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KREMLIN ADVISER OUTLINES MOSCOW'S POSITION ON PRESIDENTIAL ELECTION IN UKRAINE. Speaking at a press conference in Kyiv, Kremlin insider and National Strategy Council head Stanislav Belkovskii said that Moscow sees three favorable scenarios for Russia in Ukraine's presidential election in October, glavred.info reported on 15 June. The first scenario would be the election of current Prime Minister Viktor Yanukovich as president, the second would be the hypothetical re-election to a third term of President Leonid Kuchma, and the third scenario would be the election of a "Ukrainian Putin," that is, a member of the security services. The third scenario would be the most desirable and the first one the least. Belkovskii also stressed that this is not his personal view, but "the opinion of the groups within the administrative-bureaucratic elite that have substantial impact on Putin, but I do not want to personalize," he said. But even if the election is won by Our Ukraine leader Viktor Yushchenko, Ukraine's most popular politician, Moscow will eventually accept it. "Any next president of Ukraine will in retrospect be announced as 'Moscow's candidate,' even if it is Yushchenko," he said. Belkovskii also said he was in Kyiv to open a branch of his institution. Meanwhile, "Nezavisimaya gazeta" reported on 15 June that two well-known Moscow political consultants, Marat Gelman and Igor Shuvalov, have moved to Kyiv. The latter is not related to the presidential assistant of the same name. VY
UKRAINE'S CONTROVERSIAL PRIVATIZATION SEEN AS PATRIOTIC DEED. State Property Fund head Mykhaylo Chechetov said on Fifth Channel Television on 16 June that he is proud that a Ukrainian bidder won the tender for the Ukrainian steelmaker Kryvorizhstal (see "RFE/RL Newsline," 15 June 2004). Kryvorizhstal was purchased by a consortium led by two Ukrainian oligarchs, Viktor Pinchuk and Rynat Akhmetov, for some $800 million, despite the fact that foreign bidders offered from $1.2 billion to $1.5 billion for the 93 percent stake that was put up for sale. "I believe that the patriotism of any official is demonstrated by his deeds, not by the language he uses," Chechetov said, switching between Russian and Ukrainian. "[I] could speak Ukrainian but give the company to the Americans or Russians.... But I still speak Russian, and I have left the crown jewel of Ukrainian steel-making to the national investor." One unsuccessful bidder, the LNM and U.S. Steel group, which offered $1.5 billion for the stake and another $1.2 billion in an investment program, has reportedly appealed to the Ukrainian government to review the Kryvorizhstal tender. JM
UKRAINIAN SAILORS SENTENCED IN IRAQ RETURN HOME. Mykola Mazurenko and Ivan Soschenko, who were sentenced in Iraq in October to seven years in prison each for smuggling, are returning to Ukraine, Interfax reported on 17 June, quoting Foreign Ministry spokesman Markiyan Lubkivskyy. Mazurenko and Soschenko were among the crew of the Panamanian-flagged vessel "Navstar-1," which was detained last year off the Iraqi coast with an illegal load of oil (see "RFE/RL Belarus and Ukraine Report," 11 May 2004). After the sentence was handed down to them, the two sailors were incarcerated in the notorious Abu Ghurayb prison in Baghdad. Lubkivskyy said a Ukrainian court will review their case and in the event it confirms the Iraqi verdict, the two will serve their terms in a Ukrainian prison. JM
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CAMPAIGN AGAINST POP STAR HEATING UP... A national campaign among journalists to compel pop star Filipp Kirkorov to apologize for obscene and offensive comments he made to a journalist in Rostov-na-Donu during a 20 May news conference continues to gain momentum, Russian media reported on 18 June (see "RFE/RL Newsline," 15 June 2004). The website dni.ru has created an online petition (http://www.kirkorov.net) that has garnered 37,000 signatures calling on Kirkorov to apologize for his behavior. More and more regional media outlets are signing up to a national boycott of Kirkorov's music. The Tyumen-based website vsluh.ru reported on 18 June that two local radio stations -- RadioS-Avtoradio and Krasnaya armiya -- have joined the boycott, while Regnum reported the same day that Kamchatka's Radio-SV has also signed on. Newsru.com reported on 18 June that radio and television stations in Altai Krai, Novosibirsk, Chuvashia, Kirov, and Ukraine have also declared a ban on Kirkorov's music. RC
