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RECORD EUROBOND ISSUE FOR CELLULAR MARKET Moscow-based cellular operator Mobile TeleSystems (MTS) plans to raise up to $400 million with a five-year Eurobond issue, AK&M reported on 15 January. The company will decide on the exact size and time of the offering after a road show for investors slated to begin next week. The Eurobonds will be offered on the Luxembourg Stock Exchange through Credit Swiss First Boston and are aimed primarily at American and European institutional investors. If it takes place as planned, the $400 million issue will be the largest yet by a Russian cellular operator, "Vedomosti" noted on 16 January. MTS needs the funds to pay for recent acquisitions, most notably a controlling stake in Ukrainian cellular operator UMC that cost it $194.2 million. DK

The Republic of Tatarstan government and its Tatneft oil company celebrated a victory over Ukraine's State Property Fund (FGI) with personnel changes at the country's largest oil refinery, "Kommersant" reported on 17 January. The FGI had disputed an 18.3 percent stake in the Ukrtatnafta refinery held by two offshore companies allied with Tatneft. Tatneft itself owns an 8.6 percent stake in Ukrtatnafta, while the Republic of Tatarstan controls 28.78 percent of the refinery. (According to an 8 October article on, the Republic of Tatarstan is the largest shareholder in Tatneft with a 31.3 percent stake.) A final court victory in December cleared the way for Tatneft and the Tatarstan government to establish operational control over the enterprise, "Vedomosti" reported on 17 January. They lost little time in doing so -- a 15 January shareholders' meeting elected Tatneft ally Vladimir Fedotov CEO to replace Sergei Pereloma. An 18 November headline in Tatarstan newspaper "Vechernyaya Kazan" read "Friendship Triumphs in the Battle of Poltava" (Ukrtatnafta is located in the Poltava region of Ukraine), but the subtitle was considerably less equivocal, crowing, "We won!" DK


RFE/RL Poland, Belarus, and Ukraine Report Vol. 5, No. 2, 21 January 2003

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

COULD BELARUS BENEFIT FROM RUSSIAN-LATVIAN OIL ROW? Transneft, Russia's oil-pipeline monopoly, has cut off its oil shipments from Navapolatsk in Belarus to the Latvian port of Ventspils for the first quarter of this year. The decision has angered not only the Latvians, for whom the oil-transit trade is a major source of income, but also Russia's oil producers, who say that without the Navapolatsk-Ventspils route, export-ready crude is being stockpiled at storage facilities and refineries and that the suspension of drilling operations cannot be ruled out. It also raises once again the whole question of alternate routes for supplying Europe with oil from the former Soviet Union, and, indeed, the dependence of Belarus on Russian oil.

According to Sergei Grigorev, the vice president of Transneft, Latvian transit costs and port charges are too high. In any case, he told the media, the producers are free to choose any export route they wish. (In view of Transneft's monopoly, however, if producers fail to conform to Transneft's views, the only "choices" left to them are far more expensive road or rail transport.)

The Latvians for their part deny that their charges are excessive. Alvars Lembergs, who is at present both mayor of Ventspils and president of the Latvian Transit Association, said that Transneft's motives are political, not economic. Transneft purportedly wants to force exporters to use its own port at Primorsk, in Leningrad Oblast, which went into service at the end of 2001. Last year, Primorsk handled 12 million tons of crude, and its target for 2003 is 18 million tons. According to Lembergs, oil-export costs are, in fact, $3 per ton cheaper at Ventspils than at Primorsk. The technical facilities at Ventspils are superior; moreover, it is ice-free the whole year round, whereas Primorsk can be kept open in winter only by using icebreakers, with this additional expense passed on to the exporter.

