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UKRAINIAN PREMIER OFFERS AMICABLE SETTLEMENTS TO OLIGARCHS. Prime Minister Yuliya Tymoshenko said in an interview with Interfax on 28 June that the government wants to give those Ukrainian oligarchs who might have made their fortunes under questionable circumstances in the past a chance to live honest lives under the presidency of Viktor Yushchenko. "Today we are ready to discuss the conditions for revaluation of [privatized] strategic enterprises," Tymoshenko said. "If you want to legalize your properties, please come and pay the rest for them. Voluntarily, without any coercion, without waiting until your hands and legs are twisted and you are put into prison. Make [amicable] deals, start paying taxes, and build your lives in a normal, legal way. I think you have a chance." She also revealed that the government is in favor of adopting a law listing "several tens of strategic facilities" that could be subject to revaluation and reprivatization. According to Tymoshenko, the current owners of these facilities should be given the right to pay an extra sum to the government in order to fill the gap between what they paid for them and their "real price." Tymoshenko said a relevant bill was prepared four months ago but its passage is being opposed by a "colossal lobby." JM

UKRAINE EXAMINES MORE THAN 700 CASES OF BALLOT RIGGING. Interior Minister Yuriy Lutsenko told Interfax-Ukraine on 28 June that Ukrainian investigators have opened 726 criminal cases against people suspected of rigging the 2004 presidential election. "We suspect 5,500 people of voting with absentee ballots two times and more," Lutsenko said. He explained that the authorities does not intend to imprison all people who participated in the vote fraud. "We actually need to reveal 10-20 organizers [of the fraud]," Lutsenko said. "I don't rule out that even they will be granted some amnesty, but they should remember that [their behavior] was inadmissible." Lutsenko also said he wants 16 deputies of the Verkhovna Rada to be stripped of parliamentary immunity in order to enable investigators to instigate criminal proceedings against them. He added that these proceedings are not directly linked to the presidential election. JM

GAZPROM QUARRELS WITH KYIV OVER STORED GAS. Russia's gas monopoly Gazprom has unilaterally decided that 7.8 billion cubic meters of Russian natural gas in Ukraine-based storage facilities will be booked as payment for Russian gas transit across Ukraine, ITAR-TASS reported on 29 June, quoting a Gazprom press release. "As for us, we have made a contrary offer, proposing to book this gas volume as Russian exports to Europe across Ukraine," the "Ukrayinska pravda" website ( quoted Ivchenko as saying. Earlier this month, Gazprom blamed Naftohaz Ukrayiny for the disappearance of 7.8 billion cubic meters of Russian gas, worth nearly $400 million, from Ukraine's underground storage facilities. Gazprom and Naftohaz Ukrainy are currently negotiating the price and volume of Russian gas supplies to Ukraine in 2006. JM

GAZPROM PLAYS HARD BALL IN GAS DISPUTE WITH UKRAINE. Gazprom CEO Aleksei Miller and Naftohaz Ukrayiny head Oleksiy Ivchenko failed at a closed-door meeting in Moscow on 28 June to come to an agreement on what to do about 7.8 billion cubic meters of natural gas stored in Ukrainian reservoirs, which the Russian gas monopoly considers its property (see "RFE/RL Newsline," 8 and 10 June 2005), RTR and other media reported. Speaking to journalists after the talks, Ivchenko said that his company asked Gazprom to consider the disputed gas as future export supplies. However, Gazprom Deputy CEO Aleksandr Ryazanov said that his company made a unilateral decision to consider the gas barter payment for the transit of Russian gas via Ukraine at a price of $50 per 1,000 cubic meters. "I think this solution is profitable for Russia and acceptable for Ukraine," RTR quoted him as saying. Ryazanov added that Gazprom experts do not understand what Ivchenko had in mind with his offer, Channel One reported. However, additional gas supplies to Ukraine this year will go at a "European price" of $160 per 1,000 cubic meters, he said. Moreover, beginning in 2006, Gazprom will sell gas to Ukraine only for cash. According to an agreement signed in 2004, this year Russia should transit through Ukraine 128 billion cubic meters, 23 billion of which will be payment for transit, "Rossiiskaya gazeta" reported on 28 June. VY