PRIVATIZATION, UKRAINIAN STYLE
State Property Fund head Mykhaylo Chechetov announced in Kyiv on 14 June that the Investment-Metallurgical Union has won the tender for the sale of a 93.02 percent stake in the Ukrainian steelmaker Kryvorizhstal, which accounts for some 20 percent of the country's steel output. Chechetov said the union paid 4.26 billion hryvnyas ($800 million) for the stake at a starting price of 3.8 billion hryvnyas ($715 million). The Investment-Metallurgical Union represents the interests of the Interpipe corporation -- owned by Viktor Pinchuk, President Leonid Kuchma's son-in-law and a parliament deputy -- and the System Capital Management company, which is controlled by Donetsk-based businessman Rynat Akhmetov, reportedly the richest man in Ukraine and a longtime crony of Prime Minister Viktor Yanukovych.
In the past few weeks, Ukrainian opposition lawmakers made several unsuccessful attempts to block the sale of Kryvorizhstal -- a giant steelmaker employing some 52,000 people -- which was widely seen as yet another privatization, at a price well below the real value of the privatized company, intended to enrich the already-rich circle of pro-government oligarchs. On 3 June, the legislature fell just eight votes short of the 226 needed to approve a resolution halting the Kryvorizstal tender.
The terms of the tender were formulated in such a way that it was clear to everybody that Kryvorizhstal was poised to become the property of Pinchuk and Akhmetov. In particular, the tender's qualifying conditions announced in May included the provision that any bidder must have a history of producing 1 million tons of coke and 2 million tons of steel in Ukraine annually in the past three years. Of the six bidders that submitted purchase offers, only two meet this condition -- Pinchuk's and Akhmetov's Investment-Metallurgical Union and the Industrial Union of Donbas, another Donetsk-based oligarchic holding. The Industrial Union of Donbas offered $750 million for the stake, just slightly over the starting price of $715 million but below the Investment-Metallurgical Union's bid.
It is noteworthy that the Anglo-Dutch concern LNM and U.S. Steel, which made a joint bid, offered to pay $1.5 billion for the stake and add another $1.2 billion in an investment package. A higher bid than that of the Investment-Metallurgical Union was also made by Russia's Severstal steelmaker ($1.2 billion). LNM and U.S. Steel have reportedly called on Ukrainian President Kuchma and Prime Minister Yanukovych to revise the tender. "By limiting the privatization this way, the Ukrainian economy is being deprived of a competitive tender," LNM and U.S. Steel said in a statement.
The Kryvorizhstal sale -- which many Ukrainian commentators have said is a large improvement on previous dishonest privatizations -- nevertheless highlights Ukraine's notoriously clannish organization of the state power branches. Not only did the executive and legislative branches not see anything objectionable in such a tender, but even the judiciary expressed its approval. Socialist Party lawmaker Valentyna Semenyuk on 8 June lodged a complaint against the Kryvorizhstal sale with the Holosiyivskyy District Court, arguing that the tender terms do not sufficiently protect Kryvorizhstal employees against layoffs. In theory, any court complaint should automatically suspend the privatization in question. Later the same day, however, the documents of the case were transferred to the Pecherskyy District Court, whose jurisdiction was deemed by judicial authorities more appropriate for the State Property Fund, which managed the privatization on behalf of the government. The Pecherskyy District Court -- which is famous in Ukraine for many cases of ruling in favor of the authorities -- rejected Semenyuk's complaint and said the privatization may continue.