As soon as Transneft announced the cutoff of the Navapolatsk-Ventspils route, the heads of Russia's big four oil producers -- Vagit Alekperov (LUKoil), Mikhail Khodorkovskii (Yukos), Sergei Bogdanchikov (Rosneft), and Vladimir Bogdanov (Surgutneftegaz) -- wrote to Russian Prime Minister Mikhail Kasyanov, criticizing Transneft's decision and asking to be allowed not only to continue to export through this route but even to increase its use. However, Kasyanov, no friend of the oil producers, had already rejected two similar appeals in the past (though these did not relate specifically to the Navapolatsk-Ventspils route). The Russian business newspaper "Kommersant" wrote optimistically that, in view of OPEC's campaign to raise oil exports worldwide, this new appeal might be more successful. But this hope was not justified. A few days after the letter was made public, Russian Deputy Prime Minister Viktor Khristenko stated that oil-export plans for the first quarter, i.e., leaving out Ventspils, would not be reviewed. (Strictly speaking, such an announcement should have come from Transneft rather than a politician, but the Russian government has a 75 percent stake in Transneft.) And, as if to rebuke the exporters further, Kasyanov uttered a sharp criticism of their plan to build a pipeline from Western Siberia to the Arctic (but generally ice-free) port of Murmansk, which would provide another alternative to Primorsk. Because, Kasyanov said, Russia's oil-transport sector must remain under state control, even if private capital is used to build additional pipelines.

However, Transneft's pipelines are not the only ones supplying Europe with oil from the former Soviet Union. Ukraine has built a major oil terminal at Pivdennyy, 35 kilometers from Odesa, and is investing $200 million into a pipeline linking that terminal to Brody in western Ukraine for the transport of Caspian oil. A further link is planned from Brody to Plock in Poland. However, in spite of repeated commitments in principle to the 430 million-euro ($459 million) extension, the Poles have so far not announced a timetable for its construction. Hence, even before Transneft's boycott of Ventspils was announced, discussion was beginning to surface in Belarus of the possibility of a link from Brody to Navapolatsk and then on to Ventspils. This would require only the construction of a 183-kilometer pipeline from Babovichy to Kastsyukovichy in Belarus. (Although on the map it may seem that, even now, there are pipeline connections from Brody to Navapolatsk, one section, from Brody to Mazyr in Belarus, could not be reengineered to flow in the west-east direction; a new pipe would have to be laid parallel to the existing one.)

This idea has been around at least since 1993, when it received a public airing at a forum in Minsk of democratic politicians from Lithuania, Latvia, Belarus, and Ukraine. The idea at that time was to connect the existing east-west transit pipelines with cross connections and to modify the pumping facilities to work in either direction. Then, in the case of a Russian oil embargo, it would be possible for the four countries concerned to import oil via either the Baltic ports or the Black Sea ports. With Russian oil supplies now a matter of politics as well as economics, even Belarus, Russia's partner in the putative "union state," can no longer be certain that Russian oil will flow continuously, as the events of last August showed.

The latest variant of this scheme was analyzed last year by Natalya Tahanovich, a specialist in energy problems at the Institute of Economics of Belarus. She put the cost of the Babovichy-Kastsyukovichy section at $80.3 million, a sum that the European Union may well be prepared to help finance, particularly after the accession of the Baltic republics. It is noteworthy that Tahanovich's paper appeared in a collection titled "Belarusian-Russian integration," as the construction of a pipeline that would bring "non-Russian" oil into Belarus would seem, at first glance, to threaten a major strand of such integration: Belarusian dependence on Russian oil. Nevertheless, the fact that a Brody-Navapolatsk link is being considered even theoretically by Belarusian energy experts is, in the light of the monopolistic attitude of Transneft, highly significant.


GROUP FIGHTING PUBLIC APATHY OVER CORRUPTION. The public perception that Ukraine is rotten with corruption is not new. But the latest opinion poll (15 January) by Ukraine's Social Monitoring Center and the Institute of Social Studies is startling because of the high numbers of people who believe that most or all government officials are on the take -- 78 percent of respondents -- and the admission that 44 percent personally paid bribes last year.

The figures paint an even more ominous picture than a survey commissioned last year by a nongovernmental body working in Ukraine called Partnership for a Transparent Society (PPS). That survey found that 65 percent of Ukrainians believe corruption is very widespread.

