Briggs Taunts Klitschko Ahead Of Oct. 16 Bout

KIEV, Ukraine -- Former heavyweight champion Shannon Briggs said Monday he would make current WBC titleholder Vitali Klitschko his "30-second, first-round victim" when they meet later this fall.
"That's how a lot of my fights end," Briggs said Monday in Kiev.

Klitschko shrugged off the threat, suggesting that the fight on Oct. 16 in Hamburg, Germany, will be a test of his own mental strength.

"The only man who can defeat Vitali Klitschko is Vitali Klitschko," he said. But the 39-year-old Ukrainian also admitted, "It will be an amazing, exciting fight, full of drama."

Briggs is the fourth choice for Klitschko, after Russians Nikolai Valuev and Alexander Povetkin — and loudmouthed British heavyweight David Haye — refused the bout.

Haye had been calling out Klitschko and his brother Wladimir for months, but ultimately refused to take the fight when if was offered. Povetkin was the mandatory challenger but backed out at the last minute when his team decided he wasn't ready for Klitschko.

Klitschko (40-2) recognized Briggs (51-5-1) as "one of the most serious pretenders to the title." Briggs won the WBO title with a 12th-round knockout of Sergei Liakhovich in November 2006, but lost the title in his first defense against Sultan Ibragimov eight months later.

Briggs promoter Gregory Cohen said for the 38-year-old asthmatic from New York this is "essentially his last opportunity, and I am certain he is going to make the most of it."

Briggs considered retirement in the wake of the Ibragimov defeat, saying he entered a "diet of cookies, doughnuts and fried chicken" that ballooned him to 335 pounds. It was Klitschko, he said, who inspired his return after the two met in a Los Angeles restaurant.

"I was fat and he touched my stomach. And in that moment right there I decided to come back," Briggs said. "He should have left me alone."

Germany, Ukraine Want To Modernise Gas Pipelines

BERLIN, Germany -- Germany and Ukraine want to work together to modernise gas pipelines in the former Soviet satellite state, the two countries' leaders said on Monday.At a joint news conference with Ukrainian President Viktor Yanukovich, German Chancellor Angela Merkel said the two countries would launch a business forum this autumn as a platform for the expansion of energy ties and German investment.

"In particular, the possibility should be discussed of how and to what extent Germany can play a constructive role in the restructuring of the Ukrainian gas market," Merkel said.

Ukraine runs the main transit route for Russian gas headed to Europe, and Kiev and Moscow have a history of gas pricing disputes that have disrupted European supplies.

However, those disputes took place amid badly strained relations between the Kremlin and Ukraine's pro-Western former President Viktor Yushchenko.

Yanukovich, who has tilted foreign policy sharply back towards Russia since taking office, said he had proposed certain plans to Merkel, but did not mention specifics.

"Ukraine wants to be, and will be, a dependable partner for both Russia, a gas supplier, and Europe, an end user," he said.

It was in Europe's interest to help modernise the pipelines in order to gain influence over their use, he added.

Yanukovich says that taking Ukraine into the European mainstream is the focus of his foreign policy.

Ukrainian President Pledges To Tackle ‘Ransacking’ Corruption

BERLIN, Germany -- Ukrainian President Viktor Yanukovych said the former Soviet republic needs to tackle corruption that’s “ransacking” the state’s budget in order to lure investors and forge ties with the European Union.
The Ukrainian parliament will begin passing laws reforming the court system next month as a way to rebuild trust among international investors, Yanukovych said in a speech today in Berlin.

“Today we confront the terrible cases of corruption and the ransacking of the budget,” Yanukovych said. “The country cannot go on like this.”

During a meeting with German Chancellor Angela Merkel, Yanukovych said Ukraine would be a “trustworthy partner” for the west, citing disputes with Russia over natural gas that have disrupted deliveries to Europe twice since early in 2006.

Merkel took aim at Ukraine’s press freedoms, saying that “we still have questions” on the issue.

Yanukovych’s seven-month-old government has bolstered relations with Russia and scrapped policies of his Western- oriented predecessor, Viktor Yushchenko. Russian President Dmitry Medvedev in April cut Ukraine’s gas price by about 30 percent, while the Ukrainian government agreed to extend Russia’s lease on a naval port in the Black Sea.

Merkel said she supported an association treaty between the EU and Ukraine, which ships about 80 percent of Russia’s gas exports to Europe.

“We are obligated to find a solution that can really exclude any future instability as far as gas delivery is concerned,” Yanukovych said after meeting with Merkel.

The Rebalancing Of Ukraine's Political System

KIEV, Ukraine -- In a speech given to mark Ukraine's 19th year of independence on Aug 24, President Viktor Yanukovych declared that he has a "formula" for strengthening Ukraine that includes "a strong president who has real powers to coordinate and control the implementation of key reform issues and the country's strategic course."
The main ingredient in the president's "formula" is a return of Ukraine's government to the presidential-parliamentary system of the Kuchma era. In order to accomplish this, Yanukovych is pushing for a repeal of law No. 2222-IV.

Enacted in 2004, law No. 2222-IV shifted significant power from the president to the prime minister and parliament (Verkhovna Rada). Yanukovych attempted to repeal the law in early July 2010 by initiating a referendum, but the motion was shot down in parliament by the opposition and the Communist Party and Lytvyn Bloc - both members of the Stability and Reform Coalition spearheaded by the Party of Regions (PoR).

The president's ambitions did not fade, however, and on July 14 parliament approved a motion by a vote of 252 (out of 450) requesting the Constitutional Court consider the constitutionality of law No. 2222-IV. The court's decision is expected in October.

Rebalancing power could lead to political tension. In our view, the court is increasingly likely to determine the law unconstitutional. Though this decision would result in a clearer separation of the powers of Ukraine's central governmental bodies, tensions between groups within the PoR could appear in the ensuing reshuffle.
If law No. 2222-IV is repealed, the following changes would take place:

-- The president would have the right to nominate the PM (confirmed by parliament), the Cabinet of Ministers and the heads of the Security Service of Ukraine (SBU), the Antimonopoly Committee, the State Property Fund and the State Committee on TV.

-- The president would be able to dismiss the PM and prosecutor general without approval from parliament.

-- All bills would require the president's signature. (Currently, bills with a 2/3 majority approval by parliament become law after 10 days with or without the president's approval).

-- The President would be able to annul decisions made by the cabinet.

-- The Prosecutors Office would no longer serve as the supervisory authority over state and local authorities and government offices and officers, thus weakening the Prosecutor Office's influence.

-- Parliamentarians would be elected for four-year terms rather than the current five-year terms.

Repeal of law No. 2222-IV looks increasingly likely. Recent developments point to the Constitutional Court ruling law No. 2222-IV unconstitutional. On July 12, Anatoly Golovin was elected head of the Constitutional Court - Golovin was President Yanukovych's clear favourite for the position.

Sergiy Vdovichenko has been appointed Judge-Rapporteur for the court's decision on the law. Both Golovin and Vdovychenko are natives of the Donbass region - the PoR's home turf - and Golovin has been present at meetings on judicial reform held by the presidential administration.

In addition, among the most eager lobbyists for the repeal has been the group within the PoR led by the president's Chief-of-Staff Sergiy Levochkin and Dmitry Firtash.

The Levochkin-Firtash group maintains the closest ties with the Yanukovych group and together wield significant influence over Ukraine's judiciary, the Constitutional Court included. Both groups will be able to bolster their political stature once the authority of parliament and the Prosecutors Office has been weakened Tension in the ranks.

Not all groups within the PoR are excited about repealing law No. 2222-IV. The group led by steel magnate Rinat Akhmetov would like to see an alternative, and initiated a revision of the law "On the foundations of foreign and domestic policy" along this line.

The proposal would have increased the president's power by providing him control of the National Security Council; however, this mechanism did not find the necessary support.
When the smoke clears, the group led by Prime Minister Azarov may be on the outside looking in. The buzz among political insiders in Kyiv is that Azarov will be used as a scapegoat for the government's recently implemented unpopular reforms and demoted to head of the National Bank.

President Yanukovych would then use his new found power to hand select the replacement PM. Top contenders for the position include First Vice Prime Minister Andriy Kliuyev (Kliuyev group), Vice Prime Minister Borys Kolesnikov (Akhmetov group), Sergiy Levochkin and Minister of Fuel and Energy Yuriy Boiko (both of the Levochkin-Firtash group).

As President Yanukovych forges ahead in his plan to transform Ukraine's government back into the presidential-parliamentary system of the Kuchma era, tensions may rise among groups within the PoR, which would weaken the country's relatively stable political environment.

On the other hand, if groups are able to settle their differences, the PoR would lead Ukraine toward further stability as the current parliamentary- presidential system has a tumultuous track record - the imbalance that this system creates led to the demise of the Orange Revolution.

We are optimistic that all sides within the PoR will come to terms sooner than later. We base our judgment on the fact that the motion to send law No. 2222-IV to the Constitutional Court was strongly supported by the PoR in parliament. In addition, the party's recent dip in the polls will foster cohesion ahead of local elections scheduled for October 31, 2010.

Earlier than expected parliamentary elections are a possibility. The repeal of law No. 2222-IV could result in parliamentary elections being held a year earlier than anticipated. The current parliament was elected in 2007 to a five-year term as dictated by the rules established under the 2004 reform.

Therefore, if the law is repealed, a fifth year for parliamentarians could be deemed illegitimate, thus resulting in elections in 2011.

The uncertainty surrounding election campaigns in Ukraine has never been good for investor confidence, a trend unlikely to change in the near future. However, considering the PoR's recent dip in the polls and that more unpopular reforms are on the way in the next six months, the party would have little to gain by holding elections in 2011 and will look to defer elections until 2012, in our view.

