Ukraine Church Hit By Explosion

ZAPORIZHYA, Ukraine -- Nine people have been injured in an explosion at an Orthodox Christian church in southern Ukraine, reports say.
An official said the blast in the city of Zaporizhya was believed to have been from a homemade explosive device.

At least one person is said to have been seriously injured.

It comes on the day that Ukraine celebrates the anniversary of its adoption of Christianity, which occurred in the year 988.

Security forces said it also took place during a controversial visit to the country by Russia's Orthodox Patriarch Kirill I, seen by critics as a slight to the country's sovereignty.

"It was a homemade bomb," Ukrainian security services spokeswoman, Marina Ostapenko, said.

A spokesman for the regional interior ministry, Olexandre Volkodav, said a team of investigators was at the scene.

He added that one woman had suffered severe leg wounds.

EU Commissioner Says Russia Gas Transits To Europe Best Via Ukraine

KIEV, Ukraine -- Transits via Ukraine remain the most reliable means of transporting Russian gas to Europe, EU Energy Commissioner Gunther Oettinger said on Wednesday.
"It is a direct route and it provides the highest technical reliability," Oettinger said during a meeting with Ukrainian Prime Minister Mykola Azarov in Kiev.

"We are now in a dialogue about how best to invest in Ukraine's transport system... and how this investment may make the best business-plan for the future, more successful than South Stream," he said.

Ukraine is interested in modernizing its transport system and is ready to invest in the project, Azarov said.

"However, we must have guarantees that the EU will buy certain gas volumes from Russia, which will then be transported through our territory," he said.

Oettinger also said Ukraine may join the European Energy Community within 12 months. The community's meeting in 2009 approved Ukraine's membership of the organization on the condition it bring its gas laws closer to EU standards.

Some issues remained to be resolved, he said.

Azarov, however, said that Ukraine had met the membership conditions after passing the relevant law in early July.

The commissioner said the European Commission would consider the law within a week.

Ukraine currently transits 80% of Russian gas to Europe. It has been trying to persuade Russia to give up the South Stream project over fears that it will see a serious decline in gas volumes transited through its territory.

South Stream will deliver Russian gas to Western Europe bypassing Ukraine. The offshore part, operated by Russia's energy giant Gazprom and Italy's ENI, will run from Russia's mainland under the Black Sea to the Bulgarian coast.

The launch of the gas pipeline is scheduled for December 2015.

IMF Approves $15.2 Billion Loan To Ukraine After Fiscal Adjustment Pledge

WASHINGTON, DC -- The International Monetary Fund approved a $15.2 billion, 2 1/2-year loan to Ukraine, which agreed to trim its budget deficit and raised natural gas prices to qualify for funding.
The Washington-based institution’s board of directors agreed to disburse $1.9 billion immediately, with subsequent payments subject to quarterly reviews.

“Ukraine is emerging from a difficult period during which the economy was severely hit by external shocks and exacerbated by domestic vulnerabilities,” John Lipsky, the fund’s first deputy managing director, said in a statement.

“Authorities are committed to addressing existing imbalances and putting the economy on a path of durable growth, through important fiscal, energy, and financial sector reforms.”

Ukraine got a two-year, $16.4 billion loan from the IMF in 2008 after the global recession cut demand for its exports. The nation has received $10.6 billion and payments were frozen in November as the government declined to cut spending ahead of presidential elections at the start of this year.

The Cabinet of Prime Minister Mykola Azarov, which was formed in March, failed to reach an accord with the IMF in May.

The government this month increased gas prices for households and heating companies. Under policies attached to the loan, the consolidated general government deficit has to reach 5.5 percent of gross domestic product this year and 3.5 percent next year.
“Fiscal adjustment will start in 2010 and deepen in 2011- 12 backed by robust structural reforms of the pension system, public administration, and the tax system,” Lipsky said.

“The financial position of the gas sector will be strengthened, including through domestic price hikes and broader reforms supported by other multilateral institutions, which will help eliminate energy subsidies and create a more modern and viable sector.”

Azarov initially aimed at a target of 5.3 percent of GDP plus 1 percent to cover funds for state-run energy company NAK Naftogaz Ukrainy.

Resumed cooperation with the IMF opens the way for a European Commission loan estimated at 610 million euros ($792 million) and for an $800 million loan from the World Bank, Deputy Prime Minister Serhiy Tigipko said on July 7.

Tigipko said in March Ukraine needs IMF support to boost its economy, which contracted 15.1 percent in 2009, the biggest drop since 1994. Gross domestic product expanded 4.9 percent in the first quarter, according to government figures.

Standard & Poor’s said on July 22 it may for a third time this year raise Ukraine’s credit rating, to B+, after the government reaches agreement with the IMF.

Vladimir Putin, Moscow Mayor And Patriarch Kirill Promote Russian Interests In Ukraine

WASHINGTON, DC -- Russian Prime Minister, Vladimir Putin, Moscow Mayor, Yury Luzhkov, and Patriarch Kirill flocked to Ukraine last week.
While the official goals of the visits were different, each promoted the Kremlin’s ideology of a single Russian worldview and personally congratulated President, Viktor Yanukovych on his birthday, the man who made it possible for them to preach this ideology in Ukraine.

His predecessor, the nationalist President, Viktor Yushchenko, and Putin, shunned each other. Relations between Kyiv and Kirill’s church were strained, while Luzhkov was persona non grata in Ukraine. These relationships have dramatically changed under Yanukovych.

The guests from Moscow literally felt at home during their visit.

Putin’s July 24 visit to Yanukovych’s summer residence in the Crimea had a rather symbolic meaning. Commenting on a plea by Ukrainian pipe makers to open up the Russian market, Putin nonchalantly dismissed the business dispute as a “family matter,” suggesting that his “special relations with Yanukovych” might help solve it.

The most spectacular event involving Putin’s participation, covered by the Ukrainian and Russian media, was his visit to a bikers’ festival near Sevastopol, a city where the Russian Black Sea Fleet will stay until 2042 and possibly beyond (rather than until 2017 thanks to the gas-for-fleet agreement reached with Yanukovych last April).

Putin played the macho leader, as he likes to do before a domestic audience. Putin drove a Harley-Davidson and addressed bikers, many of whom arrived from Russia, with a speech praising freedom.
Luzhkov’s visit raised controversy even before his arrival. He told a press conference in Moscow on July 19 that he would not change his view on the status of Sevastopol which is “a Russian city,” adding that “We must never leave either Sevastopol or the Crimea;” since losing Sevastopol which is strategically important “would be tantamount to losing the south of Russia,” he told naval officers in Moscow three days later.

The Ukrainian foreign ministry promptly criticized Luzhkov for the statements which “contradicted the recently established atmosphere of constructive and good-neighborly relations between Ukraine and Russia”. This did not prevent him from visiting Sevastopol.

In 2008, Kyiv declared Luzhkov persona non grata for his repeated calls to return Sevastopol to Russia. However, in June 2010, Yanukovych revoked that decision. Luzhkov publicly expressed his gratitude to Yanukovych speaking in Sevastopol’s main square.

He praised Yanukovych’s team for “the atmosphere of friendship and cooperation” and also told the cheering crowd that “the Russian Black Sea Fleet will stay in Sevastopol forever”.

Unlike Putin and Luzhkov, who visited only the Crimea, Patriarch Kirill went to several places including Kyiv. This visit was unlike last year’s, when Kyiv protested Kirill and characterized him as an unwanted guest.
From among the two largest rival Orthodox churches, the Kyiv Patriarchate and the Moscow Patriarchate, Yushchenko clearly favored Kyiv on the basis that he wanted to establish a single national church independent from Moscow.

However, Yanukovych openly sided with the Moscow Patriarchate, whose clergy backed his victorious presidential election campaign in 2009-2010.

From the Moscow Patriarchate’s point of view, Kirill’s July 20-28 tour of Ukraine was a home visit, because the Moscow church is more popular than the Kyiv church among the Orthodox communities in the densely populated and largely pro-Russian east and south.

Kirill pointedly ignored Kyiv Patriarch Filaret who was excommunicated by Kirill’s predecessors for setting up the Kyiv Patriarchate in 1992. Last year, Filaret tried to meet Kirill, but was ignored. The current government made it clear that it supports Kirill, allowing him to preside over a mass in St. Sophia’s Cathedral in Kyiv on July 26.

Prior to his visit, only ecumenical services were allowed there annually, as the cathedral, the cradle of Ukrainian Christianity, has museum status. Filaret’s representatives said they would demand that the government also permit them to serve in St. Sophia’s church in the future.

Yanukovych is unlikely to make such a concession to Filaret, especially after Kirill, who on July 23 decorated him with the Russian Orthodox Church’s highest award, the order of the Holy Prince Vladimir, emphasized that his church was “the absolute antipode” to Filaret’s.
Kirill also ruled out any reconciliation with the Kyiv Patriarchate during the synod which he chaired in Kyiv on July 26. Instead, the synod called on Filaret’s “schismatic’s” to “return to the canonical church through repentance.”

