ANALYSIS: Dr. Edilberto Segura
Director & Chief Economist, SigmaBleyzer
President, Advisory Board, The Bleyzer Foundation
The Action Ukraine Report (AUR), Number 639, Article 7
Washington, D.C., Wednesday, January 11, 2006

It seems that they are inconsistencies between the signed gas agreement (which is given below) and statements made by officials.  But this is not so.

This agreement and other information provided by government officials (the PM and heads of the gas companies), and my own calculations, lead to the following situation:

1.  Rosukrenergo will get a total amount of gas of 49 billion m3 (of which 41 billion m3 will come from Central Asia (CA) and 8 billion m3 from Russia (only about half of the maximum amount stipulated).  In addition Rosukrenergo will get 15 bn m3 for Moldova).

2.  Rosukrenergo will sell to Ukraine  a total of 34 bn m3 at a price of $95 th m3.  Given the quoted prices ($230 th m3 for Russian and $55 th m3 for CA), about 26 bn m3 of this gas will come from CA and 8 bn m3 will come from Russia.  Rosukrenergo will keep to itself the difference of 15 bn m3 (49 bn m3 supplied to it minus 34 bn m3 provided to Ukraine) as payment for transit fees.

3.  In addition to the 34 bn m3 from the above deal,  Ukraine would also buy from CA (through a separate  contract) another 22 bn m3 at an average price of about price of $55 th m3 ($50 in 2006H1 and $60 in 2006H2).

4.  The total supply to Ukraine would amount to 56 bn m3 (34 bn m3 from the Russian deal plus 22 bn m3 directly from CA).  Together with 20 bn m3 produced internally, Ukraine will have 76 bn m3 of gas for its internal use, a figure similar to last year's. The utilization of this gas supply is expected to be as follows:

Households                    18 bn m3
Municipal heating             15 bn m3
Power stations                5 bn m3
Industry                      26 bn m3
Govt Institutions             1 bn m3
Transportation                7 bn m3
Storage                       4 bn m3
                         ---------------
                 Total        76 bn m3

Ukraine will have to pay the following for its 56 billion m3 of gas imports plus the 15 billion given to Rosukrenergo for transit fees:

26 bn m3 from CA under the Russian deal at $55/th m3
= $1.43 billion
8 bn m3 from Russia under the Russian deal at $230/th m3
= $1.84 billion
-----------------------------
Subtotal      $3.27 billion

Plus:
22 bn m3 from CA under separate contract at $55/th m3
=  $1.21 billion
----------------------
Subtotal       $4.48 billion

Plus:
Payment to CA for 15 bn m3 of gas given to Rosukrenergo at$55 /th m3
=  $0.82 billion
-------------------------                      
Total           $5.30 billion


This expense of $5.3 billion for 56 billion m3 represents a gas price of $95/thousand m3.   Therefore, the statement that Ukraine will pay $95 /th m3 at the border is right.

The total gas expense for Rosukrenergo for its gas supply will amount to the following:

41 bn m3 at a price of $55 /th m3     =  $2.05 billion
8  bn m3 at a price of $230/ th m3   =  $1.84 billion
---------------------
Total        =  $3.89 billion

To pay for these expenses, Rosukrenergo will receive payments from Ukraine of $3.27 billion (under the Russian deal) plus 15 billion m3 of gas.  This 15 bn m3 of gas would represent revenues of $3.4 billion if sold in Europe (that is, 15 billion m3 x $230 billion).  Therefore, the total revenue for Rosukrenergo may amount to $6.67 billion.

This will enable Rosukrenergo to pay $3.89 billion for the gas plus any required transit fees (which are unlikely to exceed $1.0 billion at a fee of $1.09 per 1000 m3 per 100 km for both the Ukrainian route and the Russian route. Rosukenergo could therefore retain about $1.8 billion for other operating expenses and profits.

Although we do not know the terms of the agreement between Russia and CA, the CA gas price is valid only for the year 2006.  As per the agreement below, the price of gas at the Russian-Ukrainian border of $95 per th m3 is guaranteed only for the first six months of 2006.

Text published by Ukrainska Pravda, 5 January 2006
http://www2.pravda.com.ua/news/2006/1/5/37345.htm
[Translated by Olga Bogatyrenko for the Ukraine List]

At a press conference on Thursday, Yulia Tymoshenko made the agreement signed on Wednesday morning by 'Naftohaz of Ukraine' and Russian 'Gazprom' public. Ukrainska Pravda provides the text of the agreement in full.

Agreement Regulating Relations in the Gas Sphere
Moscow, 4 January 2006

The open joint stock company (OAO) "Gazprom" (Russian Federation), subsequently referred to as Gazprom, represented by Management Chairman A. B. Miller acting by the Statute, on the one Side,

The National joint stock company "Naftohaz of Ukraine (Ukraine), subsequently referred to as Naftogaz of Ukraine, represented by Management Chairman O. G. Ivchenko, acting by the Statute, on the other Side,

And the Company "RosUkrEnergo" (Switzerland), subsequently referred to as RosUkrEnergo, represented by Executive Directors O. A. Pal'chikov and K. A. Chuichenko, acting by the Constitutive Agreement,

Referred all together as the Parties,

Seeking to reach a mutually beneficial agreement on the regulation of relations in the gas sphere, have worked out the present Agreement, agreeing on the following:

