Gays Vow to Defy Ban on Parade

Gay activists on Thursday vowed to stage a weekend pride parade outside the European Commission's building in central Moscow despite a court ruling upholding a City Hall ban on the gathering Thursday.

The activists will defy the ban to rally on Kadashevskaya Naberezhnaya on Saturday, gay rights activist Nikolai Alexeyev said at a news conference attended by Chicago Gay Liberation Network activist Andy Thayer, British gay rights activist Peter Tatchell and gay German lawmaker Volker Beck.

Organizers had requested that the embassies of several European countries accommodate the event on their grounds but were refused, Alexeyev said.

He criticized the diplomatic missions for selling “human rights for the sake of economic interest,” Interfax reported.

At least 100 Russians, as well as two or three members of the European Parliament and a number of other European and U.S. activists, are expected to participate.

Mayor Yury Luzhkov has called gay pride parades "satanic" and consistently banned them. Gay rallies, held in the city center since 2006, have been routinely attacked by radical Orthodox believers and broken up by police.

The European Court of Human Rights is expected to rule this year on City Hall's bans on gay parades in 2006, 2007 and 2008.

Homosexuality was decriminalized in Russia only in 1993, and homophobic attitudes remain widespread.

Last May, more than 30 gay activists, including Tatchell, were arrested for attempting to hold a pride march in the gardens of Moscow State University.

In October, a Russian court threw out a request by a lesbian couple to force a registry office to marry them.

Central Bank Chief: Ruble, Economy Will Weather Euro Crisis

ST. PETERSBURG — The economy and currency should weather the euro-zone crisis without serious implications, and there is no need to change the structure of reserves, Central Bank Chairman Sergei Ignatyev said Thursday.

"The [euro-zone] problem is more political than economic," he said. "With swift coordinated actions of European nations, the problem is fully solvable."

The Greek debt crisis has sent a shiver through investors across the globe, who rushed to ditch the euro for dollars and gold.

Ignatyev called the recent swings in the euro normal and said no changes to the structure of the Central Bank's gold and foreign exchange reserves — the world's third largest, worth some $450 billion — have been discussed.

"We are conservative, we do not change the structure of currency reserves — at least in recent months," he told reporters. "The euro moves one way, another way — one should get used to it."

Asked whether there were any plans to sell European assets from reserves, Ignatyev replied: "For now, I do not feel panic."

At the end of last year, Spanish assets accounted for 2.9 percent of the Central Bank's holdings, while Italian ones comprised 0.4 percent.

Nominally, Russia keeps the portion of its reserves in 47 percent dollars, 41 percent euros, 10 percent sterling and 2 percent yen. It has been gradually increasing the volume of gold, a trend that Ignatyev said would likely continue.

As a result of the euro-zone crisis, though, financial markets have become jittery and prices for oil and other goods have slumped — affecting the ruble.

The currency is slowly recovering from an 8 1/2-month low versus the dollar of 31.69 earlier this week, trading at 30.78 per dollar Thursday.

Ignatyev said the currency remained under the regulator's control, even if the control has softened somewhat.

"The exchange rate regime reflects much better the current volatile situation on global financial and goods markets," he said, adding later that exchange rate fluctuations of 2 percent to 3 percent per day are normal.

"The mechanism [of interventions] is very successful and corresponds to the situation and swiftly adapts to a new situation," Ignatyev said.

The Central Bank keeps the ruble within a floating corridor against a euro-dollar basket, shifting the band by 5 kopeks for each $700 million of interventions in the boundary. In addition, it buys up to $250 million to 300 million a day in "planned" interventions within the band.

Ignatyev said interventions have totaled about $5 billion so far this month.

He declined to comment on whether the Central Bank would continue its year-old monetary easing cycle — which has slashed the refinancing rate by 400 basis points to a historic low of 8 percent — with another cut this month.

"The Central Bank intends to follow monetary policy so as, on the one hand, to stimulate the growth of bank lending and thus economic growth, and on the other hand not allow inflation to exceed 7 percent this year or next," he told a banking forum.

He said year-on-year inflation was running at 5.7 percent as of Monday.

Economists and officials expect the inflation rate to increase in the second half of 2010, with pressure from stronger domestic demand and a traditional end-of-year increase in federal expenditures.

Ignatyev said inflation would also determine any need to increase minimum reserve requirements toward the end of the year, a move that would curb the volume of liquidity in the banking system.

Norilsk Nickel Announces $1.33Bln in Dividends

Norilsk Nickel said Thursday that its board recommended that the company pay $1.33 billion in dividends for 2009, or 210 rubles ($6.80) per share, less than half the amount proposed by shareholder United Company RusAl.

RusAl, which owns 25 percent of Norilsk, had called on the company to pay out $3 billion, exceeding its profit for the year, CEO Vladimir Strzhalkovsky told reporters.

Norilsk's board agreed to pay out 50 percent of last year's $2.65 billion net income, he said.

"We believe that today's financial state of Norilsk Nickel provides for an opportunity to pay much higher dividends," RusAl said in an e-mailed statement.

Norilsk's board also approved a program to sell as much as 100 billion rubles ($3.24 billion) of bonds in several tranches, chief financial officer Dmitry Kostoyev said.

The miner's shares rose 4.7 percent on the MICEX, outperforming the exchange's metals and mining index, which rose 2.5 percent.

Medvedev Questions Future of BP, Post-Spill

President Dmitry Medvedev on Thursday questioned the future of BP, saying its spill in the Gulf of Mexico could ultimately ruin the oil major.

"No one knows what will happen to the Gulf of Mexico, with the flora and fauna of the sea. There is even an uncertainty as to what will happen to the firm," Medvedev told a meeting on environmental regulation.

"The nature of environmental responsibility is such that it can destroy anyone," he said.

BP, which traces its history back to 1909, is the fourth-largest company in the world, with revenue of $246.1 billion in 2009. One-quarter of its global output comes from TNK-BP, a 50-50 joint venture with Russian partners.

Speaking in Finland, Prime Minister Vladimir Putin expressed his condolences over the BP spill, saying nothing like that could happen with the Nord Stream pipeline.

"The Gulf of Mexico is, of course, a long way away, but we're enduring [the accident] alongside those who are now facing this catastrophe, which is taking on a global nature,” Putin said, Interfax reported.

BP has had a bumpy experience in Russia since establishing its 50-50 joint venture, TNK-BP, in 2003. The venture has suffered from a conflict between BP and its billionaire Russia-connected partners, whom BP accused of using administrative pressure and judicial connections to win a dispute over strategy and management control in 2008.

On Thursday, BP was undertaking its latest attempt, dubbed the top kill, to seal a gushing well deep underwater in the Gulf of Mexico. The spill created by a deadly blast aboard a rig, which was leased by BP, is shaping up to be the worst in U.S. history.

Medvedev also said Russia needed to "put an end to the environmental nihilism" and introduce stronger punishments for infractions, Interfax reported. Medvedev has made the fight against "legal nihilism" — his term for the country's flawed judicial system — a cornerstone of his presidency.

2 War Veterans Relive Historic Day on Elbe

The 93-year-old American and the 86-year-old Russian had never laid eyes on each other until Thursday afternoon. But they greeted each other like old friends.

U.S. Sergeant William Duane Bush came to Moscow to raise a vodka toast with Soviet Colonel Grigory Prokopyev to a historic day in 1945 when their countries' armies linked up on the Elbe River in Germany to crush Nazi forces.

"We knew that there should be a meeting but didn't know when and where," Prokopyev said, recalling the union on April 25, 1945.

In the last days of World War II, Nazi Germany was caught between the Soviet army, marching from the east, and the Western Allies, coming from the West. The two armies met on the Elbe, near Torgau, Germany, in an event that became a symbol of brotherhood-in-arms between the United States and the Soviet Union.

Bush and Prokopyev didn't meet personally on the Elbe River. But 65 years later at the Moscow office of the Russian Committee of Veterans, they repeated what the Soviet and American soldiers did back at the Elbe: They exchanged presents, drank vodka and established friendship.

"Signs were agreed for the two armies: The Americans were to shoot with green flares, and the Soviets with red ones. But the American troops didn't happen to have any green flares that day," Prokopyev said.

The U.S. troops had to make an improvised American flag by painting red stripes on a white sheet and waving it above a Torgau castle, Prokopyev said. The Soviet side responded with red flares.

"It was a very emotional meeting. We wondered who those American guys were, and they were interested in knowing who we were," Prokopyev said. "We communicated with gestures, smiles and hugs. There were no photographers, no journalists, no interpreters, but thankfully we were well-supplied with alcohol."

Prokopyev recalled that the soldiers met on the bank of the river, where they spread their mantles and drank together.

The first toast was for victory — which came two weeks later — and the second was for the leaders: Josef Stalin and Harry Truman. "The Americans were good at drinking vodka. … We couldn't understand each other, but we were having fun," Prokopyev said.

At the end of the historic meeting, the troops exchanged ruble and dollar bank notes with their addresses scribbled on them, he said.