The synod criticized the authorities for interfering in church matters in the past, possibly referring to Yushchenko’s idea of an Orthodox Church independent from Moscow It also stated that nothing should now prevent the followers of Filaret from “repentance”.

Ukraine's Credit Ratings Raised At S&P After IMF Approval Of New Bailout

WASHINGTON, DC -- Ukraine’s credit ratings were raised by Standard & Poor’s after the International Monetary Fund approved a new $15.2 billion loan program for the country
S&P raised its long-term foreign currency ratings on Ukraine by one level to B+ from B and the long-term local currency rating to BB- from B+, the company said in a statement late yesterday. The ratings were removed from CreditWatch.

The IMF agreed on July 28 to disburse $1.9 billion immediately, allowing the former Soviet republic to use $1 billion of the first payment to help cover the budget deficit.

The government increased gas prices for households and heating companies to balance the finances of state energy company NAK Naftogaz Ukrainy and agreed to trim the deficit to 5.5 percent of gross domestic product this year and 3.5 percent next year.

“We believe that the IMF program will increase the chances of a stability-oriented policy measures that should increase the resilience of the Ukrainian economy and its public finances,” S&P said in the statement. “The IMF program also reduces the external vulnerability of Ukrainian economy by providing external financing.”

Ukraine got a two-year, $16.4 billion loan from the IMF in 2008 after the global recession cut demand for its exports. The nation received $10.6 billion before payments were frozen in November as the government declined to cut spending ahead of presidential elections at the start of this year.
Ukraine in June received a $2 billion loan from VTB Group, Russia’s second-largest bank, to help cover the deficit.

“We expect that the first tranche from the IMF will be used to finance the budget deficit and, in particular, to refinance a $2 billion loan received from VTB,” said Anastasia Golovach, an analyst at Renaissance Capital in Kiev in an e- mailed note.

The IMF will provide a second $1 billion for the state budget after the first quarterly review, the IMF said. The remaining $13 billion will go to central bank reserves, it said.

The loan “eases concerns over budget financing for this year,” said Tim Ash, head of emerging market research at Royal Bank of Scotland Plc in London, by e-mail yesterday. The program “should enable rational energy pricing, which will do much to help rein in the quasi-fiscal deficit in the energy sector.”
Prime Minister Mykola Azarov initially aimed for a deficit target of 5.3 percent of GDP plus 1 percent to cover funds for Naftogaz. The IMF said it wants Ukraine to reduce the budget deficit to 2.5 percent of GDP in 2012. Naftogaz’s deficit should be “eliminated starting from 2011,” the IMF said.

“A long-term permanent shift to a more sustainable fiscal position on the back of a permanent improvement in the finances of Naftogaz and the social security system could lead to further ratings improvements,” S&P said.

“Alternatively, setbacks to political stability, higher-than-projected recapitalization needs for the financial system, or a weakening of the government’s resolve to finalize an IMF lending program, could put downward pressure on the ratings.”

Resumed cooperation with the IMF opens the way for a European Commission loan estimated at 610 million euros ($792 million) and for an $800 million loan from the World Bank, Deputy Prime Minister Serhiy Tigipko said on July 7.

“Fiscal adjustment will start in 2010 and deepen in 2011- 12, backed by robust structural reforms of the pension system, public administration, and the tax system,” IMF Deputy Director John Lipsky said on a July 28 conference call.

Ukraine’s gas industry “will be strengthened, including through domestic price hikes and broader reforms supported by other multilateral institutions, which will help eliminate energy subsidies and create a more modern and viable sector.”
The benchmark UX stock index rose 70.13 points to 2093.85 yesterday, the biggest increase since July 6. Ukraine’s 6.58 percent bond maturing 2016 rose to 101.053, from 100.000. Ukraine’s credit default swaps fell 4 basis points to 514.5, according to data provider CMA.

The IMF action “will be moderately positive” for Ukraine’s Eurobonds “as the approval of the stand-by program has been expected and the market has already accounted for this,” Astrum Investment Management said in a comment for clients.

The decision should cause a further decline in the cost of hedging against devaluation risk, Astrum said. This “should increase the appeal of the Ukrainian domestic bond market for non-residents,” according to Astrum.

Will Russia Buy Up Ukraine?

KIEV, Ukraine -- The description of Belarusian President, Alyaksandr Lukashenka, as “pro-Russian” has side-stepped the fact that he is a Soviet Belarusian nationalist which developed after 2002, when he rejected the then Russian President, Vladimir Putin’s, offer to unite both countries.
One factor behind Lukashenka’s Soviet Belarusian nationalism is his unwillingness to open up the Belarusian economy to Russian economic take-over. Moscow’s exasperation with Lukashenka partly rests on his economic protectionism in relation to Russia, which closely resembles that of Latin American left-wing nationalism vis-à-vis the US.

Hence, it is not surprising that Lukashenka has developed close ties with left-wing, anti-American populist Venezuelan President, Hugo Chavez.

The election of Viktor Yanukovych brought to power in Ukraine a team with similar pro-Russian sentiments and Soviet nostalgia as that found in Belarus – but with one major difference. Ukraine, unlike Belarus, has undergone a transition to a market economy and the majority of its GDP is produced by the private sector.

Russian investment in Ukraine, and the takeover of strategic sectors of its economy, is therefore more likely than in Belarus. Ironically therefore, Lukashenka looks more like a nationalist than does Yanukovych. Economic protectionism (nationalism) has its supporters in the Yanukovych team, but is directed against Western rather than Russian investors, as the latter are seen as more benign.

This is assisted by the inter-mixing of Russian, Ukrainian and former Soviet capital through Foreign Direct Investment (FDI) from Cyprus and the Virgin Islands, two of the biggest sources of FDI in Ukraine.

When the Yulia Tymoshenko government nationalized and re-privatized the Kryvorizhstal plant to a Western investor, Yanukovych and the Party of Regions criticized the sale on economic protectionist grounds with the plant remaining under Ukrainian control. Kryvoriozhstal was privatized in July 2004 by the oligarchs, Renat Akhmetov and Viktor Pinchuk, for $800 million and re-sold in October 2005 for $4.8 billion to Mittal Steel.

On June 8, Putin had dinner with Yanukovych in Istanbul and told him about his irritation with Akhmetov for causing difficulties with Russian companies trying to buy metallurgical businesses in Ukraine.

Putin pressured Yanukovych to reduce Akhmetov’s influence within the Party of Regions. Such a step would put Yanukovych and Akhmetov on a collision course as the latter is the wealthiest person in Ukraine, closely linked to the Donetsk clan since its incarnation as the Party of Regions in 2001, and hugely popular in that city.

Akhmetov is a major benefactor for the Shakhtiar soccer team and financed the construction of its new stadium opened in July 2008 at a cost of $250 million.
Akhmetov blocked the sale of the Mariupol MMK Ilyich steel plant, one of Ukraine’s top three steel producers, to a secretive group of Russian investors backed financially by Russia’s state-owned Vnesheconombank, chaired by Putin.

Akhmetov’s Metinvest agreed to take a 75 percent stake in the plant and invest $2 billion in return for a merger of the two steel.

Prime Minister, Nikolai Azarov, stated: “The government is on the side of the working collective and will not allow a raider takeover of one of Ukraine’s flagship metallurgical enterprises”. Russian investors Alexander Katunin and Troika Dialog Russian investment bank, had earlier taken control of the Industrial Union of Donbas (ISD) group, one of Ukraine’s top three steel producers.

Zaporizhstal, another large Ukrainian steel producer, is also likely to fall under Russian control.

Such a lack of transparency was also evident in Russia’s acquisition of Luhanskteplovoz, one of the world’s largest producers of rail locomotives. Deputy Prime Minister, Sergei Tigipko, complained about the lack of transparency in the sale and the loss of 200 million hryvnia ($25.3 million).

Russia controls MTC (formerly UMC) and a controlling share in Kyiv Star, Ukraine’s two biggest mobile phone operators, which have led to warnings about the threat to national security if Russia gains access to Ukraine’s mobile phone network.

Russia is also prioritizing Ukraine’s nuclear energy sector. Ukrainian economic expert, Andriy Kolpakov, sees Russian economic expansion into Ukraine in four waves.
The first, metallurgical, was almost fully achieved except for one take-over being blocked by Akhmetov.

The second is beginning in machine building, with the first attempted take-over in Mykolayiv. The third will be into the banking sector.

The final stage would witness a push to take over large areas of Ukrainian land. Russia is not only seeking to acquire Ukrainian blue chip industries in a non-transparent manner, but also land. Moscow will move into food processing at the end of this year and within 2-3 years Russian capital will enter the land market if a moratorium on land privatization is lifted, Kolpakov believes.

First Deputy Head of the Presidential Secretariat, Iryna Akimova, has called for the removal of the moratorium on land privatization. The government will propose a law on land sales by the end of 2010. The Communist and Volodymyr Lytvyn bloc (which includes the renamed Agrarian Party) factions within the ruling Reforms and Stability coalition, who together provide 47 deputies, are opposed to land privatization.

Yet, with defections from the opposition, the coalition has grown to 265 and the government could eventually have sufficient deputies to initiate legislation to privatize land. A high level source told Jamestown that Putin wants his people within the Yanukovych administration to accelerate legislation to enable the privatization of agricultural land in Ukraine.