Kharkiv Airport Gets New Terminal

KHARKIV, Ukraine -- Ukraine's president Victor Yanukovych was the guest of honour as a vital new airport terminal was officially opened in Kharkiv, in preparation for hosting games at UEFA EURO 2012.
Ukraine's president Victor Yanukovych was among the honoured guests at the opening ceremony for Kharkiv airport's new terminal, a major milestone in the city's preparations for UEFA EURO 2012.

Deputy prime minister Borys Kolesnikov, UEFA EURO 2012 director Martin Kallen and Ukrainian tournament director Markiian Lubkivskyi joined Yanukovych along with a host of local dignitaries and aviation industry representatives at the ribbon-cutting event.

Acknowledging the role of FC Metalist Kharkiv owner Olexandr Yaroslavskiy in financing the building work, Yanukovych said: "The opening of a new terminal in Kharkiv opens a new air route into eastern Ukraine. It is a great example of government and private industry working together."

Guests were invited to take a tour of the new terminal on Saturday, while in the evening the citizens of Kharkiv helped celebrate this latest achievement with an open-air pop concert in the city.

The new terminal is set to be complemented by a temporary terminal, due to open in April 2012, to deal with the exceptional surge in traffic caused by football fans coming for the finals, to be staged in Poland and Ukraine from 8 June to 1 July 2012.

Yanukovych views the opening of the new terminal as another positive step in Ukraine's bid to host the finals, saying: "We have practically caught up with our UEFA EURO 2012 preparation schedule but we still have a lot of work to do."

Ukraine: A Cold Winter After The Hot Summer?

BRUSSELS, Belgium -- Ukraine could face an unexpectedly cold winter if Moscow decides to turn off the gas tap once again. Viktor Yanukovych’s presidential victory has improved relations with Russia, but Moscow may not be entirely satisfied with the current state of affairs.
The Black See Fleet deal is significant, but Russia is eyeing Ukrainian state-owned gas company Naftogaz and wishes to manoeuvre Kiev into its Soviet-area customs union, as part of ensuring loyal allies in its neighbourhood.

Some in the new Ukrainian government believed Russian Prime Minister Putin’s words about a merger between Naftogaz and Gazprom to be a joke. Clearly, they were not prepared for such an initiative only a few days after the Black Sea Fleet deal.

However, such moves are nothing new from Russia. Ukraine has failed to change the conditions of its gas contract, and Russia may present Ukraine with a bill for unpaid gas supplies, demanding equity in Ukrainian assets as payment.

But why would Moscow rush? Russia is already busy challenging President Lukashenka in the run up to the upcoming presidential elections in Belarus, which are expected to be held in December 2010.

In Moscow’s eyes, Lukashenka has not been a loyal ally, delaying the customs union between Russia, Kazakhstan and Belarus, a pet political project of Moscow.

Also, Russia has its own internal problems to worry about, such as the wildfires and related governance issues. In addition, it is entering its own presidential elections campaign period, where Prime Minister Putin and the ‘liberal’ President Medvedev will evidently clash.

This may be mere theatre, but the Kremlin needs external targets to which it can export its internal travails and remind its neighbours of Russian power. Allies need to be bound through asset and institutional takeover; a lesson learned in Belarus.

In Ukraine, the near bankruptcy of Naftogaz makes any potential Russian claim ever more dangerous. According to the ruling of the Arbitration Court of the Stockholm Chamber of Commerce on 8 June, in January 2009 Kiev’s government had illegally seized 11 billion cubic metres of gas that belonged to the trader RosUkrEnergo that is 50 percent owned by Gazprom.

It now has to return these, plus 1.1 billion cubic metres in compensation and $192 million in penalties. Compensation in cash would be lethal for Naftogaz, and returning the gas would leave Ukraine with no reserves left in storage before the winter.

On the other hand, eliminating this from the books would help consolidate the company. To address the situation, the Ukrainian government has increased domestic gas prices by 50 percent, while there are rumours of a further 50 percent increase by the end of the year.

As the US increased its own shale gas exploration, there is more cheap liquefied natural gas available for Europe. According to the Ukrainian state, there are at least 2 trillion cubic meters of shale gas and 8 trillion of methane gas in cola beds.

US Total is to assess the size of slate gas deposits in Western Ukraine. But Ukraine must go further and develop a policy based on the country’s real energy interests. As the next step, it must re-gain the trust of the EU, which it lost in the 2008 gas war.

Russia is not only lagging behind Western technology, but it is also losing its energy weapon. This makes Moscow seek speedy action. Ukraine is one of the least effective energy producers, but also one of the largest gas consumers of the world. It cannot be seen merely as a transit country for Gazprom, but an important market in its own right.

Russian interests need to be protected there, either through loyal allies or the tough diplomacy of gas cuts. The European Union should revise its current policy of inaction before the winter becomes cold – in every sense.

Ukraine must realise first that the ball is in its court.

Big business denies protester abuse

While activists for the protection of the Khimki forest tried to draw attention to their cause by meeting U2 frontman Bono, protesters around the world have been targeting the regional offices of Vinci construction group, the company that is partly financing the construction of the highway project supposed to go through the forest.

On August 25, socialist activists picketed Vinci’s regional office in North London. The police were called, but according to Melanie Matthews, head of corporate communications at Vinci Construction UK, no one was arrested. “[Calling the police] is standard procedure,” Matthews said. “But it was very peaceful. Very polite.”

Matthews told The Moscow News that the Vinci head office in Paris issued a statement to the UK office, which says that it is the Russian authorities that are legally in charge of the construction project, not Vinci. Matthews said that Vinci Construction UK was not at liberty to comment on the situation as they are “not involved in the project.”
Vinci’s main office in Paris did not respond to inquiries regarding the protest.

According to Polit.ru, Georgiy Koryashkin, a member of the board of directors of Severo-Zapadnaya Concessional Company, works for Arkady Rotenberg, businessman and Vladimir Putin’s former judo teammate. Severo-Zapadnaya was created by Vinci in 2007 and is in possession of a contract to build a section of the road through Khimki forest. Rotenberg’s representative has stated that Rotenberg has “nothing to do” with construction in Khimki.

Dmitry Peskov, Vladimir Putin’s press secretary, has stated that the Prime Minister is “constantly” being updated on the situation in Khimki, but that “everything there is being implemented in strict accordance with the law.”

Among the London protesters’ demands was that “Vinci must break all commercial and other links with OOO Teplotekhnik Company.” Teplotekhnik, a Moscow-based construction company, is responsible for the clearing of the forest in preparation for road construction. The company’s leadership has been accused by environmental activists of employing far-right groups to quash the protest movement against the destruction of the forest.

Teplotekhnik’s press secretary said that the company has no ties to Vinci. “We are the subcontractor for federal state unitary enterprise Dorogi Rossii,” she said.

Teplotekhnik’s corporate website currently features two articles from Moskovskiy Komsomolets, both of them arguing that the Khimki forest protests are politically motivated. “The main defenders of [the Khimki forest] are not ecologists and certainly not residents of Khimki,” says a featured article from August 23.

“We do not respond to provocations,” Teplotekhnik’s press secretary stated when questioned about the company’s possible ties to harassment of the Khimki forest protesters. “And we do not think this is constructive. We have a contract, we’re preparing the territory for construction, and that’s our job.”

On August 7, several Khimki forests activists were attacked by a group of people near the Chistiye Prudi metro station following a picket in defence of the forest.

Although the identities of the attackers have not been established, witnesses claimed that they ran from the scene shouting “Rossiya vpered!” [“Russia, forward!”], an ultranationalist slogan.

The United Russia party, meanwhile, has appealed to President Dmitry Medvedev to halt the construction project in the Khimki forest. No official reason for this request has so far been given.

According to RIA Novosti, the Prefect of the North District of Moscow, Oleg Mitvol, has proposed that the construction be re-routed through the Molzhaninsky neighbourhood in the north of the city. Mitvol told RIA that Moscow Mayor Yury Luzhkov is supportive of the idea.

Siberia’s dead are on the move

The dead may not be walking the earth yet, but beneath the surface they have been travelling up to 10 metres from their final resting place.

However, those fearing it's another apocalyptic sign in a summer of fire and drought should rest assured – there’s nothing unnatural, far less supernatural about these roaming bones.

Instead it’s simply a case of loose soil and water causing turbulence beneath the surface.

That’s little comfort to many whose loved ones are buried in cemeteries in the Siberian capital Novosibirsk, however.

Recently the city has seen a surge of requests for exhumations, with locals wanting to cremate corpses following the opening of the city’s first crematorium.

But once the digging started, workmen regularly found that the graves on the ground did not match the people buried below.

“During the exhumation, relatives identify the body only from the clothes or personal items,” undertaker Rodion Yakushin told the city’s funeral museum. “When it is impossible to identify the body...the relatives receive the remains found directly under the grave, but some of them may belong to another person.”

Typically Russians have buried their dead, and the Orthodox church has frowned upon cremation as a means of disposing of corpses.

But as the population grows there is an increasing need to free up space in overflowing cemeteries, meaning city’s like Novosibirsk (population 1.5 million) have started opening crematoriums.

Moscow Auto-show revs up

The glamour and glitz of the Moscow International Auto Show has brought the latest Porsche and Bentley models to town.

But while many of the marques are out of reach of most motorists, organisers say the man in the mid-range hasn’t been overlooked.

It’s the big names which grab the attention though, with the latest Porsche 911 getting petrolheads panting with excitement. The Porsche 911 GT2 RS is the fastest in the history of 911s, reaching 100 kph in just 3.5 seconds with a 3.6 liter engine packing 620 horsepower. The car, on sale from September, will make the lucky owner’s pocket 11.5 million roubles ($375,000) lighter. The manufacturer plans to sell 500 of the new 911, and claims that half the cars have already been pre-ordered.

Another luxury arrival is the Bentley Mulsanne, even though it has already been shown in the US auto-show early in 2010. However, it is a Russian debut of a car that is bound to catch the eye of numerous Moscow millionaires. Mulsanne, which is literally handmade in 400 hours (170 of them are spent on the interior) costs upwards of €400,000.