In the latest poll, respondents accuse staff in Ukraine's supposedly free medical system of being the biggest bribe takers. That's in line with the results of the PPS survey, which showed that more than half of those receiving medical treatment admitted to paying a bribe to receive service.

Both polls showed that traffic police, tax inspectors, and teachers in higher education are among the most common bribe seekers.

The PPS, funded by the U.S. Agency for International Development, is working to convince Ukrainians that corruption need not be an inevitable part of their lives. PPS Director Marta Kolomayets said the organization, which has been working in the country for two years, wants to inform ordinary Ukrainians about the rights they possess and to help organize groups to fight corruption.

Kolomayets said the PPS is not aimed at eradicating corruption among the top echelons of government but rather at the levels that affect ordinary people: bribes paid to medical personnel for treatment, to staff to admit children into higher education, or to minor bureaucrats to issue vital documents or payments such as pensions.

Kolomayets said the PPS also helps small and medium-sized businesses negotiate the obstacles presented by the country's opaque business regulations and erected by bribe seekers, such as the tax inspectorate, fire-department safety officials, and public-hygiene inspectors.

She said the PPS has opened seven regional offices and that another four will open by the end of this month. These function as advice centers, where individuals can drop in for help with problems linked to corruption. The centers coordinate with other nongovernmental agencies also interested in combating bribery and corruption.

Kolomayets said one of the PPS's most positive achievements has been to get local government authorities involved in the anticorruption process. "I think one of our biggest successes is that we were able to unite nongovernmental organizations from various regions of Ukraine that, even if they have different interests, want to fight the problem of corruption and want more transparency from local government. I also think that it's important that we have been able to work as partners with local and state government bodies and their departments. I think that this shows something is changing and that officials are prepared to listen to the opinions of the community, to people's thoughts, and to incorporate them in their work. That means that society is turning into a more democratic society," she said.

PPS coordinator Svetlana Yaremenko, from the eastern city of Donetsk, said a vital ingredient of the work is informing people of their rights and letting them know they can come to the project's offices for advice.

She said the Donetsk office operates a telephone "hot line," which is often used by small and medium-sized businesses. Yaremenko explained what she believes is the project's greatest value: "Another reason for the importance of our program is that many people acknowledge that corruption exists in Ukraine today, but unfortunately they are unwilling to fight against it. Most say, 'Yes, there is corruption, but we'll wait to see what happens.' Only a small portion say they will try to fight against it. That shows that people accept the existence of corruption but are not prepared to fight against it. Therefore, I think the work of our coalition is important to instill that everyone personally should do something and that only through a united effort can we defeat this phenomenon."

The project coordinator from the southern Mykolayiv region, Anatoliy Ivanychenko, said that bribery -- whether money or gifts -- is so prevalent that many officials do not consider it wrong. "They don't understand at all that receiving a present, a gift of gratitude, is not really a sign of thanks but that it's something corrupt. They don't understand that just because an official has issued a document without delay or has done what the law says he should do, that receiving a reward is corrupt," he said.

His colleague, Orest Pasichnyk, project coordinator in the western city of Lviv, agreed. He believes many officials who would like to run honest operations feel helpless to root out corruption. "I'm sure that some of the heads of [government] departments are dismayed at having to work in places where such negative things are happening, that is, corruption and so forth. That's natural. And some of these heads of departments cannot deal with the problem, because the junior staff cover up for one another, and it's possible that the chief doesn't even know about many of the goings-on."

Both men say that working with local authorities is essential to foster reform.

The mayor of the western Ukrainian town of Drohobych, Mykhaylo Luzhetskyy, said the PPS has demonstrated a more open way for the town's functionaries to work. He said important decisions are now made following public meetings, where the views of townspeople are heard.

Luzhetskyy said an office has been provided where citizens can receive clear explanations about what is happening in the town and get advice from lawyers and other specialists about problems they may be encountering. He said that he and other officials regularly appear on television and radio phone-in programs, where they answer questions about official matters.

