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GAZPROM TO BUILD BALTIC PIPELINE
Gazprom's board approved a North European gas-pipeline project on 18 November, "Izvestiya" reported on 19 November. The decision to go ahead with the project, which entails building a pipeline under the Baltic Sea to supply European consumers with gas by 2007, comes against a backdrop of ongoing difficulties with existing routes through Belarus, Poland, and Ukraine, "The Moscow Times" reported on 19 November. According to a report in "Vedomosti" the same day, the pipeline will cost $8 billion-$10 billion to construct and could involve cooperation with a major Western investor. Troika Dialog analyst Valerii Nesterov told the newspaper that "the Baltic Sea pipeline is expensive, of course, but unrivaled for dependability and diversification of export routes." DK

RADIO FREE EUROPE/RADIO LIBERTY, PRAGUE, CZECH REPUBLIC

A Survey of Developments in Poland, Belarus, and Ukraine by the Regional Specialists of RFE/RL's Newsline Team

MINSK SLAMS NATO FOR 'IGNOMINIOUS' VISA DENIAL. The Czech Republic denied an entry visa to Belarusian President Alyaksandr Lukashenka, thus preventing him from attending the session of the Euro-Atlantic Partnership Council (EAPC) at the NATO summit in Prague on 22 November. Belarus, a member of NATO's Partnership for Peace program, was represented at the EAPC session by Belarusian Ambassador to NATO Syarhey Martynau. Martynau read a fiery statement at the session, which was subsequently termed by NATO Secretary-General Lord George Robertson as a "pretty angry message." Below is a translation of excerpts from Martynau's speech. (Jan Maksymiuk)

"President [Lukashenka] has charged me with the task of making the following statement:

"NATO's decision to deny the right to the president of the Republic of Belarus to participate in the EAPC summit [and] the Czech Republic's decision to deny an entry visa to him is an ignominious act. It is ignominious not for Belarus but for those who made and implemented this decision, for those who continue to remain in the Cold War period and are unable to get rid of its monstrous vestiges, [and] for those who are unable to imagine politics without hypocrisy, double standards, outright violence, and primitive blackmail.

        "Belarus has the right to make such an assessment.
        "On what grounds did you, esteemed gentlemen, make this

demonstratively discriminating decision with regard to Belarus? Name the legal document that gave you such a right! Give a clear and specific answer to the question: Of what is Belarus and its president 'guilty' in the eyes of the alliance?

"You said your decision was directed 'personally against Alyaksandr Lukashenka, not against the people of Belarus.' Let us put it straight: This interpretation is ridiculous. Is it really necessary to remind you that the head of any state represents first of all the people of this state, while in case of Belarus, it is particularly relevant, given the enormous number of voters who for the second time showed confidence in the incumbent president? (Editor's note: In November 2001, Lukashenka was re-elected for a second term with 75.62 percent of the vote in elections that OSCE monitors called neither free nor fair.)

"Your decision is an act of disrespect not only to the Belarusian president but, first of all, to the Belarusian people....

"You refused a visa to the president on the grounds that Belarus allegedly 'systematically violates human rights.' Let us not forget that NATO is not an organization provided by the international community with a mandate to pronounce verdicts on issues of the internal political development of states, particularly, of those states that are not its members, and to substitute [for] the United Nations and the OSCE, organizations that have not made and will not make such decisions....

"But, perhaps, the real reason [for the visa denial] lies in something different, for example, in [the fact that] some politicians a priori do not accept the right of an independent, sovereign state to choose and consistently follow its own path of development, [or] the right of a nation to build its own national home with its own efforts, without looking back timidly to a 'foreign uncle,' and to make a reliable contribution in the construction of a secure European home.

"The decision made by NATO is unprecedented by definition, because, in European history, there has never been a country or a head of state who would have been denied an entry visa into Europe. Because there is no such international document that would legitimize your decision....

"Perhaps, the 'guilt' of Belarus in the eyes of NATO is [in the fact that] we are holding in check on our territory, with our own efforts, without assistance from abroad, some 150,000-200,000 illegal immigrants who strive to penetrate Europe and who flooded the country after the antiterrorist operation in Afghanistan?