The first world premier of the show was the renewed Ford Mondeo, followed closely by Ford Focus III, which will be assembled in Vsevolzhsk starting from next year, Gzt.ru reported. Ford is a popular car brand in Russia, so the premier attracted a lot of journalists, despite the early start.

Russian ailing auto-giant AvtoVAZ offers a first glimpse of its Renault-inspired R90. The seven-seater is already being produced in a Romanian Dacia factory under the name Dacia MVP. It’s Russian roll-out was expected last year, but the still nameless local edition is not now expected until spring 2012.

Another Russian car on the show is the shortened version of UAZ’s 4x4 Patriot. The car is 360mm shorter than the previous version, and is aimed at young and active consumers, according to the manufacturer. Prices for the new UAZ start at 420,000 roubles ($13,700), but the owner would get the most basic model. A Patriot with air-con, electric window lift, fog headlights and other options will cost 505,000 roubles ($16,500).

At the same time Vladimir Putin was one of the first to try the new Lada Kalina and the new road in Russian Far East. The Russian PM called the new sport version of Kalina and said: “Unexpectedly, it turned out to be a very comfortable and reliable car,” RIA Novosti reported.

The auto-show is opened to the public on Friday, Aug. 27 at Crocus Expo.

LDS Church Members Celebrate Kiev, Ukraine Temple Dedication

KIEV, Ukraine -- President Thomas S. Monson of The Church of Jesus Christ of Latter-day Saints is in Ukraine this weekend to dedicate a new temple in the country.
Thousands of Church members gathered for a cultural celebration Saturday. They sang and danced in traditional costumes to express their joy over the new Kiev temple.

Young people from nine countries in the temple district, which includes Eastern Russia, Moldova and others in the former Soviet Bloc, traveled thousands of miles to attend. Church leaders say the temple is a miracle.

"To see the people, feel the people, feel their love, their testimony -- it's just a miracle," said President Dieter F. Uchtdorf, Second Counselor in the Church's First Presidency. "It's just wonderful to be here. How much we're grateful for President Monson, for the love he expended tonight to these people."

Sunday, President Monson will lead three dedicatory services in the capitol city's newest landmark.

This is the first LDS temple built in Eastern Europe. It is the Church's 134th operating temple worldwide and the 11th in Europe. The temple was announced in 1998 and ground was broken for its construction in 2007.

The temple will serve close to 31,000 members of the faith beginning Aug. 30.

Russia-Ukraine Trade Up 70% In 6 Months - Yanukovych

KIEV, Ukraine -- Ukrainian-Russian trade turnover increased 70% over the past six months, Ukrainian President Viktor Yanukovych said on Saturday.
"I am pleased with this. I believe that we should follow an open policy in respect to our neighbors and be stable and reliable partners," he said in an interview with Deutsche Welle.

He accused the previous government of scaling down economic ties with Russia, causing Ukraine's GDP to fall 15%.

"Ukraine began to acquire the image as an unpredictable country," he said.

He said its current policy course was aimed at "democratizing society and upholding the country's national interests."

Gazprom Says Merger May Cut Gas Price For Ukraine

MOSCOW, Russia -- A merger deal between Russia's gas giant Gazprom (GAZP.MM: Quote) and Ukraine's state energy company Naftogaz may lead to lower gas prices for Ukrainians, equal to Russia's domestic price tag, Gazprom's head said on Friday.
Ukraine has frequently asked Russia, its main fuel supplier, to lower gas prices due to the dire state of its economy. In 2009 a pricing row between the two governments led to cuts in gas supplies to Europe.

"The gas could be delivered (in the case of merger) to the population of Ukraine, as we believe, at a price, at which gas is delivered to the Russian householders," Gazprom Chief Executive Alexei Miller told state-owned Rossia 24 TV.

Russia has regulated local gas tariffs, set at 1,880 roubles ($61.22) for 1,000 cubic metres. In the second quarter, Gazprom sold gas to Ukraine at around $233 per 1,000 cubic metres.

On Wednesday, Ukraine's prime minister said the base price for Russian natural gas is still disadvantageous for Ukraine despite a new deal reached in April.last month, Ukraine's government, bowing to pressure from the International Monetary Fund, took the painful step of announcing a 50 percent rise in the price of domestic gas from August.

A merger between Gazprom and Naftogaz was first proposed by Russia's Prime Minister Vladimir Putin in April.

Gazprom has said the firms may create a joint venture before a full-blown merger.

The deal could give Moscow control over Kiev's gas transit network, which ships a fifth of Europe's gas consumption from Siberian fields, and has been a headache for the Kremlin in past years when Kiev suspended supplies during pricing disputes.

Hopes Fade That New Ukrainian Tax Code Will Be Progressive

KIEV, Ukraine -- Experts say the document is unlikely to fulfill the key promise of relieving the tax burden on Ukrainian businesses, keeping many of them in the shadows.
With the government preparing to discuss the final version of the controversial draft tax code at a special meeting on Sept. 1, experts say the document is unlikely to fulfill the key promise of relieving the tax burden on Ukrainian businesses, keeping many of them in the shadows.

According to the latest publicly available version of the draft code, the taxation system will largely be preserved in its current form. Most disappointing for business is the likely retention of cripplingly high payroll taxes, which many businesses blame for forcing them to pay employees under the table in order to survive.

Recently published research by the World Bank placed Ukraine as the world’s sixth biggest shadow economy with an average of 54.9 percent of the economy from 1999 to 2007.

Currently, employees are to pay a reasonable 15 percent income tax. But many employers discourage employees from declaring their entire salaries, or protect themselves by paying lower salaries, to avoid paying the high payroll tax. This tax is paid by employers as a percentage of the salary they give to employees, and typically exceeds 30 percent.

According to Valentyna Izovit, the head of Light Industry Association of Ukraine, for every Hr 1 industry earns it pays Hr 0.65-0.80 of tax, forcing many into the shadows. Many prefer to pay employees tiny official salaries or none at all, and hand over the majority of the salary in an envelope.

Kyiv resident Oksana, who did not want to give her last name out of fear of losing her job, works off the books at a land surveying firm. Officially she is paid Hr 900 per month, but the firm is paying her an additional Hr 2,000 in “grey salary” as it’s known.

“I started unofficially and was getting paid completely off the books, so it is better now. But every month I am afraid of not getting that unofficial part and wondering how I would cope,” Oksana said.

Those who work completely off the books can be let go at any time with no unemployment benefits. Furthermore, they don’t get record of length of service – one of crucial criteria for a pension – and have no insurance in case of accidents at work.

Many employers ask their employees to register as private entrepreneurs so that they pay a single flat tax – currently from Hr 20 to Hr 200 per month. The government is now trying to limit those who fall under the single tax, such as Internet providers, accountants, engineers and others. For many professions, the single tax looks set to rise to Hr 600 under the new tax code.

“This will surely force even more people into the shadows,” says Oleksandr Zholud, an economist at the International Centre for Policy Studies, a Kyiv-based think tank.

However, many do not mind working unofficially.

“Many employees do not have confidence in the Ukrainian pension and social security systems and prefer to receive more undeclared cash to finance their personal needs and take care of their retirement needs themselves,” said Oleh Chaika, director of tax and legal services at leading consulting firm KPMG Ukraine.

Kostyantyn Solyar, an associate at Asters law firm, said most Ukrainians do not understand why they should pay taxes and are very reluctant to do so. “This is understandable, as many Ukrainian bureaucrats are inclined to steal money from the state budget rather than invest them for the prosperity of society,” he said.

According to a survey conducted in 2009 by the Kyiv-based Razumkov Center think tank, 38 per cent of Ukrainians are certain their taxes are being stolen by officials and only 4 per cent actually see their taxes returned to them and their families through public services provided by the state.

“The biggest challenge is changing the overall mindset towards paying taxes in Ukraine,” said Jorge Zukoski, President of the American Chamber of Commerce in Ukraine.

“Both business and the population need to be convinced that if they invest into the state, the state will take care of them, their families and their neighbors in the future.”

Some countries have succeeded in bringing employers and employees out of the shadows by lowering the tax burden on them.

In Georgia, payroll taxes were eliminated and instead personal income tax was raised from 12 percent to 20 percent. This increased tax flow and contributed to Georgia moving up to 11th place in the World Bank’s Doing Business rating for 2010. Ukraine, meanwhile, is languishing in 142nd place.

Such a plan is not on the table for Ukraine. “It is a debatable issue, but forcing the economy out of the shadows has nothing to do with lower taxes ... [Lowering taxes] has an effect in short term only, say, in two years,” said Iryna Akimova, deputy head of the presidential administration.

Back in 2008 a single, flat payroll tax of 20 percent was considered by lawmakers. However, the idea came to a dead end.

“There is an ongoing discussion about a single social tax. ... But we simply cannot afford to lower taxes in the near future,” Akimova said.

Finance Minister Fedir Yefymenko said a decrease in payroll tax is only possible after pension reform.

However, some say these are weak excuses.

“We shouldn’t wait until private pension funds are introduced,” says Zholud.

“For starters, we could put everyone in equal position when it comes to pension. For example, governmental officials do not pay into the pension fund at all, while many of them receive a pension of thousands of hryvnias.”

Meanwhile, officials and experts admit that there are other ways to fill the budget while easing the pressure on business and average Ukrainians and restoring people’s trust in tax system.

According to Akimova, the state would save around $20 billion (Hr 160 billion) by eliminating corruption.

A property tax and luxury tax – neither of which is included in the code, despite demands from the presidential administration – would mainly hit those who can afford to pay, and could bring in Hr 5 billion and Hr 85 million respectively, according to government estimates.

A deal with Cyprus, which created an offshore tax haven for Ukrainian business, costs the country around 1-2 percent of gross domestic product every year, experts say.

But until these are introduced, the state will continue to squeeze small businesses.