Luzhetskyy said the combination of transparency and the involvement of the public in decision making is a good recipe for fighting corruption. "This transparency is one of the ways we can fight corruption, because all matters to do with privatization, questions of renting out facilities, [or] questions about construction projects are resolved transparently with the participation of the community before we make the final decision. Decisions are not made by just one or two officials but after consultation with the community. The scope for corruption diminishes, as it's not just one or two bureaucrats making the decision," he said.

Luzhetskyy said the PPS inspired him to take another practical step to lessen corruption: "We've also implemented our project combating corruption by rotating 70 percent of all our town officials into different jobs. This movement of people who have worked for a long time in the same office has snapped many of the links that lead to corruption, and today we have a fairly positive result."

The PPS's Ivanychenko said one of the biggest problems facing Ukraine is that young people seem to accept the necessity for bribery. That sentiment also emerged from the most recent poll, which shows nearly one-quarter of respondents nationwide -- and nearly half in the capital, Kyiv -- believe that paying bribes is a normal part of life.

"In our experience, most of the people we work with are more than 50 years old. The younger generation prefers to resolve matters speedily, even if this means making illegal payments, to save time. But this returns like a boomerang to affect that same person," Ivanychenko said.

PPS Director Kolomayets said the latest poll shows again the importance of demonstrating to ordinary people that they are not powerless and that, with enough determination and information, they can combat corruption.

SUPPORT FOR INDEPENDENCE RETURNS TO 1991 LEVELS. Two recent Ukrainian opinion polls have indicated both positive trends in Ukraine's post-Soviet transition and an alarming degree of schizophrenia in Ukraine's identity. A late-December poll by the Kyiv International Institute for Sociology (KMIS), based at the Kyiv Mohyla Academy, provided evidence that Ukraine had recovered from its postindependence depression. The KMIS poll found that support for state independence had returned to the same high levels that existed in the December 1991 referendum, in which 90.3 percent of those participating in the referendum -- 84.3 percent of the electorate took part -- supported independence from the Soviet Union, which translates into 76.1 percent of Ukrainian voters. The KMIS poll found that 77 percent of Ukrainians now support independence.

A number of factors have led to this return to high levels of support for independence. The KMIS poll was conducted two years after the economic recovery of Ukraine, which saw the country's first economic growth since 1989. In addition, the hardcore 20 percent opposed to independence found in the KMIS poll are likely to be supporters of the Communist Party of Ukraine (KPU) (in the March 2002 parliamentary elections, the KPU obtained 19.98 percent of the vote under a proportional party-list system). The March elections and subsequent opinion polls have showed that the popularity of the KPU is in decline. Its current parliamentary strength is less than half of what it had been in the 1998-2002 Verkhovna Rada.

The KPU is no longer seen as the sole opposition party to the executive and oligarchs. When it was the only opposition party, it received the protest vote from noncommunist voters unhappy with their socioeconomic situation. In last year's elections, three other opposition forces appeared: Viktor Yushchenko's Our Ukraine, the Socialists, and the Yuliya Tymoshenko Bloc. Yushchenko said in an interview in "Dzerkalo tyzhnya" of 21-27 December that "our political force is oppositional."

The KPU suffers from being associated with the Soviet past, to which Ukrainians have a schizophrenic attitude. The KPU's continuing popularity of 20 percent is countered by a higher proportion of Ukrainians who hold negative views about communism. This negative attitude was capitalized upon by Leonid Kuchma in the second round of the 1999 presidential elections, which showed how it would be impossible for a Communist to win the presidency in Ukraine.

The impact of the growth of historical consciousness concerning crimes committed in the Soviet era, such as the 1933 famine, to which a large monument will be unveiled this year in Kyiv (a small one has existed since 1993), has reduced KPU support. Ukrainian leaders tirelessly repeat that independence will ensure that tragedies such as the 1933 famine and the April 1986 Chornobyl nuclear accident will be not repeated.

At the same time, Ukrainians remain divided over the Soviet legacy. The KMIS poll found that 38.6 percent agreed with the view that Josef Stalin was a "great leader" (vozhd). Stalin is associated both with crimes against Ukrainians (such as the famine) and with victory in the Great Patriotic War (World War II).