Bush, a native of Nebraska, said he wanted to drink vodka with the Russians again, this time at the office of the Russian Committee of Veterans. Like 65 years ago, he and Prokopyev raised their first toast to victory.

"I think it's great that you people remember the veterans. In our country, we are almost forgotten," Bush said.

Prokopyev, who attended a reunion of the troops on the Elbe in April, said only one American veteran had shown up this year.

"Most of the U.S. troops are too old to travel, most of them are over 90," said Nathan Hunt, a great-nephew of Bush who helped arrange his great-uncle's trip to Moscow.

"The Committee of Veterans was interested in arranging such a meeting because it might be the last-ever meeting of the American and Russian soldiers who were at the Elbe River," said Hunt, who chairs the national board of the Canada Eurasia Russia Business Association.

Bush, a sergeant in the 134 Regiment of the 35th Division, said he wore his uniform Thursday for the first time since the 1970s.

"This is my first visit to Russia and for the first time abroad since 1945," said Bush, who was accompanied by his family. "And I'm very glad to be here."

The two veterans were welcomed by Soviet Air Force Marshal Alexander Yefimov, 87, who presented them with special medals.

"It was a general victory, a mutual victory," Yefimov said of the end of World War II. "I think it was a war of our politicians. We soldiers had been friends, and we remained friends."

Chekhov’s ‘Ivanov’ Not Suicidal in New Version

Yury Butusov and the Moscow Art Theater were hardly alone this season in putting together a production of a play by Anton Chekov. In this, the year honoring the 150th anniversary of the writer’s birth, there has been a veritable explosion of productions of Chekhov’s plays and adaptations of his stories.

The Chekhov International Theater Festival is now under way, and by the time it ends on July 30 it will have brought us 25 Chekhov-inspired works from around the world.

One of those productions is Butusov’s interpretation of Chekhov’s early play “Ivanov.”

Especially in his work across town at the Satirikon Theater, Butusov has proven himself to be one of the boldest and most interesting directors to emerge in Moscow in the last decade. For what it’s worth, he actually hails from St. Petersburg, and the stylistic clarity and intellectually challenging manner of his best work is reminiscent of the aura that city projects.

I must admit that I have been less impressed by Butusov’s work at the Art Theater, and that goes for “Ivanov” as well. The acting style at the House that Stanislavsky Built is often reduced to nuances so subtle and supposedly lifelike that it actually becomes difficult to discern from no style at all.

Butusov, on the other hand, wants and requires eccentricity and audacity.

“Ivanov” was surely an audacious play for the young, 27-year-old Chekhov to write. It was all about the failure of love, family and life itself. It ends melodramatically with the title character running off to shoot himself in anger and despair.

Clearly, when writing “Ivanov,” Chekhov had not yet worked his way up to the blistering sarcasm of “Uncle Vanya,” a play he would write a decade later. There he would turn suicide into a clumsy, bitterly comic, failed attempt at murder.

Murder, suicide, failure or incompetence — Chekhov was always exploring territories where people are cut adrift from their dreams. He had a way of making it appear genteel and discreet on the surface, but that surely was another example of his sarcasm at work.

Butusov wastes no time in getting to the heart of the matter. With the curtain still closed and the house in darkness, we hear a gunshot.

So, Ivanov’s fate is sealed before anything begins.

Or is it? Because by the end of this performance we have given up believing that Ivanov is truly suicidal. As events unfold, he increasingly resembles someone who fakes suicide all the time, perhaps in part to try it on for size, perhaps to see what effect it may have on others.

Butusov recalibrates the play by picking up on a few of Chekhov’s specific words — the notion of Ivanov’s youth “awakening” in him seconds before he goes to shoot himself, and his claim that he has been racing “downhill on an incline” for too long.

Butusov interprets both instances literally.

In the first case, he has Ivanov seemingly commit suicide repeatedly, only for us to see him invariably wake up again as if from a slumber. In the second, Butusov avoids that final suicide altogether by giving Ivanov the task of piling broken branches on an enormous wood pile. Both he and the branches often slip back down the incline, bringing to mind the picture of Sisyphus eternally rolling his rock up a hill before it rolls back down.

Ivanov’s tragedy is his loss of a feeling for, and of, life.

His wife Sarah (Natalya Rogozhkina) means nothing to him anymore. His lover Sasha (Natasha Shvets) is beautiful, but he sees her only as a China doll. His old friend Lebedev (Igor Zolotovitsky) would talk sense into him if possible, but nothing makes sense to him anymore. His jaded old uncle Shabelsky (Sergei Sosnovsky) may be close to him in spirit but is worlds apart in sensibility.

Everyone is alien to Ivanov, no matter what their character or their place is in his life. The bigger the crowd around him, the more this man is alone.

Designer Alexander Borovsky set the action in a devastated, hacked-up former orchard. Could this be what was left of the cherry orchard in the last play Chekhov ever wrote?

Ultimately Butusov’s take on “Ivanov” works better in theory than in practice.

In its best moments, it is chaotic, strange and unexpected. More often, however, the performance suffers from the same aimlessness and enervation that keeps trying to kill Ivanov off, but can’t

For Russia's Entrepreneurs, Inheritance Is Open Question

Most Russian entrepreneurs have not thought seriously about what to do with their businesses when they retire, but many say they want to give their potential heirs both a Russian and a Western education to ensure that they would be up to the job.

Twenty-one businessmen and four businesswomen — each with a personal net worth of more than $50 million or owning a business that is worth at least $100 million — were surveyed in the summer and fall of 2009 by Swiss bank UBS and Campden Research. The respondents were interviewed for about two hours on condition of anonymity on a number of wealth management issues, the companies said.

The issue of inheritance gained prominence in February when Vladimir Potanin, ranked by Forbes as Russia's 19th-richest person with a fortune of $2.1 billion, said that he would leave most of his fortune to charity instead of his three children.

“An inherited million allows one to … realize your goals," he told Bloomberg at the time. "An inherited billion kills a person, depriving him of a meaning in life.”

But not everyone shares his sentiment. Sixty percent of those polled said they would involve their family in their business in some capacity, while 64 percent said they would take on close relations in managerial roles.

Still, only 32 percent said they would create incentives for their children to take up the family business, while 68 percent plan to support them as they follow their own careers.

Informal ties play a big role in business relations, as most entrepreneurs trust their money to people they know personally, the survey found.

“It is important to find the right person as your relationship in a large bank,” said a 41-year-old entrepreneur. “I think people are more important than the bank.”

“I only work with local banks, these are banks of friends, who own them, and therefore I have a lot of confidence,” another entrepreneur explained.

But other results of the survey go against the stereotype of Russian society being a clannish community where family connections are vital for a successful business.

In 72 percent of cases, the entrepreneurs said their family members hold no stake in their company and would not be entitled to one in the future.

“I don't have succession planning, and I am the only one in the family who has the overview of the wealth: My kids are still too young, and my wife is not involved so as not to expose my business to additional risks,” one of the respondents said. “Just look at some of the high-profile divorce cases, and you will understand me.”

Lack of family involvement is expected, because children of most Russian businessmen are still very young, the researchers wrote in their report, although the question could become more important in the next five to 10 years.

Giving children both a Russian and a Western education is considered essential by 80 percent of respondents. Only 12 percent think a local college or university will suffice, while 8 percent were in favor of an exclusively Western education.

“I want my kids to get their basic education and first degree in Russia,” said one of the entrepreneurs polled. “If they want to continue, then it should be at an international school abroad. I want my kids to feel and understand our own culture before I send them abroad.”

The main goal of the survey was to get a better understanding of Russian business leaders, virtually none of whom have inherited significant wealth, Dominic Samuelson, managing director of Campden Research, said in a statement.

“A lot has been written about Western entrepreneurs over the years, however, little is properly understood about the Russian businessmen and women who have been in the driving seat of developing businesses in Russia since the fall of communism over two decades ago,” he said.

Russia Inks Deal to Extend Waterway Lease for Finland

Russia signed a deal Thursday extending a Finnish lease on a key waterway for another 50 years, allowing Helsinki to import timber and export paper and pulp.

Under the agreement, signed by Prime Minister Vladimir Putin in Finland, Russia will continue leasing its stretch of the 43-kilometer Saimaa Canal that connects Finnish lakes to the Gulf of Finland after the current 50-year contract expires in 2013.

The canal runs from the city of Lappeenranta, in the southwestern Finland, to the Leningrad region city of Vyborg. Finland agreed to pay a rent of at least 1.2 million euros ($1.5 million) per year, up fourfold from 300,000 euros. The pay may rise depending on the number of passing ships.

Putin, who spoke at a meeting of the EU-Russia Innovation Forum, described the deal as a show of the “special nature of our relations” and “trust” in talks with his Finnish counterpart,Matti Vanhanen, before they signed the accord in Lappeenranta.

The new agreement expands the usage of the canal by allowing passenger vessels from third countries to navigate it as well, the Finnish government said on its web site in March. It also seeks to exploit the scenic waterway's opportunities for the tourist industry and pleasure boating.