        "Europe will never resolve this problem without us!
        "Perhaps, Belarus's guilt is [in the fact that] each and

every day we stop an unprecedented flow of drugs moving to the West at the crest of the migration avalanche and suppress the flow of arms and nuclear materials coming the opposite way and destined to wind up in the hands of terrorists? In just the past three months, we have thwarted three attempts at our border to smuggle fissile materials abroad!

"Is this not, in your view, a contribution to Europe's security? Is this not a contribution to the antiterrorist coalition?...

"On behalf of the president of the Republic of Belarus, I want to declare with all responsibility: We will not follow the path of offenses, discord, and undermining of civilization's coalition against terrorism....

"Despite the NATO decision, unprecedented in its consequences, the Republic of Belarus has made the decision to continue and intensify its contribution to the common cause of the coalition.

"We invite [you] to hold on the territory of our state exercises in combating radioactive-[contamination] danger -- a real threat from the side of terrorists. Following the Chernobyl disaster, we have gained a sad and a unique experience in fighting [this threat], and we are ready to share it.

"We allocate for the use of the Euro-Atlantic Partnership Council a rescue team that can be deployed independently in Central and Eastern Europe to provide urgent assistance in overcoming consequences of a possible nuclear, biological, and chemical attack.

"We offer a fully equipped training ground of the Ministry for Emergencies as a regional training center of the Partnership for Peace for rescue experts....

"Concluding my address, I am not going to apologize for its harshness. It is fully justified by NATO's anti-Belarusian steps. I invite each of you to ask yourself this last and quite simple question: If you, in fact, wring the arms of those who are ready to fight hand in hand with you against terrorism, proliferation of weapons of mass destruction, drug trafficking, and other threats -- who are not only ready but are doing this -- where are you going to look for allies in the near future then?

"It is easy to lose partners and allies. But they are hard to find.

        "The Republic of Belarus has made its choice.
        "Now it is your turn to make a choice."

UKRAINE

KUCHMA REPLACES PRIME MINISTER AND APPOINTS A POSSIBLE SUCCESSOR. On 21 November, 234 deputies comprising the pro-presidential parliamentary majority from the eight factions that grew out of the For a United Ukraine (ZYU) election bloc and the Social Democratic-united party (SDPU-o) voted to support President Leonid Kuchma's candidate, Viktor Yanukovych, as Ukraine's 10th prime minister. All opposition groups on the left -- the Communists and the Socialists -- and the right -- Our Ukraine and the Yuliya Tymoshenko Bloc -- boycotted the vote, except for two deputies, one from Our Ukraine and one from the Socialist Party. Two other candidates for prime minister, Mykola Azarov and Oleh Dubyna, also came from Ukraine's largest and wealthiest group of oligarchs, the so-called Donbas clan, as did Yanukovych (for more on the Donbas/Donetsk clan, see " The Clan From Donetsk (Part 1)," below).

The negative international impact of Yanukovych's appointment takes a backseat to ensuring Kuchma's trouble-free exit from power and blocking Viktor Yushchenko as a potential successor as Ukrainian president. SDPU-o faction leader and former President Leonid Kravchuk said, "We can't insist on the ideal of what Europe's view of a prime minister should be."

Western media, which have already begun to compare Ukraine to Belarus, have reacted negatively to Yanukovych's appointment because of his close association with Rynat Akhmetov, Ukraine's wealthiest oligarch. Yanukovych's appointment could lead to a rerun of the disastrous Pavlo Lazarenko government of 1996-1997.

The timing of the appointment of the new prime minister on the first day of the NATO summit in Prague will also not help improve Ukraine's poor international image.

Dov Lynch, a resident research fellow at the EU's Paris-based Institute for Security Studies, commented that: "The appointment does not send out a very hopeful message for Ukraine, and it only seems to confirm the marasmus in which the president finds himself domestically and internationally. He is in a hole and is only digging himself deeper."

Lynch believes that, "the appointment looks unprofessional and [was] triggered much more by personal needs than the public good," adding that, "There is certain amount of bewilderment and a large dose of disappointment with the turn of events in the last few years [in Ukraine]."

