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LEGAL CHALLENGE HALTS UKRAINIAN CELLULAR DEAL Moscow-based cellular operator MTS has put a deal to acquire Ukrainian Mobile Communications (UMS) on hold in the face of a legal challenge from a minority shareholder. The trouble began when Kharkov-based Elmaks, a shareholder in Ukrainian national operator Ukrtelecom, disputed the legality of the Ukrainian government's decision to sell Ukrtelecom's share in UMS to MTS, "Vremya novostei" reported on 22 January. MTS arranged a multistage deal that would have allowed it eventually to acquire 100 percent of UMS for some $337 million. Kyiv's "Ukrayinskaya pravda" wrote on 22 January that Elmaks might be acting on behalf of influential Ukrainian figures who want to prevent their "northern neighbors" from biting off a tasty chunk of local business. On 24 January, a Kyiv commercial court ruled that the MTS acquisition was legal, but Elmaks representatives announced that they will continue to appeal to the highest level, "Kommersant" reported on 25 January. DK

South Korea's bankrupt Daewoo Corporation has sold its 49 percent stake in Ukrainian cellular operator Ukrainian Radiosystems (URS), as well as its 50 percent stake in joint venture AvtoZAZ-Daewoo, "Kommersant" reported on 23 January. URS operates a GSM-900 network with 37,000 subscribers under the brand name WellCOM; Daewoo is selling its stake to the Ukrainian companies Ukrfondinvest and Interinvest. Daewoo sold its stake in AvtoZAZ-Daewoo to Swiss investment firm Hirsch & Cie, Prime-TASS reported on 21 January. "Ukrayinskaya pravda" speculated on 20 January that the mysterious Swiss investors might represent the interests of "certain Ukrainian or Russian companies." "Kommersant" wrote on 21 January that Ukravto, Daewoo's partner in the joint venture, might stand behind Hirsch & Cie. Daewoo entered the Ukrainian auto business in 1997 but was hit hard by the 1998 world financial crisis and declared bankruptcy in 2000. It has been looking for a buyer for its half of the joint venture since May. There was no initial word on how much money changed hands in the sale of Daewoo's Ukrainian assets. DK


RFE/RL Poland, Belarus, and Ukraine Report Vol. 5, No. 3, 28 January 2003

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

BELARUS AS NEITHER DEMOCRACY NOR DICTATORSHIP. A book review by Vera Rich of Elena Korosteleva, Colin W. Lawson, and Rosalind J. Marsh (eds.), "Contemporary Belarus -- Between Democracy and Dictatorship," Routledge/Curzon, London and New York, 2003, 201 pp. ISBN 0-7007-1613-0.

This book --- yet another with a subtitle in the form "Belarus Between X and Y" -- is based on papers from the conference "Belarus: the forgotten heart of Europe," which was held at the University of Bath in February 2000, plus an afterword covering the presidential elections of September 2001. It is also, in some sense, derived from a two-year collaborative research project with academics from Belarusian State University, the Ukrainian Academy of Sciences, and Moscow State University, which was funded by both INTAS and the British Academy, called "Comparative Analysis of Charismatic Leadership in Russia, Belarus and Ukraine: Its Emergence, Mobilization, and Sustainability." This latter research, we are told, provided the empirical grounds on which the research conclusions of the book are based.

The result is a high-powered academic collection, with almost all the contributors either currently holding academic posts or writing doctoral dissertations at Western or Belarusian universities. The exceptions are Teresa Dumasy ("Belarus's Relations with the European Union -- a Western Perspective"), who at the time of writing was a senior research analyst on Ukraine, Belarus, and Moldova at the Foreign and Commonwealth Office in London and who is now at the British Embassy in Paris, and the eminent emigre Belarusian scholar, Jan Zaprudnik, now retired after a long stint with RFE/RL. The individual papers consider Belarus from the viewpoint of such topics as "postcommunist authoritarianism," the "difficulties of elite formation," the development of political parties and their election platforms, "president and opposition," the consequences of late economic reforms, the Russia-Belarus Union, and Belarus's relations with foreign states. Particularly valuable (especially to those who have only recently become involved in, or even aware of, Belarus) will be the papers "History and Politics in Post-Soviet Belarus (David R. Marples, University of Alberta) and "Belarus in Search of National Identity Between 1986 and 2000 (Zaprudnik).