Finland will no longer lease Maly Vysotsky Island, or Ravansaari as it is known in Finland, during the next 50 years, the Finnish government said in a memo Thursday. Instead, the lease will include a new road between the border checkpoints of Nuimaa and Brusnichnaya.

Ships carry about 2 million metric tons of cargo across the canal every year, meeting the needs of some 20 Finnish companies that employ 7,000 people.

Russia gained the 20-kilometer portion of the canal following a brief war with Finland in 1940.

In other deals, state-owned shipping company Sovcomflot and three Finnish companies, including STX Finland, signed a memorandum of understanding on development and construction of an icebreaker for Sovkomflot to clean up oil spills in the Baltic Sea. The other Finnish companies were Aker Arctic Technology and Southeast Trading.Rosmorport, a Russian state enterprise that manages port infrastructure, also signed the memorandum.

State-owned railway-equipment maker Transmashholding agreed to set up a 50-50 joint venture with Finland’s Waertsilae to develop and produce diesel engines for trains, ships and power plants. The agreement calls for 1.8 billion rubles ($58 million) of investment, Transmashholding spokesman Artyom Ledenev said, Bloomberg reported.

The two companies will upgrade an existing plant in the Russian city of Penza, which will begin operation in 2012, Ledenev said. Waertsilae makes ship engines and power plants.

Putin and Vanhanen kicked off their meeting Thursday by taking a tour of a high-speed train that is scheduled to begin shuttling between St. Petersburg and Helsinki in December, reducing the travel time to three hours from the current 5 1/2 hours.

Delegation Visits Vladimir Prison

Two key advisers to Presidents Dmitry Medvedev and Barack Obama got down to business on the reset of U.S.-Russian relations Thursday by visiting one of Russia's most well-known prisons.

The Civil Society Working Group, headed by Obama's top Russia expert Michael McFaul and Medvedev's first deputy chief of staff Vladislav Surkov, dropped by Prison No.2 in the city of Vladimir, 200 kilometers east of Moscow.

The prison, better known as Vladimirsky Central, was founded in 1783 and counts U.S. pilot Gary Powers and Soviet dissident Vladimir Bukovsky among its former inmates. It also features in a 1990s cult song "Vladimirsky Central" by chanson singer Mikhail Krug.

The lunchtime visit lasted less than an hour, prison spokeswoman Inessa Galitskaya told The Moscow Times by telephone.

"They entered cells and spoke with inmates, who readily answered questions," Galitskaya said.

The delegation also peeked into the medical ward, the prison chapel and an Internet room, where inmates are allowed to visit a restricted number of web sites, she said.

The working group of representatives from government and nongovernmental organizations discussed conditions for prisoners and migrants in both countries during a meeting in Vladimir.

The talks behind closed doors lasted the whole day, and no concrete results emerged by late Thursday.

Ombudsman Vladimir Lukin told reporters during a break that the Americans had openly addressed problems in the U.S. prison services. "They surely have strengths but also difficulties, and they talked quite frankly about that," he told Interfax.

Critics have pointed to appalling conditions in Russian prisons after the recent deaths of lawyer Sergei Magnitsky and businesswoman Vera Trifonova in Moscow detention centers. Their supporters say they were denied proper medical care.

Lukin on Wednesday handed Medvedev a list of those prisons where the rights of inmates are violated most often, the Kremlin said on its web site.

The working group, part of a greater U.S.-Russian Bilateral Presidential Commission,met for the second time Thursday. Its first session in January in Washington focused on corruption and child adoptions

Embattled Tycoon to Invest $800M in Sochi

Telman Ismailov the tycoon who fell from favor after building a $1.5 billion hotel in Turkey, will invest $800 million into two Sochi hotels,Olimstro said Thursday.

The price tag is double what Ismailov had been expected to invest in the construction of hotels in the host city of the 2014 Winter Games, and analysts called the deal loss-making.

But what Ismailov might lose on the properties, he apparently hopes to make up with the Russian authorities, who closed his Cherkizovsky Market in Moscow last June after Prime Minister Vladimir Putin complained of smuggling.

Observers have linked the crackdown on Cherkizovsky, Europe's biggest market, to government anger that Ismailov had built the luxury hotel in Turkey instead of investing the money at home.

Olimpstroi, the state corporation overseeing construction for the Sochi games, said Thursday that Ismailov's AST Group had signed an agreement to develop 4,000 rooms and that the two sides were negotiating the hotels' design and concept.

AST will construct a 150-room, five-star hotel on the Black Sea shore in a new project that will be added to the Olympic program, Olimpstroi said.

The remaining 3,850 will be of three- and four-star quality and be part of the 5,500-room Sodruzhestvo hotel complex, which is currently listed in the official program without an investor, Olimpstroi said.

Sodruzhestvo, which will cover 24.9 hectares, will be the closest hotel to the main Olympic venues and will be located about 700 meters from the beach, according to Olimpstroi's map.

The sum of $800 million is a standard price for developing 4,000 four-star rooms, but the investment is dubious, analysts said.

"Even with beach access, such a hotel would take 10 years to break even," said Konstantin Romanov, a partner with Knight Frank.

Building a similar hotel in Turkey would make more sense because labor would be cheaper and the tourist season lasts 4 1/2 months, six weeks longer than in Sochi, he said.

The proposed site for the hotel in the Imeretinskaya lowland area could add to construction costs because of its difficult geology, but a large project like Sodruzhestvo has some room for cost-cutting, said Olga Shirokova, director of the consulting department at Blackwood.

“The Olympics are not enough to make this project profitable," she said, adding that it might make sense to build it in such a way to convert it to housing.

Four thousand hotel rooms can be converted into about 1,000 apartments, she said. Demand for such housing will depend on the cost, but "converting four-star hotel rooms into affordable housing is not optimal," she said.
Apartments in the Sochi area can fetch up to 80,000 rubles ($2,600) per square meter, but there is little demand, Romanov said.
"Local demand is practically zero, and demand for vacation homes among residents of other regions is very low," he said.

A secretary in Ismailov's office said nobody was available to comment Thursday.

But Ismailov might have more on his mind than the economics of the Sochi hotels. The businessman drew gasps and frowns last May when he opened Mardan Palace, a five-star wonder on the Antalian coast that is the most expensive hotel in Europe. The 560-room hotel is named after Ismailov's father and filled with extravagancies like gondola rides in a pool full of sparkling water.

Ismailov's fall from grace was swift after he gave such a blatant display of wealth during the economic crisis. Putin complained in early June that the seizure of $2 billion in contraband goods sold at Cherkizovsky Market had not resulted in convictions and, taking the hint, the authorities closed the market at the end of the month.

After Ismailov made Turkey his temporary home, Putin said in December that investors like Ismailov should focus on Russia, "for example in building hotels in Sochi."

Now, barely six month later, Ismailov's fortunes appear to be improving again. RBC Daily reported last week that Ismailov had purchased 36 hectares southwest of Moscow, not far from the Mega-Tyoply Stan shopping center, and was likely to recreate Cherkizovsky Market there.

The International Olympic Committee needs 24,400 hotel rooms ranging from three to five stars for tourists, officials, journalists, athletes and other Olympic guests. In addition, 38,000 rooms are needed for tourists, Olimpstroi said.

Binding investment agreements have been signed for three hotels in Imeretinskaya, including Sodruzhestvo, according to a program that Olimpstroi provided to The Moscow Times. Investors also have been found to build eight hotels with a total of 5,400 rooms in the area, although no deals have been signed yet. No investors have been found for two four-star hotels with 1,120 rooms.

Student dies of head injuries in a Kyiv police station

A 19-year-old student living in a Kyiv hostel has died in unexplained and very worrying circumstances. The Kyiv Police Department has claimed that he died in the Shevchenkivsky District Police Station after falling in a drunken state. There are however conflicting stories.

The Police Public Relations Department state that around 10 days ago the student, known only as Ihor, was celebrating his 20th birthday in the hostel where he was living. They assert that at around 8 in the evening he saw a friend from his part of the country off and “after returning to the hostel in a drunken state began causing a disturbance”.

The report goes on to assert that after some time, a police officer who is temporarily living in the hostel got involved and took him to the district police station, It says that the above-mentioned other person was there all the time. The report claims that “while in the police station, the student felt ill and he fell several times, as a result of which he received a skull and brain injury.”

The police say that a forensic examination found no evidence of a violent death and deny claims that Ihor died as the result of police actions.

On 26 May the news service of TV “1+1” reported that a police officer had taken the student to the police station. It said that the parents had been contacted in the morning and asked to collect their son’s body from the morgue. According to the TV report, the autopsy was carried out before the parents learned of their son’s death, and they did not get to see the body.

His mother also stated that they had been told that their son choked to death, yet when they arrived in Kyiv they were given the doctor’s report for the death certificate. That said that their son had been blood haemorrhaging in the brain tissue, skull fracture and injuries from a blunt object.

The Director of the college where Ihor was studying explained that about a year and a half earlier, at the request of the Head of the Shevchenkivsky District Police Station, the police officer had been accommodated in the hostel for the students’ protection.