...AS PARTY LEADER UPBEAT ON FUTURE. In the latest edition of "Kommersant-Vlast," No. 25, Motherland leader Rogozin claimed that his party has 106,000 members and predicted that it will soon surpass the Communist Party (KPRF), with membership approaching 215,000 by the end of this year and 500,000 by the time of the next parliamentary elections in December 2007. He characterized the typical Motherland member as an educated person between the ages of 35 and 50 and said that regional branches of Motherland are instructed to find at least 30 to 40 donors, primarily representing medium-sized business. He said Motherland is willing to cooperate with the "healthy part" of the KPRF, namely its youth organizations and the "communist intelligentsia" who are educated and do not hail from the Soviet-era nomenklatura. Although Rogozin called for protests against social-benefits reform earlier this year and advocated a "social revolution" at Motherland's recent party congress, he told "Kommersant-Vlast" that he is "categorically against all revolutions" like Ukraine's Orange Revolution and used the word merely to denote a "deep transformation" of economic, social, and crime-fighting policies. LB


RFE/RL Belarus, Ukraine, and Moldova Report Vol. 7, No. 24, 29 June 2005

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

WESTERN SPONSORSHIP OF REVOLUTION GREATLY OVERSTATED. Preventing the export of democracy has become a key objective of Belarusian President Alyaksandr Lukashenka in his domestic and foreign policies, particularly after revolutionary changeovers in Ukraine and Kyrgyzstan. Belarusians are being assured by official propaganda that the West is shoveling massive amounts of money to support the regime's opponents and that only the authorities' vigilance impedes political turmoil and prevents the opposition from committing acts of "banditry." Gullible listeners of regime-controlled media would be greatly surprised if they found out where Western democracy-promotion efforts regarding Belarus stand in reality.

The supplemental budget for Belarus under the Freedom Support Act passed earlier this year by the U.S. Congress allocated $5 million, a fraction of the sum of $40 million that the Belarusian government insists is to be spent according to the Belarus Democracy Act adopted last October. The figure of $40 million indeed appeared in the act's initial versions, but this never represented a commitment. The European Union, meanwhile, is running into internal obstacles to promoting democracy in Belarus.

Ironically, bureaucratic obstacles inside the EU have become more insurmountable barriers than Lukashenka's regime in stepping up aid to the democratic opposition in Belarus. "The problem is not the Belarusian regime, but our financial regulations and the open and transparent way in which we have to operate our projects," Raul de Lutzenberger, former head of the European Commission's Minsk Desk and current head of the European Commission's delegation to Moldova, told the European Parliament on 9 June. "It's not Belarus that will accuse us of using the money badly, but our own controllers," he added.

These underlying barriers reflect both difficulties in democracy promotion in Belarus and the EU's own ineffectiveness or unwillingness to work in restrictive political environments. According to Lithuanian center-right Member of European Parliament Aldis Kusis, the EU tries "to use normal ways with an abnormal dictatorship" in Belarus.

The EU's official policy towards Lukashenka's Belarus was formulated back in 1999 as a "step-by-step approach." That is, the EU's actions were to be contingent upon the commitment of Minsk to political liberalization and reform. If such commitment was demonstrated, official contacts, assistance programs, and other forms of cooperation would have followed. If Lukashenka took steps backward, relations were set to freeze, which is what happened.

Crackdowns on the opposition and independent press sparked criticism and condemnation, but at the same time the withdrawal of the EU's already low presence from Belarus. This, perhaps, was exactly what Lukashenka needed. The political and social isolation of Belarus from Europe -- but not economically, as the enlarged EU accounts for almost 40 percent of Belarus's exports, mostly processed Russian oil and potash fertilizers -- has proven to be extremely conducive to strengthening authoritarian rule, which seems to be heading toward a fully consolidated dictatorship.

Following the October 2004 referendum that allowed Lukashenka to stay in power indefinitely, the EU introduced a travel ban for top government officials. This measure will hardly hurt Lukashenka, as he clearly prefers his subordinates to stay at home. Lukashenka himself has recently restricted foreign travel for Belarusian bureaucrats, who now need specific permission from the president to go abroad.

As an entity, the EU simply does not possess instruments for assistance and democracy promotion that can't be blocked by a restrictive government. The EU's Technical Assistance for the CIS (TACIS) is a government-to-government program that has to be co-signed by Minsk, which gives the latter a free hand to choose the components that it wants to leave out. Moreover, Minsk has demanded recipients pay taxes on TACIS grants, and the entire program was frozen by the EU in 2002. Obviously it was not Lukashenka who was punished.

An assistance program becomes meaningless once the rules prevent money going to individuals or unregistered organizations -- the most rapidly growing part of the NGO sector in Belarus because of the ongoing liquidation of NGOs. The policy of disbursing assistance only to government-approved projects and to registered organizations is justified by considerations of transparency. This is a legitimate concern that has some tricky aspects, however. On one hand, it is only fair to demand that the money allocated to civil-society-building programs be spent on what it was supposed to be spent on. On the other hand, it is puzzling why "transparency" should imply facilitating the work of the KGB and Lukashenka's administration in blocking democracy-oriented assistance from coming to Belarus.