“Most businesses and people want to work officially,” said Dmytro Oliynyk, head of the Employers Federation of Ukraine. “They just need to be encouraged and given clear simple rules.”

In The Nerve Center Of The Cold War

PERVOMAISK, Ukraine -- We are 100 feet underground. The dark eyes of Edward Idrisovych Sabirov skip around the tiny room. He knows every inch of it. For five years, he waited here for an order that never came: Blow up chunks of the U.S.
Today, Mr. Sabirov guides tourists through his old haunt, now the Museum of the Strategic Rocket Troops.

At the climax, he takes visitors by twos or threes into a cramped, gray elevator to descend to the underground command post. The center controlled 10 nuclear-tipped missiles buried in the rich black earth of the Ukrainian steppe.

This journey into the bowels of the Cold War reveals deadly doomsday mechanics. But Mr. Sabirov, who speaks both Russian and Ukrainian, is just as riveting. As he crisply explains his job, this intense man who grew up on the Volga River, east of Moscow, wins my respect.

He has me sit at his old console to go through the final steps required to wipe out several million Americans: Open a little door on the instrument panel. Press the gray button inside.

Nearby, a launch officer at another console presses a similar gray button. Then each launch officer opens another door on his console, revealing a small metal fitting into which each inserts a key. At the same moment, each twists his key while holding down a button.

Ignition

After a moment of silence, I ask Mr. Sabirov what he thought about when he imagined turning the key.

"Truman," he says, in a flash. "I thought a lot about Truman. You know, he was the one who changed the rules of the game."

The unassuming little museum is about 3½ hours south of Kiev by car. Hawks wheel across the undulating horizon and skylarks sing above lime-green wheat fields.

Missiles and rocket engines surround the low museum building. Its five above-ground rooms display models and mock-ups of how the place operated during the Cold War. Photographs of the destruction wrought by President Truman's decision to bomb Hiroshima and Nagasaki line the walls of the back room.

The tour is in Ukrainian and may seem a bit long-winded, even with a translator. But it is worth the wait for the underground portion of the tour.

The trip to the base's nerve center begins with a walk through 100 yards of drab underground tunnels lined with cables. After a few minutes, we reach the elevator that hugs the side of a 12-story steel silo.

The same size as the missile silos, it was designed to quarter launch crews. The elevator has room for only three or four people at a time. "Please don't touch anything," he says to the rest of us before dropping out of sight with the first party.

When our turn comes, the descent provides plenty of time to wonder what would happen if the elevator malfunctioned. At the bottom, the door swings open on turquoise-paneled living quarters for the men waiting to go on duty. The space is less than 11 feet in diameter.

Three people could sleep and eat here, though typically there were crews of two. The space has the engineered feel of a railroad-car sleeping compartment and holds a small stove, a tiny refrigerator, three fold-down bunks, a drop-down table with seats, a shower, a sink, a toilet. In one corner is a ventilator. Smoking was allowed but drinking was strictly forbidden.

"If you were caught with alcohol, you were sent to a place people never come back from," Mr. Sabirov explains.

On one wall, a steel ladder goes up through a hatch to the cramped command center, where the launch crew sat during its six-hour shifts. The room, beige with a red linoleum floor, bristles with buttons and dials.

We sit at the command consoles as he guides us through the launch sequence. I man the senior station, now marked with No. 1 and a yellow and blue Ukrainian emblem.

Firing required four hands operating at once. The consoles were distant enough to make it physically impossible for one man to fire the missiles. Given that Soviet officers sat in this claustrophobic room for six-hour shifts, year after year, it seems like a very sane arrangement.

As Mr. Sabirov explains the procedures in crisp professional terms, I consider him sitting here in the 1980s, prepared to launch a missile while I was raising two daughters in Miami. I can't remember worrying much about the nuclear threat then, but sitting next to the launch key, I wonder whether I should have worried more.

Until 1991, Ukraine was an integral part of the Soviet Union, and the U.S. Defense Department considered the missile arsenal at Pervomaisk one of the crown jewels of the U.S.S.R.'s ballistic system.

When the Soviet Union collapsed, independent Ukraine inherited an arsenal of 1,900 strategic nuclear weapons. The Russians didn't relinquish the launch codes, but if Ukraine had taken over the missiles and warheads, as it might have, it would have become the world's third-largest nuclear power.

After a lot of back and forth, Ukrainians agreed to give up their nuclear sword. The warheads were shipped to Russia and dismantled. The rockets themselves were destroyed over the next few years.

Two other former Soviet republics, Belarus and Kazakhstan, did the same. Mr. Sabirov says that some Ukrainian visitors to the museum think it was a good idea, but others are sorry "we gave up the rockets."

As for Mr. Sabirov, "I don't get into politics myself." But his nostalgia is clear when he says: "We didn't have jeans, we didn't have butter, they put water in our margarine, but we had the best rockets in the world."

Tomato farmers eke out hard lives in Kherson region

Tarasivka, Kherson Oblast– The word “farmer” is too posh to describe them. They’re peasants, really.

Yet thousands of these people make the backbone of the food growing industry in Ukraine, a nation where agricultural corporations are only just emerging and commercial land cultivation is in its infancy.

Oleksandr Koryagin is one of them.

Like his peers in the sunny steps of Kherson Oblast, Koryagin grows tomatoes on his one-hectare allotment. He keeps livestock, grows early cucumbers in the spring and late cabbages in autumn, raises cows for milk and meat, and does dozens of other things to stay afloat. He and his wife, Halyna, do most of the work manually.

Theirs is a life typical of Ukrainian farmers, most of whom received small land parcels when the Soviet collective farm system broke down at the start of the 1990s.

Slaving away on land for long hours with no financing available for modern equipment and fertilizers, they produce just enough to eat and sell at a local market. But the rich soil, strong sunlight and their hard work combine to create a delicious product.

By the time my city alarm clock rings at 6:30 a.m., their beds have been cold for a long time – sometimes for up to two hours, depending on the day’s agenda. By breakfast time, Halyna has milked her two cows and churned the milk into cream.

The cows have been taken to the field, dozens of geese, chickens, ducks and ducklings have been fed, as well as two dogs, two pigs, two puppies and six calves. All the animals have been given water to last them through the heat of the day.

Everything takes much longer here than a town dweller would imagine. The lack of modern infrastructure and equipment is compensated for by manual labor. But once the morning routine is over, it’s time for the humans to have breakfast and get ready to go into the field.

August is one of the hottest times in this village, Tarasivka, both in terms of temperature and work. Apart from tomatoes, there are plenty of melon and watermelon fields around. But unlike tough-skinned melons, tomatoes cannot be left on the vine for too long before picking.

They will simply rot and the crop will be lost. Timing is everything here in late summer.

The Koryagins collect about a metric ton of tomatoes per day, give or take three hundred kilos. They usually hire four other locals for help at Hr 50 each.

After picking, the tomatoes are sorted into old but sturdy banana boxes.

Then they need to be driven about 60 kilometers to the nearest wholesale market as soon as possible. Modern storage facilities and other agribusiness conveniences are yet to arrive to this area, and it does not look like it will happen very soon.

Most of the farmers drive ancient, Soviet-made Ladas or Moskvich cars. Usually coupled with trailers, they are kings of the dusty roads – hard to drive, but simple in design and easy to fix.

“In good crop years, prices drop by the day. Today its Hr 1.50 per kilogram, tomorrow it’s Hr 1.20, and two days later it’s down to 50 kopecks.”
- Oleksandr Koryagin.

When a little Lada pulls a ton of tomatoes in a trailer, the car is so strained that the drivers often have to switch on the heating in the salon to kick-start the engine cooling system.

In the 40-degree heat, the temperature in the car soars to the point that would make hell seem quite mild by comparison. But the choice is none if you want to sell what you have labored for since the early days of spring.

Once at the marketplace, the farmers seek out wholesale buyers, usually arriving by trucks from other parts of Ukraine. The current asking price is Hr 2 per kilogram. To me, the price seems quite shocking. “Isn’t there a crop you can grow that would sell for more?” I ask.

“That would probably be cannabis,” Oleksandr jokes back.

The local farmers think that the wholesale price this year is actually pretty good.

“In good crop years, prices drop by the day. Today its Hr 1.50 per kilogram, tomorrow it’s Hr 1.20, and two days later it’s down to 50 kopecks,” explains Oleksandr.

But this year the crop is relatively poor. Early in the summer, the tomato plants got too much rain, and then got scorched by the sun. Many of the vines wilted or its fruits baked in the sun. The simple underground irrigation systems every farmer has installed have not helped much.

Tomatoes are the local pride and joy for villagers and the main source of summer income. Whoever manages to keep his plants bearing fruit the longest is rewarded with respectful looks.

The ability to grow and fix things, and manage on a shoestring budget is the local glamour in this forgotten land of absent agricultural machinery, no specialized literature or help from the local government.

The farmers here have had to survive on their own ever since the collapse of the local collective farm in the 1990s.

The land was then divided up, and one-hectare allotments were issued to each local resident, like in most of rural Ukraine. Some end up leasing their land plots; others cultivate them.

Somehow, the former collective farm head ended up keeping most of the farm’s not-so-numerous machinery. He is very well-off now, offering plenty of heavy-duty services with his tractors and combines.

As a result, he drives the coolest car in the village, a vast Japanese pickup truck that looks terribly out of place here where a second-hand Volkswagen minibus is every farmer’s dream.

Loans – for anything from machines to fertilizer – is an even more distant dream. And that distance is even longer than the 30-kilometer drive the villagers would need to take to get to the nearest bank – or ATM, for that matter.

But on the upside, boy does their homemade cream taste good! And their tomatoes could have tempted Adam in the Garden of Eden.

Medvedev Freezes Khimki Highway

President Dmitry Medvedev ordered a halt to the construction of a highway through the Khimki forest Thursday, marking a rare victory for a grassroots effort that the authorities heavy-handedly tried to squash but nevertheless swelled into a thousands-strong rally last weekend .