Other students, according to the news service, say that Ihor had been visited by a school friend, that the two had drunk a bit to mark his coming birthday, and then Ihor saw his friend off. On the veranda the young men met the police officer, and an altercation followed. The police officer asked him to come to the police station, and he apparently agreed. Another student, Natalka, told the TV channel that Ihor had walked out of the hostel by himself and got into the back seat of the police officer’s car. That was the last time she saw him alive.

When the police officer returned at 21.30, the lecturers asked him to release the lad. The report states that the police officer refused saying that Ihor had been aggressive in the police station. He said that they would only release him in three days.

The television channel also reported that an ambulance had been called four times during that night, but that the doctors had refused to take him.

They reported that students had contacted them, saying that the police were putting pressure on students to say that there had been a fight and that Ihor already had head injuries when he got in the car.

Lawyers from the Ukrainian Helsinki Human Rights Union are in contact with Ihor’s relatives trying to ascertain what happened.

IMF shows signs of getting tough with Ukraine over deficit, lack of reforms

The IMF is apparently concerned that the government is hiding a large budget deficit

Ukraine’s deputy prime minister, Sergiy Tigipko, has confirmed what many had guessed: Despite the self-congratulatory fanfare with which the government announced its budget for 2010, the International Monetary Fund – a critical lender to the nation -- seems unimpressed. Apparently, the IMF suspects a hidden budget deficit larger than declared, which may imperil lending frozen last year over similar concerns.

The government is hoping to secure a $19 billion lending program from the IMF, but the international lender seems to be playing hardball as the country’s economy starts to strengthen, and may demand further cuts and market-oriented reforms from the recalcitrant Ukrainian side.

The government engineered the budget to comply with the IMF’s demand for a maximum deficit of 6 percent of gross domestic product. But the government did so by avoiding any social spending cuts that could undermine the government’s populist rhetoric.

The official budget deficit in the budget law passed by parliament April 27 is 5.3 percent of GDP. But skeptics argued that the government’s revenue forecasts were massively over-optimistic and spending forecasts understated.
Now Tigipko confirmed that the IMF is among the ranks of the skeptics. “The main problem between us and the IMF is that we must confirm a projected deficit of 5.3 percent,” he said on May 21. “What is projected by the Ukrainian government is a rather ambitious program, and the international organizations don’t really believe it. They have doubts, first of all, about our arguments,” he confessed.

Serhiy Lyovochkin, President Viktor Yanukovych’s chief of staff, said on May 26 that the main bones of contention are the government’s plan to issue bonds to compensate business owners who have not received value-added tax refunds, which the IMF sees as indirect budget deficit, and the refusal to raise gas tariffs for households.

The IMF announced that it has yet to fix a date for starting its mission in Kyiv, which observers take as confirmation that it does not agree with the declared budget parameters.

Former Finance Minister Viktor Pynzenyk, who resigned in 2009 over then Prime Minister Yulia Tymoshenko’s wildly unrealistic budget, wrote in the Dzerkalo Tyzhnia weekly that the real budget deficit for 2010 could reach a staggering 16 percent, which includes the costs of bank recapitalization that the government kept separate from the budget law passed by the Verkhovna Rada on April 27.
Analysts see the real consolidated budget deficit, including bank recapitalization to shore up Ukraine’s shaky financial system, at closer to 10 percent.

According to Oleh Ustenko, chief economist at the Bleyzer Foundation: “Ukraine’s total hidden budget deficit is at a very minimum 10 percent of GDP.

This includes 5.3 percent primary revenue deficit, 3 percent for [gas distribution monopoly] Naftogaz, if there is no increase in utility tariffs, 1.5 per cent for the Pension Fund deficit, and 2.8 per cent for bank recapitalization.”

“The budget has obviously been designed to meet IMF requirements on paper,” said Vitaliy Vavryshchuk, an analyst at brokerage BG Capital. “Our calculations put the real budget deficit at 7 percent, and 9-9.5 percent, including the costs of bank recapitalization.”

Olena Bilan from brokerage Dragon Capital similarly forecasted a deficit of 7.5 percent of GDP, with an additional 1.4 percent needed for bank recapitalization, making an overall 8.9 percent.

On the revenue side, analysts are skeptical about the government’s targets. “The budget is based heavily on a surge in revenues (19 percent on the year) on the back of higher tax collections (36 percent on the year) in order to finance inflated social expenditures and rising public sector wages,” said Vavryshchuk, who forecasted instead 22-25 percent tax growth.

According to Pynzenyk, for the first four months of 2010, tax revenue growth on the year only reached 10 percent instead of the forecast 40 percent, taking into account the practice in 2009 of not refunding VAT. For the government forecasts for VAT revenue to come true, imports would have to increase by 40 per cent, according to Ustenko, instead of the 25 percent that is likely, leaving 11 percent of the predicted VAT revenues unaccounted for.

According to Ustenko, to rectify the situation, the IMF will demand that Ukraine hike utility tariffs to mitigate the Naftogaz deficit, and reform the pension system, by raising the average pension age, in particular by abolishing privileges such as early pensions for particular groups.

The government is likely to resist such demands that would be deeply unpopular in the short term, although crucial over the long term.

With export-led economic growth surging in the first quarter to 5 percent on the year, and reaching 8 percent on the year in April, Ukraine’s government has a stronger footing in talks with the IMF when it comes to budget revenue forecasts. The budget is based on a modest growth forecast of 3.7 per cent. “They [the IMF] most of all question planned budget revenues. But the dynamics in April and May show that the figures will be achieved,” Tigipko claimed
The government has penciled in roughly $2 billion of IMF money to fund the deficit. An IMF deal would serve as a clean bill of health for markets and also for other international financial institutions, making other borrowing such as a planned $1.3 billion Eurobond cheaper. According to Vavryshchuk, the government could get by over the short term without the IMF money by expensive borrowing on the market and by monetizing the deficit – effectively printing money.

At the same time, with Ukraine having stabilized and even strengthening, it is now easier for the IMF to walk away without a deal, instead of jeopardizing its principles internationally, said Vavryshchuk. This means a deal with the IMF may not be signed until later in the year.

The IMF surprised many in 2009 with its lenient attitude towards embattled countries like Ukraine. Many countries, especially in Eastern Europe, received IMF funding while running large budget deficits and increasing social expenditure as stimulus spending in the face of economic meltdown.

But those days seem to have past. With a nervous eye on the spreading Greek debt crisis, the IMF is reverting to its deficit-cutting form of the 1990s. A policy review released May 14 called for governments to exit stimulus spending and launch fiscal consolidation. “It is now urgent to start putting in place measures to ensure that the increase in deficits and debts resulting from the crisis … does not lead to fiscal sustainability problems,” wrote IMF head Dominique Strauss-Kahn in the introduction to the report. “In many countries, fiscal adjustment will require a sizable, and sometimes unprecedented, effort,” he said.

True to its word, the IMF has already downsized neighboring Romania’s 2010 budget in April, leading to 15 percent cuts in pensions and 25 percent in public sector salaries. Romania, like Ukraine, has a comparatively low level of national debt, but was running a high structural budget deficit as a result of the crisis.

The IMF in autumn 2008 agreed to disburse about $17 billion. Ukraine received three tranches worth almost $11 billion. The allocation of the fourth tranche, worth $3.8 billion, was scheduled for November 2009, but was stalled after social spending hikes were passed into law.

Ukraine’s government already took drastic steps to cut the budget deficit when it negotiated a 30 percent reduction in the price paid by Ukraine for imported Russian gas, in exchange for a 25-year extension of the lease for the Russian Black Sea fleet naval base in Sevastopol, due to expire in 2017. The controversial agreement was signed in Kharkiv by President Viktor Yanukovych and Russian President Dmitry Medvedev April 21, and ratified on the same day as the budget was passed, on April 27.

Foreign Ministry: No obstacles to introduction of visa-free regime between Ukraine, Israel

There are no obstacles to the introduction of a visa-free regime between Ukraine and Israel, Ukrainian Deputy Foreign Minister Kostiantyn Yeliseyev has said.

"There will be a visa-free regime [with Israel], and I hope this will become a reality very soon. There are already no obstacles on this way," he said live on Channel 5 on Thursday evening.

Yeliseyev said that the last domestic procedures were currently being conducted and a respective bilateral document was being agreed. He also said that Kyiv was in talks with Croatia on the possibility of signing a bilateral agreement on a visa-free regime between the two countries, however, in his words, a certain amount of work has yet to be done in this area

Germany ready to participate in equipping corvette for Ukrainian Navy

The possibility of Germany's participation in equipping a corvette for the Ukrainian Navy was discussed as part of Germany's Military Industry Day in Sevastopol.

A meeting between German and Ukrainian working groups took place on board the German Navy frigate FGS Niedersachsen, which is on a working visit to Sevastopol.

German Ambassador to Ukraine Hans-Jurgen Heimsoeth said ahead of the meeting that "in the context of building a promising Ukrainian corvette, we are ready to cooperate with Ukraine, in the industries that Ukraine chooses, as are most required for it."