As the standstill in assistance progresses, the search for new solutions is under way. The Brussels-based Bertelsmann Foundation issued a statement in November 2004 supporting the Polish government's proposal to set up a European Democracy Fund (EDF), a European answer to the U.S.-based National Endowment for Democracy, that would act not only in the case of Belarus, but also in other countries with nondemocratic regimes. Such an institution would work without the agreement of the given country, even when the authorities do not accept programs that support the opposition or civil society.

The Polish-based Batory Foundation, while supporting the EDF idea, goes further. In its recent policy paper titled "Efficient EU Policy Towards Belarus," the foundation calls upon the EU to explicitly "focus on those schemes that promote the activity of Belarusian society, the consolidation of opposition forces, and the building of pro-European attitudes." It also calls for a more proactive plan to replace symmetrical responses to the Lukashenka government's actions.

The first such proposal is that the EU should prepare a unilateral proposal for a EU-Belarus action plan as a signal to the Belarusian opposition and society that the EU is developing consistent policy toward Belarus and that it wants to commit itself to promoting democracy. The second proposal is that EU member countries' embassies in Minsk should develop common pro-European activities. The third proposal is that a special EU representative for Belarus should be chosen to make and maintain contact with representatives of Belarusian civil society, opposition forces, and the authorities, as well as to inform EU institutions about the current situation in Belarus and to propose actions to be undertaken by the EU regarding Belarus.

But such ideas, in order to be implemented, would require a small reform inside the EU. The EU is by no means an enemy of what the U.S. administration calls "spreading freedom." In fact, the EU is responsible for perhaps the most successful democracy-promotion efforts, which were driven by the promise of EU membership in countries of Eastern and Central Europe a decade ago and, a few decades before, in those of Southern Europe. But this instrument, by definition, is not available for the countries for which EU membership is not on the table for at least the foreseeable future. In such cases, the EU prefers to work as a "soft power," extending the arm of cooperation and support to the governments and societies through technical assistance, like TACIS. But the soft-power magic stops in places like Belarus. The transition from technical assistance to direct promotion of democracy in Belarus and other countries would require not only bureaucratic changes but also an adjustment of attitudes within the EU. And it would arguably make the EU's foreign engagement a bit "U.S.-like." (Vital Silitski)


KYIV SECURES TURKMEN GAS SUPPLIES FOR 2006. On 24 June in Ashgabat, Naftohaz Ukrayiny head Oleksiy Ivchenko signed what he described to journalists in Kyiv as "four historic agreements" with Turkmen President Saparmurat Niyazov.

According to Ivchenko, Niyazov agreed that in the second half of 2005 and the entire 2006 Turkmenistan will supply 48.5 billion cubic meters of gas to Ukraine for $44 per 1,000 cubic meters, down from the $58 per 1,000 cubic meters that Kyiv has had to pay so far. In exchange for the lower price, Kyiv obliged itself to pay for Turkmen gas fully in cash as of 1 July. Under the previous contract that was valid for 2002-06, Ukraine was to obtain 36 billion cubic meters of Turkmen gas annually, paying 50 percent in cash and the other 50 percent in commodities.

Ivchenko's visit to Ashgabat followed what Russian newspapers presented as scathing criticism by Niyazov of Ukraine's failure to pay fully and timely with commodities for Turkmen gas deliveries in 2004-05. "You are fooling us beautifully, while the money is circulating in Ukraine," the 22 June "Kommersant-Daily" quoted Niyazov as saying on Turkmen television, reportedly in a public response to an earlier telephone call from Ukrainian President Viktor Yushchenko. "If you don't have commodities, do not sign commodity agreements. Let's switch to payments in hard currency."

Other Russian newspapers, citing Turkmen sources, reported that Ukraine has accumulated from $560 million to $600 million worth of a commodity debt for Turkmen gas supplies. Niyazov's ire, according to Russian newspapers, was also provoked by the fact that Kyiv reportedly priced its goods shipped to Turkmenistan as payment for Turkmen gas nearly three times as much as was their market value. Therefore, Ivchenko's boast after his return to Kyiv that the new gas contract with Turkmenistan will allow a saving of some $20-$22 on the purchase and transit costs of each 1,000 cubic meters of Turkmen gas in comparison with the previous contract came as a fairly big surprise.

