city, is a hard place where communities exist through a close brotherhood. It is this brotherhood that has enabled them to live through the hardship and the loss common to mining communities. It is not a brotherhood you betray no matter how powerful you believe yourself to be. If the president does not find a way to appease this anger, then the miners and steel workers of the Donbas could well be the seeds of his downfall.

EU keeps up pressure as Oleksandr Tymoshenko flees

The Czech Republic has granted asylum to Oleksandr Tymoshenko, husband of Yulia Tymoshenko. The Czech Republic’s Interior Ministry explained that he was granted asylum on Jan. 6, following his request two months earlier. The media say that he was recognized as a political refugee, which guarantees him international protection. The daughter of Yulia Tymoshenko believes that had her father stayed, he would have been arrested and imprisoned for political reasons. She noted that the whole Tymoshenko family is under huge pressure.

Having received asylum in Czech Republic, Olexander Tymoshenko publicly announced that he had to do so, citing persecution from the Ukrainian governing authorities. He plans to register 'Batkivschyna' as a civil group in Czech Republic. He met with the former minister of economy of Ukraine Danilishyn who received asylum in Czech Republic a year ago. At the same time the Presidential Administration of Ukraine hopes that granting political asylum to Tymoshenko's husband will not hurt Ukrainian-Czech relations as stated by presidential adviser Hanna Herman.

Despite the passing of the new year, Tymoshenko;s case remains one of determining factors in Ukraine-EU relations. The European Union has made it clear that they will not silently accept the imprisonment of the former prime minister. So, unless the government makes concessions, relations between Ukraine and EU will most likely be chilled.

People First Comment: Ask yourself: with 98 percent of prosecutions resulting in conviction, your wife in prisona and under investigation for a seemingly endless stream of allegations, some of which relate to cases closed 15 years ago, and with the declarations of dozens of world leaders including the Dalai Lama unable to afford her any respite, would you trust your personal security to the Ukrainian legal system?

Under Soviet rule, legislation was designed to enforce whatever the party willed. Whereas much of the world relies on the concept of innocent until proven guilty, Ukraine’s deputies seem to feel it unnecessary to abandon legislation written nearly a century ago for the purposes of dealing decisively with dissenters, however vaguely identified.

Is it any wonder that so much legal defense in Ukraine is outsourced to institutions within the EU? In the first year of the Yanukovych’s presidency, Ukrainian citizens submitted more than 10,000 cases to the European Court of Human Rights, an institution which recently put the case of Tymoshenko vs. Ukraine on fast-track priority.

The pure volume of applications can be attributed partially to the success of the cases that get through: one recent case involved a Ukrainian who had been hospitalized following a police abduction, which was utterly disregarded by the Ukrainian legal system at every level, whom the court demanded be remunerated 15,000 euros by the state.

Europe’s principles will not be compromised by association with a regime uncommitted to the rule of law; neither can its institutions bear the weight of righting every Ukrainian injustice. Europe will eventually tire of the Ukraine’s Janus foreign policy; let us hope that the authorities bow to pressure before it is too late.

Murdering justice

The death of student Igor Indylo as a result of militia brutality is again in the spotlight in Ukraine. The student died in May 2010 of severe injuries he received in custody. Despite substantial evidence, Kyiv district court issued the militia officers accused of the student's murder with mild punishments without imprisonment. Both officers were charged with minor negligence that led to the death of 19-year-old Igor Indylo. One of them received a five-year suspended sentence, the other was granted amnesty by the court. Indylo's family has already appealed the court’s decision. Ukraines’s human rights commissioner Nina Karpachova also plans to appeal the decision of Kyiv district court on the case. She made a statement in which she insisted that the decision is cancelled and that the case is sent for further investigation.

The selective nature of Ukrainian justice has been noticed by many international organizations. Representatives of Amnesty International state that the Ukrainian authorities must initiate a new investigation of student's death in custody. John Dalhuisen, Amnesty International’s deputy director for Europe and Central Asia, stressed that the decision of Ukrainian court on the case shows a shocking disregard for human life. The Ukrainian system of justice has clearly demonstrated to the citizens of Ukraine, its position on militia brutality.

People First Comment: Firstly, that which hardly needs saying: this is an atrocious miscarriage of justice in which murder has been deemed insufficient cause for a jail sentence. Tragic and infuriating though this case is, it is in fact indicative of a more fundamental issue.

A recent Ukrainian Interior Ministry survey demonstrated that 80 percent of militia officers feel it is impossible to maintain even the most basic standards of living from their meager salaries, over which 25 percent of the national militia claims to be ready to resign. If 80 percent of the militia claims it is impossible to live on official salaries, and 75 percent of those claim not to be ready to quit, there must be some alternative perks filling in the gaps.

This case appears to be a sickening after-effect of those very perks: the attitude that a position of authority grants the bearer freedom beyond the law and impunity from prosecution. The upside for the government has been unquestioning obedience for very low pay; with militia salaries subsidized through the extortion of the public via bribes, or shall we say shadow-taxes.

With the sole mechanism of law enforcement positioned above the law there are no effective systems for curtailing the behavior of the law enforcers themselves. To meet calls from Europe for the rule of law to be upheld, the government would have to find space in its already austere 2012 budget for substantial pay rises across the public sector. Otherwise Ukraine is stuck with a fundamental problem: Nobody is watching the watchmen; and if they were, the watchmen would quit.

Viktor Tkachuk is chief executive officer of the People First Foundation, which seeks to strengthen Ukrainian democracy. The organization’s website is: www.peoplefirst.org.ua and the e-mail address is: democracywatch@peoplefirst.org.ua


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