"I understand that it's very important for Ukraine to employ its workers, and I understand that it's very important to produce most of the ship's equipment in Ukraine. On the other hand, in the technical sphere we have certain areas where we could help Ukraine raise the level of such ships to a high modern level. This is a subject for further talks with the Ukrainian side," he said.

The commander of the frigate, Andre Dirks, in turn, said that Germany was a leader not only the construction of modern submarines.

"German industry can offer an entire range of naval equipment and technology. It's up to the Ukrainian customers to choose," he said.

Ukraine’s steel industry set to go through convulsions, consolidation

An alleged raider attack on the nation's third-largest steel mill points to consolidation of the critical steel sector

Ukraine, one of the world’s top 10 steel exporters, appears to be undergoing a major shakeup in the ownership of its mills. Russian capital is flowing in, sector consolidation is under way and dirty business tactics are, apparently, unavoidable.

The metallurgical sector, which accounts for 40 percent of Ukraine’s exports, took a turn toward transparency back in 2005, when the nation’s biggest steel mill, Kryvorizhstal, was resold by the state to multinational Mittal (now ArcelorMittal) for a record-breaking $4.8 billion in a nationally televised auction.

Now, another major Ukrainian steel mill, number-three ranked Ilyich, may be under attack by so-called corporate raiders intent on seizing the asset through dubious means. Whoever one believes – the mill’s management or the self-proclaimed new owners – Ilyich’s ownership and the future of the country’s metallurgical industry have already been tainted by legal nihilism.
When the smoke clears, all the country’s top five steelmakers could come under the control of an even smaller circle of Ukrainian oligarchs or their fellow billionaires in Russia.

On May 26, two men claiming to represent offshore companies registered in Cyprus, Boris Podolsky and Ilya Gorn, announced the sale of Mariupol-based Ilyich to an unknown investor.

“The sale took place in full accordance with the law and received all legitimate signatures,” Podolsky told journalists.
However, he declined to reveal the name of the new owner, asserting that no banks were involved in the deal and claiming that the transaction took place more than a year ago.

Moreover, according to Podolsky, no approval of the deal by Ukraine’s Anti-Monopoly Committee is necessary.
While short on details, however, Podolsky was long on promises. “We represent the interests of a large industrial group and therefore can guarantee that none of the plant’s employees, except management, will be dismissed. Moreover, there will be increases in salaries, which at Ilyich are currently among the lowest in the sector,” he said.

Sergey Mahera, a spokesman for the steelmaker, called the claims of Podolsky and Gorn “nothing more than an attempt to seize control of the mill.”
Mahera further linked Podolsky and Gorn to previous raider attacks against other Ukrainian companies.

He said that Volodymyr Boyko, Ilyich’s chief executive officer and manager of its shares, “took part in no oral or written agreement to transfer their ownership.”
A shareholders meeting at Ilyich Steel, the company behind the mill which is supposedly owned by the employees, was to be held in April. It was postponed following a controversial decision by a Donetsk court, according to the company.

On May 27, Ilyich released a statement claiming that the head of the registration company that maintains the records of the company’s shares had been replaced.

Yury Kravets, attorney for an Odesa-based business association called the Ukrainian Anti-Raider Movement, said it’s still not clear whether the events at Ilyich are a raider attack or a legitimate dispute. “A conflict exists, but it’s still too early days to say who’s doing what,” Kravets said.

Long before this week’s events, Ilyich’s Boyko had been vocal in complaints about other sorts of unfair pressure on his company, namely suspended value-added tax returns from the government and monopolization of the country’s abundant ore reserves by competing steel makers.

Jean Jouet, chief executive officer of Ukraine’s largest steel maker, ArcelorMittal Kryviy Rih, has also raised the alarm of the financial damage that suspended VAT payments can inflict on companies with limited ties to within the government.

“At ArcelorMittal Kryviy Rih, [overdue VAT reimbursements] have now reached more than Hr 2.3 billion. If you add to this income tax, an additional Hr 1.4 billion, then ArcelorMittal Kryviy Rih is today a creditor to the state for Hr 4 billion ($500 million). This is such a huge amount that the company is clearly facing severe cash issues today,” Jouet said in a statement.
Meanwhile, other steel players, both Russian and Ukrainian, are consolidating their positions on the market.

In a purchase valued by market insiders at $1 billion, a 50 percent stake in top-30 international steelmaker Industrial Union of Donbas (ISD Group) was sold to Russian tycoons. The group controls Ukraine’s modernized Alchevsk Metallurgical Plant, along with another Ukrainian mill, and factories in Hungary and Poland.

More recently, System Capital Management, the holding company of Ukraine’s richest man, Rinat Akhmetov, has been rumored to be eyeing the purchase of Zaporizhstal steel mill, the country’s fifth largest.

If the deal goes through, Akhmetov would consolidate control of two of Ukraine’s top five steel makers, making ore-starved and isolated Ilyich particularly vulnerable to takeover by Russian giants such as Evraz, which announced plans to acquire strategic Ukrainian metallurgical assets as early as 2007, or Severstal, which has been rumored to be eyeing steel assets in Ukraine as well, or possibly another Ukrainian oligarch.

Analysts and investment bankers have perceived such moves as part of a global trend toward consolidation, where producers are driven to take control of raw materials to ensure their position as suppliers.

“The consolidation and restructuring of Ukraine’s metallurgical sector is long overdue and is now accelerating due to both the fall out of the financial crisis and global trends in the sector. In addition, following the improved relations between both countries, there is a renewed interest of Russian capital to invest in Ukraine’s steel producers. In short, it is a mix of local, regional and international factors,” said Peter Vanhecke, CEO of brokerage Renaissance Capital Ukraine.

“A holdup of VAT returns as well as arestricted access toorereserves are additional disadvantages to some of the local producers. The VAT issue is aserious one across the whole Ukrainian economy and can have a crippling effect on the cash flow of even the strongest companies. Restrictedaccess to raw materials is a structural sector issue which often drives mergers and acquisitions and a drive to integrated business models,” he added.

Yanukovych signs law on international activities of police

Ukrainian President Viktor Yanukovych has signed amendments to the law on the police regarding international cooperation, the presidential press service has reported.

As reported, the Verkhovna Rada amended the law on the police on May 11.

The law proposes the following rewording of clauses of Article 8: "Cooperation between the Interior Ministry of Ukraine and relevant agencies of other states and international organizations in the sphere of police activity is carried out in line with Ukrainian legislation, Ukraine's international agreements, as well as the constituent acts and rules of the international police organizations of which Ukraine is a member."

According to the amendments, the Ukrainian police can address law enforcement agencies of other states and international police organizations with inquiries in line with and on the basis of Ukraine's international agreements, as foreseen by the legislation, or under constituent acts and rules of those international police organizations of which Ukraine is a member.

Most Ukrainians say country doesn't need multi-party system

Most Ukrainians think Ukraine doesn't need a multi-party system, according to a new survey.

The poll was carried out by the Sociological Service of Razumkov Center in all regions of Ukraine on May 15-20, 2010. Its results were announced in Kyiv on Thursday during a meeting dedicated to the issue of "Party system of Ukraine and its future: stabilization, conservation, (r)evolution."

A total of 52.2% of those polled said Ukraine doesn't need a multi-party system, 33.5% of Ukrainians supported such a system and 14.3% failed to answer.

At the same time 64.2% of those polled said there should be up to five parties in Ukraine, 17.6% said there could be 10-15 parties in Ukraine, 1.7% of the respondents said 20-100 could operate in the country, 0.2% of Ukrainians consider that over 100 parties could exist in Ukraine, and 12.1% of those polled failed to answer.

According to the survey, a total of 65.9% of the respondents do not trust political parties, and 41.6% do not trust public organizations.

A total of 40.7% of those polled don't trust the trade unions, while 69.1% of those polled don't trust commercial banks.

At the same time, 71.6% of Ukrainians said they trust the church, 68.3% trust the Ukrainian mass media, 53.6% trust the Russian mass media, and 40.8% trust the Western media.

A total of 2,014 respondents aged over 18 participated in the survey. The poll's margin of error is 2.3%

Regions Party lawmaker slams Crimea's decision to use Russian as regional language

Regions Party MP Volodymyr Zubanov does not exclude the possibility that the prosecutor's office may appeal against Crimea's decision to use Russian as a regional language.

"I think that prosecutors will appeal against [this decision]," he said at a press conference in Kyiv on Friday.

He recalled that in its decision, the Crimean parliament referred to the European Charter for Regional or Minority Languages.

"So if we rely on the language charter, then those in Crimea should learn and know Ukrainian and introduce it as an official language, and then defend, as they have decided, the Russian and Crimean Tatar languages... Therefore, if Crimea said 'A', then it needs to say 'B,' and know and introduce the Ukrainian language," Zubanov said.

He said that the European Charter foresaw that the protection of regional and minority languages should not affect the development of an official language.

Zubanov said that his strategy envisaged Ukrainian being a state language in the light of the Charter for Regional or Minority Languages, and stressed the need to define two languages of priority development.