To draw together the findings of the individual contributors, the editors provide a substantial introduction focusing in particular on economic problems, institutional and structural environments, the "paradoxical" nature of the Belarusian electorate, the "stability" of the existing regime and the prospects of what might happen if it were overthrown, and how far Russia is prepared to bear the costs of "union" with Belarus. Addressing the question implicit in the subtitle of the book, this introduction concludes that Belarus is not a "total dictatorship" since it "retains some aspects of a democratic state" but is rather an "elected dictatorship" possessing the "preconditions for democracy," though not democracy itself. They further conclude that, "Belarus has arrived at a crossroads of transition: what lies ahead is either an irrevocable path to democracy or a slide backwards to dictatorship."

During the three years since these papers were first presented in Bath, Belarus has shown little sign of firmly setting off on the path to democracy. However, in spite of some worrying increases in authoritarianism and infringements of human and civil rights (notably the 2002 law on religion), the backward slide has not become inevitable, and the "preconditions for democracy" still exist. Belarus remains stuck at the crossroads, and in spite of its long gestation period, this book, and the findings of the individual papers, remain largely relevant today.

Some of the numerical data is, of course, now outdated, and some contributors exhibit a somewhat naive tendency to take official Belarusian statistics and the findings of "pro-presidential" opinion polls at their face value without further discussion. Overall, however, the book provides a stimulating and challenging contribution to the study of contemporary Belarus.


UKRAINE-NATO ACTION PLAN UNVEILED. The Ukrainian Foreign Ministry and NATO on 22 January published on their respective official websites the text of the Ukraine-NATO Action Plan adopted by the NATO-Ukraine Commission at the NATO summit in Prague in November (see "The purpose of the Action Plan is to identify clearly Ukraine's strategic objectives and priorities in pursuit of its aspirations towards full integration into Euro-Atlantic security structures, and to provide a strategic framework for existing and future NATO-Ukraine cooperation under the Charter," the text says, adding that the plan will be reviewed periodically. The plan lays out jointly agreed principles and objectives in five sections: Political and Economic Issues; Security, Defense, and Military Issues; Information Protection and Security; Legal Issues; and Mechanisms of Implementation.

In accordance with the document, Kyiv has committed itself to pursuing "internal policies based on strengthening democracy and the rule of law, respect for human rights, the principle of separation of power of judicial independence, democratic elections in accordance with Organization of Security and Cooperation in Europe (OSCE) norms, political pluralism, freedom of speech and press, respect for the rights of national and ethnic minorities, and non-discrimination on political, religious or ethnic grounds."

In the sphere of foreign and security policies, Ukraine pledged in particular to update these policies to reflect its declared goal of full Euro-Atlantic integration, to be a key contributor to regional stability and security, to sustain and enhance participation in peacekeeping operations, and to fully observe international arms-control obligations.

In the sphere of economic policy, Ukraine promised to ensure the openness of its economy in conformity with World Trade Organization standards.

The document obliged Ukraine -- in close cooperation with NATO's Joint Working Group on Defense Reform -- to reform its defense and security system in general in order to obtain "a well-trained, well-equipped, more mobile and modern armed force" and to strengthen civil control over the armed forces and other security forces. In particular, Ukraine committed itself to achieving the following objectives: to increase the country's contribution to NATO-led peacekeeping operations in the Balkans and to NATO measures in the fight against terrorism; to develop the full interoperability, sustainability, and mission effectiveness of its armed forces through effective implementation of Partnership for Peace goals; and to maintain the readiness of rapid-reaction-force units for participation in joint operations with NATO.

Ukraine has also obliged itself to present annually a draft Annual Target Plan (ATP) for achieving principles and objectives of the action plan. The action plan stipulates that "within the framework of the NATO-Ukraine Commission (NUC), NATO member states will provide advice on the proposed specific measures and timelines, and the NUC will agree [on] any joint NATO-Ukraine actions. Ukraine will then approve its ATP at the highest level, which will include joint NATO-Ukraine activities agreed by the NUC and activities Ukraine undertake[s] on its own." The NUC is to review on an annual basis progress in achieving the objectives of the action plan.Quoting a source in the NATO press service, Deutsche Welle in Ukraine reported last week that the action plan does not automatically guarantee Ukraine membership in NATO. At the same time, the source said the implementation of the plan's principles and objectives will allow Ukraine to make essential progress on the path to full membership. (Jan Maksymiuk)

UKRAINIANS LESS TRUSTING OF NATO. The NATO-Ukraine Action Plan was published on 22 January. The five-chapter document outlines Ukraine's strategy for meeting NATO criteria on issues like policy, economy, security, defense, information, and law. It also proposes developing joint programs in disarmament, air defense, research, science, and emergency situations.