According to Ivchenko, it was Ukraine's initiative to switch to cash payments for Turkmen gas. In addition to the lower gas price negotiated with Niyazov, Ivchenko claimed that Ukraine will also save money on transit of Turkmen gas across Uzbekistan, Kazakhstan, and Russia. "Since we pay 37.5 percent of the [Turkmen-gas] transit cost with gas itself, we will economize an extra sum on the transit," Ivchenko explained on the 1+1 television channel on 26 June. "It is because 37.5 percent of the previous price of $58 [per 1,000 cubic meters] is certainly more than 37.5 percent of the current price of $44 [per 1,000 cubic meters]. Thus, we will economize not just $14 but as much as $20-$22 [on each 1,000 cubic meters of Turkmen gas]."

However, according to the 27 June "Kommersant-Daily," Ivchenko's calculations should not be taken for granted. The Russian newspaper argued that after switching to cash settlements for Turkmen gas, Ukraine will actually have to pay more than before. The newspaper quoted Ukrainian lawmaker Oleksandr Hudyma, a member of the parliamentary Committee for the Fuel and Energy Complex, as saying that under the previous contract, because of overpricing its goods shipped to Turkmenistan as payment for Turkmen gas, Kyiv actually paid $30-$32 per 1,000 cubic meters.

"Kommersant-Daily" did not specify the new real price of Turkmen gas for Ukraine but predicted that the price of gas for Ukrainian corporate consumers could soon be increased from $65 to $90 per 1,000 cubic meters. The increase would reportedly be due to the fact that Ukrainian enterprises are sold exclusively imported gas, while cheaper, domestically extracted gas is provided to individual consumers.

Ivchenko announced that he also signed three other agreements with the Turkmen president: on Ukraine's repayment of a commodity debt for Turkmen gas supplied in the first half of 2005; on a supply of $500 million worth of Ukrainian goods to Turkmenistan in July 2005-December 2006; and on increasing the supply of the so-called "investment" Turkmen gas to Ukraine from the previous 4.5 billion cubic meters to 5 billion cubic meters in 2005 and 6 billion cubic meters in 2006. The "investment" gas, in contrast to the above-mentioned "commercial" gas, is delivered by Turkmenistan in exchange for services of Ukrainian companies in that country, which are provided primarily in road and industrial construction.

Ivchenko announced on 24 June that Niyazov accepted Ukrainian President Yushchenko's invitation to visit Kyiv in September, when both countries are planning to sign a 25-year accord on Turkmen gas supplies to Ukraine. Ivchenko said Niyazov made a statement to the Turkmen press denying the reports in Russian newspapers that last week he slammed Ukraine for "fooling" Turkmenistan in payments for gas. According to Ivchenko, the Russian newspapers utilized pronouncements made by Niyazov "a few years ago." And Ivchenko revealed that Russia did not allow his plane on the way back from Ashgabat to Kyiv to enter its airspace, which was the first such occurrence in the history of Ukrainian official delegations' flights to Turkmenistan. "I think this was connected with the documents we signed today in Turkmenistan," Ivchenko noted.

Some Ukrainian commentators have speculated that Niyazov's apparent goodwill in signing the new gas contract with Ukraine was cunningly cajoled by Yushchenko, who without making much publicity in Ukraine, awarded Atamurat Niyazov, the president's father, with the Yaroslav the Wise Order of the Fifth Degree to mark the 60th anniversary of the victory over Nazi Germany in World War II. "Ukraine honors the combat services of Atamurat Niyazov, whose immortal image personifies the heroism of the 740,000 Turkmen heroes who sacrificed their lives on the battlefields of the Great Patriotic War," Ivchenko reportedly said while presenting the award to the Turkmen president on Yushchenko's behalf in Ashgabat in May.

And on 21 June, reported that Yushchenko congratulated Niyazov on the 13th anniversary of his presidency, paying homage to the "wise policy of Saparmurat Niyazov," thanks to which Turkmenistan "has won great respect and taken a worthy place in the international arena."

Has Yushchenko any such moves in store for the Kremlin? Because Ukraine, which consumes annually some 24 billion cubic meters of Russian gas obtained as payment for transit of Russian gas across Ukraine to Europe, is now facing tough talks with the Russian gas monopoly Gazprom. Gazprom executives announced earlier this month that the price of Russian gas for Ukraine might soar from the current $50 for 1,000 cubic meters to $160 in 2006, in connection with switching to cash payments under European-level tariffs. Ivchenko said that Ukraine, which prices Russian gas transit at $1.09 per 1,000 cubic meters per 100 kilometers, does not intend to revise the current payment arrangements with Gazprom. (Jan Maksymiuk)

"RFE/RL Belarus, Ukraine, and Moldova 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.