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TURKMENISTAN RENEWS GAS EXPORTS, RUSSIA TALKS IMMINENT. Turkmenistan resumed gas exports to Russia and Ukraine on 10 January after cutting them off on 1 January in the course of contract negotiations, Russia's "Vedomosti" reported on 11 January. Ukraine has already agreed to pay $58 per 1,000 cubic meters of natural gas in 2005, a $14 price hike on the previous year (see "RFE/RL Newsline," 4 January 2005). A source in Gazprom told "Vedomosti" that the Russian natural-gas monopoly will continue to pay $44 per 1,000 cubic meters and 76 cents to transport 1,000 cubic meters 100 kilometers. Nevertheless, Turkmen negotiators plan to raise the price issue again when Gazprom Chairman Aleksei Miller visits Ashgabat in mid-January, "Kommersant-Daily" reported on 11 January. Finam investment-company analyst Mariya Radina told "Gazeta" on 10 January, "Gazprom will have to make concessions. It needs the gas, and that enables Turkmenistan to feel very comfortable on this issue." DK

One of the big decisions facing the Russian government this year is what, if anything, to do with the money that has accumulated in the so-called stabilization fund. The creation of the fund, which is now worth more than 500 billion rubles ($16.7 billion) because of unprecedented global oil prices, was widely hailed domestically and abroad as one of the government's signal economic achievements of 2004.

Recognizing Russia's overwhelming economic dependence on the export of raw materials -- especially energy -- the government created the fund at the beginning of 2004 to accumulate proceeds from high oil prices in a special account that could then be used to ameliorate the economic effects of significant downturns in energy prices in the future. When oil prices are above $25 per barrel, as they were throughout 2004, up to 90 percent of the excess proceeds on oil exports are automatically diverted to the fund. Already by the end of March, Deputy Prime Minister Aleksandr Zhukov was boasting that the fund contained nearly $5 billion.

Despite the windfall from high oil prices, the Russian economy still faces numerous problems that make it increasingly difficult for politicians simply to allow the vast resources of the stabilization fund to sit idle, waiting for a rainy day. As might be expected, left-leaning politicians led the call for using the stabilization fund to resolve social problems.

Communist Party leader Gennadii Zyuganov, during this summer's debate over the monetization of most in-kind social benefits, cited the fund in his rebuttal to government claims that social benefits had to be restructured for economic reasons. "The country's huge hard-currency reserves and the stabilization fund deprive the government of the right to speak about an inability to afford benefits," Zyuganov wrote in an open letter to President Vladimir Putin in June. "Rather, it is a case of the government's clear lack of desire to fulfill the norms of the Russian Constitution." Although the government has not made any announcements regarding the use of the stabilization fund for the monetization of benefits, periodic media reports indicate that some regions expect just such a policy. On 29 December, for instance, Regnum quoted Federation Council member Yevgenii Bushmin, who represents the administration of Nizhnii Novgorod Oblast, as saying that his region expects to receive 100 million rubles from the fund for benefit payments this year.

Of course, opposition arguments like Zyuganov's carry little weight in Russia these days, but other voices within the government and the pro-Kremlin Unified Russia party have also been floating ideas for spending the stabilization fund. Prime Minister Mikhail Fradkov told a cabinet session in August that in 2005 the fund "will cease to be a cumulative institution and will become an instrument of active budget policy."

In the wake of a wave of horrific terrorist attacks in August and September that culminated with the Beslan school hostage taking, the government proposed sharp increases in defense and antiterrorism spending, increases which many argued should be covered from the stabilization fund. Finance Minister Aleksei Kudrin -- who has been one of the staunchest figures opposed to spending the stabilization fund, except for the noninflationary purpose of paying down the country's foreign debt -- conceded in an October interview with "Itogi" magazine that the fund could be used to pay for such things as the creation of an Interior Ministry fingerprint database and other projects that are "an important part of the fight against terrorism."

Union of Russian Entrepreneurs and Industrialists (RSPP) President Arkadii Volskii, one of the Kremlin's most loyal supporters in the business community, told Ekho Moskvy on 29 December that the government's policy of accumulating hard-currency reserves and building up the stabilization fund is inhibiting economic development. He accused government economic managers like Finance Minister Kudrin and Economic Development and Trade Minister German Gref of adhering to a stubborn belief -- "some kind of blockheadedness" -- that "it's good when money just sits there." Volskii said some of the funds should be distributed to business in the form of development loans "so the money works for the country rather than for foreign banks."