Medvedev, whose last public comment on the forest was a pledge to consider the issue after being asked about it in Paris on March 2, stopped the partial demolition of the ancient oak forest, planned to make way for an $8 billion highway from Moscow to St. Petersburg, after United Russia unexpectedly sided with growing public discontent over the project.

“Our people, including representatives of the political parties, from the ruling United Russia to opposition ones, as well as public groups and expert circles, say that additional analysis is needed,” Medvedev said in a two-minute video posted on his blog, standing with his back to the green foliage of a forest.

Medvedev promised to initiate a public discussion.

"I can't predict the result of the discussion, but the issue is resonating throughout society," he said.

Yevgenia Chirkova, the businesswoman who led the efforts to stop the deforestation, called the apparent change of heart a victory for civil society.

“I think it's time for a celebration already. Even if the decision is not final, the very fact that [Medvedev] stopped deforestation is a great victory,” she said."I think it will be followed by other victories because people will start believing in their own power."

Earlier Thursday, the head of United Russia's faction in the State Duma,Boris Gryzlov, urged Medvedev to “look into the situation” with the forest near Sheremetyevo Airport north of Moscow.

“A decision must be made either to change the highway's route or to proceed with the construction, but with a deeper understanding of the matter,” he said in a carefully worded statement on the party's web site.

Mayor Yury Luzhkov also supports an alternative route for the highway that would not require deforestation, Oleg Mitvol, a former federal environmental inspector who serves as prefect of the city's Northern Administrative District.

Luzhkov, who was on vacation this week, did not comment on the highway.

The government's backdown on the highway marks a stunning reversal on a decision that had been vigorously defended by the government and backed by the Supreme Court, despite surveys that indicated the project had little support from all levels of society. Public anger over plans caused the European Bank of Reconstruction and Development to pull out of the project early this year.

Environmentalists and local residents, who blocked contractors from starting to clear trees by camping out in the forest in July, have been beaten by unknown assailants and questioned and detained by police both in the forest and during rallies in Moscow.

But the discontent continued to grow, climaxing with a rally of more than 3,000 people on Pushkin Square on Sunday. Rock legend Tury Shevchuk, who asked Prime Minister Vladinir Putin at a charity event in May to stop police crackdowns on rallies, headlined the rally and played two songs despite police efforts to enforce a concert ban imposed by City Hall.

Bono invited Shevchuk up on stage during U2's first-ever Russian show at Luzhniki stadium on Wednesday night (they sang Bob Dylan's classic “Knockin' on Heaven's Door”) for a performance that environmentalists said sent a clear signal to the authorities about the illegality of their crackdown on Khimki forest defenders.

“The fact that Bono was singing with Shevchuk was a clear answer to those who commit lawless actions,” said Sergei Tsiplyonkov, acting director of Greenpeace Russia.

Bono, an outspoken activist on various social issues, said during a meeting with environmentalists that he regretted not raising the Khimki forest issue during talks with Medvedev in Sochi on Tuesday and promised to assist the forest defenders, environmental activist Yaroslav Nikitenko told Interfax.

The activists' problems continued even on the day of a recent Moscow concert, with police targeting Greenpeace and Amnesty International activists, who usually stage small events before the band's gigs.

About 10 Greenpeace activists were asked to stop collecting signatures in support of Russian forests in the lobby of the Luzhniki stadium, Tsiplyonkov said. Amnesty activists also reported trouble with the police.

Artyom Troitsky, a prominent music critic and the host of Sunday's Pushkin Square rally, said Chirikova deserved all the praise. "She played solo, while Shevchuk and Bono were the backup vocalists," he said.

He said he felt encouraged about the state of civil society but worried that most Russians still did not care enough to stand up for their rights.

"This action shows that if people want something, it is possible to move mountains," he said in a telephone interview. "The other question is that in 99 percent of cases people don't want anything and prefer to live in the backwater."
The highway project was further complicated by the fact that the company contracted to construct it, theNorth-Western Concession Company, has been linked in media reports to Aekady Rotenberg, Putin's friend and former judo trainer.

Rotenberg denied the reports Thursday, saying Igor Koryashkin, who sits on the North-Western Concession Company's board, does not represent him and is an independent director.

But Koryashkin also sits on the board of the Novorossiisk sea port, which is controlled by Rotenberg.

Putin, who heads United Russia, did not comment on the Khimki forest Thursday. His spokesman Dmitry Peskov said in July that the deforestation would proceed.

Stanislav Belkovsky, an independent analyst, said United Russia was aware that Medvedev had planned to halt the highway project and suggested that cracks were emerging in its once-steadfast alliance to Putin.

"The decision shows that the party is responding to orders from the top powers represented by Dmitry Medvedev and not to Vladimir Putin, the party leader," he said.

The authorities are known for being tone-deaf to grassroots campaigns, viewing them as a threat to their power. But things appear to be changing ahead of the upcoming election season, which kicks off with October regional elections and will culminate with the presidential vote in 2012.

Last week, United Russia withdrew its support of Kaliningrad Governor Georgy Boos, who faced mass protests in his region earlier this year, even though Gryzlov had promised to back Boos as recently as July 16. Medvedev subsequently decided not to nominate Boos for a second term.

Environmentalists have scored a victory with the authorities before. After protests, then-President Putin in 2006 ordered that an oil pipeline that was supposed to be constructed near Lake Baikal be moved away from its shores.

Yanukovich Takes Over Missing Case

KIEV, Ukraine -- Ukrainian President Viktor Yanukovich has taken personal control of the investigation into the disappearance and suspected murder of a campaigning journalist, after his attitude to media freedom was questioned by international watchdogs.
Vasyl Klymentyev, editor of the weekly Novy Stil newspaper in the industrial city of Kharkiv, was last seen on August 11th getting into a silver BMW with an unknown man. Six days later, his mobile phone was reportedly found on a boat adrift on a nearby reservoir.

Police sniffer dogs and divers searched the area but found no trace of the reporter, whose newspaper is known for probing corruption among politicians and major businessmen in Kharkiv and eastern Ukraine, which is Mr Yanukovich’s power base.

The case carries grim echoes in Ukraine of the kidnapping and murder in 2000 of journalist Georgiy Gongadze, missing for several months before his decapitated body was found outside Kiev.

Though he denied the allegations, then president Leonid Kuchma was accused of sanctioning the murder. Public anger over the case and his administration’s harassment of the media helped fuel the 2004 Orange Revolution that brought pro-western leaders to power.

Ukraine developed a vibrant and outspoken media in recent years, but journalists in Ukraine and experts abroad complain that pressure is again mounting on the press under Mr Yanukovich. He took office in February and is closer to the Kremlin than to Brussels or Washington.

“Law-enforcement bodies in the Kharkiv region and the whole of Ukraine must do everything – the possible and the impossible – to find the journalist,” Mr Yanukovich said as he ordered top security officials to report to him.

Petro Matvienko, Mr Klymentyev’s deputy, said the missing man had been threatened after refusing to take money to drop a story about a regional prosecutor accused of accepting bribes.

Media watchdog Reporters Without Borders said press freedom in the country had “deteriorated markedly in recent months”.

Nonaligned Ukraine Dances With Both East And West

KIEV, Ukraine -- Sitting as a buffer between East and West, Ukraine recently declared itself “nonaligned” thus ending its courtship with NATO. However, Ukraine’s new president now shows signs of exploring a military alliance with a Russian-led block.
Since Russian-leaning Victor Yanukovych took the presidency in February, he has steered the country off its path towards NATO set by his pro-Western predecessor Viktor Yushchenko.

Last month, under Yanukovych’s direction, Ukraine's non-alliance became law. The law, however, still leaves the door open for Ukraine to join a regional military alliance—but it does not specify which one.

Recently, Yanukovych has been cozying up to Russia. Relations between the two countries, which had been deadlocked for years under the previous pro-Western administration, have been steadily warming. The two countries have begun cooperating across a broad range of issues including the economy, gas prices, nuclear power, and satellite navigation.

In April, Russia opened a branch of its military alliance the Collective Security Treaty Organization (CSTO) in Kiev. The Kremlin expects the two countries to cooperate more on security issues.

“CTSO for Ukraine means deeper integration in terms of foreign policy,” Alexander Babakov, the deputy speaker of Russian parliament told NTDTV.

Analysts say that the new military block has been created with a similar, parallel structure to NATO. It now includes Russia, Belarus, Armenia, Kazakhstan, Uzbekistan, Tajikistan, and Kyrgyzstan.

CSTO was established in 2002. In 1991, the last Russian-led alliance, the Warsaw Pact, was dissolved after the collapse of the Soviet Union.

At present, Ukraine is still continuing cooperation agreements with NATO and the U.S. made it clear after the non-alliance law was passed, that the door to NATO is still open.

“Ukraine is a sovereign and independent country that has the right to choose its own alliances and NATO's door remains open,” said U.S. Secretary of State Hillary Clinton on a trip to Ukraine in July.

"But it's up to Ukraine to decide whether or not you wish to pursue that or any other course for your own security interest," Clinton continued.

Public support in Ukraine to join NATO has been waning over the last few years.

Ukraine’s nonaligned status means it needs to sustain its military forces, which have suffered from a lack of financing for years.

Some analysts doubt that the cooperation with CSTO will be useful for Ukraine in terms of what the organization can offer.

NATO helps Ukraine dispose of post-Soviet era ammunition, re-train military officers, as well as help retired officers find their good use in non-defense occupations.

“CSTO does none of the above and it has never done so,” said Vladimir Gorbach, a political analyst with the Kiev Euro Atlantic Cooperation Institute.

“CSTO is made up of post-Soviet armies—countries which in terms of social development do not act as democratic ones, but rather as authoritarian ones. There is no sense to cooperating with that block,” he said.

When violent clashes claimed hundreds of lives in Kyrgyzstan in April and June this year, the block failed to do anything to calm the situation.