More curious still, trade-union bosses at Kryvorizhstal have organized a petition among employees saying that they want a domestic investor for their enterprise. The petition was signed by more than 30,000 people, of whom the overwhelming majority, if not all, were reportedly completely unaware of not only the sums offered for their enterprise but also of the tender's provisions regarding guarantees for the Kryvorizhstal workforce.
Kryvorizhstal is a juicy privatization morsel -- it reported net sales of $1.4 billion on production of 7 million tons of steel last year. Therefore, some Ukrainian media assert, it should be expected that the 93 percent stake will unavoidably, even if inconspicuously, be resold in the future, partly or completely, and with a hefty profit for the Investment-Metallurgical Union. Why the state did not want to put this profit in its coffers is, of course, a different question.
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UKRAINIAN PARLIAMENT REVISES 2004 BUDGET UPWARD... The Verkhovna Rada on 17 June passed a bill increasing the 2004 budget revenues by $4.5 billion hryvnyas ($845 million) and spending by 7.9 billion hryvnyas, Interfax reported. The budget-revenue revision was primarily connected with the government's recent sale of the Kryvorizhstal steelmaker (see End Note). The 2004 budget adopted in November projected revenues at 60.7 billion hryvnyas and spending of 64.2 billion hryvnyas (see "RFE/RL Newsline," 1 December 2003). JM
...AND REJECTS OPPOSITION-SPONSORED BILL ON 'HIDDEN' REVENUES. The Verkhovna Rada on 17 June rejected a bill by the opposition Our Ukraine bloc on the "redistribution of hidden revenues" in the 2004 budget law, Interfax reported. The bill proposed increasing the minimum monthly wage to 240 hryvnyas ($45) and recalculating all budget indicators linked to the minimum-wage level. This bill was supported by 122 lawmakers, while 226 votes were necessary for approval. Our Ukraine believes that the estimated revenues in the 2004 budget were underestimated and that Prime Minister Viktor Yanukovych's cabinet is concealing 10 billion hryvnyas ($1.9 billion) in budget revenues and 5 billion hryvnyas of pension-fund revenues. JM
UKRAINIAN PRESIDENT SIGNS RENEWED MILITARY DOCTRINE. President Leonid Kuchma has signed a decree detailing Ukraine's military doctrine, Ukrainian news agencies reported on 17 June. The current doctrine replaces the old one adopted in 1993. Under the new doctrine, Ukraine sees NATO as the basis of the European security system and pledges to pursue Euro-Atlantic integration in order to join the Atlantic alliance eventually. The document states that Ukraine currently does not consider any specific state a military threat. JM
SCHEDULE FOR UKRAINIAN PRESIDENTIAL ELECTION PUBLISHED. Ukraine's Central Election Commission has made public its resolution of 7 June on the schedule of this year's presidential-election campaign, Ukrainian news agencies reported on 17 June. The detailed schedule is available at the commission's official website (http://www.cvk.ukrpack.net). The election campaign will officially start on 3 July. Prospective presidential candidates should be nominated no later than 27 July and documents for their registration filed with the commission no later than 1 August. The commission is to conclude the registration of candidates on 6 August. Foreign observers of the election should register with the commission no later than 25 October. The voting will take place from 8 a.m. to 8 p.m. on 31 October. JM
BRUNEI SULTAN VISITS UKRAINE. Sultan and Prime Minister of Brunei Hajji Hassanal Bolkiah Muizzaddin Waddaulah arrived in Ukraine on 17 June for a four-day official visit, Ukrainian media reported. Following a meeting of the Brunei official with President Leonid Kuchma on 18 June, the two sides signed accords on mutual protection of investment and cooperation in tourism. Kuchma visited Brunei in March. JM
PRIVATIZATION, UKRAINIAN STYLE
State Property Fund head Mykhaylo Chechetov announced in Kyiv on 14 June that the Investment-Metallurgical Union has won the tender for the sale of a 93.02 percent stake in the Ukrainian steelmaker Kryvorizhstal, which accounts for some 20 percent of the country's steel output. Chechetov said the union paid 4.26 billion hryvnyas ($800 million) for the stake at a starting price of 3.8 billion hryvnyas ($715 million). The Investment-Metallurgical Union represents the interests of the Interpipe corporation -- owned by Viktor Pinchuk, President Leonid Kuchma's son-in-law and a parliament deputy -- and the System Capital Management company, which is controlled by Donetsk-based businessman Rynat Akhmetov, reportedly the richest man in Ukraine and a longtime crony of Prime Minister Viktor Yanukovych.