Moscow Mayor Yurii Luzhkov, writing in "Trud" on 3 December, made similar arguments, accusing the government of a policy of "accumulation for its own sake." He criticized the government's policy of investing the fund in foreign securities, saying that doing so was tantamount to "supporting the foreign producer, not the domestic producer."

More nefariously, perhaps, political scientist Sergei Markov told utro.ru on 30 December that one potential use of the stabilization fund could be to "purchase assets" in Ukraine as a way of increasing Russia's influence there in the wake of the 26 December victory of opposition presidential candidate Viktor Yushchenko.

In October, Industry and Energy Minister Viktor Khristenko proposed several possible uses for the stabilization fund, including a federal program for the development of civil aviation and a guarantee fund to attract investment to the housing and municipal-services sectors, strana.ru reported.

Perhaps in response to opposition from Kudrin and Gref, Khristenko has since changed his tactics a bit. On 2 January, he told RosBalt that "indubitably we cannot touch the funds that go into the stabilization fund." He added, however, that the government in 2005 could create "in addition to the stabilization fund" a sort of "development fund, the resources of which could be used to fund strategically important projects that are capable of exercising systematic influence on the development of our economy." Although, Khristenko did not say where the money for this development fund would come from, Kudrin told ITAR-TASS on 1 November that he will propose reducing the amount currently set aside for the stabilization fund by raising the threshold beyond which profits are diverted into the fund from $20 per barrel to $21.50 per barrel.

Such concessions notwithstanding, Kudrin, Gref, and presidential economic adviser Andrei Illarionov have so far presented a united front, advocating spending the stabilization fund only on reducing Russia's foreign debt. Any domestic use of the fund, Illarionov has said, threatens to spawn inflation and endanger the government's macroeconomic program.

In the wake of the vocal opposition of these liberals to the government's actions regarding Yukos over the past 15 months, the battle over the stabilization fund could be the issue that ultimately pushes them out of the government. As economist Vladimir Mau told "Vedomosti" on 30 December: "A sharp political battle has already evolved around the 'cheap money' in the stabilization fund. Pressure to use the fund's money given high oil prices will only grow and will only become more difficult to resist."

BELARUSIAN PRESIDENT UNHAPPY ABOUT RUSSIAN GAS PRICE... President Alyaksandr Lukashenka on 11 January accused the Russian government of backtracking on its commitments under the 1999 Union State Treaty, saying that Russia does not supply Belarus, as it should under the treaty, with gas at Russian domestic prices, Belapan reported. Last month, Belarus and Russia's Gazprom concluded a gas-supply contract for 2005 establishing the price at $46.68 per 1,000 cubic meters, which is the same as that in 2004. However, Belarusian customers are expected to get gas at a higher price following the adoption of the country-of-destination principle in the collection of value-added tax (18 percent) on Russian gas as of 1 January (see "RFE/RL Belarus and Ukraine Report," 23 December 2004). "As before, our government is a sort of Gazprom branch," Belarusian Television quoted Lukashenka as saying on 11 January. "Why are we not increasing tariffs for the transit of [Russian] gas [via Belarus]? Why are we not increasing them by 20 percent?" JM

UKRAINIAN SUPREME COURT POSTPONES YUSHCHENKO'S INAUGURATION. The Supreme Court on 11 January satisfied a request from presidential candidate Viktor Yanukovych to block the publication of the official results of the 26 December presidential vote (see "RFE/RL Newsline," 11 January 2005) from being published in either of the country's two official newspapers, "Uryadovyy kuryer" and "Holos Ukrayiny," until the court makes a ruling on a new complaint against the official election outcome by Yanukovych, Ukrainian media reported. The decision effectively pushes back Yushchenko's presidential inauguration, which was expected this week, to a later date. Yanukovych's election staff manager, Taras Chornovil, said on 11 January that Yanukovych is planning to appeal to the Supreme Court on 12 January and request that the court rule that it is impossible to establish the real expression of the voters' will in the 2004 presidential election. "This means that we may demand that the election be declared invalid -- not just some election round but the entire election, which will require a repeat election," Chornovil said. JM