But a nationwide poll conducted in December by the Social Monitoring Center and the Ukrainian Social Studies Institute and published last week shows that confidence in NATO has dropped dramatically since a similar survey made last summer after Ukrainian President Leonid Kuchma declared his country's intention to join. The results published show that out of a sample of more than 3,000 Ukrainians, just 28 percent said they trusted the Atlantic alliance, down 11 percent from the poll last summer. Likewise, 44 percent of respondents said they did not consider NATO a trustworthy organization this time around. Last summer, just 34 percent said they had doubts.

The head of NATO's representative office in Kyiv, Michel Duray, said that opinion polls only partially reflect reality and that NATO is not disheartened by the poll. "Polls are like tides in the sea. They can go up, they can go down. So I'm personally convinced that [, although] there may have been some problems and misunderstandings, and there maybe still are some misunderstandings between NATO and Ukraine, this does not hamper our decision to go forward and to contribute to the implementation of the recently published action plan," Duray said.

Duray said another document will appear soon explaining how to implement the objectives outlined in the plan year by year. "The next practical step will be the publication of the annual target plan, which should occur, hopefully, in a few weeks -- no more than three weeks, I hope -- which describes, indeed, all the practical steps which are to be undertaken by Ukraine and by NATO and Ukraine [jointly]," Duray said.

When Kuchma declared in May that Ukraine wanted to join NATO, it was a dramatic departure from the country's previous policy of treading a neutral path between the West and its former colonial master, Russia.

Ukraine has been a member of NATO's Partnership for Peace since 1997, and joint NATO and Ukrainian military maneuvers are conducted frequently in Ukraine. But Kyiv's decision to intensify relations emerged from a growing fear Ukraine was being left behind as many former Soviet-bloc countries raced toward membership in not only NATO but the European Union as well.

However, Ukraine has only seen its isolation grow in recent months, as Kuchma has come under fire from Western leaders for his alleged corruption and possible role in the killing of an opposition journalist. The Ukrainian leader was roundly snubbed during November's NATO summit, which he attended despite requests that he not come to Prague.

The United States has also imposed financial sanctions on Ukraine amid claims that Kuchma authorized the sale of a sophisticated radar system to Iraq. And last week, Britain and Canada imposed additional sanctions on Ukraine, saying it had not done enough to combat money laundering.

Some of the organizers of the poll on NATO entry say many Ukrainians see the snub against Kuchma at the Prague summit as a snub against Ukraine overall.

This view is seconded by Serhiy Komisarenko, Ukraine's former ambassador to the United Nations and Britain and current head of the nongovernmental Ukrainian International Institute for Peace and Democracy. He said that many Ukrainians feel shunned not only by NATO but by the West overall.

Recent statements by the European Union appearing to dismiss Ukraine's chance of joining the bloc, Komisarenko said, have only contributed to that feeling of growing isolation. "Many Ukrainians are, I won't call it disappointed, but they objectively see that Western Europe and the United States are turning away from Ukraine. But what's the reason for this? Well that's another question," Komisarenko said.

Komisarenko said that most Ukrainians believe that "prevailing politics," i.e., the policies of Kuchma and his administration, are to blame for the country's isolation from the West. He added that the Western stance is understandable, given that Ukraine has consistently failed to honor pledges to introduce the reforms necessary for membership in the EU or NATO. "Therefore Ukraine, unfortunately -- I repeat, unfortunately -- even though it talks about wanting to be [closer to Western] Europe, it has done everything to show Europe that it is not ready for that process," Komisarenko said.

Commenting on the recent poll, Komisarenko said that many people are still locked into Soviet-era prejudices that color their outlook on institutions like NATO. "Different people look at issues in different ways depending on their world outlook and the events that happen in the world. It depends on the extent to which they are tied to the past. The attitude toward NATO, to a large degree, depends on the attitude toward NATO that prevailed during Soviet times," Komisarenko said.

Komisarenko's theory is supported by survey findings indicating that those Ukrainians most likely to distrust NATO are over 50 and remember the Soviet Union fondly. Geographically, most NATO doubters in Ukraine are found in areas with large numbers of ethnic Russians and Russian speakers: Crimea and eastern Ukraine. The most pro-NATO responses came from western Ukraine, where national consciousness is most firmly entrenched.

