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FINNS PLAN PURCHASE OF MAJOR RUSSIAN PUBLISHER. The magazine division of Finnish media giant SanomaWSOY has purchased Russia's Independent Media for $186 million, "The Moscow Times" and other Russian media reported on 20 January. Independent Media publishes about 30 glossy-magazine titles in Russia, Ukraine, and Kazakhstan, as well as the newspapers "Vedomosti," "The Moscow Times," and "The St. Petersburg Times." According to "The Moscow Times," Independent Media controls about one-third of the magazine-advertising market in Russia and its 2004 revenues were $92 million. Independent Media founder and CEO Derk Sauer has agreed to remain with the company for at least three years. Sanoma Magazines CEO Koos Guis told "The Moscow Times" that Sanoma does not intend to become involved in the management of Independent Media and that the company's newspapers will remain a key part of the business. Sauer said the company plans to launch new newspaper titles, as well as new, nonpolitical magazines. The purchase must be approved by government antimonopoly authorities and is expected to be completed during the second quarter of this year, Interfax reported. SanomaWSOY is northern Europe's largest media company and had revenues of $3.25 billion last year. RC

...AS MOSCOW MIGHT GET ANOTHER 'SCULPTURE.' However, reported on 6 December that Tsereteli plans to create a composition devoted to Yalta for the palace in Crimea -- as well as a column dedicated to the Leningrad, Belarus, and Ukraine fronts that would be located in Poklonnaya Gora park. In an interview with "The Washington Post" on 10 June, David Sarkisian, director of the Schusev State Museum of Architecture in Moscow, called Tsereteli "a genius of kitsch." He added that he considers Tsereteli the person who has "done the greatest damage to [Moscow]." JAC

RUSSIAN COMPANY ACQUIRES GEORGIAN METALS PLANT, POWER STATION. A consortium that includes Russia's Evrazia Holding and Georgian shareholders of the Zestafon Ferrous Alloys plant have won a tender to purchase the Chiatura Manganese plant and the Vartsikhe hydroelectric power station for a total of $132 million, Caucasus Press reported on 19 January. Rival bidder Interpipe, which is reportedly owned by outgoing Ukrainian President Leonid Kuchma's son-in-law, is variously reported to have made a rival bid of $120 million, $137 million, or $200 million, but Caucasus Press on 19 January quoted Georgian Economy Minister Aleksi Aleksishvili as saying that Evrazia improved on its initial proposal and offered better terms for reviving the two enterprises. Interpipe board member Igor Yaroslavets was quoted as saying his company was prepared to pay $200 million but that it quit the tender because the Georgian government delayed announcing the outcome. Also on 19 January, Georgian President Mikheil Saakashvili and Prime Minister Zurab Zhvania both hailed the acquisition the previous day by Russia's Vneshtorgbank for an undisclosed sum of a 51 percent stake in the United Bank of Georgia, Interfax reported. LF

UKRAINIAN SUPREME COURT SANCTIONS YUSHCHENKO'S PRESIDENTIAL VICTORY. The Supreme Court ruled in the early morning hours of 20 January to reject an appeal by presidential candidate Viktor Yanukovych against the victory of his rival, Viktor Yushchenko, Ukrainian and international media reported. "The appeal by presidential candidate Viktor Fedorovych Yanukovych alleging inaction by the Central Election Commission concerning the outcome of the presidential election of 26 December and the resolution adopted by the [Central Election] Commission regarding the outcome of the presidential election and the disclosure of the results on 10 January is hereby rejected," Supreme Court Chairman Anatoliy Yarema said. "The decision is final and not subject to appeal." Additionally, the 20 January issues of the official newspapers "Uryadovyy kuryer" and "Holos Ukrayiny" published the official election results, according to which Yushchenko won 51.99 percent of the vote (15.1 million voters) compared with Yanukovych's 44.2 percent (12.8 million voters). The court ruling and the newspapers' publication finally open the way for Yushchenko's inauguration, which is set to take place in the Verkhovna Rada on 23 January. JM

UNIAN PUBLICIZES POWER SHARING ACCORD BETWEEN YUSHCHENKO, TYMOSHENKO... The Ukrainian news agency UNIAN on 20 January published details of a coalition deal signed in July by Our Ukraine leader Viktor Yushchenko and Yuliya Tymoshenko, the leader of the eponymous opposition bloc, on their concerted efforts in the presidential election campaign and the distribution of government posts after an anticipated Yushchenko victory (see "RFE/RL Newsline," 7 July 2004). Under the deal, Yushchenko pledged to nominate Tymoshenko for the post of prime minister as well as use "the force of his moral authority" and "a balanced personnel policy" to persuade the Verkhovna Rada into approving her nomination. Oleksandr Turchynov, Tymoshenko's partner in her bloc, confirmed that the deal was made. JM