TYMOSHENKO ATTEMPTS TO ALLAY RUSSIAN FEARS OF YUSHCHENKO. Yuliya Tymoshenko, a staunch political ally of Ukrainian President-elect Viktor Yushchenko, published an article on what Russia should expect from Yushchenko's presidency in the 11 January issue of Moscow-based "Vedomosti" daily, one of Russia's leading business newspapers. Tymoshenko wrote that the Yushchenko entourage has unsuccessfully tried to get in touch with the Kremlin since the spring in order to deter the Russian presidential administration and President Vladimir Putin from taking "ill-considered" steps toward Yushchenko. According to Tymoshenko, Russia's strategic interests will not suffer from Yushchenko's presidency. She pledged that Yushchenko will propose new investment possibilities for "responsible" Russian capital in Ukraine, including in the military-industrial sphere. Tymoshenko also assured "Vedomosti" readers that under the Yushchenko presidency the rights of ethnic Russians and Russian-speaking Ukrainians in Ukraine will in no way be restricted. "I do not rule out that in the medium term Ukraine may become a member of NATO," Tymoshenko wrote. "However -- jointly with Russia. My personal view is that Ukraine and Russia cannot find themselves in qualitatively different, let alone hostile to each other, defense [alliances]." JM

RADIO FREE EUROPE/RADIO LIBERTY, PRAGUE, CZECH REPUBLIC

RFE/RL Belarus and Ukraine Report
Vol. 7, No. 2, 12 January 2005

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

UKRAINE

POROSHENKO EXPECTING TO GET YUSHCHENKO'S FIRST PRIZE. Ukrainian lawmaker and businessman Petro Poroshenko announced last week on Channel 5 that he is prepared to accept the post of prime minister from Viktor Yushchenko, whom the Central Election Commission on 10 January announced as the official winner of the 26 December presidential vote.

Poroshenko's public declaration of readiness to head Ukraine's new cabinet followed those of Yushchenko's two other political allies -- Yuliya Tymoshenko and Anatoliy Kinakh. Ukrainian political observers mention two more names of possible hopefuls for the post of prime minister -- Socialist Party leader Oleksandr Moroz and Our Ukraine Party head Viktor Pynzenyk. Thus, Yushchenko may develop a headache due to the large number of candidates for the premiership when he returns this week from a vacation in the Carpathian Mountains.

Just who is Petro Poroshenko? And why does he think he may be taken seriously by Yushchenko in the company of such political heavyweights as Tymoshenko and Moroz? Indeed, even Kinakh and Pynzenyk are better known in the Ukrainian political arena than Poroshenko. All of Poroshenko's supposed rivals for the post of prime minister have previous experience in top government jobs: Moroz was parliamentary speaker in 1994-98; Tymoshenko was deputy prime minister in Yushchenko's cabinet in 2000; Kinakh was prime minister in 2001-02; and Pynzenyk served in the government as a minister and deputy prime minister in 1992-93 and 1994-97. As for Poroshenko, his most prestigious public post to date is his leadership of the parliamentary Budget Committee, which he has headed since 2002.

To begin with, Poroshenko is the owner of the Channel 5 television station, which has made a huge propagandistic contribution to the success of the Yushchenko-driven "Orange Revolution" in Ukraine. Channel 5 was the country's only television channel sympathetic to Yushchenko's presidential bid throughout the 2004 election campaign and in the first week of the "Orange Revolution" that followed the discredited 21 November second election round that favored then-Prime Minister Viktor Yanukovych. It was only in the second week of the ongoing protests of orange-clad Ukrainians on Independence Square in Kyiv that journalists on other television channels, both private and state-controlled, launched a rebellion against official censorship and started to cover events in Ukraine in a more unbiased manner. Channel 5 spearheaded a major breakthrough in Ukraine's electronic media toward more pluralistic and objective news coverage, which clearly benefited opposition presidential candidate Yushchenko.

Also notable is that Poroshenko is a very rich businessman, and his financial contribution to the Yushchenko presidential campaign -- in addition to that from Tymoshenko -- has surely been hefty, although we will most likely never learn exactly who paid what in sponsoring Yushchenko's campaign. Poroshenko runs the Ukrprominvest concern, which includes five confectionery plants and a business that sells foreign-made automobiles and motorcycles, and also manufactures domestic motor vehicles and ships. Poroshenko is the largest manufacturer of confectionery in Ukraine and has been dubbed the country's "Chocolate King." He once said that "more than $100 million" has been invested in Ukrprominvest.