Ukraine's Interior Minister Suspects Police Involved In Journalist's Disappearance

KIEV, Ukraine -- Ukraine's interior minister says he believes a journalist who was reported missing earlier this month is likely dead, and that security forces are suspected of involvement in the disappearance.
Vasily Klymentyev, the editor of a weekly newspaper in the eastern city of Kharkiv, has been missing for two weeks. His deputy said Klymentyev was threatened after refusing to take money to halt the publication of a story about a regional prosecutor accused of accepting bribes to close criminal cases.

"We suspect that law enforcement officials, both former and current, might be involved in the case," Interior Minister Anatoly Mogiliov said in televised comments.

Law enforcement officials include the police, Interior Ministry troops, special security forces and prosecutors, among other agencies.

International rights groups have expressed concern about a deterioration of media freedom in Ukraine since Moscow-friendly President Viktor Yanukovych was elected to office in February.

The Organization for Security and Co-operation in Europe urged a "swift and transparent" investigation. Mogiliov, however, warned "the case will be quite difficult and take a long time."

Klymentyev's case is being followed with anxiety in Ukraine, where memories are still fresh of the unsolved murder of another journalist in 2000.

Like Klymentyev, Heorhiy Gongadze wrote about corruption. Gongadze, whose investigations implicated then-President Leonid Kuchma, had been missing for months before his decapitated body was found outside Kyiv.

The killing sparked months of protests against Kuchma, who was accused of involvement in his death.

Going Down

KIEV, Ukraine -- President Viktor Yanukovych’s approval rating has plunged by double-digits as voters have balked at tough austerity measures adopted by his ruling coalition.
After accepting tough austerity measures in return for a $15 billion International Monetary Fund bailout, President Viktor Yanukovych’s popularity has plunged. With voters feeling the pinch of higher gas prices, his popularity could dive further if the cost of bread rises more amid surging global grain prices.

What will Yanukovych do to preserve his coalition’s strong grip on power? Will he win back voters by delivering reforms? Or will he trample on democracy, grabbing power long term as Vladimir Putin did in Russia?

Yanukovych’s popularity suffered a double-digit plunge, according to an August opinion poll, as voters balked at tough austerity measures adopted by his ruling coalition in return for badly needed loans from the International Monetary Fund.

The nationwide poll, conducted by the Kyiv-based Razumkov Center Aug. 10-14, found that 22.5 percent of Ukrainians completely supported Yanukovych in August, down from 39.7 percent in May and 40.9 percent in April. According to the poll, 38.7 percent of those surveyed support some of his actions, while 33.3 percent don’t support him.

During Ukrainian Independence Day celebrations on Aug. 24, Yanukovych pledged to pursue reforms, even “unpopular” ones, and preserve democracy.

But some observers say the Donetsk strongman could tighten his grip on the country’s media and employ other authoritarian measures to quell rising popular dissent against the austerity measures, which include higher gas prices and retirement ages.

Yanukovych took office in February with less than 49 percent of the popular vote, banishing the compromised heroes of Ukraine’s 2004 democratic revolution by a paper-thin margin.

His approval rating jumped soon afterward, amid promises that he would set the country on a more prosperous track. But with local elections scheduled for Oct. 31, the latest poll figures make for grim reading for the president and his Regions party.

Popular support of the party, a core element of the president’s ruling parliamentary coalition, has also sunk, according to the Razumkov poll, from 41 percent in May to 27 percent this month.

In May, almost 50 percent of Ukrainians also believed that Yanukovych was guided by national interests, with only 30 percent believing that he gave priority to personal or party interests. Now the figures have been reversed, with some 48 percent of Ukrainians suspecting Yanukovych of putting himself and Regions above the nation.

Pollsters had predicted that, following the post-election honeymoon period, Yanukovych would see a dip in his voter support ratings, according to Iryna Bekeshkina, acting director of the Kyiv Democratic Initiatives Foundation.

Experts at Razumkov said the 14.5 percent plunge for Yanukovych picked up in their poll was partially due to the president’s decision to prolong the stay of Russia’s Black Sea Fleet at a Crimean port, as well as his implementation of unpopular economic reforms.

Experts said cash-strapped citizens are most upset that Yanukovych, who pledged not to raise utility prices while campaigning for president last year, agreed to raise natural gas prices for households by 50 percent effective Aug. 1.

Badly in need of cash from the IMF to plug gaping budget holes, Yanukovych also agreed to gradually raise the pension age for women by five years over the next decade.

But his popularity rating could touch even lower depths if prices for the nation’s staple foods, starting with bread, continue to increase in response to poor harvests in the Black Sea region from this summer’s heat wave.

Moreover, the effect of increased gas prices, instituted at the beginning of the month, have yet to hit home in the form of utility higher bills. Heating bills peak in winter.

“I think Yanukovych's approval rating might plummet, but only to about 20 percent [from the current 27 percent] because his electorate does not have many alternatives,” Bekeshkina said.

Yevhen Kopatko, head of the Kyiv-based Research&Branding Group, which is widely believed to enjoy warm relations with Yanukovych and his party, said it’s too early to say whether the president’s ratings are in decline.

According to him, only in September, when the political season starts, will it be possible to determine whether the Razumkov poll indicates a clear-cut trend. Kopatko acknowledged, however, that the unpopular measures pushed forward by Yanukovych will negatively reflect his popular support.

“It depends not only on the decrease in living standards but also on how all these changes are presented to the public through propaganda on TV,” said Valeriy Khmelko of the Kyiv International Sociological Institute.

Yanukovych himself recently announced that he would soon begin touring Ukraine to explain to people why the austerity measures are so badly needed by the country. Some analysts interpret this announcement as an attempt by the president to preserve voter support ahead of local election scheduled for Oct. 31.

Bekeshkina believes this to be the only way out for Yanukovych to avoid falling sharply further in poll ratings. “Another option for Yanukovych would be to show that the austerity measures are being shouldered not only by the poor, but he failed to deliver on this by not cutting the pensions of former high-ranking officials,” she said.

Instead, he could try to tighten the screws in order to boost his power, a trend some analysts already detect.

The new law on local elections, adopted by Yanukovych’s ruling coalition this summer, severely limits competition by preventing parties formed less than a year ago as well as independent candidates from participating. Some believe that Yanukovych’s dominant ruling coalition is also not above browbeating the country’s media into submission.

“His administration may try to take full control of the national TV channels, which are still largely unconsolidated in support of the current administration,” said Volodymyr Fesenko, head of Kyiv Gorshenin Institute of Management Issues, a Kyiv-based think tank. “Yanukovych may now be tempted to use authoritarian methods,” he added.

Oleksiy Haran, the director of the School of Political Analysis at Kyiv-Mohyla Academy, said that Yanukovych is likely to tighten his grip on the country’s media in tandem with the use of some carrots. “In order to secure his powers, Yanukovych will keep promising people some social benefits, partially following up on such promises, while backtracking on other unpopular measures such as the tax code,” he said.

Regarding the upcoming elections, the president can be expected to use so-called administrative resources to help candidates whom he supports while hampering his opponents' chances, Fesenko said. Similar tactics were initially used by Russia’s Vladimir Putin in his building a managed democracy, Fesenko recalled.

Yet authoritarian measures alone are not enough to improve Yanukovych’s hold on power, according to Fesenko. “In Russia, broad public support was secured by huge revenues from rising oil and gas prices.” In the mean time, Yanukovych has called for an emergency session of parliament at the end of August.

He now seems to be pushing for the election law his coalition adopted this summer to be amended, supposedly to cancel clauses that undermine the chances of opposition parties.

“Yanukovych's proposal to introduce changes into the election law is driven by the drop in his approval ratings,” Bekeshkina said. “This is aimed at bringing in more parties to scatter the opposition.”

Other experts expect the president to also propose generous social packages to soothe public dissent.

Stalin's Harvest

Poor wheat harvests in Russia and Ukraine, along with devastating wildfires in Russia, have resurrected fears of a global food crisis. Some have blamed global warming for inducing a severe drought. But the real blame rests with poor agricultural performance over the long term in a region still hampered by communist experimentation.
To react by banning exports, as Moscow has done and Kiev is considering, would be counterproductive. Combined with restrictions on the use of modern agricultural technologies imposed in the European Union and being proposed in the U.S., such bans really could lead to a global food crisis.

After the Russian revolution in 1917, the Bolsheviks socialized all agricultural markets. Although they directed their rhetoric against "middlemen," their real aim was to squeeze farmers by paying them below-market prices and use the proceeds to finance state-owned industry.

This "New Economic Policy" backfired spectacularly as farmers fed grains to livestock, or converted them into liquor and then sold both on the black market, thereby evading the Bolsheviks' price controls.

Stalin dealt with such evasions first by denigrating independent farmers as greedy kulaks (the Russian word for fist) and then by starving them to death. As Soviet agriculture was collectivized and crops and livestock were confiscated, millions of peasants died. Russia and Ukraine have yet to recover fully from this assault on the countryside.

The contrast with China is stark. In the late 1970s, millions of peasants who had survived agricultural collectivization and Mao Zedong's "Great Leap Forward" two decades earlier responded to his death by becoming entrepreneurs.

In village after village, property was informally privatized. Output exploded, ensuring that attempts at sanctioning this illegal activity were carried out half-heartedly. Deng Xiaoping subsequently legitimized these bottom-up reforms in what became known as the "Household Responsibility System," which provided a major catalyst for China's modern economic take-off.

During the 1980s, Mikhail Gorbachev attempted similar reforms in Russia, but from the top down. These were not successful. After more than half a century during which entrepreneurship had been repressed, who would dare take the risks associated with farming and agricultural marketing?

In spite of the collapse of communism, it has been difficult to convert Stalin's collectives into private farms. Although most of the farming industry is privately managed, rural property rights are poorly defined and access to commercial credit is limited.