The same source said Putin has offered to make available $6 billion to Russian businesses to purchase huge tracts of Ukrainian land.

Russian take-overs are non-transparent and unlikely to bring new investment and capital. Their purpose is geopolitical and to remove competitors rather than the profit motive. Akhmetov and Ukrainian oligarchs who supported Yanukovych’s election have been side-lined from the Yanukovych administration, which is controlled by the gas lobby and pro-Russian ideological wing of the Party of Regions who provide it with a link to former communist voters.

The weak influence of the oligarchs, long associated with pragmatism, makes Ukraine’s foreign policy less pro-European as the energy and ideological lobbies increase the influence of the eastern vector. This makes Yanukovych’s foreign policy more pro-Russian and explains why a return to Leonid Kuchma’s multi-vector approach so far has failed to occur.

Controversial Moscow Mayor Back In Crimea

KIEV, Ukraine -- Just weeks after losing his status of persona non-grata in Ukraine, the infamous and hard-charging Moscow Mayor Yuri Luzhkov is back in Crimea and making headlines claiming that the peninsula, and particularly the city of Sevastopol, has always been Russian.Luzhkov, whom former President Viktor Yushchenko declared “persona non-grata” in 2008 over his comments that the Crimean city of Sevastopol, where the Russian Black Sea Fleet (BSF) is based, should be transferred to Russia, was granted permission to enter Ukraine on July 9. He immediately flew to Kyiv the following day to celebrate President Viktor Yanukovych’s 60th birthday.

But the more disconcerting visit came when Luzhkov traveled to Crimea on July 24-25, which has an ethnic Russian majority and has long been a hotbed of ethnic tension. While there, he visited the Crimean capital of Simferopol, then headed to Sevastopol to meet the city’s mayor, Valeriy Saratov, with whom he signed cooperation agreements between Moscow and Sevastopol for 2011-2013.

Luzhkov also celebrated Russian Navy Day on July 25 along with Russian Prime Minister Vladimir Putin, who came to visit Yanukovych vacationing in a state residence nearby.

But experts say Luzhkov’s visit to Crimea in light of his position that Sevastopol is a “Russian city” sends the wrong signals.

“Allowing Luzhkov, someone who behaves inappropriately and considers Ukraine some sort of mistake, to visit Crimea is an irresponsible act,” said Serhiy Solodky, deputy director of the Institute of World Policy think tank. “If Russia wants to take its relations with Ukraine seriously, it wouldn’t allow people like Luzhkov to come to Ukraine and make such statements.”

Luzhkov said he expresses no regrets and stands by his statements, underscoring the strategic and geopolitical value Sevastopol carries for Russia.

"We must by no means leave Sevastopol and Crimea. This position is firm, and our response to all innuendoes is: Sevastopol is a Russian city and a Russian naval base, which ensures the geo-strategic balance in southern Russia,” he said at a July 22 press conference in Moscow. “Its loss will be tantamount to the loss of southern Russia.”

It is precisely such statements that had made Luzhkov persona non-grata in Ukraine on May 12, 2008, amidst fears of Russia’s increased involvement in Ukrainian affairs in Crimea.

Allegations have abounded in recent years that Russia uses the presence of its once-mighty Black Sea Fleet to monitor the peninsula’s ethnic Russians, in many cases handing out Russian passports in order to claim rights over “their own citizens.”

The situation reached a boiling point in mid 2008, after Yushchenko expelled two Russian diplomats –one from Crimea –on allegations of subversive activities, provoking Moscow to do the same to two Ukrainian diplomats in Russia.

Then, during Russia’s brief war with Georgia the same year, Yushchenko blocked ships from the BSF from returning to their base after deploying on combat missions to the Georgian coast.

Luzhkov, who is known for his widespread and near-absolute power in the Russian capital, has in recent years kept Sevastopol on his personal agenda.

He personally funded the renovation of the missile cruiser Moskva, the flagship of the Russian BSF, and has donated funds in the past for the establishment of Russian Orthodox churches, housing for Russian sailors, and even a branch of Moscow State University in Sevastopol.

But experts said Luzhkov’s heavy-handed support is part of a greater narrative of Russian involvement in Crimea, particularly in Sevastopol. As a city of immense historical importance to Russia, Sevastopol under Ukrainian stewardship is a hard pill to swallow, according to Viktor Chumak, director of the Ukrainian Institute for Public Policy think tank, and while Moscow’s official line is to accept Ukrainian independence, the status quo is one of denial.

“Some Russian politicians see Ukraine as under their historical ownership, and they simply don’t accept the fact that it is now an independent country,” said Chumak. “And Luzhkov is one them.”

As for Ukraine’s rapidly warming relations with Moscow, Chumak said Kyiv is unlikely to make any more shrewd decisions such as banning Russian politicians from Ukraine over questionable statements.

“The current government is built on cooperation with Moscow in whatever respect,” he said. “While it may realize that this endangers Ukraine’s sovereignty, they will allow it so long as it doesn’t threaten their ability to stay in power.”

Russia: Ukraine: Arrests And Bans During Patriarch Kirill's Visit To Ukraine

MOSCOW, Russia -- Down with the Moscow pope", is the slogan repeated by nationalist demonstrators every time the Patriarch of Moscow and All Russia visits Ukraine.
In fact it was brandished again today in Kiev, where Patriarch Kirill is on an official visit and were he opened the Synod of the Russian-Orthodox Church. Eight people were arrested for demonstrating against the leader of the Russian Orthodox Church.

In Dnipropetrovsk, however, the authorities have even banned any kind of street protests against Kirill, on this his third trip to the country since being elected in 2009.

In the Patriarch’s attempts to unify the various Orthodox Churches in Ukraine, bringing them back under the spiritual leadership of Moscow, the nationalists glimpse the political objective of the Kremlin to reassert its influence on the former satellite republic.

In Russia the "tour of Ukraine" by Kirill is being closely followed by TV and newspapers, as if it were a state visit. In fact at the very same time, Prime Minister Vladimir Putin met with Ukrainian President Viktor Yanukovich.

After the fall of the USSR in 1991, the Orthodox Church in Ukraine underwent a schism, with some bishops declaring their independence from Moscow.

So far, the Russian Patriarchate has been able to avert their recognition by the global Orthodox hierarchy.

In Ukraine, 80 percent of the 46 million inhabitants are Orthodox Christian, with a third referring to the Moscow Patriarchate.

Beyond the controversy, Kirill’s visit confirms that the unity of the Eastern Orthodox Church is one of his key objectives.

During trip which touched several cities, the Patriarch made the most significant statement on the issue to date in the city of Odessa, tracing what the Russian media have called his "third path".

In the city home to the Kremlin’s Black Sea fleet, where the majority of the population is Russian and relations with the Ukrainian minority are always tense, Kirill spoke for the first time against nationalism as a "dangerous instrument for building societies" which instead, end up living under the "continuing threat of violence."

The alternative to a fanaticism of boundaries, race and ethnicity is "a Western-style multicultural society, but based on a solid structure." "Even in the most multi-ethnic societies like the U.S. – he said - there is always a dominant culture, in this particular case the Anglo-Saxon culture: for Russia and Ukraine it is the Orthodox culture."

And the Patriarch has also listed its core values: "Goodness, the absence of ill will, the spirit of sacrifice and willingness to help others."

The "third path" is realized, then, in a society whose members live according to the "divine law of love."

Ukraine: Back From The Grave

KIEV, Ukraine -- Growing confidence that the International Monetary Fund will back a $14.9bn standby loan for Kiev this week, is encouraging the brave to look around,
Earlier this month, Ukraine cancelled a $2bn 10year eurobond issue after balking at paying 8 per cent or more. It hopes that with the IMF deal in place it will secure cheaper money - and that investors will still be ready to cough up.

“There will be a window for Ukraine to borrow and market appetite will be strong immediately after the IMF approves assistance,” Tim Ash, emerging markets analyst at the RBS, told beyondbrics. “The appetite for Ukrainian corporates has also been strong and is getting stronger.”

Groups of European bankers were seen in recent days visiting Ukraine on scouting missions, seemingly eager to buy fresh debt from a government desperate to cover a budget shortfall.

After adopting a series of unpopular but economically necessary austerity measures in recent weeks, including budget cuts, Ukraine has a strong chance of landing approval for the IMF loan during when the Fund’s board meets on July 28.

Recently, international debt markets, virtually closed since Ukraine plunged into recession in 2008-9 and the last IMF agreement was suspended, have opened up a little to the recession-battered nation’s oligarchs.

Companies controlled by Rinat Akhmetov, Ukraine’s richest man, have raised nearly $2bn through Eurobond placements and syndicated loans. Akhmetov, who is close to president, Viktor Yanukovich, hopes to use the money to expand his dominant position in Ukrainian steel.

But other sectors are still desperate for finance. Domestic banking was hit hard last year, with the European banks which control more than 40 per cent of the market suffering seriously.