Asked by Channel 5 to comment on Yushchenko's requirement that the next prime minister not have business connections, Poroshenko said that he has no business interests "from a formal point of view." This may be true to some extent. According to some Ukrainian media, a significant part of the Ukrprominvest property legally belongs to Petro Poroshenko's father, Oleksiy Poroshenko, who is now general director of Ukrprominvest.

Petro Poroshenko was born on 26 September 1965 in the city of Bolhrad, Odesa Oblast, near the Ukrainian-Moldovan border and near the Danube Delta. He debuted in big politics in March 1998, when he was elected to the Verkhovna Rada from a first-past-the-post constituency in Vinnytsya Oblast. At that time, Poroshenko was a member of the Social Democratic Party-united (SDPU-o) led by Viktor Medvedchuk and was on its Political Bureau. In 2000, Poroshenko quit the SDPU-o and formed its own parliamentary caucus, called Solidarity, and a political party called the Party of Solidarity of Ukraine. By the end of 2000 his party joined the Party of Regions of Ukraine (now headed by Yanukovych), of which he become a cochairman. In 2001, Poroshenko left the Party of Regions, recast his former party into a Solidarity Party and joined Yushchenko's Our Ukraine election bloc. Poroshenko become manager of the Our Ukraine parliamentary election staff in 2002 and, after being elected to the Verkhovna Rada in March 2002, became head of the Budget Committee.

Poroshenko, who was deputy manager of Yushchenko's presidential campaign in 2004, is generally described as a very influential person in the Yushchenko entourage and seen as a moderate, particularly in comparison with radical populist Tymoshenko. Although Poroshenko has kept a low profile in politics so far, his maneuverings in party politics and the Verkhovna Rada have demonstrated as a minimum that he is capable of forging political alliances with oligarchic groups, a talent that no doubt boosts his stock as a potential prime minister. Poroshenko's very good political relations with parliamentary speaker Volodymyr Lytvyn are also an advantage, especially as Lytvyn's 30-strong Popular Agrarian Party parliamentary caucus is tapped to join a pro-Yushchenko coalition in parliament, while Lytvyn himself, whose political stature has risen noticeably during the 2004 election standoff, is expected to guarantee the stability of the pro-Yushchenko parliamentary coalition in the first year of his presidency.

What can be seen as Poroshenko's most serious shortcoming as a candidate for the top cabinet job is his strong business connections, despite the fact that he may be "formally" free of them. Too many businessmen in Ukraine seem to perceive Yushchenko's victory as an opportunity for revenge against the oligarchs who supported the Kuchma-Yanukovych regime and for a "redivision" of the spheres of economic influence under the new regime. Therefore, Poroshenko may not be totally free of the temptation to mete out "economic justice" and promote his "wronged" associates to the posts and benefits they were denied during the era of President Leonid Kuchma.

In other words, Yushchenko will think long and hard before deciding on the nomination of Poroshenko to the post of prime minister. Because Yushchenko does not need a war with Ukrainian oligarchs, but their cooperation, primarily in replenishing the state budget. Poroshenko said in a press interview in mid-2004 that it is quite possible for the Ukrainian budget to immediately have annual revenues of 100 billion hryvnyas ($19 billion) by recovering part of the money from the shadow economic sector. (The budget revenues projected for 2005 stand at 86.5 billion hryvnyas.) Arguably, to make this happen, the government needs to cajole the old oligarchs into leaving the shadow economy rather than to replace them with new ones, "wronged" or not.author biography. (Jan Maksymiuk)

TYMOSHENKO LEAVES FEW UNMOVED. Admired by her supporters as a charismatic leader and castigated by her opponents as a corrupt turncoat, Ukraine's Yuliya Tymoshenko leaves few people indifferent. Now, Tymoshenko, who does not mince words, says she expects to be Ukraine's next prime minister.

She has compared herself to Joan of Arc and called outgoing Ukrainian President Leonid Kuchma a "red-haired cockroach."

But Yuliya Tymoshenko can turn on the charm and win over an audience -- even in enemy territory -- as she demonstrated with a recent visit to the eastern city of Donetsk.

At the height of opposition demonstrations in Kyiv in December 2004 that forced a rerun of the presidential election, adoring crowds dubbed her the "Orange Princess."

Tymoshenko portrays herself as a tough-talking crusader, a passionate Ukrainian nationalist, and woman of the people who is on a mission to clean up the country's morass of government and business corruption.