Komisarenko said that reporting on NATO by the Ukrainian mass media is largely negative. He said that NATO itself should do more to teach Ukrainians about the alliance and what it can offer Ukraine. "Unfortunately, I think that NATO publicizes itself too little in Ukraine. Ukrainians still know very little about NATO: what role it played previously in the world, what it did when the Cold War finished, and what NATO's current plans are," Komisarenko said.

Duray said that NATO does not want to isolate Ukraine and does not rule out Kyiv's eventual full membership in the alliance if it implements reforms like those in the plan outlined last week.

"Lazarenko was a natural phenomenon in the chaos that followed the creation of the independent [Ukrainian] state, [the chaos characterized by] the total absence of the understanding that national interests should be a priority, the domination of private interests, the uncontrollability and corruptibility of the entire power system, and the immaturity of society itself. Without doubt, he was a gifted man. I would have never hit upon [the ideas he had]." -- Opposition Sobor Party leader Anatoliy Matviyenko on former Prime Minister Pavlo Lazarenko, who is in a U.S. prison awaiting trial on charges of laundering $114 million through private U.S. financial establishments. When Lazarenko was prime minister (May 1996-July 1997), Matviyenko was governor of Vinnytsya Oblast and headed the pro-presidential Popular Democratic Party. Quoted by the "Ukrayinska pravda" website on 23 January.

"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.


PRESIDENTS LAUNCH 'YEAR OF RUSSIA IN UKRAINE.' Ukrainian President Leonid Kuchma and his Russian counterpart Vladimir Putin on 27 January in Kyiv inaugurated the Year of Russia in Ukraine, a yearlong festival of Russian culture in Ukraine that is intended to strengthen ties between the two countries, Ukrainian and Russian media reported. "I am sure [the festival] will strengthen our old and strong friendship, which will continue for centuries," Putin said, according to AP. "Today we can say with full confidence that strategic partnership with Russia is not a tribute to geopolitical realities or the long joint past. The development of partnership between our countries is demanded by life itself, by globalization and integration processes in the modern world," ITAR-TASS quoted Kuchma as saying. The same day, the culture ministers of both countries signed a plan of cooperation between their ministries for 2003-07. JM

POLISH PREMIER QUESTIONS WORDING OF EU ACCESSION ACCORD. The European Commission on 27 January ruled out any possibility of introducing changes to final agreements on agriculture reached between Poland and the European Union in Copenhagen in December (see "RFE/RL Poland, Belarus, and Ukraine Report," 17 December 2002), PAP reported. The commission was reacting to letters to EU leaders from Premier Leszek Miller who expressed his concern over the difference between what the Polish leader believes was agreed in Copenhagen and what the EU is now seeking to include in the accession treaty. The Polish side maintains that it negotiated a simplified system of subsidies based on farm size irrespective of the type of production. "Now [EU] experts are trying to persuade us into introducing a twofold system [of direct farm subsidies]: a simplified one and a standard one," PAP quoted Miller as saying. EU diplomats reportedly declared that the EU will prepare a reply to Miller's letters after a meeting of its ambassadors in Brussels later this week. JM


On 29 January, the first demarcation point on the Moldovan-Ukrainian is expected to be installed in Chernivtsi Oblast (formerly North Bukovina). The demarcation of the entire Moldovan-Ukrainian border is expected to take another two years to complete. In June 1996, delimitation of the 1,200-kilometer border was based on the administrative border established by the USSR on 4 November 1940. This resolved 70-80 percent of the delimitation. The remaining 20-30 percent took until 1999 to complete.

Why, then, the long delay in the border's demarcation? The border dispute between Moldova-Ukraine has always involved more than the issue of territory. The Moldovan village of Palanca is located exactly on the country's border with Ukraine. The Odesa-Reni highway runs through the village. When Moldova ceded a 7.7-kilometer section of the highway to Ukraine, the village of Palanca was effectively split in two. In exchange, Ukraine initially transferred to Moldova 100 square kilometers of land, to be followed by another 1,000 square kilometers near the mouth of the Danube River. This has allowed Moldova to begin building an oil terminal for the import of Azerbaijani oil, thereby reducing its dependency on Russia for energy and earning transit fees for the re-export of oil to other countries.