Net banking sector losses are down substantially from last year’s $4bn, but are still high - at about $1.1bn for the first half of 2010. Results of a central bank stress test released this month show that at least one third of Ukraine’s 175 banks need $5 billion in capital injections.

“The banking sector in Ukraine remains fragile,” said Martin Raiser, head of the World Bank office in Ukraine. “For Ukraine, the recovery of the banking sector will play a critical role in recovery. Without the flow of credit, investment will remain subdued and this would impact the pace of post-crisis GDP growth.”

Government figures released this week indicate the economy has rebounded robustly from its 15 per cent plunge last year, posting 6 per cent growth year-on-year in the first half of 2010.

But dependent on steel, Ukraine’s top export, the recovery is fragile. A dip in global steel demand in June had an immediate impact on Ukrainian steel revenues. Meanwhile, a recent survey suggests consumer confidence has slipped after steadily recovering for the first five months of the year.

Further pain is ahead, with utility prices up 50 per cent to meet a key IMF condition. And a summer heat wave is scorching the harvest.

So, investors buying Ukrainian bonds for the long-term may be in for a rough ride. But the yields on offer immediately after the IMF deal could be among the most tempting in Europe.

Russia Proposes Ukraine To Conduct Joint Naval Drills More Often - Navy Commander

SEVASTOPOL, Ukraine -- Russia proposed Ukraine to conduct joint Russian and Ukrainian naval drills more often, Russian Navy Commander Admiral Vladimir Vysotsky said.
"[There is] a proposal to reduce periods of time between these events," Vysotsky said after parade marking Russia's Navy Day.

He said that the countries should hold naval exercise annually instead of one in a year leaded by Russian and Ukrainian fleets' commanders alternately.

Russia celebrates the Navy Day on the last Sunday of July.

The festivities usually include a military parade, a number of sport and cultural events and an exhibition of skills by naval personnel.

Russian-Ukrainian Trade Turnover Reaches Pre-Crisis Level: Putin

FOROS, Ukraine -- Russian-Ukrainian trade turnover reaches pre-crisis level, Russian Prime Minister Vladimir Putin said on Saturday during the talks with his Ukrainian counterpart in the Crimea resort town of Foros.
Putin said he was particularly satisfied with the Russian-Ukrainian cooperation in "high-tech areas - aircraft and space industries".

Russian-Ukrainian relations worsened during the presidency of pro-Western Viktor Yushchenko. In February, 2010 the new President Viktor Yanukovych came to power what resulted in the thaw between Moscow and Kiev.

Both countries saw the improvement of bilateral economic and trade cooperation.

The premier said the countries were dynamically developing the projects on the joint venture on sales of An-series transport and passenger planes.

One of the first projects is the joint production of the An-158 passenger jet. Along with this deal, Russia plans to buy the Ukrainian-designed Antonov An-124 and An-70 military transport aircraft as part of the new state arms procurement program for 2011-2020.

Moscow Patriarch’s Visit To Ukraine Proving Counterproductive

KIEV, Ukraine -- Instead of generating pressure for an end to the independent Ukrainian Orthodox Church, the Russian church leader’s latest visit is in fact “provoking the growth of autocephalous attitudes” in Ukraine, according to an expert on religious affairs.
In a commentary on Portal-credo.ru, Aleksey Malyutin argues that Kirill does not understand that his repeated visits to Ukraine and his use of terms denigrating the independence of that country and its religious communities are having “exactly the opposite” impact the Russian patriarch intends.

It is one thing for Orthodox people in Ukraine “to have the Patriarch as a banner and symbol far away,” Malyutin says, but it is “an entirely different thing to constantly have to cope with his administrative interference,” the scandals involving his limousines and security details, and his “unsuccessful political declarations.”

“All this,” the commentator says, “inevitably leads to the devaluation of [Kirill as] the bright symbol of ‘church unity’ and to the undermining of the very idea of this unity.”

Indeed, Malyutin points out, “not one of the hierarchs likes such constant interference in his see,” whatever Kirill may think.

And as a result the very “frequency and length of the visits” of Kirill to Ukraine “deprive them of the exclusiveness or if one likes sensational quality and gradually reduce them to the level of protocol ritual,” a trend that means his current visit, all the hype of the Russian press notwithstanding “will be less successful than the one he made last year.”

In short, Malyutin suggests, Kirill is overplaying his hand in the religious sphere even more than Vladimir Putin is doing so in the political one, pursuing an approach that is so Moscow-centric that even those who would be willing to cooperate with the Russian center more closely are being driven away.

One reason for the counterproductive nature for Kirill’s approach, the religious affairs specialist says, is that the Russian churchman has shown no interest in going to Western Ukraine, “an inalienable part of his ‘canonical territory’” and the location of a large fraction of Orthodox parishes in Ukraine.

Kirill has tried to reach out to the faithful there by opening a Ukrainian-language version of the official site of the Russian Orthodox Church of the Moscow Patriarchate this month, but the patriarch has shown no interest in going to a place where Ukrainian national identity is strong and where few people would accept his ideas about a single “Russian world.”

Another reason for judging his visit counterproductive, Malyutin suggests, is that despite his reputation for diplomatic skill, Patriarch Kirill in this case is pushing too hard and too quickly for the “resolution of questions,” forgetting that the new rapprochement between Moscow and Kyiv is not proceeding as fast or as consistently as he may want to believe.

An example of such haste is Kirill’s designation of Kyiv as “synodical capital of the Moscow patriarchate” and Odessa as “one of his residences.”

Such statements are “paradoxical” given that “all this is taking place on the territory of the most independent part of the Moscow Patriarchate which independently creates sees, forms bishoprics, and elects a leader.”

As specialists have “frequently and justly noted,” Malyutin notes, “the level of the real independence of the Ukrainian Orthodox church of the Moscow Patriarchate exceeds the analogous measure not only in autonomous but even in autocephalous churches of ‘world Orthodoxy,’” something Kirill has failed to take into consideration.

Moreover, “the Ukrainian church question is very delicate, much more delicate than the question about the relations between Yanukovich and Putin.” That is because historically the Kyiv metropolitanate has been the “mother” see for the Moscow Patriarchate and because Moscow’s subordination of it in 1686 was anything but transparently legal.

Support for Ukrainian autocephaly has “deep roots” extending back to the 19th century and, after Ukraine regained its independence in 1991, these attitudes have only increased.

There is no going back, Malyutin argues, because “in the history of humanity there has not yet been a single empire which has not been subject to dismantling.”

And by his actions, Malyutin continues, Patriarch Kirill is “strengthening autocephalous attitudes within the Ukrainian Orthodox Church of the Moscow Patriarchate,” something that Kirill appears unable to understand given “the deeply rooted imperial stereotypes in the Moscow mentality in relation to Ukraine.”

But in Ukraine, he notes, people “perfectly well understand that the Ukrainian Orthodox church of the Moscow Patriarchate is the most powerful ‘symbolic capital’ of Ukraine because the 17,000 Ukrainian Orthodox parishes (of which almost 12,000 are part of the Ukrainian Orthodox Church of the Moscow Patriarchate) can tilt the balance in Orthodoxy as a whole.”

Consequently, “the latest change in the foreign policy conjunction hardly will lead mechanically to the destruction de facto of the autocephaly of the Ukrainian Orthodox Church of the Moscow Patriarchate.”

Indeed, Malyutin says, “the canonical status of the Ukrainian Church is more stable and fixed than the state status of Ukraine itself.”

Putin in Sevastopol

Russia's Putin Meets Ukraine's Yanukovych

Russia's Prime Minister Vladimir Putin, right, rides a Harley Davidson Lehman Trike as he arrives for the meeting with Russian and Ukrainian motor bikers at their camp near Sevastopol in Ukraine's Crimea Peninsula, 24 Jul 2010.

FOROS, Ukraine -- Russian Prime Minister Vladimir Putin and Ukrainian President Vyktor Yanukovych held talks on a wide-range of issues Saturday in Ukraine.
The meeting took place at Mr. Yanukovych's vacation home in the town of Foros on Ukraine's Crimea peninsula. Russian media reports say the talks focused on trade issues.

Prior to the meeting, Mr. Putin participated in a motorcycle rally near the port city of Sevastopol on the Black Sea coast of the Crimea peninsula. Mr. Putin roared to the rally on a Harley Davidson mortorcyle where he addressed thousands of motorcycle enthusiasts.

Mr. Putin's visit to the Crimea coincides with Russia's Navy Day, which is observed Sunday. Sevastopol is home to Ukrainian naval forces and to Russia's Black Sea fleet.

Speaking on Saturday Mr. Putin said it was symbolic of the friendship between Russia and Ukraine that both Russian and Ukrainian seamen will celebrate the Russian holiday.

The Russian base at Sevastopol was a major issue of contention between Russia and Ukraine after the break up of the Soviet Union.

Ukraine's previous government wanted the Russian fleet to leave after its lease expired in 2017. However after Mr. Yanukovych came to power in February, Moscow and Kyiv signed an agreement to extend the Russian lease by another 25 years to the year 2042.

Moscow heat claims more victims

A Japanese tourist and four swimmers are the most recent victims of this year’s summer scorcher. The 75-year-old man died of heart failure while he was sight-seeing in the city centre.