Another poll this month by the Ukrainian Democratic Circle (UDK) found that 40 percent of Ukrainians -- twice the number of those supporting the KPU -- identified with the Soviet Union. Meanwhile, 47.7 percent identified themselves with Ukraine, a figure far lower than public support for independence.

The UDK poll also found that one-third of Ukrainians remained positive about the Soviet legacy, 42.2 percent held a positive attitude toward the Bolshevik Revolution, and 44.5 percent held negative views of this same event. During the 1990s, nationalist, anti-Bolshevik governments of the 1917-1921 era were rehabilitated in Ukraine, which may have affected attitudes regarding the Bolshevik Revolution. The UDK poll found that the doyen of Ukrainian historiography and president of the 1917-1918 Tsentralna Rada, Mykhaylo Hrushevskyy, was the third-most-positive historical figure for Ukrainians. Between the 1930s and the 1980s, Hrushevskyy, who worked in Soviet Ukraine during the 1920s, was attacked as a "bourgeois nationalist" and "German agent."

Ukrainians hold contradictory views of the Soviet era: nostalgic for the days of near-complete employment and cheap prices, when wages and pensions were paid on time, coupled with negative views of the crimes committed by the Soviet regime. Hence, not all of the 58.7 percent who lamented the disintegration of the Soviet Union in the UDK poll are KPU voters.

The year 2002 also witnessed the revival of the popularity of national democrats to the same levels they held in the December 1991 presidential elections when five national democratic candidates obtained a combined vote of 34.2 percent. In the March 2002 elections, national democrats obtained a combined total of 30.77 percent (Our Ukraine received 23.56 percent and the Yuliya Tymoshenko Bloc 7.21 percent). This revival of national democratic fortunes has also been seen in polls during the last two years, which have given Yushchenko stable ratings of 25-30 percent.

These different factors are closely interlinked. While Ukrainian statehood was still perceived to be threatened during the presidency of Leonid Kravchuk and during Kuchma's first term (1991-1999), the national democrats and former oligarchs held a mutual alliance against domestic (Communist) and foreign (Russian) threats.

As Ukrainian statehood became de facto and de jure no longer questioned in Kuchma's second term, the major focus of attention of different political groups switched to the issue of what kind of Ukraine was being built. On this question, the national democrats parted company with the centrist oligarchs and Kuchma, feeling they had more in common with the left. The Socialists had themselves evolved toward a pro-statehood position during Kravchuk's tenure and Kuchma's first term. Meanwhile, the threat once represented by the Communists in Kuchma's first term was replaced by the authoritarianism and corruption of the centrist oligarchs in Kuchma's second.

The 1991, 1994, and 1999 presidential elections were dominated by issues of Ukrainian statehood. This will no longer be the case. The main issue that will be fought over in the presidential elections next year will be the nature of the system to be built in Ukraine.

"Millions of Ukrainians have sex every day, but they apparently do that inadequately, because our [population] has decreased even below 49 million. I see nothing immoral in the name of the exhibition and I'm going to see it with my wife." -- Ukrainian lawmaker Oleksandr Hudyma (Our Ukraine), commenting on 18 January on the controversy surrounding an exhibition called "Let's have sex" in Lviv, which was banned and subsequently permitted by Lviv Oblast authorities; quoted by the Our Ukraine website (

"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.

CIS OFFICIAL VISITS GEORGIA. CIS Executive Secretary Yurii Yarov held talks in Tbilisi on 17 January with Georgian Foreign Minister Irakli Menagharishvili, Minister for Special Assignments Malkhaz Kakabadze, and President Eduard Shevardnadze, Caucasus Press and Russian news agencies reported. The talks focused on the agenda for the 28-29 January CIS summit in Ukraine that is to decide whether to renew the mandate of the Russian peacekeeping force deployed under the CIS aegis in the Abkhaz conflict zone. Yarov told journalists that Shevardnadze might meet on the sidelines of the summit with Russian President Putin. Shevardnadze described his meeting with Putin in October on the sidelines of the previous CIS summit in Moldova as a potential turning point in relations between the two countries (see "RFE/RL Newsline," 8 October 2002). LF