Also, bankruptcy law is ill-developed, which impedes the liquidation of inefficient operations and the transfer of real estate and other assets to efficient managers. All these factors undermine incentives to invest in productivity-enhancing technologies and good management. Former collectives are also subsidized, warping incentives further.

Fertilizer applications on Russian farms currently average 11 kilograms per hectare, which is below the amount needed to compensate for crops' uptake of nutrients and is similar to levels in sub-Saharan Africa. As a result, soil fertility is declining with each passing year.

Predictably, cereal yields in Russia (1,865 kilograms per hectare) are barely a quarter those of the United States (typically 7,000 kilograms per hectare or more), and similar to U.S. yields before the 1930s, when farmers began using hybrid seeds and synthetic fertilizer.

Russia and Ukraine have the potential to be far more productive, but to do so their governments must provide the right incentives to farmers to invest in land improvements and to use modern seed, fertilizer and pesticides. That means removing barriers to ownership and exchange.

Banning exports has the opposite effect, curtailing farmers' existing markets, then their incomes, then their incentives to invest, all of which would further reduce their low output.

World supplies of grains are also adversely affected by the EU's restrictions on the use of biotechnology and pesticides. In addition to limiting production in the EU, these restrictions also spill over into exporting countries.

Russian and Ukrainian producers, for instance, worry about falling foul of EU rules and so have additional reasons not to adopt beneficial yield-enhancing technologies.

To make matters worse, the U.S. Environmental Protection Agency seems to be following the EU's example and is seeking to restrict a number of widely used agricultural chemicals.

One of these is atrazine, a weed-killer that has been applied for more than four decades with no observable ill effects, and which the EPA itself reapproved four years ago. Such restrictions would further undermine global crop output.

Americans are accustomed to availing themselves of plentiful food at affordable prices, which most take for granted. But there is no such thing as a free lunch in the food economy.

Removing the inputs that make bountiful harvests possible will inevitably drive up prices and, as the experience of Russia and neighboring countries demonstrate, place the world at risk of shortages.

Kyiv City State Administration staff to be cut by at least 20%

Kyiv City Council has taken a decision to reduce the number of employees of Kyiv City State Administration by at least 20%.

A total of 64 deputies supported the relevant decision at a sitting of Kyiv council on Wednesday.

The staff of Kyiv City State Administration is to be reduced by 20% by November 1, 2010.

The decision was taken in order to improve the structure in and the number of employees of the administration, as well to comply with the resolution of the Cabinet of Ministers of Ukraine.

Tymoshenko: Sept. 7 rally will be a wake-up call for Yanukovych

Yulia Tymoshenko is urging Ukrainians to make a personal contribution to the struggle to return Ukraine to a democratic course of development.

"We need to organize and prepare for a long and hard struggle that could, once and forever, end in our victory," Yulia Tymoshenko said today during a rally honoring Ukrainian Independence Day near the Taras Shevchenko monument in Kyiv.

The opposition leader urged every citizen to share with others information about what the government is really doing. "We need for everyone in Ukraine to know their action plan and how they can contribute to our ongoing struggle."

Bank of Moscow braces for Luzhkov’s departure

City elections loom in 2011 and Medvedev’s rejuvenation campaign in regional authorities leaves Mayor Luzhkov looking far from secure in his seat. This could spell bad news for Bank of Moscow’s credit ratings, as city money is closely tied up with the bank.

A new mayor would in face be a ‘major risk,’ Troika Dialog Analyst Ekaterina Sidorova said. When Luzhkov does go, the bank could lose its quasi-sovereign status and city serving privileges. City money makes up a third of the bank’s funds from clients, including state enterprises. It could have to borrow to make up the shortfall.

Italian gymnast fell out of sixth floor window in Moscow

Russian doctors are fighting for the life of a young gymnast who fell out of a sixth-floor window in Moscow.

Violetta Ballirano, 15, fell out of an apartment and received serious injuries, including a broken shoulder, broken ankle and brain contusion, RIA Novosti reported. She is currently in intensive care in Moscow’s Botkin hospital.

The Italian athlete was at a party with friends at 10 pm on Sunday, when the incident occurred.

One version of events suggests that Violetta got in an argument with her boyfriend, who accused her of flirting with another and then left. Violetta then started crying, told her friends that she would go home, but instead jumped out of the window, according to the paper.

The police started an investigation and are questioning all those present at the party.

Russia and US set up environmental park

On both sides of the Bering Straits environmentalists are celebrating after Washington and Moscow agreed to create a huge eco-park in Chukotka and Alaska.

The “Beringia” park will cover 1.8 million hectares of largely untouched wilderness, reviving an idea first mooted 20 years ago, Kommersant reported.

At the same time the two countries are trying to agree a visa-free regime for all residents of Alaska and Chukotka, expanding the current system where the indigenous populations of the regions enjoy open borders.

Luzhkov named Russia’s richest politician

He might be under pressure to quit as Moscow’s mayor, but at least Yury Luzhkov can look forward to a comfortable retirement.

The veteran politician has been named as the wealthiest official by Forbes Russia, sharing a family income of more than 30 billion roubles (approx. $1 billion).

The other 99 representatives on the list pulled down just 56 billion ($1.8 billion) between them.

The Luzhkov family’s earning power is greatly enhanced by the success of his wife, Elena Baturina, and her Inteko construction firm.

$65 million a month stolen by Russian bankers

A group of top Russian bankers has been caught with its fingers in the till – to the tune of $65 million a month.

The interior ministry reported on Wednesday that the evidence pointed to leading officials at Tempbank, Imperiabank and several others cashing more than 2 billion roubles every month via inflated fees.

Several searches have yielded further evidence, including $100,000 found in a car belonging to one of the suspects.

Real estate bubble

A lack of residential construction is pushing up prices and threatening a new real estate bubble as demand for housing outstrips supply.
That’s the message from Prime Minister Vladimir Putin, who last week warned that Russia faced a housing bubble similar to the one that hit many countries before the crisis that struck in 2008.

“A possible repetition of the pre-crisis conditions, when we were faced with rapid growth in apartment prices – this is what we must not allow,” Putin said at a meeting on housing construction in the Moscow region.

Experts say that a high for rouble mortgage loans will be reached by mid-autumn. This could mean the cost of buying a Moscow apartment in a new building could surge to 2008 levels, when the average price per square metre was around $6,000.

The current Moscow average is about $4,400 per square metre, according to Metrinfo.ru.

“We can see the revival of demand through reviving mortgage lending,” said Yevgeny Nadorshin, associate director at Jones Lang LaSalle.

Central Bank statistics indicate that the number of mortgages issued in the first half of this year was twice that for the whole of 2009, when the crisis was taking its toll.

One factor preventing apartment prices from rising too far is lower wages, which still have not returned to pre-2008 norms, experts say.

“Wages are still below pre-crisis levels,” said Anastasia Mogilatova, Welhome’s general director. She forecasts that there will be no sharp rise in prices until the end of 2010, while an inflation adjustment is possible.

Speculative capital has also disappeared from the market, helping prices stay low.

“On the demand side there are different motives now – people buy homes to live in,” said Nadorshin, of Jones Lang LaSalle.

The absence of speculation makes the market look “balanced” said Dmitry Taganov, an analyst at Incom.

Up to 80 per cent of deals are currently trade-offs on the secondary market, when, for example, a family swaps a three-bedroom apartment for two smaller ones so they can live separately from their grown-up children.

At his Moscow region meeting to discuss housing, Putin reminded local officials that the government had set a goal of building one square metre per capita every year until 2020.
In the last year, residential construction has fallen by more than 6 per cent despite the government injecting more than one trillion roubles in 2009-2010 programmes to support mortgages and construction.
“However, the government cannot always be the principal client and homebuyer,” said Putin.

Russification Of Ukraine Renewed

The law making Russian an official language of law proceedings in Ukraine is not only unconstitutional, it is yet another step in the renewal of the russification of Ukraine that this new government has embarked upon.
The ruling Party of Regions claim they are making Ukraine compliant with the European Charter for Regional or Minority Languages (ECRML). That is a most hollow claim.

The ECRML is designed specifically for “the protection of the historical regional or minority languages of Europe, some of which are in danger of eventual extinction”, none of which applies to the Russian language in Ukraine.

According to the 2001 census, 67.5 percent of the population declared Ukrainian as their native language and 29.6 percent declared Russian. That percentage already exceeds the number of ethnic Russians in Ukraine, which is 17.3 %, compared with 77.8 Ukrainians and 4.9 % others.

Ethnic Russians form 56% of the total Russian-speaking population, while the remaining Russophones are people of other ethnic background: 5,545,000 Ukrainians, 172,000 Belarusians, 86,000 Jews, 81,000 Greeks, 62,000 Bulgarians, 46,000 Moldavians, 43,000 Tartars, 43,000 Armenians, 22,000 Poles, 21,000 Germans, and 15,000 Crimean Tartars.

Furthermore, that number does not even reflect the actual usage of Russian in everyday life. According to a 2004 public opinion poll by the Kyiv International Sociology Institute, Russian is used at home by 43–46% of the population of the country (in other words a similar proportion to Ukrainian).

By regions, this accounts for 86.8% of the population in the east, 82.3% in the south and 46.9% in the east-centre. Russian language also dominates in both print and electronic media. The Ukrainian state subsidizes nearly 3,000 Russian schools. That’s discrimination?

Under Russian rule successive governments attempted to eradicate the Ukrainian language. The Russian Minister of Internal Affairs Pyotr Valuev in 1863 issued a secret decree that banned the publication of religious texts and educational texts written in Ukrainian.

This ban was expanded by Tsar Alexander II with the Ems Ukaz of 1876 which prohibited all Ukrainian language books and song lyrics as well as the importation of such works. Under the USSR, the Ukrainian language was not officially banned, but certainly frowned upon, suffered russification, and its usage declined.