...WHICH INCLUDES DETAILED DIVISION OF GOVERNMENT POSTS. The deal also stipulates that 55 percent of the government and state administration cadres will be selected by Our Ukraine and 23 percent by the Yuliya Tymoshenko Bloc. "The [remaining] 22 percent of posts is reserved by the founders of the coalition for ensuring the formation of a new parliamentary majority," UNIAN quoted from the Yushchenko-Tymoshenko accord. Tymoshenko's partner in her bloc, Turchynov, said the priority for the bloc is to have Tymoshenko installed as prime minister. "We are aware that after the appointment of prime minister, the percentage quotas [mentioned in the deal] are to be revised, taking into account the interests of those political forces that will form and support the government," Turchynov told UNIAN. JM

MOSCOW DEMANDS MOLDOVA NULLIFY DECISION CURBING DIPLOMATS' MOVEMENT. In a diplomatic note addressed to the Moldovan Foreign Ministry, Russia demanded on 19 January that Chisinau reverse its decision to curb freedom of travel to Transdniester for diplomats accredited in Moldova, Flux and ITAR-TASS reported. The Russian Foreign Ministry said the Moldovan decision "raises deep concerns in Moscow because of the obstacles that will inevitably arise as our official representatives fulfill their mission" of mediating the conflict with the separatist region, according to ITAR-TASS. The note said that concern is also shared by Ukraine, which alongside Russia and the Organization for Security and Cooperation in Europe is a mediator in the conflict. Transdniester "Justice Minister" Viktor Balala said Chisinau is attempting to deny the international community first-hand reliable information on Transdniester, ITAR-TASS reported (see "RFE/RL Newsline," 18 and 19 January 2005). MS


RFE/RL Belarus and Ukraine Report
Vol. 7, No. 3, 21 January 2005

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


WILL YANUKOVYCH TURN TO EUROPEAN COURT OF HUMAN RIGHTS? Viktor Yanukovych is pursuing his claim to the Ukraine presidency relentlessly, despite having his appeals rejected repeatedly by the Ukrainian Supreme Court.

He is seeking to have declared void the result of the 26 December presidential election rerun, officially won by his rival, Viktor Yushchenko. He said if the Supreme Court rejects his last appeal -- which it did on 20 January -- he will go to the European Court of Human Rights in Strasbourg, France.

If he does, he will need patience. Normally it takes the court about three years to issue a verdict.

The court was established in 1959 by the Council of Europe, the 45-nation body that seeks to foster democracy and cooperation across the continent.

The court's chief spokesman, Roderick Liddell, explained that the long delay in handing down decisions stems from the workload, which grows by about 15 percent each year as more and more people turn to the court for redress. "Last year, I believe, we had something like 40,000 applications coming into the system, and currently we have a list of pending cases of around 75,000. So that is an enormous amount. But when you consider this court deals with applications from 45 states, soon to be 46, with a population of some 800 million, then that is hardly surprising," Liddell said.

Liddell said, however, that the statistics make the problem sound worse than it is. Few of these cases actually get as far as a verdict. Most are rejected at earlier stages of the legal process. "Of these cases, a very large percentage are inadmissible, and are not examined on their merits; we calculate that about 90 percent of the applications that come into the system are inadmissible, and they are dealt with fairly rapidly," he said.

The court consists of 45 judges -- equal to the number of member states in the Council of Europe. Its rulings are binding on member states and without appeal. Theoretically, that means that if Yanukovych were accepted, Yushchenko would have to give up the Ukraine presidency sometime in 2008.

Countries that fail to abide by the court's rulings face possible expulsion from the Council of Europe. That, however, is very unlikely to happen. Colin Warbrick, a professor of law at Britain's Durham University, said that Yanukovych has been given the opportunity to present his case to the Ukraine Supreme Court, and that court appears to have had sufficient ground to reject his appeals.

Warbrick told RFE/RL that the European Court would be very unlikely to overturn the national court's verdict unless new information of large-scale wrongdoing in the election comes to light.

Noting the growing popularity of the European Court for Human Rights, Warbrick described it as "one of the most remarkable of the post-[World War II] experiments" in Europe. "Not just the court, but the Council of Europe as a whole, has laid down a mechanism which is the most effective there is -- which is not to say it is perfect -- but the most effective there is anywhere in the world, for protecting human rights at the international level," Warbrick said.

Warbrick said the council and the court achieve this because they try to enlist the states in the protection of human rights, rather than condemning them. To this end, the council has extensive training programs, financial assistance to improve judicial systems, and the like.

Warbrick said both council and court see their work as a continuous process, as there will always be human rights violations to protect against. (Breffni O'Rourke)

UKRAINE: ENERGY OVERVIEW (PART I). In 2003 Ukraine, a country the size of Texas, consumed 74 billion cubic meters (bcm) of natural gas, more than the combined gas consumption (44.1 bcm) of the Central European states of Poland, Hungary, the Czech Republic, and Slovakia, according to the CIA's World Factbook. Moreover, a study prepared by Margarita M. Balmaceda of the Woodrow Wilson Center, "Ukraine's Energy Policy and U.S. Strategic Interests in Eurasia," found that Ukraine, with a population of only 48 million, was the sixth largest gas consumer in the world.

That same year, Ukraine consumed some 290,000 barrels of oil per day, considerably less then the roughly 823,000 barrels of oil per day used by the four above-mentioned Central European countries, and burned roughly 100 million metric tons of coal. It also consumed 154.4 billion kilowatt-hours (kWh) of electricity.