        It has been an amazing transformation.
        A decade ago, Tymoshenko had no nationalist credentials. In

fact, she spoke no Ukrainian and had no more than a pragmatic interest in politics. A trained economist from the eastern city of Dnipropetrovsk, she used her connections to former Prime Minister Pavlo Lazarenko to build a natural gas trading empire that made her the country's richest businesswoman -- until her ambitions ran up against the designs of President Leonid Kuchma.

RFE/RL regional analyst Jan Maksymiuk explains: "In the 1990s, Tymoshenko was generally perceived as one of the most powerful oligarchs in Ukraine. Reportedly, in 1996, when she was the chairwoman of Ukraine's Unified Energy Systems, her company controlled one-fourth of the Ukrainian economy. But then she got into conflict with other oligarchs who were supported by Kuchma, and her career as a businesswoman ended."

While her career as a businesswoman may have been cut short, she proved more deft than Lazarenko, who had to step down. He ended up fleeing the country, only to be tried and convicted on 29 extortion and money-laundering charges in the United States, which he is now appealing.

In 1999, Tymoshenko joined the new reformist cabinet of Prime Minister Viktor Yushchenko and turned against her former business partners with a vengeance. Tymoshenko was credited with forcing Ukraine's energy sector to pay back some $2 billion into state coffers and stripping the oligarchs of some of their power.

Soon after she left the government in 2001, her legal troubles began. She was indicted on fraud and money-laundering charges and jailed for several weeks. A Kyiv judge eventually dismissed the charges against her.

Still, questions remain over what happened to Tymoshenko's share of the Unified Energy System profits."Nobody knows for sure. At one time, she was indicted for channeling more than $1 billion dollars abroad to foreign accounts. Some of those accounts were controlled by the infamous former Ukrainian Prime Minister Pavlo Lazarenko. She was also indicted for gas smuggling, tax evasion, and a lot of other crimes. But she was able to shake off all those allegations. Everybody believes that she's a very rich person in Ukraine. But apparently, she doesn't pursue any business activity right now," Maksymiuk says.

Observers say Tymoshenko's short time in prison and the destruction of her business empire by Kuchma's allies -- which she calls politically motivated persecution -- had a profound psychological impact.

While such events might have crushed weaker personalities, Tymoshenko used them as a springboard to forge a new identity as an opposition crusader and born-again nationalist advocate, complete with traditionally braided hair and flawless Ukrainian.

So who is the real Tymoshenko? Cunning business woman or genuine reformer?

That has yet to be determined. But one thing is for certain. She is one of the smartest public figures in Ukraine and has always been fiercely determined to attain her goals -- be they in business or politics.

"No doubt she's a pragmatist. But she's also a very passionate and determined pragmatist, and whatever she sets her eyes on, she goes for it in a big way -- in a very determined, systematic, and effective way," says Kataryna Wolczuk, a Ukraine analyst at Britain's University of Birmingham. "So from that point of view, when she was a 'gas princess,' she did it in an extremely competent way -- milking the system to the extent it was possible under Lazarenko. When she became the deputy prime minister and tried to deal with the system which was created in the mid-1990s, again she was extremely competent and effective. And she trampled on many vested interests in Ukraine. So, in a way, she is a pragmatist, but whatever she does, she does it without compromising, and that's perhaps her greatest strength. But from the outgoing regime's point of view, it's the greatest threat she presents to them."

Tymoshenko told The Associated Press that she has a formal agreement with Yushchenko that leaves no alternative than for her to become prime minister after he is inaugurated as the country's new president.

Wolczuk says this demand poses a dilemma for Yushchenko. She is more than competent, but her polarizing nature means it could be difficult for the Yushchenko camp to win enough support among former Kuchma backers, who fear her.

Ironically, says Maksymiuk, Tymoshenko could also prove a threat to Yushchenko himself -- especially if reforms that cut the president's powers are enacted as planned.

"In the longer term, yes. If Tymoshenko becomes prime minister and if the political reform goes into action, as it is planned in 2006, then, of course, Tymoshenko could become the most powerful figure in Ukraine. So, that's perhaps why she's willing to be prime minister," Maksymiuk says.

Yushchenko's office has so far declined to say who will be nominated for prime minister. (Jeremy Bransten)

MOSCOW PONDERS HOW UKRAINE WAS 'LOST.' As Ukraine's former Prime Minister and defeated presidential candidate Viktor Yanukovych clears out his government office in Kyiv, pundits, journalists and political analysts back in Moscow continue to ask what went wrong. With so much financial backing from Russian businesses and political support from Russian President Vladimir Putin, why did Yanukovych lose?