In the past few weeks, Ukrainian opposition lawmakers made several unsuccessful attempts to block the sale of Kryvorizhstal -- a giant steelmaker employing some 52,000 people -- which was widely seen as yet another privatization, at a price well below the real value of the privatized company, intended to enrich the already-rich circle of pro-government oligarchs. On 3 June, the legislature fell just eight votes short of the 226 needed to approve a resolution halting the Kryvorizstal tender.
The terms of the tender were formulated in such a way that it was clear to everybody that Kryvorizhstal was poised to become the property of Pinchuk and Akhmetov. In particular, the tender's qualifying conditions announced in May included the provision that any bidder must have a history of producing 1 million tons of coke and 2 million tons of steel in Ukraine annually in the past three years. Of the six bidders that submitted purchase offers, only two meet this condition -- Pinchuk's and Akhmetov's Investment-Metallurgical Union and the Industrial Union of Donbas, another Donetsk-based oligarchic holding. The Industrial Union of Donbas offered $750 million for the stake, just slightly over the starting price of $715 million but below the Investment-Metallurgical Union's bid.
It is noteworthy that the Anglo-Dutch concern LNM and U.S. Steel, which made a joint bid, offered to pay $1.5 billion for the stake and add another $1.2 billion in an investment package. A higher bid than that of the Investment-Metallurgical Union was also made by Russia's Severstal steelmaker ($1.2 billion). LNM and U.S. Steel have reportedly called on Ukrainian President Kuchma and Prime Minister Yanukovych to revise the tender. "By limiting the privatization this way, the Ukrainian economy is being deprived of a competitive tender," LNM and U.S. Steel said in a statement.
The Kryvorizhstal sale -- which many Ukrainian commentators have said is a large improvement on previous dishonest privatizations -- nevertheless highlights Ukraine's notoriously clannish organization of the state power branches. Not only did the executive and legislative branches not see anything objectionable in such a tender, but even the judiciary expressed its approval. Socialist Party lawmaker Valentyna Semenyuk on 8 June lodged a complaint against the Kryvorizhstal sale with the Holosiyivskyy District Court, arguing that the tender terms do not sufficiently protect Kryvorizhstal employees against layoffs. In theory, any court complaint should automatically suspend the privatization in question. Later the same day, however, the documents of the case were transferred to the Pecherskyy District Court, whose jurisdiction was deemed by judicial authorities more appropriate for the State Property Fund, which managed the privatization on behalf of the government. The Pecherskyy District Court -- which is famous in Ukraine for many cases of ruling in favor of the authorities -- rejected Semenyuk's complaint and said the privatization may continue.
More curious still, trade-union bosses at Kryvorizhstal have organized a petition among employees saying that they want a domestic investor for their enterprise. The petition was signed by more than 30,000 people, of whom the overwhelming majority, if not all, were reportedly completely unaware of not only the sums offered for their enterprise but also of the tender's provisions regarding guarantees for the Kryvorizhstal workforce.
Kryvorizhstal is a juicy privatization morsel -- it reported net sales of $1.4 billion on production of 7 million tons of steel last year. Therefore, some Ukrainian media assert, it should be expected that the 93 percent stake will unavoidably, even if inconspicuously, be resold in the future, partly or completely, and with a hefty profit for the Investment-Metallurgical Union. Why the state did not want to put this profit in its coffers is, of course, a different question.