The man collapsed and passed away on the ground by the Borovistky gate, a law enforcement spokesperson said on Monday. According to preliminary reports he died of acute heart failure, which could have been caused by the heat.

Meanwhile the swimming season officially opened at the beginning of June. As the mercury has continued to climb more and more people have taken to the Moscow waters, with some meeting a watery end. The Emergency Ministry Emercom announced that over the course of last month there were 70 incidents reported and 16 people drowned.

And Monday saw four people drowned on the city’s waterways, including a boy aged just nine.

None of the victims had been swimming at authorised areas, officials said.

So leaping into a river might not be the best way to beat the heat. Luckily, Russias chief medical officer Gennady Onishchenko has some handy hints for employers and employees, on how to avoid coming to harm.

And as if World Cup winning football isn’t enough, he’s looking for another Spanish success story in the form of a siesta.

Onishchenko suggested we should all take a page out of the Mediterranean country’s book and take it easy during the hottest hours of the day, between midday and 3 pm. He also recommended saving the most active tasks for the beginning and end of the day, when it is cooler.

NATO talks of war in Moscow

Russia’s Defence delegation and NATO have begun talks about European security. “Your visit is very important for the development of dialogue between Russia and NATO,” Head of General Staff General Nikolai Makarov told NATO Defence delegation representative Admiral Giampaulo di Paula.

“Today our talks have had some interim results. We will be talking about the issues of European security and areas of mutual interest,” Makarov said.

Missile defence is likely to be a key component of the discussions.

Troubled developer Mirax faces $18 million tax bill

A subsidiary of Mirax Group has been ordered to pay over 560 million roubles ($18 million) in back taxes, or face the seizure of its accounts and assets.

However, the group disputes the claim, acknowledging only 162 million roubles ($5.3 million) is still owed.

The firm has been involved in high profile developments, including Moskva-Citi, but has run into difficulties during the financial crisis.

Foot and Mouth comes to Russia

A pig farm in southern Russia has had its herd of 204 pigs destroyed, after an outbreak of foot and mouth disease, the Emergency Ministry press service announced Thursday.

The carcass of a wild boar, which had died of the disease, was found in the area in May, prompting concerns about the spread of the highly infectious virus. Other wild boar in the area were culled, to contain the spread.

An outbreak of the disease in Britain in 2001 decimated farming communities and caused colossal financial losses.

The 'unravelling relationship' between Russia and Iran

Russia and Iran seemed to be good friends, but in recent weeks the relationship has unravelled.

Since 1991, Russia has been a major supplier of modern arms to Iran.

The Russian-built nuclear power plant in the southern Iranian city of Bushehr is due to finally come on line this year.

In advance, Russia has shipped more than 100 tonnes of low-enriched uranium reactor fuel rods to Bushehr. Moscow has earned billions, helping Iran bypass US and European Union (EU) sanctions.

And yet, last month, Moscow supported UN sanctions against Iran over its nuclear programme.

Last week, President Dmitry Medvedev even publicly questioned the Iranian programme which is moving into a position that may allow Tehran to acquire nuclear weapons.

Previously, Russian officials maintained that there was no proof that Iran was developing nuclear weapons.

In December 2005, Russia agreed to sell Iran long-range S-300 anti-aircraft missiles - 40 to 60 launchers with four missile tubes each, radars, and control stations, worth some $1bn (£650m).

Together with the shorter-range Tor M1 and the older super-long-range S-200 already provided by Russia, Iran could build a solid anti-aircraft shield able to defend its nuclear facilities against a possible US or Israeli assault, and inflict serious damage to the attacking force.

Without the S-300, the Iranians do not have a balanced air defence.

Moscow has been withholding the delivery of the S-300 to Iran since 2008, while officials maintained the delays were "technical".

Last month, after some hesitation, Moscow announced that the S-300 deal is forbidden by the new UN sanctions.

Iranian officials reacted angrily. Defence Minister Ahmad Vahidi demanded that Russia must pay for the damage it has caused by failing to deliver the S-300.

President Mahmoud Ahmadinejad has publicly berated Mr Medvedev for buckling under what he said was US pressure for fresh sanctions.

Moscow's policies towards the Middle East are clearly very different from its Cold War stance, when it steadfastly supported Muslim nations against the US and its closest ally, Israel.

Today Russia is seriously distressed by the spread of Western influence and the expansion of the North Atlantic Treaty Organisation (Nato) into what it considers its legitimate sphere of "privileged interests": Ukraine, Georgia and other former Soviet republics.

The Middle East today is too far from Moscow's true sphere of interest or capability.

If Washington under Barack Obama seems to be less intrusive in the post-Soviet space, if Israel obediently agrees to stop the supply of modern weapons to Georgia - like it did in 2008 - Russia is ready to be forthcoming on Iran.

The threat of Iran acquiring nuclear weapons is also a factor, but hardly the main one.

The Russian military do not consider a handful of primitive North Korean or Iranian nuclear weapons a serious threat.

Of course, Moscow has genuine business and security interests in the larger Middle East: supplying arms and nuclear technologies to Arab nations and to Iran.

At the same time, Russia has an increasingly important military and security relationship with Israel.

With Israel, Russia has been jointly producing billions of dollars worth of weapons for India.

The Russian military have acquired a substantial batch of different types of Israeli-made spy drones or unmanned aerial vehicle (UAV), the first official procurement of a major weapon system from a Western nation since 1945.

Moscow is at present negotiating the joint production of UAVs with Israel in Russia.

In the absence of a clear, overriding strategic interest in the Middle East, Russia's policies are highly opportunistic and can be easily changed by lobbying or intrigue.

There is no evidence that Mr Medvedev and the all-powerful Prime Minister Vladimir Putin seriously differ on Iran.

But Tehran's anti-American policies, as well as its purchase of Russian military and nuclear technologies, helped to build a powerful lobby in Moscow.

The cancelling of the S-300 sale when the due process of vetting by all required government agencies was complete, and the hardware ready for shipping, has financially hurt influential officials and caused anger.

But Tel Aviv also has a lobby in Moscow.

An additional factor that may further influence the decision-making in Moscow is Saudi Arabia's offer to buy more than $2bn worth of Russian weapons (helicopters, armour, anti-aircraft missiles) on condition that Russia does not sell Iran S-300 missiles, and stops supporting it in the UN.

Working in apparent cohesion, Israelis, Arabs, Russians and Americans have somewhat changed the traditional outlay of Middle Eastern great power rivalry.

But the Iranian nuclear problem seems to be as far from resolution as ever.

Luzhkov no longer persona non-grata in Ukraine

Moscow's Mayor Yuri Luzhkov has thanked President Viktor Yanukovych for canceling the decision to declare him persona non grata in Ukraine, a decision that prohibited him from entering the country.

Luzhkov was speaking in Simferopol at a meeting with the leadership of the Crimea.

"I want to express heartfelt gratitude to Viktor Fedorovych Yanukovych for the decision that he made, which once again granted me the opportunity to directly resolve issues of interrelations in various areas between Moscow and the Crimea, between Moscow and regions of Ukraine," Luzhkov said.

According to Luzhkov, the election of the new authorities in Ukraine marked the beginning of a new area in Ukraine's relations with Ukraine.

"The muddy times and the unreasonable times are in the past," Luzhkov said

According to him, it is unreasonable to disunite Russians and Ukrainians because they are people with the same fate.

"Those times were connected with [attempts to] push our countries apart from each other in political terms. They were fundamentally unreasonable because our people are the closest of relatives, brotherly people, and people with a single fate. Regarding economics, little reasonable was said, it was wildness, the wildness of isolation that resulted in the most serious of losses in our ability to solve social problems, solve developmental problems," Luzhkov said.

Luzhkov was banned from entering Ukraine on May 12, 2008, for his statements about the ownership of Sevastopol.

As Ukrainian News earlier reported, Parliamentary Deputy Viacheslav Kyrylenko of the Our Ukraine-People's Self-Defense bloc said on July 9, 2010, that Luzhkov was no longer persona non grata in Ukraine.

Luzhkov said at a press conference on July 19 that he had not abandoned his conviction that Sevastopol was a Russian city.

Increased gas price for public and heating companies to lead to growth in its extraction in Ukraine

The increase in gas prices charged to the public and heating companies will allow the investment of additional funds in the development of Ukrainian gas fields, and increase the volume of gas extracted, Fuel and Energy Minister Yuriy Boiko said at a briefing on Friday, July 23.

"About Hr 1.2 billion [received from increasing gas prices] this year will be used to extract gas on the shelf of the Black and Azov seas," he said.

The minister said that the funds received would be directed to developing the Subotynske, Shtormove and Odeske gas deposits.

"The money invested will increase gas volumes and allow us to provide our consumers with [Ukraine's] own gas, and not to pay too much for it [to foreign suppliers]," the minister said.

He noted that Russia, despite having gas extraction volumes exceeding those of Ukraine, sets higher gas prices for the population compared to those in Ukraine.

"The main task is to optimize tariffs is to reach at least the level of the gas price in Russia, and thus obtain additional funds to increase [Ukraine's] own gas production, and not feed a foreign producer," said Boiko.