Many Russian and Ukrainian analysts have hesitated to place primary responsibility on the Kremlin or Putin for misjudging the Ukrainian situation. Instead they have been blaming the "aggressive tactics" of a gaggle of Russian campaign consultants who began arriving at Kyiv's Borispol Airport sometime in July, RFE/RL's Russian Service reported on 28 December.

In an interview with "Lviv ekspres" on 22 December, outgoing President Leonid Kuchma's chief speechwriter, Vasyl Baziv, said that Foundation for Effective Policies head Gleb Pavlovskii, former ORT Deputy General Director Marat Gelman, and Russian businessman Maksim Kurochkin "made themselves at home" in the Ukrainian presidential administration during the lead-up to the first round of presidential voting on 31 October. He said that he even saw one Russian spin doctor, whom he declined to name, sitting beside Yanukovych during an official meeting. "This is not a matter of campaign tricks but an erosion of our sovereignty," Baziv complained.

Naturally, the spin doctors themselves have a variety of explanations for what happened in Ukraine. First of all, they assert that Yanukovych did not in fact lose. At a news conference in Moscow on 28 December, Pavlovskii asserted that Yanukovych won the second round on 21 November but that through a series of "manipulations of the results...the political process became one based entirely on force," RFE/RL's Moscow bureau reported.

At the same time, in what might be considered an apparent contradiction, they proffer at least three different explanations for why Yanukovych did not win or why they should not be blamed for Yanukovych's failure to perform better. First and foremost, they claim that they were outgunned next to U.S. and Polish resources, according to Sergei Markov of the Institute for Political Research. Second, they had too little time to refashion Yanukovych's image. Third, Yanukovych, a former prison convict, was too difficult a candidate to make palatable to the broad public.

Marat Gelman told "Lvivska hazeta" on 16 November that Yanukovych's "criminal record [was] a formidable issue, a brick wall that no brilliant scheme [could] break down." In an interview with utro.ru on 30 December, Markov said: "If you ask me, I would say that the candidate should have been someone else. It was unwise to put forward as a candidate for president someone with two previous criminal convictions. I can assure you that this was not Moscow's decision."

According to politcom.ru on 10 December, Pavlovskii complained that he and his colleagues were invited too late and that they should have started 12 to 18 months before the election in order to remake Yanukovych's image. In an interview with gazeta.ru on 27 December, Markov voiced a similar sentiment. "I believe that Russian spin doctors had extremely limited opportunities: They spent only three months working with Yanukovych," he said.

But the biggest problem, according to Markov, was not the candidate or any lack of time but that Russia and its spin doctors were outnumbered and outgunned by the West. In the gazeta.ru interview, Markov claimed that "Americans and Poles spent several years working with Yushchenko." Asked to explain what he meant by Poles and Americans, Markov said that there was "American and European collaboration with elite structures and the public across a broad front." Markov also said that while Russia spent only millions of dollars on the campaign, the United States and European Union spent hundreds of millions of dollars in Ukraine. Therefore, according to Markov, Yanukovych's defeat was not a defeat for Russian spin doctors but for "Russia's ruling class, which proved incapable of achieving such a major strategic task."

Pavlovskii put forth a more obscure defense of his and other spin doctors' roles in Ukraine. In an interview with "Nezavisimaya gazeta" on 7 December, he faulted himself and others merely for being unable to "draw the attention of our partners in Ukraine that an 'overthrow' project was in preparation." He continued, "The point is that the opposition circles were not preparing for elections. They were preparing for the seizure of power, in the guise of elections." He then claimed that neither he nor his colleagues "had the power to advise our Ukrainian partners on preventive counterrevolution and not only on elections, [otherwise] this misfortune would not have happened." In a later interview with gazeta.ru on 28 December, when asked whether he was willing to share responsibility for the defeat of Yanukovych, Pavlovskii responded, "Yes, but as a politician, not as a spin doctor. Unfortunately, I did not work in the latter role in Ukraine." What he was doing, he said, was "liaising with the group of politicians that put Yanukovych forward. Unfortunately, this was not enough. You need to have the powers to make decisions." So, in Pavlovskii's view, he did not have the power to inform his Ukrainian colleagues of what was going on, even though by his own admission he was acting as a liaison with Yanukovych's supporters.