The model that Yanukovych brings from Donbas is of a "socially regulated market economy" combined with political authoritarianism. This model, according to Freedom House's annual survey "Nations in Transit," has become the norm in the Commonwealth of Independent States, including in Russia. In accordance with this model, stability is seen by the ruling elites as of paramount importance. The opposition is marginalized by the authorities whose refusal to compromise with them denies them any semblance of legitimacy. Their right to protest is condemned as creating instability and threatening the independent state.

Our Ukraine leader Viktor Yushchenko's attempts to create a "democratic majority" centered on Our Ukraine that could include oligarchic groups, except for the SDPU-o, and that would see him appointed as prime minister were blocked. Kuchma also opposed a Polish-style roundtable that Yushchenko suggested and the Polish government offered to hold.

In Donbas, all political life is controlled by the party of power, the Party of Regions. This allowed Kuchma to reduce the local base of support of his communist opponents in the 1999 and 2002 elections. Yushchenko's Our Ukraine failed to cross the 4 percent threshold only in Donetsk and Luhansk oblasts, where it obtained 2.69 and 3.62 percent of the vote, respectively, and in the city of Sevastopol, where it managed 2.99 percent. In comparison, Donetsk was the only oblast where the ZYU came first with 36.83 percent of the vote.

After the March elections, Ukrainian political scientists termed Yanukovych's Donbas model, which he wishes to apply to the remainder of Ukraine, as "Ukraine's Belarusianization." "It is not something that will take Ukraine to Europe," Anatoliy Hrytsenko, head of the Kyiv-based Razumkov Center for Economic and Political Studies, believes.

Yanukovych's appointment will also lead to pressure in two other key areas. First, the new prime minister supports the transformation of the parliament into a bicameral institution where the upper house would be composed of regional representatives. This issue was not incorporated in the 1996 constitution but was raised in the April 2000 constitutional referendum. In principle, a bicameral parliament, where the same number of representatives is sent from each region regardless of population size, would benefit western Ukraine, but it would be simultaneously bad for democratization, as Ukraine's governors are appointed, unlike in Russia where they are elected. An unelected upper house, coupled with a pliant pro-presidential majority in the lower house, would transform parliament into a puppet institution of the executive.

Second, Yanukovych may be pressed into elevating Russian into a second "official" (state) language. In early November, the Presidium of the Crimean Supreme Council, which has been controlled since the elections by pro-presidential oligarchs, sent an appeal supporting this move. The appeal was allegedly instigated by Viktor Medvedchuk, head of the presidential administration.

Will Yanukovych be Kuchma's successor? The new government has a grace period of 18 months during which it cannot be dismissed by parliament. This will lead up to the summer of 2004, when political life will be quiet, as parliament will be in recess. This will also be just a few months before the presidential elections in October.

All opinion polls during the last two years have given Yushchenko popularity ratings of 25-30 percent. This is far higher than any pro-Kuchma oligarch but insufficient on its own to win a presidential election. Ukraine's regional and linguistic divisions will have a negative impact on any chance of increasing Yushchenko's popularity in eastern Ukraine. Using the language card could undercut Yushchenko's already low popularity in eastern Ukraine.

In the 2004 presidential elections, what will be crucial to Kuchma will be Yanukovych's Donbas experience where he blocked Our Ukraine in this year's elections. This could be coupled with a rerun of the manner in which the language card was successfully used by Kuchma himself against the "nationalist" incumbent, Kravchuk, in the 1994 elections. Yanukovych's appointment, therefore, makes Yushchenko's victory in 2004 more problematic.

THE CLAN FROM DONETSK (PART 1). On 16 November, Ukrainian President Kuchma fired the government of Anatoliy Kinakh on the pretext that it had been unable to insure financing for education and science, and he proposed that Viktor Yanukovych become the 10th prime minister in Ukraine's 10 years of independence. On 21 November, Yanukovych's candidacy was approved in parliament by a less-than-overwhelming vote of 234 for and no votes against, as opposition factions decided not to participate in the voting.