Despite the huge amount of energy it consumes -- 6.08 quadrillion British thermal units or 1.5 percent of the world's total energy consumption, according to the U.S. International Energy Administration -- Ukraine's Gross Domestic Product (GDP) purchasing power parity of $260.4 billion was far below Poland's GDP of $427.1 and one-third of the combined GDPs ($800.2 billion) of the four Central European states, which had a combined population of 64.2 million in 2004, according to the CIA's World Factbook.

The Balmaceda study, along with research by the U.S. International Energy Administration, came to the conclusion that Ukraine exhibits very low levels of energy efficiency. Balmaceda writes: "Not only does Ukraine have one of the highest levels of energy intensity in Europe and the world, but its energy intensity (measured as its energy consumption per unit of GDP) actually increased by about 50 percent from 1991 to 1999."

The Woodrow Wilson study found that "the share of energy in the cost structure of Ukrainian goods was 25 percent in the late 1990s, 8.3 times more than in France and 4 times more than in the United States. The other side of the coin is that energy subsidies are a way of subsidizing this inefficient production, with dual negative effects: The incentive for increasing efficiency is lost, and the state as a whole must carry the costs of such subsidization."

As a result of these hidden subsidies, such major Ukrainian enterprises as Interpipe, Kryvorizhstal, and others are able to remain profitable and make their owners enormously wealthy.


Ukraine in 2003 had proven natural-gas reserves of 560.7 bcm and produced 18 bcm. It also had 395 million barrels of proven oil reserves, mostly in the Donetsk basin and in the Crimea.

Its largest energy resource was coal, with estimated reserves of 34.1 billion metric tons.

Ukraine is also a major producer of uranium. In 1999 Ukraine was the 10th largest producer of uranium, accounting for just over 3 percent of the world's total. Its reasonably assured resources (at up to $80 per kilogram of uranium) are put at 42,600 tons, according to the World Energy Council's "Survey of Energy Resources 2001."


About two-thirds of Ukraine's 193 coal mines are unprofitable and require large government subsidies, which in 2002 were to have been $324 million, of which only $159 million was paid out, according to the Woodrow Wilson study.

The study further found that the coal industry's debt level has risen to more than $2 billion -- over 50 percent greater than the value of annual production and twice as much as its accounts receivable.

A $300 million World Bank structural adjustment loan that was designed to close down more than 80 loss-making pits between 1997 and 2000 failed to close even half of those mines. If they were shut down this would have meant a significant rise in unemployment in the region, which is highly dependent upon the coal industry for jobs (some 450,000 are employed in the coal-mining industry).

In addition to these indicators, the coal industry is considered by most observers to be one of the most corrupt and dangerous in Ukraine. A prime example of this is the government-owned Zasyadko mine, the largest coal mine in the world. It has one of the highest mortality rates in the world and its miners are perpetually owed millions of hryvnyas in back wages.

Furthermore, the coal industry is located in the most densely populated region of Ukraine which is also the base for the "Donetsk clan," the informal grouping of business and political leaders in the Donetsk region. The leaders of this clan fervently supported Viktor Yanukovych, the former head of the Donetsk State Administration, in his bid for president due to his pledge not to change the status quo in the energy sector of the country.


Russia is by far the largest supplier of energy to Ukraine. Prior to 2005 Russia's Gazprom paid Ukrainian transit fees for gas going through the Ukrainian pipeline system to Europe in kind -- which in 2004 totaled 28 bcm of gas.

Ukraine buys 80 percent its oil imports from Russia and in 2003 this consisted of 232,000 barrels per day. Its main suppliers are the Russian companies LUKoil and BP-TNK.

The second largest supplier of energy to Ukraine is Turkmenistan. According to a contract signed on 3 January, Turkmenistan will deliver 36 bcm of gas for a period of two years at a price of $58 per 1,000 cubic meters, a $14 increase over the previous price of $44. Ukraine will pay for this half in barter goods and half in cash.

All Turkmen gas transits Russia before it reaches the Ukrainian border and is therefore reliant upon a contractual agreement with Gazprom, the owner of the pipeline to the Ukrainian border, in order for it to arrive at its destination.

Ukraine's total energy dependency is one of the highest in Central and Eastern Europe. According to the study by Balmaceda of the Woodrow Wilson Center, "this is the result of declining domestic [energy] production and inefficient energy use, among other factors." According to a study by the Ukrainian Center for Economic and Political Studies, if the current trends continue, Ukraine's total energy import dependency "could rise to 65-70 percent in 2020, leaving the country even more vulnerable to price fluctuations and dependence on Russia." (Roman Kupchinsky)

QUOTE OF THE WEEK. "The old government is going: on the way out, it is stealing what is still there in the state ownership, transferring public funds into offshore accounts, antedating privatization deals, appointing dozens of officials to new positions, destroying information in state agencies' databases, and burning documents by the tons. This adds another top-priority task facing the new government to the long list that has already been compiled, namely, to revise all decisions the public administration made after 1 November 2004." -- The 15-21 January issue of the Kyiv-based weekly "Zerkalo nedeli."

"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.