Popov takes charge of Kyiv

First deputy Kyiv City Administration Oleksandr Popov looks to be running the show in Kyiv, at least according to the city administration's website, which in recent weeks has gone to great lengths to advertise the official's prominence in all affairs related to Ukraine's capital and the lives of its inhabitants.

Kyiv Mayor Leonid Chernovetsky, elected in 2006, was shortly thereafter appointed Kyiv City Administration chief by presidential decree. Former Mayor Oleksandr Omelchenko served under former President Leonid Kuchma following the same practice.

The state prosecutor's office and State Security Services are currently investigating numerous allegations against city administration officials and Kyiv City Council deputies related to committed acts of embezzlement and fraud. No top officials have been formally charged with any wrongdoing.

Opportunity For E.U. Sway In Ukraine

BERLIN, Germany -- When Nico Lange arrived at the Kiev airport last month, border guards told him he was being expelled and deported to his native Germany.
Mr. Lange, who is the director of the Ukrainian branch of the Konrad Adenauer Foundation, the research organization of Germany’s conservative Christian Democratic Union party, protested. The guards put him in a small detention cell and held him for 10 hours.

Mr. Lange, who had already been detained in April, contacted Chancellor Angela Merkel’s office, the Foreign Ministry and several European lawmakers in Brussels.

Finally, without any explanations or interrogations by the security services, he was released and, at least for now, he can remain in Ukraine, where he has been based for the past four years.

“Maybe the security services wanted to use me in order to set an example for other nongovernmental organizations,” said Mr. Lange, who has written trenchant analyses about the political situation in Ukraine.

The intimidation of Mr. Lange is not unusual in today’s Ukraine, a country where the euphoria of the 2004 pro-democracy Orange Revolution has evaporated. All the more reason, say analysts and diplomats, for the European Union and especially Germany to adopt a much stronger and united policy if they want to prevent Ukraine from sliding away from democracy and moving into the orbit of Russia.

“The great shame is that there is no actual German or European Union policy towards Ukraine,” said Jonas Grätz, security analyst at the Norwegian Institute for Defense Studies, Oslo. “Everything seems to be focused on the reset button with Russia,” a reference to the United States, and now the E.U., improving relations with Russia.

But by making Russia its priority among the countries east of its borders, the E.U. risks losing a still democratic and stable Ukraine, say analysts.

Since Viktor F. Yanukovich was elected the Ukrainian president last February and his Party of Regions took power, journalists, local and foreign nongovernmental organizations and independent television channels have come under pressure from the security services.

Last month, the authorities withdrew the broadcasting license from the 5 Kanal television station. If the decision is upheld, one of the last independent stations will go off the air.

Valery Khoroshkovsky, a media magnate and head of Ukraine’s security services, or S.B.U., is poised to take over the frequencies, a move that will increase even further the growing powers of the security services over the dissemination of news.

Mr. Yanukovich himself has proposed reintroducing “temnyky,” official guidelines for journalists. The abolition of the temnyky was one of the gains of the Orange Revolution.

The pressure on the media has become so intense that the 2010 Press Freedom Index published by Freedom House ranked Ukraine 115th out of 195 countries, alongside Kuwait and Mexico.

More significantly, relations between Ukraine and the Russian leadership, which had opposed the Orange Revolution and which has always supported Mr. Yanukovich, have greatly improved.

President Dmitri A. Medvedev agreed last April to supply Ukraine with cheaper gas in return for Russia keeping its Black Sea Fleet in the Crimea until 2042. Susan Stewart, an expert on Russia at the German Institute for International and Security Affairs in Berlin, estimates that Ukraine will save up to $40 billion over the next 10 years.

Ukraine and Russia later signed an agreement restoring the right of Russia’s counterintelligence services to operate on the base of the Black Sea Fleet, giving them an official foothold in Ukraine.

Ms. Stewart believes Russia’s policy toward Ukraine “is about re-establishing its hegemony in the region so as to become stronger vis-à-vis the West.” The Kremlin has resented Ukraine’s independence ever since the collapse of the Soviet Union in 1991.

Despite using Mr. Yanukovich’s election as an opportunity to entrench itself in Ukraine, Russia has made limited inroads into Ukraine’s economy. Mr. Grätz argues that Ukraine’s oligarchs, who dominate most sectors of the economy, are prepared to challenge this aspect of Russia’s influence.

They would lose out financially if Russian businesses took over the country’s energy resources and gas transit pipelines, which the Kremlin has long coveted.

This is where the E.U. could exercise some leverage. It is willing to offer Ukraine a free trade agreement provided the government embarks on major structural reforms. Such an accord would benefit some of the oligarchs; it would give them access to more markets and make their businesses more competitive.

Since Mr. Yanukovich says he is committed to bringing Ukraine closer to the E.U., Brussels should make any free trade negotiations conditional also on press freedom, an independent judiciary and the rule of law.

“After all, these are the values of the E.U.,” said Mr. Lange. “We should use conditionality in a much more forceful and convincing way,” he added.

E.U. diplomats say they have repeatedly tried to do this with all the leaders since the Orange Revolution, but with little success. The aftermath of that revolution was dominated by infighting between its leaders, Viktor A. Yushchenko and Yulia V. Tymoshenko.

They neglected economic and political reforms, failing to capitalize on their immense popular support and refusing to stamp out corruption. Ukraine is currently ranked 146th out of 180 countries in the annual Corruption Perception Index published by Transparency International.

“There is a massive sense of frustration in Brussels because no matter what the E.U. offers, it receives only empty promises by the Ukrainian authorities,” said Katinka Barysch, deputy director of the Center for European Reform in London.

When the E.U. offered recently to modernize Ukraine’s inefficient energy sector, there was enthusiasm by reformers but reluctance by the oligarchs. Modernization would mean transparency over supplies and prices, eroding the influence of the oligarchs. Russia also opposed the plan: it would make it more difficult to acquire parts of the energy sector.

No wonder then that Brussels is frustrated.

Nevertheless, the E.U., like Germany, is still too focused on Russia to really do something about Ukraine. Were Berlin to establish a separate strategy for Ukraine instead of always looking at the region through the prism of Russia, Europe might have a real chance in halting Ukraine’s slide away from democracy and into Russia’s sphere of influence.

Putin To Visit Ukraine, Meet Yanukovych On July 24

MOSCOW, Russia -- Russian Prime Minister Vladimir Putin will visit Ukraine for talks with President Viktor Yanukovych on July 24, the Russian government's press service said on Thursday.
Putin and Yanukovych, who last met in Istanbul at the Conference on Interaction and Confidence Building Measures in Asia (CICA) summit in early June, are expected to discuss "current issues of Russian-Ukrainian cooperation and other questions of bilateral interest," the statement said.

In a 60th birthday telegram to Yanukovych on July 9, Putin praised Ukraine's efforts towards "strengthening friendly relations and mutually beneficial cooperation between Ukraine and Russia."

According to Yanukovych's press service, the president will meet on July 23 with Patriarch Kirill of Moscow and All Russia, who is on an eight-day visit to Ukraine.

Russia-Ukraine ties have strengthened significantly since Viktor Yanukovych replaced pro-Western Viktor Yushchenko as president in late February.

Israel, Ukraine Now Visa Free

JERUSALEM, Israel -- Israel and Ukraine signed an agreement canceling visas between the two countries.
Minister of Foreign Affairs Avigdor Lieberman and Ukrainian Foreign Minister Kostyantyn Gryshchenko on Wednesday signed a reciprocal visa cancellation agreement in Jerusalem.

The agreement, which means that Israelis and Ukrainians do not need visas to visit the other country, is "an expression of the good and stable relationship" between the two countries, Lieberman said.

It is the second such agreement Israel has signed. Israel and Russia have had a visa-free agreement for more than a year.

The Shas Party, a member of the coalition government, objected to the agreement, saying it would increase crime and prostitution.

Media Watchdog: Ukraine TV Too Cozy With Leaders

KIEV, Ukraine — Ukraine's top television networks are too cozy with the country's leaders, reporters are hindered in investigations and independent journalism is under threat in the country's far-flung regions, an international media watchdog said Wednesday.
On a three-day trip to the former Soviet state, the head of the Paris-based group Reporters Without Borders, Jean-Francois Julliard, called upon the journalists themselves to seek protection if the authorities won't oblige.

"If there is no political will to protect press freedom, journalists should keep fighting to defend their rights," he said.

Critics say media liberties have been stifled under pro-Russia President Viktor Yanukovych, who took over from a Western-leaning predecessor earlier this year.

Chief among Julliard's observations were that top management and owners of Ukrainian TV channels are very close with the country's leaders, undermining objective reporting.

Ukraine has one national TV channel and dozens of private networks, but critics say all follow an unwritten rule never undermine or embarrass the authorities.

Julliard noted numerous cases of censorship and political pressure on Ukraine's TV channels where journalists were not allowed to cover some news, such as when Yanukovych was hit by a wreath amid strong winds as he honored war victims.

Media executives also block muckraking probes by their reporters, Julliard said, adding that political pressure on journalists outside the country's capital is even higher than in Kiev.