Of course, if Yanukovych were about to assume Ukraine's presidency, it is not difficult to imagine Pavlovskii and others taking credit for his victory. In an interview with "The Washington Post" on 2 January, former political adviser Dick Morris explained how he managed to contribute a key element of President-elect Viktor Yushchenko's strategy without ever managing to actually visit Ukraine. Morris told the paper that an acquaintance from a previous overseas campaign put him in touch with Yushchenko's campaign manager. Because of unspecified "security concerns," he met with Yushchenko campaign officials in an undisclosed East European capital. According to Morris, his main contribution to the campaign was to urge exit polling on election day and the immediate publication of those results. In this way, according to Morris, Yushchenko's campaign would draw supporters to the streets to celebrate -- thus presenting Ukrainian authorities with an angry mob if they tried to tamper with the vote.

So far, though, it's the CIA's acumen rather than Morris's that is being hailed in Moscow. In an interview with Radio Rossii on 7 December, Aleksandr Konovalov, president of Moscow's Institute for Strategic Assessments, suggested that Russia believes "the myths created by our spin doctors" and "now we probably will believe their explanations, the main one being [that Ukraine was lost because of] a CIA conspiracy." He asked ironically, "How can poor Gleb Pavlovskii handle the whole Central Intelligence Agency on his own?"

In an interview with RFE/RL's Russian Service on 9 December, former leader of the Union of Rightist Forces (SPS) Boris Nemtsov suggested that the stories of excessive Western influence in Ukraine might be more than just a yarn by Russian spin doctors to avoid taking responsibility for losing a key election. According to Nemtsov, it might be a device that the Russian authorities are using to avoid telling the truth about what really happened in Ukraine. He said Russian authorities "treat their own people cynically and invent such arguments of the type that the West influenced [events], or the campaign consultants worked poorly -- anything but the truth that the people were tired of Kuchma's regime, that people were living in despair and lawlessness and their last drop of patience went when the election was falsified." (Julie Corwin)

"If the [Ukrainian Supreme] Court does not satisfy our demands, we reserve the right to act in accordance with the existing law and appeal to the European Court [of Human Rights]. And we will never accept the results of the so-called re-run of the election." -- Presidential candidate Viktor Yanukovych in Kyiv on 11 January, pledging to appeal against the Central Election Commission's official announcement that his rival, Viktor Yanukovych, won the 26 December presidential vote; quoted by an RFE/RL correspondent.

"The country split into two parts: eastern Ukraine and western Ukraine. They were on the verge of a civil war. The economy has now slipped into recession. Ukraine's economy had grown at a good pace in recent years and now it has gone downhill. I don't know, maybe the West won the battle with Russia there now, so maybe the West will make them happy. But I don't think they can improve the lives of 50 million people in that country by giving them their breadcrumbs.... Who came to power as a result of the revolution? Democrats? Look at that 'gas lady' [Yuliya Tymoshenko] who will apparently become prime minister. She is an international fugitive and is believed to be the most corrupt person on the territory of the CIS. And now she is a revolutionary, a democrat." -- Kyrgyz President Askar Akayev, speaking about Ukraine's Orange Revolution on 9 January, during a meeting with local officials in Tokmok, Kyrgyzstan; quoted by an RFE/RL correspondent.

"RFE/RL 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.

As 2004 began, it was already taken for granted by Russia watchers that the Kremlin had established its control over the mass media, especially the national broadcast media. By the end of the year, opposition figures were focusing primarily on the state's efforts to solidify and exploit that control in its purported effort to bolster its authoritarian control over the country. According to a commentary in "Vedomosti" on 30 December, after securing -- with the help of the cowed media -- an impressive reelection in March, President Vladimir Putin "began to 'reboot' the entire system of the executive branch," beginning with the replacement of the government of former Prime Minister Mikhail Kasyanov and ending the year with the abolition of the direct election of regional governors.

Union of Rightist Forces political council member Boris Nemtsov, who is also a member of Committee-2008, told Ekho Moskvy on 13 December that there is de facto censorship on Russian television. "There are absolutely forbidden subjects on Russian television," Nemtsov said. "They are alternative views on Ukraine, Chechnya, and the situation in the armed forces; corruption in the highest echelons of power; the false, nontransparent budget; and [former Yukos CEO Mikhail] Khodorkovskii." He added that the media also does not discuss topics such as the spread of AIDS. "Moreover, the list keeps on growing," Nemtsov said. "Pretty soon, they are likely to be included in the law on state secrets. This is the logic of an authoritarian, lying regime. The Kremlin people cannot understand one simple thing: one cannot hold out on lies for long."