He said that these could be languages of the six official languages of the United Nations. For example, for Ukraine it may be Russian and English, the MP said.

Bloc of Yulia Tymoshenko (BYT) member Pavlo Movchan, in turn, said that a signal from Crimea was quite alarming and could destabilize the situation in the autonomy.

He said that the Charter for Regional or Minority Languages was designed to protect languages that are under the threat of extinction.

Movchan said that the Crimean parliament's decision was contrary to the Constitution of Ukraine and a Constitutional Court ruling.

As reported, on May 26, the Crimean parliament adopted a resolution implementing constitutional guarantees on the free use of Russian in Crimea and promoting the observance of Ukraine's commitments to implementing the standards of the European Charter for Regional or Minority Languages.

The Crimean parliament ordered the measures foreseen by the charter on the use of Russian as a regional language be applied to the work of the Crimean Supreme Council.

Yanukovych is welcomed with the traditional bread-and-salt ceremony at the Lviv airport.

Lviv Welcomes Yanukovych

LVIV, Ukraine – More than three months into his presidency, Viktor Yanukovych finally made a trip to Lviv, where he is a deeply unpopular and divisive figure for his pro-Russian policies.

The result?

He came. He talked. He answered questions. And he probably didn’t change many minds in the unofficial capital of western Ukraine, where less than 10 percent of voters supported his presidential bid.

Olha Balaban is a second-year student at Lviv Politechnic University, where Yanukovych spent two hours of his five-hour visit. Balaban may have summarized the local feeling with these comments: “I didn’t see him. I don’t want to see him. Everything would be fine if we had a normal president.”

As one might expect, more than 1,000 protesters turned up outside Polytechnic University, where a similar number officers, many of whom were helmeted and armed, forcibly pushed the crowd to a side street for their demonstration. There were, unsurprisingly, conflicting reports over whether unruly protesters were to blame for breaking through security lines or whether the officers got overly aggressive and started striking demonstrators with truncheons.
In either case, Yanukovych barely noticed the demonstrators before he ended the official part of his visit about 3:30 p.m. on May 27. He suggested the protesters had been hired to cause trouble.

“I think Lviv Oblast in general positively assesses our work, but the group of people [yelling outside] are paid for political issues,” Yanukovych told regional government leaders. “We have a democratic society and this shouldn’t get in the way of our decisions and our attitude toward any regions. Do you agree with me or not?” Members responded: “Yes!”

The biggest news of the day, perhaps, was his announcement that Ukraine will make an official bid to host the Winter Olympics in 2022.

The president arrived at the airport, visited a new soccer stadium under construction to host the Euro 2012 football championships and also spent time at a military academy. The bulk of his visit was taken up by a two-hour discussion that he chaired with regional government officials. Yanukovych brought along many leading members of the Ukrainian government, including Central Bank chairman Volodymyr Stelmakh and Deputy Prime Minister Sergiy Tigipko.

He took four questions from regional journalists. He brushed aside one question about whether his Russian-friendly policies are dividing the nation. Yanukovych has criticized early 20th century Ukrainian nationalist leaders Stepan Bandera and Roman Shukhevych, both popular in western Ukraine for fighting Soviet rule. The president also has agreed to let the Russian Black Sea Fleet remain based on Ukrainian territory until at least 2042, a decision that is an anathema here. His appointment of Dmitry Tabachnyk as education minister continues to rile many, since Tabachnyk has questioned whether Ukraine deserved to be an independent nation and has been
especially dismissive of western Ukrainians.

Ukraine Drops NATO Membership Aim

KIEV, Ukraine -- Ukraine Thursday formally buried pursuit of NATO membership as an aim, its foreign minister declaring the issue had been taken off the policy agenda.
It was the most clear-cut statement by the new leadership of President Viktor Yanukovich that the issue was a dead letter in Ukraine for the conceivable future.

"Ukraine will continue developing its relations with the alliance, but the question of membership is now being removed from the agenda," the foreign minister, Kostyantyn Gryshchenko, was quoted by Interfax news agency as saying.

"This corresponds to the way things are today," he added in comments to a foreign policy coordination meeting.

Yanukovich himself was separately quoted as saying by Interfax in the Western city of Lviv: "Entry into NATO is not realistic for our country today. NATO conditions would require us to have the support of the majority of the population."

Membership of the U.S.-led military alliance was ardently pursued by the pro-Western ex-president Viktor Yushchenko, despite widespread indifference in the country and lack of encouragement from the alliance itself.

But Yanukovich, who came to power in February and has tilted the ex-Soviet republic back toward Moscow in several areas of policy, has made clear NATO membership was being pushed on to the back burner as an objective.

He has equally told Moscow that Ukraine will stick by its policy of staying out of military blocs. He has not responded to an invitation by Russian President Dmitry Medvedev to join the Russia-led CSTO security grouping.

Interfax quoted Gryshchenko as saying that NATO membership did not have the support of the majority of the population and had a "destructive effect" on state policy.

But his words indicated that Ukraine, whose Crimean peninsula is home to Russia's Black Sea fleet on an extended lease until 2042, would continue to take part in military and civil emergency programs with NATO countries.

Springtime For Stalin

Three and a half months after a Ukrainian court convicted Stalin of genocide against the Ukrainian nation during the famine of 1932-1933, a new monument in honor of the Soviet dictator has been erected in the southeastern Ukrainian city of Zaporizhia.
Separating the two events was this year’s Ukrainian presidential election, in which Viktor Yushchenko, who had pursued a radically anti-Stalinist memory policy, was defeated and replaced by Viktor Yanukovych, who promised to avoid extremes and unite the nation.

Though Yanukovych would prefer to steer clear of such ostentatious nostalgia for Stalin, he is responsible for a remarkable change in mood.

In his final months in office, Yuschchenko favored an ill-considered “trial” against Stalin and other long-dead defendants as a way to define the history of Ukraine’s past within the Soviet Union; Yanukovych, by contrast, has overseen the formation of a new coalition government that includes the Communist Party of Ukraine.

Rather than simply letting his predecessor’s strident anti-communism fade into the past, the new president has pronounced on Ukrainian history in a contrary spirit.

Thus, Yanokovych told the Council of Europe in late April that the deliberate starvation of the three million inhabitants of Soviet Ukraine by the Stalinist regime was not genocide, but rather a “common tragedy for all people who lived in the former Soviet Union.”

His bland formulation blurs important truths.

While it is true that Stalin’s policy of collectivization—the state seizure of farmland and the coercive employment of peasants—brought enormous suffering throughout the USSR in the early 1930s, it is also true that Stalin made deliberate decisions about grain requisitions and livestock seizures that brought death to three million people in Ukraine who did not have to die.

Some of the very worst of the killing took place in southeastern Ukraine, where Stalin is now being celebrated and where Yanukovych has his political base.

The famine destroyed that region’s rural society by killing many, cowing more, and permitting the immigration of people from beyond Ukraine—chiefly Russians, some of whom inherited the homes of the starved.

The cult of Stalin is thus no empty symbol in Ukraine; it is a mark of active identification with a person who owed his mastery of Ukraine to a campaign of death.

Media Censorship Resurfaces In Ukraine

KIEV, Ukraine -- Initiative youngsters held major protests in the main Ukrainian cities against media censorship
Protestors washed newspapers and TV sets by detergent. They put up posters with slogans such as: “Censorship – path to totalitarianism”, “Let’s wash off mass media from censorship” and so on.

Journalists of two biggest Ukrainian TV channels wrote open letters about censorship returning in Ukraine.

Recently members of “Party of Regions” registered in parliament a bill that accepts criminal prosecution of journalists for publishing “irresponsible political statement”.

In addition, on the birthday of Ukrainian journalist Georgiy Gongadze who was killed by ex-president Leonid Kuchma regime, ukrainian journalists set up public movement “Stop censorship”.

Reporters Without Borders, an international media watchdog, has written to Yanukovych twice, first to express dismay at “an alarming deterioration in the press freedom situation in Ukraine” since his Feb. 25 inauguration

Natalia Petrova, a lawyer and a media expert, said that Ukrainian politicians and courts still don’t understand that a basic tenet of a democratic society is the freedom to assemble peacefully – even in protest.

“Ukraine should learn from the Western countries how to balance people’s rights for assembly and public order. Just take a look at the anti-globalists protests during the G8 and other summits: nobody bans them and if the police notice a violent action, they just locate and isolate the instigators, while other people keep protesting”. - a lawyer and a media expert Natalia Petrova said.

Ukraine Unwilling To Reduce Cooperation With NATO

KIEV, Ukraine -- Ukraine has no intention of reducing cooperation with NATO, the country's deputy foreign minister said on Wednesday.
"We are interested in the maintenance of political dialogue with NATO," Kostantyn Yeliseyev told a joint Ukraine-NATO working group on the country's defense program and national security in Kiev.

"Ukraine will continue to fulfill obligations in its relations with NATO... We intend to continue wholesale inner reforms and appreciate NATO's help in this direction," he added.