Viktor Fedorovych Yanukovych was born on 9 July 1950 in the city of Yenakiyevo in Donetsk Oblast. According to his official biography, which was circulated by the UNIAN press agency shortly before the vote, he worked as a laborer in a metallurgical factory, a car welder, and a mechanic. Later, he worked as the general director of a number of enterprises most of which were somehow connected to the transportation sector. In August 1996, he was appointed as deputy head, and in September as first deputy head, of the Donetsk Oblast State Administration. On 14 May 1997, Kuchma appointed him the head of this administration.

Yanukovych's biography says that he graduated from the Donetsk Polytechnic Institute in 1980. It also mentions in passing that in 1968 he was arrested (the reason is not provided) and sent to a penal institution for minors. In 1970, he was arrested for the second time and found guilty of assault and battery. However, a different version of this second arrest was broadcast on 18 November on ICTV television (a station belonging to Viktor Pynchuk, Kuchma's son-in-law), which reported that he had been charged with manslaughter and theft of state property.

As soon as Yanukovych's name was announced by the president as his candidate for the job, a number of political observers in Kyiv were quick to comment that with his appointment, power in Kyiv would shift to the Donetsk clan. Some believed that the West would not be too happy with Yanukovych's appointment, given his very close connections with what they claimed to be a criminal and corrupt clan.

The Donetsk clan is not a well-known group, even for Ukrainians. More people tend to know about the other large and more prominent clan, the one from Dnipropetrovsk, or, as it is often called, "Dnipro." Kuchma is part of that group, as was Pavlo Lazarenko (presently in a prison cell in California) and many others in the Ukrainian government. Even members of the opposition, like Yuliya Tymoshenko, are also part of the Dnipro group.

The Donetsk clan began its formation in the late 1980s and early 1990s. The first step took place in the settlement of Oktyabrsk in 1988. A local resident, Akhat Bragin, a man of "great authority" in both local official and underworld circles, took control of the local market. At that time, close to Bragin was the 22-year-old Rynat Akhmetov, a young man of Tatar nationality. Akhmetov, born in Donetsk in 1966, was noticed by many local men of authority for his quick mind and ability to get things done. Bragin kept him close and taught him the business of doing business Donetsk-style.

In the early 1990s, two other business enterprises came into being in the region: the Anton company, headed by Yevhen Shcherban, and Delo Vsekh, belonging to Volodymyr Shcherban (the two Shcherbans were not related).

In the early 1990s, men of authority from Donetsk realized that they could influence decisions in Kyiv by the sheer might of their industrial and natural resources. Thus, in 1993, a wave of coal-miners strikes, organized by their own management, swept the region and forced then-Prime Minister Leonid Kuchma to appoint as his deputy a powerful "coal baron" from Donetsk, Yukhym Zvyahilskyy. Kuchma left his post soon afterward to concentrate on his presidential campaign, and Zvyahilskyy became acting prime minister. During his short time in office, Zvyahilskyy did manage to slow inflation somewhat and arranged for Russian energy supplies to reach Ukraine.

In 1994, Kuchma was elected to his first term as president, and matters rapidly changed. Zvyahilskyy soon found himself the object of an investigation into his dealings while acting prime minister -- he was accused of having stolen some $20 million -- and he fled to Israel in fear for his life. After some time, Zvyahilskyy returned to Ukraine and is presently living in the Donbas region where he is still very powerful. Being a member of parliament, he has immunity from prosecution.

When Zvyahilskyy was hiding in Israel from the wrath of his enemies in 1995, Donetsk came under the control of the two businessmen mentioned earlier, Bragin -- by this time the owner of the local soccer club, Shakhtar, where Akhmetov was his deputy -- and Yevhen Shcherban. They enjoyed the full support of Volodymyr Shcherban, Kuchma's choice in 1994 to head the Donetsk State Administration.

In December 1995, the Industrial Union of Donbas (PSD) was registered as a corporate entity in the city of Donetsk. Its acting director was listed as Serhiy Tartyta and its founding members were the Donetsk regional branch of the Academy of Technical Sciences of Ukraine, the Ukrainian Academy of Economics, the Donetsk Chamber of Trade and Industry, the construction company Azovinteks from the city of Mariupol, and the joint-stock company Vyzavi from Donetsk. But most people in Donetsk knew that Bragin and Yevhen Shcherban were the real muscle behind the PSD.