The major change in Russia's media environment in 2005 is a new mass media law, a development that Culture and Mass Communications Minister Aleksandr Sokolov promised at a 16 December cabinet meeting. "Novaya gazeta," No. 93, reported that its correspondents have been unable to secure a draft revision that is less than 18 months old or to find anyone within the ministry or in the media sector who can authoritatively say who is working on the new law.

The paper, however, cited some illuminating remarks by Yurii Golik, head of the ministry's legal department. "The present law was written in a different era and it has been changed 15 or 16 times," Golik said. "There it reminds one of a quilt.... However, strange as it might seem, it is alive and working. Freedom of speech is greater even than journalists themselves need. Do you think that workers and people on the street really do not have enough? It is needed only by those who have selected it as their occupation -- prattlers. I don't hear anything but sobs and chest beating."

Golik went so far as to suggest that journalists be made civil servants. "Now journalists depend on their employers, but surely they work for society!" he said. "We support deputies, law enforcement agents, and jurists. Maybe we need to support journalists as well?" In the same article, the newspaper quoted Deputy Culture and Mass Communications Minister Leonid Nadirov as saying cryptically that the drafting of a new media law has been delayed because of "changes that have occurred recently," including "government reforms and the monetization of [in-kind social] benefits."

The secrecy with which the bill is apparently being drafted has already provoked alarm. "Novaya gazeta" noted that the highly controversial law on the monetization of social benefits was introduced to the legislature and quickly pushed through with minimal discussion. The vast pro-Kremlin majority in the Duma, which has already reshaped Duma procedures sufficiently to prevent any delays on the part of opposition figures, means that the Kremlin could introduce a new media law rapidly and with minimal fuss.

Mikhail Yurev, former Duma deputy speaker and president of the Kremlin-connected Yevrofinans company that has made considerable inroads in the media sector over the last couple of years (see "RFE/RL Media Matters," 23 April 2004), told press-attache.ru that the recent events in Ukraine will spark "counterrevolution" in Russia. "It is not for me to decide," he said, "but I think that in the near future changes will take place not only in the electronic media but throughout the entire ideological sphere and it will not even stop there." He hinted coyly that TV-Tsentr, which is controlled by the Moscow government, is "a difficult case" and that "there are a lot of questions about RTR."

"Some people have to be removed from the field," Yurev said. "With some of them it will be possible just to have a couple of talks, which, incidentally, was extremely widespread during the era of [U.S. Senator Joseph] McCarthy. Some will understand everything of their own accord."

He concluded bluntly by saying: "I have spoken with [deputy presidential-administration head Vladislav] Surkov many times. His viewpoint is no different from mine: State ideology absolutely must be effective. The greatest defect of the Soviet type of television was that it was not very effective."

Speaking to Interfax on 5 January, Federation Council International Relations Committee Chairman Mikhail Margelov also noted the importance of the Ukraine events for Russia. He said that Moscow failed to achieve its aims in Russia "not because we did not have enough strength but because we were poorly prepared." Saying that diplomats work "with a scalpel," Margelov argued that "nongovernmental organizations...in an alliance with the press can form a sledgehammer in addition to the scalpel."

Surkov remains the Kremlin's point man on ideological and political issues and all the evidence indicates that he is not satisfied with the current level of state domination of the Russian media. In a rare, but revealing interview with "Komsomolskaya pravda" in September, Surkov made it clear that he believes "war has been declared on Russia" by outside forces whose "goal is the destruction of our country." He added that these unnamed enemies are aided by "fifth columnists" in the form of liberal politicians and journalists. The "bottom line" of Putin's program is the "mobilization of the country in the fight against terrorism," Surkov said. "We should all realize that the enemy is at the gates. We need vigilance, solidarity, and the unification of citizens' and the state's efforts."

It seems evident that in 2005, the Kremlin intends to use the tools that it honed in 2003 and 2004, including especially the state media. By the end of the year, we could be -- like Yurev -- talking about an ideological sector in Russia, rather than a media sector.

WHO LOST UKRAINE?

As Ukraine's former Prime Minister and defeated presidential candidate Viktor Yanukovych clears out his government office in Kyiv, pundits, journalists and political analysts back in Moscow continue to ask what went wrong. With so much financial backing from Russian businesses and political support from Russian President Vladimir Putin, why did Yanukovych lose?