"Usually journalists in provinces are not so well protected as in capital and we have to find way to protect them more," he said.

Julliard called on Yanukovych to say "he is very committed to defending press freedom."

"If there is no strong political will at the highest level, the situation will go in the wrong direction," he said.

Yanukovych has repeatedly denied accusations of press censorship.

Nationalist political party leaders say Moscow mayor should be persona non grata

The head of the information security subcommittee of the committee on national security and defense at the Ukrainian parliament, and member of the For Ukraine! Party, Ivan Stoiko (the OU-PSD faction), has called for Moscow Mayor Yuriy Luzhkov to be banned from entering Ukraine.

Stoiko sent a relevant deputy address to the Security Service of Ukraine (SBU) and the Foreign Ministry of Ukraine after Luzhkov again stated that "Sevastopol should be retuned to Russia," according to a posting made on Monday on the Web site of the For Ukraine! Party.

"A high-ranking official from Moscow again allowed himself to make anti-Ukrainian statements. That's why if there is an independent Foreign Ministry and SBU in Ukraine who will protect Ukrainian interests, Luzhkov should again be banned from entering Ukraine," Stoiko said.

The Congress of Ukrainian Nationalists also for Luzhkov to be banned from entering Ukraine.

"We are indignant not so much at the statement by Luzhkov…, as the position of the current government, which allows its Moscow friends to infringe on the territorial integrity of our state," the press service of the congress cited Deputy Congress Head Volodymyr Boreichuk as saying on Monday.

As reported, in May 2008 Luzhkov said that the Soviet naval base, Sevastopol, had never been transferred to Ukraine and Russia should regain control over it.

In the wake of those statements, the Ukrainian Security Service banned Luzhkov from entering Ukraine, while then President Viktor Yuschenko officially condemned his statements in Sevastopol.

Sevastopol and Moscow non-governmental organizations on May 29, 2010 asked Yanukovych to lift the entry ban on Luzhkov at the initiative of the Sevastopol Patriots Association. And all restrictions on the Moscow mayor's entry into Ukraine have been lifted.

On Monday, July 19, at a press conference in Moscow, Luzhkov said he had not changed his opinion about the status of Sevastopol. "I made my statements on Sevastopol consciously and with good reason – my position on the status of Sevastopol hasn't changed and will never change," the mayor of Moscow said.

Azarov meets Yanukovych in Crimea

President Viktor Yanukovych held a working meeting with Prime Minister Mykola Azarov in Crimea today.

At the meeting President Yanukovych and Prime Minister Azarov have discussed managing this year's harvest. Mykola Azarov said that the issue is in the focus of Government’s attention.

"We know and control the situation on the market. We expect that we will sell the harvest at a good price... so that farmers were not robbed once again, so that they got a good price for their grain and could lay a stable base for harvests in the following years," said Mykola Azarov.

According to him, this is what the work of the Agrarian Fund and purchases to the state reserve are aimed at.

The President of Ukraine expressed support to the idea of the Agrarian Fund issuing bonds to help it receive appropriate financial resources and perform its functions, namely the purchase of grain in large quantities. "I think that within a few days this mechanism will start working," said the Prime Minister.

Particular attention the participants of the meeting have dedicated to overcoming consequences of floods in some regions of Ukraine. The President instructed to dedicate attention to funding all the works associated with the provision of assistance to population in the areas affected by floods.

The Prime Minister reported that the Government is implementing all the instructions of the Head of State regarding overcoming the disaster and providing assistance to each aggrieved family.

"The allocated money will first of all be used to rebuild homes, roads, wells, water supplies," said the Prime Minister. He also stressed that the Government strictly controls the use of funds and that this year "the money will not dissolve in the air, as it has happened before, but will really be used to restore specific objects”.

Besides, President Yanukovych and Prime Minister Azarov have discussed improving public procurement. "I have received another letter from the Accounting Chamber about corruption occurring in public procurement... Where an officer has the opportunity to work with permit system, he uses it for his own benefit," said Viktor Yanukovych, expressing confidence that today there is every opportunity to develop sufficiently transparent public procurement system.

The President also said that the Government should take supervision over all the tender procedures conducted by the ministries, departments, committees, regions, etc.. He said that "such procedures must be absolutely transparent, open, and meet all the requirements of the law on public procurement”.

Also, the President and the Prime Minister have discussed elaboration of 2011 budget, negotiations between Ukraine and the IMF, fighting corruption, and so on.

After the meeting Mykola Azarov said that the Government would consider issues he has discussed with the President today already tomorrow.

Russia's Moskva Missile Cruiser Sets Off To Its Naval Base In Ukraine

VLADIVOSTOK, Russia -- The flagship of the Black Sea fleet, the Moskva missile cruiser, has set off from the port of Vladivostok in Russia's Far East to its home port in Ukraine's Sevastopol, a Navy spokesman said on Wednesday.
The Moskva missile cruiser was participating in Russia's Vostok 2010 military drills jointly with the flagship of the Northern Fleet, the Pyotr Veliky nuclear-powered guided-missile cruiser, and the flagship of the Pacific Fleet, the Varyag guided-missile cruiser.

"After a short rest in Vladivostok, the Moskva set off for the Black Sea to its home base in the port of Sevastopol. It will have to pass across the Pacific, Indian and Atlantic oceans," the spokesman said.

Russia's Black Sea Fleet is stationed in Ukraine's port of Sevastopol under a lease agreement. Moscow and Kiev signed earlier in the year a deal extending the lease on the fleet's base in Sevastopol for 25 years after the current lease expires in 2017.

Vostok-2010 exercises in Siberia and the country's Far East started on June 29 and ended on July 8. They involved 20,000 troops, up to 2,500 pieces of military hardware, 70 warplanes and 30 warships.

During the exercises, warships of the three Russian fleets conducted live firing at naval and aerial drones and practiced combat interoperability and repelling simulated attacks by hostile submarines and aircraft.

Russia holds Vostok strategic command-and-staff drills every two years.

Thailand Army Wants More APCs From Ukraine

BANGKOK, Thailand -- The Thailand army is seeking approval to buy an additional 121 armoured personnel carriers from the Ukraine even though it has yet to receive any of the vehicles it ordered three years ago.
A military source said army chief Anupong Paojinda has decided to spend his forces' leftover funds for this year on 121 APCs from the Ukraine, which has yet to deliver the 96 vehicles ordered in 2007.

The army will seek cabinet approval for a 4.6 billion baht ($143 million) budget to purchase the APCs next week, said the source.

Defence permanent secretary Apichart Penkitti yesterday confirmed the army had already received the ministry's approval for the APCs and that the army had enough of its budget remaining to make the purchase.

Gen Apichart dismissed criticisms that the purchase would cause budgeting problems.

"We're not rushing the deal through. We're working within the budget," he said.

Gen Apichart said the army had supplied the Auditor-General Office with a detailed explanation of the background of the company providing the armoured vehicles.

Three years ago, the army ordered 96 model BTR-3E1 APCs, worth about 4 billion baht ($124 million), from the Ukrainian manufacturer.

However, it has not yet delivered those 96 vehicles to the army due to problems with the vehicles' engines.That purchase was also criticised.

The deal to purchase the APCs was done while Gen Sonthi Boonyaratkalin, head of the coup government's Council for National Security, was the Army chief.

The manufacturer had initially planned to use German engines in the assembly of the vehicles, however the maker of the engines refused to sell them to the Ukrainian company.

The Ukrainian APC manufacturer was forced to switch to US-made engines and therefore still has to complete the assembly of the 96 APCs ordered by the Thai army, said the source.

The source said Gen Anupong wanted to push through the purchase of the additional 121 APCs before he retires in September.

The Office of the Auditor-General had asked the Defence Ministry to reconsider the initial deal.

The Ukranian company that won the bid had allegedly not submitted its documents on time, the office argued, saying also that the APCs were not suitable for combat.

Ukrainian Government May Resell Ammonium Producer Odeskyi For $630 Million

KIEV, Ukraine -- Ukraine may resell VAT Odeskyi Pryportovyi Zavod, its second-biggest ammonia producer, for 5 billion hryvnia ($630 million), said Oleksandr Ryabchenko, the head of the State Property Fund.
Should the government fail to make a final decision on the sale of Odeskyi or state phone company VAT Ukrtelecom by Aug. 15, it will have to be postponed until next year and the state will probably miss its target for state budget revenue from state-asset sales, Ryabchenko said.

“For the time being, the government has not delivered any decision,” said Ryabchenko today at a press conference in Kiev.

The Cabinet aims to raise 6.35 billion hryvnia this year from selling state-run companies, he said, adding that Parliament approved the reduction from 10 billion hryvnia.

The fund tried to sell Odeskyi Pryportovyi, based in Yuzhnyi, Ukraine, at an auction in September last year.

TOV Nortima, a Ukrainian company, won the bid for 99.57 percent of Odeskyi Pryportovyi, offering 5 billion hryvnia, or $594 million at that time.

Two other companies participated in the bidding. Still, the Cabinet of then-Prime Minister Yulia Tymoshenko cancelled the result, saying it was the result of “a conspiracy.”