The agreement on the transfer of territory was signed in August 1999 after delimitation was completed. But Ukraine refused to withdraw its border troops from the Giurgiulesti region -- the area seceded to Moldova to give it access to the Black Sea -- because "an agreement on state borders has not yet been ratified." This, in turn, halted the construction of the oil terminal.

The ruling Communist Party of Moldova (PCM) has always supported the territory exchange. Opposition to it came from the Popular Party Christian Democratic and other the center-right parties. Those parties pointed to the constitution, which envisages making changes in the country's territorial integrity only through a referendum. In September, the Constitutional Court ruled in response to their objections that the transfer of land was constitutional. A Foreign Ministry official pointed out that the highway was not ceded but "transmitted into ownership" and that this "does not harm the sovereignty of Moldova."

An additional factor that complicates the border dispute is the Transdniester region. Since coming to power in 2001, the PCM has been a staunch advocate of Moldova's territorial integrity, hoping that its close relations with Russia would lead Moscow to apply pressure on the Transdniester separatists to reach an agreement with Chisinau. But while Russia first overtly and then covertly backed the Transdniester separatists, it has been unable to force them to sit down at the negotiating table.

Although Russia has shifted its support to the Moldovans since the election of the PCM, Ukraine still backs the Transdniester separatists. Earlier this month, Ukraine's special commissioner to the talks, Yevhen Levytsky, tabled a proposal that the Transdniester be granted de facto independence "as a republic in its current manifestations and characteristics" until a final settlement is reached. The proposal envisaged that the Moldovans would desist from interfering in the Transdniester while providing it with the new customs seals to undertake external trade. Ukraine is also seeking to open a consulate in the Transdniester.

Moldovan President Vladimir Voronin has become exasperated at the Transdniester stance and especially that of its intransigent president, Igor Smirnov. Moldova proposed installing joint Moldovan-Ukrainian customs checkpoints on its -- and Transdniester's -- border with Ukraine.

The OSCE has backed that proposal. Joint checkpoints would, according to an OSCE delegation that visited the border in December, make it possible "to improve import- and export-control procedures from the Dniester region." But this was precisely the issue that neither the Ukrainian or Transdniester sides wanted to resolve, and hence they both rejected joint checkpoints.

In 1996, the Moldovans issued eight customs seals for the Transdniester. By 2001, this number had been augmented by an additional 348 forged customs seals. In September 2001, Moldova changed its customs seals and thereby deprived the Transdniester of the possibility of "legal" involvement in international trade. The Ukrainian side has insisted that the new seals be given to the Transdniester. The Moldovans have also demanded that countries refuse to issue visas to residents of Transdniestr, many of whom have Russian citizenship.

Voronin has accused Ukrainian officials of involvement in illegal smuggling rackets operating out of the Transdniester and through the Ukrainian ports of Odesa and Illichevsk. In both of these ports, the Transdniester has individuals capable of fabricating documents facilitating such trade. Ukraine remains the only CIS state that has not recognized the new Moldovan customs seals.

One measure of the extent of Transdniester officials' involvement in the smuggling trade is the fact that Smirnov's son heads the Transdniester State Customs Committee. The scale of the trade Ukraine is facilitating for the Transdniester is evident in the 12,000 freight rail cars allowed to cross since the new customs seals were introduced. Late last year, a tape recording made by former presidential security officer Mykola Melnychenko of a conversation between Ukrainian President Leonid Kuchma and Odesa Mayor Ruslan Bodelan was released publicly. The tape substantiated allegations by Voronin and others of Ukraine's long-standing involvement in Transdniester smuggling rackets.

These smuggling rackets allegedly involve weapons, narcotics, metals, oil, gas, cigarettes, and other commodities. As Voronin complained: "We in Moldova have understood that Smirnov is a bandit. It is not clear who he is for Ukraine." The Transdniester was the most industrialized region of Moldova, with many factories involved in military production. Since 1992, the region has been forced to create closed production cycles for many of these weapons, such as small arms, mortars, GRAD multiple-missile and grenade launchers.

The Transdniester's involvement in the export of such weapons -- some of which could fall into terrorists' hands -- was one reason why the issue was on the agenda during Voronin's December visit to the United States, where he met with President George W. Bush. U.S. awareness of Ukraine's involvement in the smuggling rackets might, in turn, contribute to worsening the already poor relations between Kyiv and Washington.