Yeliseyev said bilateral ties would continue to develop along the principles outlined in the Charter on Ukrainian-NATO partnership.

NATO's assistant secretary general for defense policy and planning said in an interview with a Ukrainian newspaper that the experience of the alliance's partnership with Kiev was "unprecedented," as the country maintains close ties with NATO yet expresses an unwillingness to join it.

"NATO will continue to provide help to Ukraine," Jiri Sedivy said, adding that NATO respects Ukraine's policy.

New Ukrainian President Viktor Yanukovych has indicated that Ukraine will drop his predecessor's plans to attempt to seek NATO membership, a proposal that infuriated Russia, but has also indicated that he will try to maintain good ties with both Moscow and the West.

Biden Holds Telephone Talks With Ukrainian President

KIEV, Ukraine -- U.S. Vice-President Joe Biden held telephonic talks Monday with Ukrainian President Viktor Yanukovych to discuss the steps being taken by Ukraine to put its economy on a stable path to recovery.
"They discussed the steps Ukraine is taking to put its economy on a stable path to recovery," the White House said in a statement following the conversation between the two leaders.

They also discussed issues of bilateral and regional importance, including Ukraine's progress in forging closer ties with the United States and Europe, it said.

The talks came as Russia continues to make its presence felt in the former Soviet republic with Ukraine readying to open its border to Russian business and establish a free trade zone with its eastern neighbor.

Yanukovych's taking over the presidency from Viktor Yushchenko has renewed prospects of Ukraine forging closer ties with Russia, and a 25-year extension of the Russian Black Sea Fleet's presence at Sevastopol.

The Black Sea Fleet was expected to be relocated from Sevastopol to Russia's Novorossiysk, which was originally looking at possible expansion to accommodate the fleet.

In return for extending the lease, Russia agreed to significant discounts on exports of natural gas to Ukraine, where high gas prices exacerbate its economic troubles.

Ukraine is a member of the Commonwealth of Independent States (CIS), a regional organization whose participating countries are former Soviet republics, and formed during the break-up of the Soviet Union.

It is the second largest country in Eastern Europe, and most of it was a constituent republic of the USSR from 1923 to 1991.

Media Freedom Watchdog To Screen Ukraine

KIEV, Ukraine -- According to Elsa Vidal, head of EU’s bureau of the Reporters Without Borders, a RWB delegation is to visit Ukraine to examine the freedom of the press situation.
“We would like to meet with various journalists representing state-owned and commercial outlets as well as members of the Union of Journalists and politicians,” Ms Vidal said.

As soon as we garner sufficient information, we will publish our report on how the freedom of expression is observed in Ukraine, the RWB official stressed.

After Viktor Yanukovych’s election as president, Vidal continued, RWB observed that the situation in Ukraine had deteriorated regarding the freedom of expression.

This was manifested in attacks on journalists and their arrests.

We have received several complaints from Ukrainian journalists of editing by the secret service.

“Journalists in Ukraine fear to speak or write about certain topics and criticize Pres Yanukovych,” Elsa Vidal stressed.

Beijing Leads Ukrainian Officials To Cancel Cultural Performance

KIEV, Ukraine -- By putting pressure on Ukrainian authorities, Chinese diplomats caused the cancellation of a performance by Shen Yun Performing Arts, which was scheduled for May 28 at a theater in Odessa, in southern Ukraine. Shen Yun is a New York based company that is currently on tour around the world.
Some of the show’s performers were denied visas to enter Ukraine, and were given no explanation.

Meanwhile an organization run by Odessa regional Council "Oblconcerteservice," has informed the Shen Yun show organizer in Ukraine, charity organization “For Children of the New Century,” that the agreement to rent the venue in Odessa Academic and Ballet Theatre has been suspended.

The letter says that Chinese officials have requested Odessa regional council cancel the Shen Yun performance in Odessa.

"It is categorical for the show not to take place. In such situation the juridical details—whether the contract had been broken or suspended—mean the same," Dmitry Polunin, the head of Oblconcerteservice, told The Epoch Times.

Based in New York, Shen Yun Performing Arts is a nonprofit organization that is independent of China’s communist regime. Through classical Chinese dance, the performing arts group seeks to revive the five-millennia-old artistic tradition of China that was largely destroyed by the Chinese Communist Party (CCP) during the Cultural Revolution.

Since 2006, the company has performed more than 500 shows around the world to millions of audience members.

OperaOnline said the show "gave a glimpse of a culture and its history that was at times hypnotic in its presentation, sensual in its fluid movements, and inspirational in its theme … and flawless musical performances … simply astounding to watch and a pleasure to the ear."

The CCP regularly puts pressure on authorities in most of the countries where the show performs. Pressure usually comes through the use of its consulates, embassies, and community organizations, and aims to cancel the show.

Shen Yun takes as its mission to revive China's artistic tradition that thrived before decades of suppression by the CCP. The show also includes dance programs set in contemporary China that portray the persecution of Falun Gong—a peaceful meditation practice persecuted by the regime since 1999. These portrayals are an irritant for CCP diplomats.

Polunin said that there was a letter from Ukraine’s foreign ministry requesting his organization not assist the Shen Yun show in Odessa. He said it was because of “political” issues.

Odessa officials told The Epoch Times in a private conversation that they also received letters from the Ukrainian prime minister, the minister of culture, and the head of the national security service not to let the show perform.

An Epoch Times reporter met with Vice Prime Minister of Ukraine Vladimir Seminozhenko, whose negative letter was among those from the top officials, to ask him about the situation. He denied any government involvement in the interference with the performance.

Ukrainian officials say that the pressure is connected to the official visit of China’s foreign minister, Yang Jieqi to Kyiv last week.
Vice President of European Parliament Edward McMillan-Scott has sent a letter to ask Ukraine’s president to let the Shen Yun perform in Ukraine.

Some members of Ukrainian Parliament, and members of the U.S. Congress also sent letters to Ukrainian officials to assist Shen Yun Performing Arts.

Human rights advocates have also condemned the Chinese diplomats’ interference with domestic affairs in Ukrainian. “This is brutal intervention and we can’t agree with it," said Evgeniy Zakharov, the head of Kharkov human rights group in Ukraine.

Zakharov commented that the Chinese officials behave the same way as Soviet authorities who physically destroyed art and elements of culture. "Ukraine should respond if it considers itself to be a European civilized country," he said.

Two performances of Shen Yun were canceled in Kiev in April, last year, under the same scenario. Ukraine's Ministry of Foreign Affairs did not grant visas to the show’s performers and the president's office made the dates which Shen Yun was scheduled to perform unavailable at the country's renowned theater, the National Palace Ukraine. Ukraine's top officials declined to speak with The Epoch Times or the show’s organizers.

Russia And The New Ukrainian Foreign Policy

KIEV, Ukraine -- Dmitri Medvedev managed to get half-way through his presidency without ever visiting Kiev. That was before Viktor Yanukovich replaced the Kremlin’s bête noire, Viktor Yushchenko, as Ukraine president in February.
Since then, high-level meetings have taken place almost weekly, culminating in Mr. Medvedev’s state visit to Kiev this week.

Mr. Medvedev has even taken to advertising his part-Ukrainian grandmother from Belgorod.

Mr. Yanukovich has now signed a huge number of agreements with Russia, most notably the deal to swap an extra 25 years for the Russian Black Sea Fleet in Crimea for a 30 percent reduction in the price of gas.

Ukraine has also agreed to big deals on cooperation in the nuclear industry and in aviation, a 10-year economic cooperation plan, and common positions on Transnistria and security in the Black Sea region that have disturbed neighbors like Moldova and Georgia.

And Mr. Yanukovich has backed Mr. Medvedev’s pet European Security Initiative and its goal to “eliminate the dangerous dividing lines that have appeared in the European region over the past decade.”

A recently leaked strategy paper written by Russia’s foreign minister, Sergei Lavrov, defines Russia’s overall aim as nothing less than “to actively draw Ukraine into an orbit of economic cooperation with Russia.”

This new Ukrainian foreign policy is something of a mystery. Even some old hands are wondering why Ukraine is huddling so close to Russia, and why it has conceded so much so quickly.

Four possible explanations suggest themselves:

One is that Ukraine is still in economic trouble and the rapprochement with Russia is all about cheap gas.

The gas discount obviated the need for harsh spending cuts, and Kiev thinks a budget deficit under 6 percent of gross domestic product will bring the International Monetary Fund back to the table. Standard & Poor’s has upgraded Ukraine’s credit rating from B- to B.

In the short term, the gas deal is also the one thing that pleases both competing wings of Mr. Yanukovich’s Party of the Regions. The Dmitry Firtash group runs several chemical plants; Rinat Akhmetov’s main business is steel. Together, they consume almost half of all Ukraine’s gas imports.

However, the I.M.F. is well-aware that hard choices and fiscal retrenchment have been postponed, possibly only for a matter of months. Moreover, Ukraine is still paying $230 per 1,000 cubic meters for gas – the price may have fallen, but only to levels common elsewhere in Europe.