Ukraine’s state property fund plans to sell its 50 percent plus one share stake in VAT Dniproenergo, the country’s biggest electricity producer, or VAT Zakhidnenergo, another energy producer, in which the government controls 70 percent, in the fourth quarter of this year, said Ryabchenko.

Ryabchenko also said the fund has submitted a five-year program to the government. Under the program, Ukraine may receive between 50 billion hryvnia to 70 billion hryvnia in proceeds from state-asset sales through 2014, Ryabchenko said.

The government has to approve the program, which later should be approved by Parliament, he added.

Russian Patriarch Begins 9-Day Visit To Ukraine

MOSCOW, Russia -- Russian Orthodox Patriarch Kirill will make a nine-day pastoral trip to neighboring Ukraine on July 20 in line with a new tradition launched last year to make annual visits.
"Ukraine is very close to my heart for many reasons", Patriarch Kirill told Ukrainian media, adding that "quite positive" changes have occurred in Ukraine over recent months.

"It is these changes in the Ukrainian social life that I would like to see for myself", Patriarch Kirill said.

His first stop will be in Odessa in southern Ukraine.

Patriarch Kirill will then spend July 24 and 25 in Ukraine's third largest city, Dnepropetrovsk, and on the evening of July 25, he will travel to the capital Kiev where he will return to Moscow from.

The visit is no ordinary visit as the Patriarch is going to meet his congregation, Archpriest Vsevolod Chaplin, head of the Russian Orthodox Church's Synodal Department for Church and Society Relations, said before the Patriarch's visit.

Following the collapse of the Soviet Union in 1991, the Orthodox Church in Ukraine split.

The Moscow Patriarchate still controls most parishes but the Kiev Patriarchate has managed to attract a large number of followers.

Justice suffers in the heat

A trial in Vladivostok was abandoned on Tuesday, as the seriously ill defendant was brought into the courtroom unconscious and was subsequently unable to answer questions.

“My client is suffering from chronic cardiac disease and needs treatment,” lawyer Oleg Kuchin said, adding that doctors had recently examined the man.

“However, the paramedic at the pre-trial detention centre was of a different opinion and considered that my client was capable of taking part in a trial.” A court spokesman confirmed that “the accused was lying unconscious in the dock.”

Court employees told local media that the man may have exaggerated the seriousness of his condition to avoid legal proceedings.

Another capital for Another Russia

Following in the footsteps of Peter the Great, opposition politician Eduard Limonov is planning to shift Russia's capital away from Moscow.

But while the Tsar wanted to make St. Petersburg a window to the west, Limonov hopes his purpose-built Siberian city will open new routes to the Orient.

The plan was unveiled on Tuesday when Limonov published his new party manifesto in Rossiiskaya Gazeta.

The programme explains that “the necessary move of enormous historical meaning” will balance Russia’s geographical, economic, infrastructure and political tilt towards Europe.

They argue that the project will create millions work places, new infrastructure and will increase the population of Siberia and improve ties between the Russian Far East and its European metropolis. It will also stop China’s expansion, says the programme.

“There have been calls to move the capital to Siberia before,” Eduard Limonov said. “A Member of Parliament from Novosibirsk Region suggested moving it to Novosibirsk in the State Duma in the 90s; Luzhkov expressed an idea to move the capital in 2007. These suggestions are constantly raised,” he said.

Besides, he argues that building a city from scratch is not that difficult, as proved by Kazakhstan, who “built Astana from scratch and they are very happy, and they have a much smaller population.”

As for the location of the new capital, Limonov said that “the developers will find a suitable place for the city.”

Limonov’s reference to Kazakhstan’s positive experience is supported by those who witnessed the move.

Vladlen Lyssenker, an employee of Moskommertsbank in Moscow was living in Almaty when Kazakhstan moved its capital from Almaty to Astana.

“There it was done right, not least for the threat of earthquakes,” he told The Moscow News. “There had always been one developed city in Kazakhstan – Almaty, then suddenly there were two – Almaty and Astana.”

“I did not feel the difference, and it did not become worse,” he said. “Almaty went on developing. It remained the financial centre – all the financial authorities, the national bank, all the banks’ headquarters remained there. So did the cultural life. Almaty did not lose one bit.”

However, Lyssenker thinks that Russia is a different matter. “Moving the capital away from Moscow is an unreal fantasy in Russia. All the communication leads to Moscow. In Siberia in order to move from one region to another you have to go through Moscow,” he said.

Some opposition figures also see the idea as strange for various reasons.

Sergei Mitrokhin, the leader of Yabloko opposition party disagrees with the necessity of the move.

“We have more pressing issues at the moment that require money, like mass construction of housing and providing free land for the people,” he advized. “Moving the capital to Siberia is originally a more costly enterprise. It will be more expensive for transport, communication, for the people to travel to the capital,” he said.

Mitrokhin also doubts the choice of the location. “Despite the fact that the Russian East is much bigger than the Russian West, it is also much more scarcely populated,” he said.

However, Mitrokhin does not think that such whimsical comments can discredit the opposition. “There is different opposition. It discredits the opposition that makes such suggestions,” he said.

In the recent history there have been repeated calls to move the capital. Different cities were named, like St Petersburg, Novosibirsk, and Sochi. The latter was suggested by Russian oligarch Alexander Lebedev.

“Moscow will be the economic capital, Piter – the cultural capital, and Sochi – the administrative [capital],” he told Profil magazine in April, 2009.

“People from Piter’s KGB will get tanned, breathe sea and mountain air, will stop being so sombre and aggressive, will become fit, and maybe even release Khodorkovsky and Lebedev,” the oligarch said then.

While Petersburg is the most famous ex-Russian capital it is not alone. For a brief period the northern town of Vologda became the so-called “diplomatic capital” in 1918 amid the uncertainties of civil war and revolution.

The Middle Ages saw several cities vying for the honour of being Russia’s capital, including Vladimir, Suzdal, Pskov and Veliki Novgorod.

Russia revving up to host first-ever Grand Prix

MOSCOW: Russia could host its first ever Forumla 1 Grand Prix in 2012 – but there’s confusion over where it will happen.

At Sunday’s Moscow City Racing show, the pre-race interest focused on the prospect of bringing Monte Carlo-style street racing to the Russian capital in an official capacity, building on the massive success of three years of staged shows around the Kremlin walls.

City Hall’s Vladimir Makarov said there were advanced plans for a 4,420 metre route through the city centre, allowing for speeds of up to 320 kph, with German design guru Hermann Tilke creating what would be the fastest urban circuit together.

And Derk Sauer, the director of Moscow City Racing, believes that the dream of a Russian Grand Prix is close to seeing the chequered flag.

“We’re getting closer,” he told journalists before Sunday’s event. “This country deserves F1, and F1 deserves Russia.

“It’s not done yet, but we’re getting closer every year.”

This plan would seem to push Tilke’s proposed Podmoskovye track into the pit lane for good. Although impressive designs were drawn up for the site at Volokolamsk in 2008, little concrete progress has been made and a glamourous circuit through the centre of Moscow would be a far bigger draw for F1.

Even the notoriously poor state of Russia’s roads won’t be an obstacle, according to current World Champion Jenson Button.

Speaking at the Moscow City Racing event, he said the roads he’d seen in Moscow had been “pretty smooth” – albeit from the back of a chauffeur-driven Mercedes S-Class.

“Driving an F1 car around streets is a different experience,” he added. “Circuits designed for racing are very smooth and the cars sit very low on them. Here we have to raise the cars, like we do in Monaco, Singapore and Valencia, but you always feel a few little bumps.

“The excitement of racing in the streets is completely different from racing at a prepared circuit.”

But there could be competition from Sochi, with F1 chief Bernie Ecclestone reportedly telling the Independent newspaper in Britain that the Black Sea resort is the more likely venue for Russia’s racing debut.

True to his traditions, the shortest Mr Big in world sport rallied against the diminutive payments received from certain long-established venues – notably Monaco, long regarded as Grand Prix’s glamour card – and suggested the rights to hold one of the 20 races each year would be sold off to the highest bidder.

With a massive influx of funding into Sochi ahead of the 2014 Winter Olympics, that could make them a serious rival to the capital.

While it now seems likely that Russia will be on the starting grid in a couple of years, the fate of Russia’s only racer, Vitaly Petrov, is less clear.

In his debut season at Renault the “Vyborg Rocket” has failed to take off, managing a meagre six points in his first 10 races.

The noises coming from Renault boss Eric Bouiller suggest that although Petrov is “the best prospect in the paddock” he still has some way to go.

“It’s literally in his own hands,” Bouiller said, according to pitpass.com. “He’s clearly lacking the consistency to get the points he deserves.”

Petrov himself was in Moscow to take part in the City Racing event and said: “I’m a newbie this year and we have to understand that [team mate] Robert Kubica has been in Formula 1 for five years.

“It’s hard for me to make a real challenge to Jensen and other racers who’ve been here for years. I’ve had a lot to learn.

“There have been some positives and some negatives but I’m looking forward and expecting some innovations in the car.

“As for next year, that’s all in hand and the talks will be held later.”