SOME 57 PERCENT OF BELARUSIANS OPPOSE THIRD TERM FOR LUKASHENKA. According to a poll conducted by the Independent Institute for Socioeconomic and Political Studies (NISEPI) among 1,478 Belarusians in December, 57 percent of respondents said they oppose a constitutional amendment that would lift the current two-term restriction on presidents. Lukashenka has suggested he might organize a constitutional referendum to enable him to run for a third term (see "RFE/RL Newsline," 18 September 2002). The poll also indicated that Lukashenka's popularity has increased for the first time in 16 months, from 27 percent in September to 30.5 percent in December (see "RFE/RL Poland, Belarus, and Ukraine Report," 21 January 2003). JM

UKRAINIAN PRESIDENT TOURS MIDDLE EAST. President Leonid Kuchma visited Saudi Arabia on 18-19 January and Kuwait on 20-21 January, Ukrainian media reported. Later on 21 January, Kuchma was scheduled to make an official visit to Bahrain. In Riyadh, the secretary-general of the Gulf Cooperation Council, Abdelrahman bin Hamad al-Atiyyah, assured Kuchma that the council is ready to develop cooperation with Ukraine in the economic, trade, and investment spheres. He added that Ukraine's potential in technical areas, investment, and technology can be useful for countries in the Persian Gulf region. On 20 January, Kuchma held talks with Kuwaiti government officials, followed by the signing of an intergovernmental agreement on avoiding double taxation and preventing tax evasion. JM

UKRAINIAN SPEAKER DENIES HARBORING PRESIDENTIAL AMBITIONS. Verkhovna Rada speaker Volodymyr Lytvyn told journalists on 17 January that he is not going to run for president in the 2004 elections, Interfax reported. Lytvyn speculated that candidates might include Our Ukraine leader Viktor Yuschenko, Communist Party leader Petro Symonenko, Yuliya Tymoshenko, Socialist Party leader Oleksandr Moroz, Premier Viktor Yanukovych, and presidential administration chief Viktor Medvedchuk. Last week, the 4th Verkhovna Rada concluded its second plenary session. The next session will begin on 4 February. JM

UKRAINIAN JOURNALIST FOUND DEAD. Well-known Ukrainian journalist Serhiy Naboka was found dead in a hotel room in Vinnytsya, in western Ukraine, on 18 January, UNIAN and Interfax reported. Naboka, 47, a veteran journalist for RFE/RL's Ukrainian Service, was in Vinnytsya with a group of journalists to prepare a series of reports on the living conditions of prisoners. Preliminary reports indicated that Naboka's death was caused by a blood clot. JM

CIS SUMMIT RELOCATED TO KYIV. Ukrainian Foreign Minister Anatoliy Zlenko on 21 January confirmed media reports that the CIS informal summit originally scheduled for Ivano-Frankivsk, western Ukraine, on 28-29 January, will be held at the same time but in Kyiv, Interfax and UNIAN reported. UNIAN on 20 January quoted a diplomatic source from Moscow as saying that some CIS presidents objected to meeting in Ivano-Frankivsk, citing insufficient transport and accommodation infrastructure. Earlier, the radical nationalist Ukrainian National Assembly-National Self Defense announced it would stage protests against holding the CIS summit in western Ukraine. JM

POLISH PRESIDENT VETOES BIOFUELS LAW. President Kwasniewski on 17 January vetoed a bill under which all gasoline marketed after 1 July would have to contain at least 4.5 percent bioethanol (dehydrated alcohol), Polish media reported. According to the president, a majority of experts he consulted "commented negatively" on the bill. He advised the Sejm to make changes to the bill, including adding provisions about the gradual introduction of biofuels, offering consumers a choice, and providing for the creation of an effective inspection system in the biofuels market (see "RFE/RL Poland, Belarus, and Ukraine Report," 21 January 2003). JM