If the PRU is so concerned about minority linguistic rights, why don’t they turn to their masters in the Kremlin? While, as noted earlier, Kyiv pays for 3,000 Russian schools in Ukraine, Russia doesn’t even pay for one to serve its 3-5 million strong Ukrainian minority (depending on official or unofficial figures).

Recent articles in Window on Eurasia, by analyst Paul Goble outlined some of the glaring discrepancies between Russian education in Ukraine and Ukrainian education in Russia. In Ukraine, 1.3 million children are studying Russian; but in Russia, only 205 are studying Ukrainian, a number so low that it can only involve students at a school attached to the Ukrainian embassy.

Ukraine currently publishes 1.5 million Russian-language textbooks and 125,000 Russian-Ukrainian dictionaries each year, whereas the Russian Federation government is not paying for the publication of a single copy of a Ukrainian-language book for students in that country. Furthermore, Moscow is seeking to suppress Ukrainian cultural organizations in Russia.

Because the Ukrainian language was threatened with extinction in its own homeland through Russian policies, it was necessary to provide the bare minimum of security for its continuation.

Frankly, existing Ukrainian language legislation is already toothless. So what’s the problem? Is it unreasonable to expect a minority to learn the language of the country they are living in, while preserving their own? Or do they really expect their own to dominate at the expense of the native language?

This is not therefore a matter of minority rights – but of minority rule, much as was the case in Apartheid-era South Africa.

Back To The Stalinist Future

The clocks run backwards in Ukraine: hardly six months have elapsed since the last elections and nearly nothing remains of the “Democratic Awakening” that rocked the nation in 2004.
Writer Yuri Andrukhovych depicts the “internal occupation” of his country and implores Europe to watch closely what’s happening there.

It’s high time I got a grip on my subconscious. I don’t like my dreams at all. They’ve been troubling me for several months now. More or less ever since Ukrainian reality began to resemble the dream. It will take at least 10 years, announce the optimists. In other words at least two terms of office for the incumbent president
You could use present-day Ukraine to teach a whole course on “The fragility of democracy or How we’re being driving back into dictatorship”. The man who was gnawed by the “insult of 2004” [when he was beaten by Viktor Yushchenko in the presidential election] is relishing his revenge.

Viktor Yanukovych is the first “minority president” in our history: in the second round of the elections [February 2010], he won less than 49 per cent of the vote. So it looked as though he’d be even less effective than his predecessor. But that’s only how it looked to those of us naïve enough to believe the country’s constitution was inviolable.

By mid-March the new president had already seized power with amazing dexterity. He now has a parliamentary majority under his thumb that is incapable of doing anything but carrying out his orders and ignoring the opposition.

The latest case in point was the cloak-and-dagger vote held at night on the law on foreign policy principles. Of the 420 amendments proposed by the opposition, not a single one was admitted.
The cabinet is run by Mykola Azarov, an avowed enemy of small and medium-sized businesses – and the president’s staunch ally. His favourite pastime: crushing his adversaries.

The tax legislation he has proposed, for example, allows tax inspectors to enter people’s homes to search the place. The object is clear: to bring the middle class to heel, bleed the opposition dry by administrative means, so his own henchmen can enrich themselves.

I can’t remember the last time a Ukrainian court found for the opposition. But they can’t possibly be in the wrong every time! No sooner has parliament passed a new law on public assembly than the judges feel it is their utmost duty to proscribe protest actions.

Meanwhile, the militia have shown they’re quite capable of quelling protest even without a court order.
Once upon a time there was a country that wasn’t so bad at all, a country brimming with hope and knocking on Europe’s door. Where did it go? We’re hearing about more and more so-called “preventive interviews” with journalists and representatives of the public sphere, about efforts to recruit new names for the “loyalty lists”, and about files being kept on opposition activists.

The country is morphing back into a police state again. “Back” is the key word here: we’ve gone back to the past. The 1970s perhaps?

Yanukovych’s “Party of Regions” is bound to win by a landslide (target proclaimed: 70%) in the local government elections this autumn. The point of the “reforms” is to create a “Russia 2” of sorts – albeit more feeble, more backwards.

And the right social order to achieve that end is a brand of neo-Stalinism of a feudal oligarchic cast. Not for nothing are Stalin monuments popping up again in the Ukraine.
Only one thing remains a mystery though: What does the Yanukovych regime need Europe for? What’s the point of all this playing at integration and the unchanged Euro-rhetoric? Is it only for the banking connections?

Or to facilitate holidaymaking in Sardinia? Never before have we had a state power that was so far removed from European values. Sometimes we can’t help yearning for Kuchma’s return [Leonid Kuchma, president forced to resign in 2005].

Hence my plea to the European Community: “Watch, more closely than ever before, what this Ukrainian government is doing! God only knows why, but they still care what you think. And don’t let them play you with their twaddle about ‘order’!”

Actually, all I really want is to dream my dream to the end. Five years ago I couldn’t have imagined that our vision would suffer such a shattering defeat in the year 2010. No battle fought, and the war is already lost.

The upshot is occupation. In Ukraine we have a special term for that: “internal occupation” ­– by means of presidential elections and parliamentary machinations. But it simply cannot be that such an anachronistic system, an outgrowth of Stalin’s legacy, should win out in the historical scheme of things.

That questionable conviction is what I pin all my hopes on today. Or rather what’s left of them.

Miss Universe's Miss Ukraine Supports Full-Body Scanners At Airports

LAS VEGAS, USA -- During yesterday evening's Miss Universe pageant two big things went down. One was the crowning of Miss Mexico, Jimena Navarrete, as the winner, only the second time in history for Mexico to take the title.
The second notable thing came dural the "Final Question" period, when Miss Ukraine was asked about her stance on full-body scanners in airports.

Miss Ukraine, 23-year-old Anna Poslavskaya answered this question put to her by judge Jane Seymour: ""Many airports are using full-body scanners. How do you feel about going through a scanner that can actually see through your clothes?"

Poslayskaya replied (through an interpreter) that she supports full-body scanners in the name of security: "I think it's a very important question of security...if that helps us to save the lives of people, then I'm for it."

The answer helped Miss Ukraine place as the third runner-up in the pageant, but what we'd now like to know is if she also supports full-body scanning for people with less than a pageant-ready body.

Ukraine Marks Independence Day On Tuesday, August 24

KIEV, Ukraine -- Ukraine marks the 19th anniversary of the gaining of independence on Tuesday. In an address to the people of Ukraine on the occasion of the Day of Independence, President Viktor Yanukovich pointed out, "Nineteen years ago with great hope and belief we responded to the challenge of fate by embarking upon the road of creation and development of an independent state of our own".
The President believes that "the peculiarity of the present day, when we are entering a 20th year of independence, is that the authorities do everything to ensure that Ukraine gains an economic independence as well".

"Because a real independence is based precisely on that foundation. My programme of reforms is a programme for building an economically independent Ukrainian state," Yanukovich stated.

"I shall not allow the country to swerve off the democratic road of reforms to satisfy the selfish interests of some irresponsible politicians," the Head of State added. "I understand that the road that we have chosen is very complex and hard.

However, there is no other road to a genuine freedom and real independence. There is no other road to an independent Ukraine, in which I would like our children to live".

On August 24, 1991, the Ukrainian parliament adopted an "Act of Proclamation of the Independence of Ukraine". "A republican referendum must be held on December 1, 1991, to reaffirm the Act of the Proclamation of Independence," said the resolution of the Verkhovna Rada.

The outcome of the historic referendum marked the beginning of a final break-up of the Soviet Union. Presently, on December 8, 1991, the leaders of independent Ukraine, the Russian Federation and the Byelorussian SSR signed a Belovezhye Accord on the dissolution of the Soviet Union.

The Accord was ratified by the parliaments of those countries and supported by a majority of the republics of the USSR. Shortly after that the state independence of Ukraine was recognized in the whole world.

Notwithstanding the fact that during the December 1 referendum in 1991 more than 90 percent of Ukrainians supported the independence of Ukraine, thereby factually legalizing the country's withdrawal from the Soviet Union, many present-day Ukrainians pine for Soviet times.

Over 45 percent of Ukrainians participating in a survey carried out by the Razumkov Center are confident that the economic situation has deteriorated and the population's living standards have declined in the independent Ukraine, as compared with those in the Ukrainian SSR.

The present authorities promise to rectify the situation in the country through effecting large-scale reforms. However, in order to do that, Yanukovich associates believe, it is essential to broaden the powers of the Head of State.

According to Sergei Levochkin, head of the presidential administration, Yanukovich with his powers has enough clout in the state but that his activity, in effecting reforms, in particular, could have been more effective if those powers were extended. Levochkin declared in favour of reverting to the Constitution of the1996 pattern.

Yanukovich himself also states that he wants to enhance the presidential powers. With this end in view he considers it advisable to rewrite the Constitution. "The Constitution in the present-day dynamic historical conditions requires some amendments.

Some of its norms, such as, specifically, those hastily adopted at the end of 2004, have become the cause of imbalance and a serious crisis of power and, it means, the target for well-founded criticism inside the country and on the part of the international community," Yanukovich said earlier.

According to sources, in a speech on Tuesday, Yanukovich is expected to state the need to cancel the constitutional reform of 2004, which will enhance his powers. It is true, as Mikhail Chehetov, deputy head of the parliamentary faction of the Party of Regions, said, "No one knows now what the President will say exactly". In so doing the Member of Parliament recognized the need to enhance presidential power.

"We all are in need of order and, it means, a strong vertically integrated system of power with clear-cut powers. And we shall ensure that," Chechetov emphasized.

On Monday, Yanukovich stated that he so far intends to refer to the Verkhovna Rada only proposals about amending the law on local elections.

"On August 25, immediately after the Independence Day, I shall sign amendments to the electoral law and I shall insist on the convocation of an extraordinary meeting of the Verkhovna Rada so that we could amend the law and political forces would get an opportunity under the provisions of the new law to take part in the elections", he said.

The President did not specify what amendments exactly he intends to initiate, pleading an extensive list of amendments.