Initially, the corporation stated that its goals were to coordinate the work of different regional enterprises in the new economic situation that existed after the collapse of Soviet communism. But the true original purpose of the PSD was to make a lot of money by supplying natural gas to enterprises in the region and by stripping assets from the companies they acquired during the early period of privatization.

At this time, some people in Donetsk began to show political ambitions, and some were openly predicting that Volodymyr Shcherban would be a presidential candidate in the next election. (The most vocal proponent of this line of thinking was Yevhen Shcherban.) By late 1995, certain events convinced the Donetsk clan that this was in fact a very bad idea. Near the end of that year, Bragin was gunned down in Donetsk, and his young deputy Akhmetov almost immediately took over the soccer club. From that day on, he was the most powerful member of the clan.

From January through July 1996, a number of less prominent Donetsk businessmen affiliated with the PSD were killed, and in July 1996, Yevhen Shcherban, at the time a member of parliament, was killed, along with his wife and bodyguard, at the Donetsk airport. A car filled with people dressed as police officers drove up to his plane as Shcherban was exiting the aircraft. The men jumped out and opened fire with automatic weapons, then walked back to the car and drove off at a leisurely pace without any difficulty. The real killers have never been found in any of the cases named above, but earlier this year, Ukrainian Prosecutor-General Svyatoslav Piskun stated that former Prime Minister Lazarenko was the person who ordered the contract hit on Yevhen Shcherban. This revelation came at the same time that rumors began circulating that Lazarenko had decided to cooperate with the prosecution in California and was naming some very important people in Kyiv as participants in his criminal dealings.

"RFE/RL Poland, Belarus, and Ukraine Report" is prepared by Jan Maksymiuk on the basis of a variety of sources including reporting by "RFE/RL Newsline" and RFE/RL's broadcast services. It is distributed every Tuesday.

UKRAINIAN PRESIDENT MAKES FIRST APPOINTMENTS TO YANUKOVYCH'S CABINET. President Leonid Kuchma has appointed State Tax Administration head Mykola Azarov as first deputy prime minister and finance minister in Prime Minister Viktor Yanukovych's cabinet, Reuters reported on 26 November, quoting presidential spokeswoman Olena Hromnytska. Hromnytska also told the agency that Ivan Kyrylenko has been appointed deputy prime minister for agriculture, Dmytro Tabachnyk as deputy prime minister for humanitarian issues, and Vitaliy Hayduk as deputy prime minister for fuel and energy. Yanukovych told journalists on 25 November that Defense Minister Volodymyr Shkidchenko, Interior Minister Yuriy Smyrnov, Justice Minister Oleksandr Lavrynovych, and Foreign Minister Anatoliy Zlenko will retain their posts in his cabinet. Kuchma also proposed that the Verkhovna Rada approve Serhiy Tihipko, the leader of the Labor Ukraine-Party of Industrialists and Entrepreneurs parliamentary caucus, as governor of the National Bank of Ukraine. That post is currently held by Volodymyr Stelmakh. JM

FOREIGN INVESTIGATORS RAISE MORE QUESTIONS ABOUT UKRAINIAN KOLCHUGAS. U.S. and British experts who last month investigated the alleged sale by Ukraine of a Kolchuga radar system to Iraq said in a report released on 25 November that they were unable to prove that Ukraine transferred radar systems to Iraq "under openly declared contracts," but added that "covert or illegal arms transfers, particularly with the complicity of third parties, remain a credible possibility," Reuters and AP reported. The report says Ukraine provided documentation on 72 Kolchuga systems but that four remain unaccounted for. According to Ukrainian officials, these four systems were sold to China, but Ukraine denied investigators access to the contracts, claiming they were commercial secrets. The investigators say they need missing documentation on the sale of the four systems to China, technical information on the location of the systems in China, and access to people who were not available for interviews during their visit to Ukraine in October -- especially Leonid Derkach, the former head of the Ukraine Security Service, and Yuriy Orshanskyy, the former honorary consul in Iraq. JM