So if economic trouble is the explanation, Russia cannot bail out the whole economy. Ukraine will come back to the Western table soon enough.

The European Union in particular should reiterate that the deal that Ukraine signed but never implemented in 2009, promising substantial Western investment if Ukraine reformed its gas sector, can still be revived.

The second possibility is that Mr. Yanukovich’s priority is to strengthen himself internally.

Playing closer to Russia makes this easier, as Russia is not likely to object to recent moves to chip away at media freedom and pack the judiciary. But a stronger Yanukovich might be a more prickly partner in the long run – not just for the West but for Russia as well.

If this is the case, the West should avoid giving the impression that it is so fed up with the years of chaotic “Orange” government that it will allow Mr. Yanukovich to undercut freedoms won by the Orange Revolution in 2004 in the name of restoring “stability.”

The third possible explanation is corruption.

Local elites are quick learners. The main current scam involves Ukraine’s internal gas distributors buying cheaper “gas for households” and selling it to higher-paying industrial customers.

The cut in the overall Russian gas supply price reduces the pressure from the European Union for market pricing across the board, which would close these gaps.

But the world is paying more attention since the gas crisis in January 2009. And some of Ukraine’s oligarchs may split from Mr. Yanukovich soon enough if the “gas lobby” gains too much power in the new government.

The Ukrainian oligarchs are also interested in concessions from the Russian side, such as opening up access to Central Asian gas.

The fourth possibility is that Ukraine shares some of Russia’s analysis of rapidly changing world events.

Mr. Yanukovich’s team may also think that the United States is preoccupied with other things, and that the E.U. is in long-term decline and is too busy with the euro crisis in the short-term to pay much attention to Eastern Europe.

Ukraine might also believe that the global economic crisis will replace flat “globalization” with lumpy “regionalization,” and Ukraine should throw in its lot with Russia as it seeks to consolidate “its” region.

If that is the case, encouraging the Ukrainian pendulum to swing Westward again will be much harder this time.

Russia-France 2010 gains momentum

The Bolshoi Theatre will be co-producing Mozart’s opera “Don Giovanni” in collaboration with the Aix-en-Provence festival (France), Teatro Real Madrid (Spain) and Canadian Opera Theatre (Toronto).

The producer is to be Dmitry Chernyakov, already an established figure in Russian theatre circles despite his young age.

The opera will be premiered in France at the Aix-en-Provence festival from June 1-20 and will then be brought to Moscow. The Moscow premier is to take place on Oct. 29 and it will remain in the Bolshoi theatre’s repertoire until February 2013, after which the sets will travel to Madrid, then Toronto.

Market volatility scuppers Russian IPOs

A combination of domestic and external factors, such as Chinese overheating, European financial downshifting and market volatility, have caused a series of Russian companies to either cancel or rethink their planned IPOs.
“The external environment heavily affected the dynamics of the Russian stock market, as the volatility is huge,” said Yaroslav Lissovolik, chief economist for Deutsche Bank in Moscow.
Russian sugar manufacturer Rusagro, which had declared its domestic IPO on MICEX and RTS just a month ago, said it cancelled the placement due to volatility. This setback came a few days after Oleg Deripaska’s Strikeforce Mining and Resources, a world leader in molybdenum alloys, cancelled its IPO for the same reason. The companies expected to raise about $600 million ($400 million and $200 million, respectively) to finance their expansion goals.
“As global market instability increased, it had been very difficult for Russian top managers to assess what the market will be when they were moving towards pricing of an offer,” said Roger Monson, chief strategist at Unicredit in London. Doubts emerged from sellers and buyers alike, as Russians now have little confidence that their stock will be in high demand, while investors require higher risk premiums, Monson said.

One relatively successful IPO was held by Russkoye More Group, a Russian sea products manufacturer, right before the May stock market nosedive.

Although the placement was conducted at the low end of the spread – about $6 per share, it attracted $90 million.
“Just half a year ago the RM bonds were perceived as junk paper and had been trading at a 50 per cent premium, which indicated the company had serious debt problems,” said Alexei Kurasov, head of corporate finance at Finam.
The price of $6 per share means the market valued the company at $725 million, “while the ratio for junk companies should have (theoretically) brought the RM capitalisation down to about $400 million,” said Kurasov.Russian domestic factors, such as lack of corporate transparency, must be taken into consideration to measure the RM offering, said Monson, of Unicredit.
“Some Russian companies find global markets attractive, but the level of disclosure required is higher than they are comfortable with,” Monson said. “Regulations for listing and transparency requirements in London are higher than they were and higher than they are now in Shanghai and Hong Kong.”
This dilemma, of whether to switch their listings to less demanding Chinese stock markets, is now taxing Russian companies.
“A listing [in China] for any company is more likely to have more visibility … for business development,” said Monson,

But listing in China could be a double-edged sward. “Failure in China will lead to lower world prices for commodities, and Russia will be affected,” said Alexei Minayev, head of research at Rue, Man and Gore. “We have to admit that conditions for raising funds externally aren’t the best now, and the main source of investment for industrial companies will be their own profit.”
Monson, of Unicredit, noted that some companies, including such giants as Mechel and Rusal, have serious problems with corporative debt.
“While some, especially oil companies, are very liquid and conditions [to borrow] are a lot easier in Russia now than they were eight months ago, still they are not comfortable,” he said.

Mine blasts hit industry

The deadly Raspadskaya mine accident in the Kemerovo region and the measures required to tighten safety could hit the Russian coal and steel industries hard, analysts said.

The damage could spread to other coal producers such as Mechel and Belon, said Scott Semet, chief strategist at IFD Kapital.
“The uncertainty surrounding Raspadskaya remains high, but judging by the development of events there, we believe that in addition to operating risks, its shares now bear some political and administrative risks,” said Semet.
The disaster has prompted the state industrial safety watchdog, Rostekhnadzor, to launch unscheduled inspections at all Russian collieries, in the wake of tough statements by Prime Minister Vladimir Putin and Kemerovo Governor Aman Tuleyev.
Analysts said the company’s likely commitment to pay salaries in full to idled miners would seriously hit its profitability, as salaries represent around 40 per cent of operating costs.
Raspadskaya’s stock has already fallen 13 per cent since the accident took place last week.
“If the mine remains flooded, a fair price would be around $5, or just 3 per cent above the current price,” said Oleg Petropavlovsky, an analyst at Broker Credit Service, who said he had visited the mine before the explosion.
“But if it is restored within two years, as planned, it might increase its value twofold,” he said.

Russian industries dependent on domestic coal for fuel could have to import more coal to maintain output, analysts said. Imports of 4 million tons a year of coking coal are already required, and further falls in output could push up Russian steel prices by as much as 30 per cent.
“Steel companies that have their own coal production are currently doing well,” said Semet, of IFD. But companies such as NLMK, which lack their own coal production, will be in a more vulnerable position, he said.
In a move seen as related, NLMK on Monday announced a drastic hike in rolled steel prices for automakers.
“One of the main reasons for such a situation is that Mechel, the second-largest coal producer, switched from domestic markets to exports last year and still has not come back,” said Petropavlovsky.
Analysts said that if the situation did not change, the deficit of coking coal on the Russian market by the end of the year could be as much as 10 million tons.

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<div style="border:1px solid #d3d3d3; padding:10px 12px 15px 10px; background:#ffffff; width:510px;"><div style="width:100%; overflow:hidden;"><a target="_blank" href="http://mn.ru/business/20100517/187819391.html" style="text-decoration:none;"><img src="http://mn.ru/i/mn/logo_sml.gif" alt="The Moscow News" title="The Moscow News" border="0" /></a><div class="clear"></div><a target="_blank" href="http://mn.ru/business/20100517/187819391.html"><img src="http://mn.ru/images/18781/93/187819373.jpg" width="120" height="83" border="0" alt="Emergency crews continue recovery works at Raspadskaya mine" style="float:right; padding:17px 0 0 20px;" /></a><div style="padding-right:100px;"><a target="_blank" href="http://mn.ru/business/20100517/187819391.html" style="color:#000;text-decoration:none;display:block;margin:11px 10px 0 0;"><strong style="font:15px Georgia,sans-serif; font-weight:bold;">Mine blasts hit industry</strong></a><p style="font:13px Georgia,Arial,sans-serif; margin:5px 10px 0px 0;"><span style="color:#000; font:10px Verdana,sans-serif; padding-right:7px;">17/05/2010</span><span style="color:#ff0000; font:10px Verdana,sans-serif; padding-right:7px;">22:20</span><div style="font-size:13px;"><a target="_blank" style="color:#000; text-decoration:none;" href="http://mn.ru/business/20100517/187819391.html" title="Mine blasts hit industry">The deadly Raspadskaya mine accident in the Kemerovo region and the measures required to tighten safety could hit the Russian coal and steel industries hard, analysts said.</a></div></p></div></div></div>

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Mine blasts hit industry

17/05/201022:20

The deadly Raspadskaya mine accident in the Kemerovo region and the measures required to tighten safety could hit the Russian coal and steel industries hard, analysts said.

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