1.     The Parties agree that the price of transit of natural gas, which belongs to Gazprom (Ltd. Gazexport) and RosUkrEnergo, across the territory of Ukraine and the Russian Federation is to be set at US $1.60 per 1000 cubic meters per each 100 km of transit until 01.01.2011.
2.        The Parties appoint RosUkrEnergo as the supplier of natural gas to Ukraine. Starting from 1 January 2006, Gazprom does not supply Russian natural gas to Ukraine and Naftohaz of Ukraine does not export natural gas that arrives from the Russian Federation.
3.        Naftohaz of Ukraine and RosUkrEnergo are to found a joint venture on the basis of cash deposits and other assets as soon as possible and not later than 1 February 2006 in order to provide Russian natural gas for consumption at Ukraine's domestic market.
4. The Parties are to work out necessary agreements/contracts (and are to assure working out of necessary agreements/contracts) creating, starting from 1 January 2006, the commodity balance of gas of company RosUkrEnergo to cover the following volumes:
Purchases:

-     41 billion cubic meters of Turkmen gas that is to be purchased from Ltd. Gazexport and Naftogaz of Ukraine, which is at their disposal.
-        Up to 7 billion cubic meters of Uzbek gas that is to be purchased from Ltd. Gazexport in order to, specifically, swap existing gas deliveries in the South Caucasus.
-   Up to 8 billion cubic meters of Kazakh gas that is to be purchased from Ltd. Gazexport in order to, specifically, swap existing gas deliveries in the South Caucasus.
-  Up to 17 billion cubic meters of Russian gas that is to be purchased from OAO Gazprom at the price determined by the formula based on the base price of gas (Ro= US $230 per 1000 cubic meters).

On sales:
-      In 2006, 34 billion cubic meters of gas to be sold at the price of US $95 per 1000 cubic meters of gas, which is valid for the first six months of 2006 to the joint venture created in accordance with point 3 of the present Agreement  (until the joint venture is created, until 1 February 2006 to be sold to Naftogaz) for the subsequent sale for consumption in Ukraine's domestic market without re-export rights.
-    Starting from 2007, up to 58 billion cubic meters of gas to be sold to the joint venture created in accordance with point 3 of the present Agreement for subsequent sale for consumption in Ukraine's domestic market without re-export rights.
-        15 billion cubic meters of gas to be forwarded for export for joint programs with Gazprom.

5. The rate of pay for transit and the price of natural gas determined by the present Agreement can be changed only by mutual agreement of the Parties.

Addresses of the Parties

OAO Gazprom: 16, Nametkin Str, Moscow, Russia, 117997
NJSC Naftohaz of Ukraine: 6, Bogdan Khmelnitsky St., Kyiv, 01001
Company RosUkrEnergo A": 7 Bahnhoffstrasse, Zug, Switzerland

Signed by:
A. B. Miller on behalf of OAO Gazprom
A. G. Ivchenko on behalf of NJSC Naftohaz of Ukraine
O. A. Pal'chikov, K. A. Chuichenko on behalf of Company RosUkrEnergo AG

The Leader of the Party of Regions believes political rights must be backed by financial resources
by Maxim Sterlingov
Strana.ru, 21 December 2005
[Translated by Olga Bogatyrenko for The Ukraine List]

Viktor Yanukovych opened the parliamentary electoral campaign of the Party of Regions by visiting Kharkiv. After a number of his statements about issues in regional politics it became clear that the Party of Regions had not abandoned the idea of Ukrainian federalism. In Yanukovych's opinion, regional politics, first and foremost, should be defined by the relationship of the state to regions' budgets. "Today, can you find a single city or a region in Ukraine in which the government exercises immediate control? My answer to you is - no. Why not? Because neither city nor regional budgets have enough resources to allow local governments to fulfill their immediate responsibilities and functions. Until we pass a reform about local self-administration and until the share of regional budgets is increased at least to 50% of the government's budget, the situation is not going to change", - Viktor Yanukovych stated.

That is why the Party of Regions will support a reform of the system of local self-administration, election of heads of local regional and district administrations so that these people worked for their regions and in regional interests to assure the well being of regions. In Yanukovych's opinion, rights and responsibilities need to be delegated to regions along with financial resources. This system would allow the creation of normal relations between the center and the regions in which regions would be sufficiently strong and having broad rights vis-�-vis a strong center.

As for Ukrainian federalism, in still remains one of the top priorities of the Party of Regions. However today, given the sad experience of calling for immediate federalism by participants of the all-Ukrainian conference of people's deputies in Severodonetsk in November of last year, Viktor Yanukovych speaks of federalism with caution. "Reform does not mean that Ukraine will immediately become federal. It will take a long time, this reform will be implemented gradually and it will result in strengthening Ukraine", - he stated. He believes that federalism will create additional economic, social and cultural conditions that would contribute to preserving the uniqueness of each region. Besides, federalism will result in a greater quality of life of Ukrainian citizen who will "feel freer."

At the same time, it is necessary to note that officially, Kyiv has always been very sensitive about ideas of Ukrainian federalism fearing of the country's break up. Ukraine's administrative, financial and tax system was structured in such a way so as to concentrate all the power in Kyiv. To resolve the political crisis following the second round of presidential elections in 2004, the Supreme Rada passed a package of laws stipulating changes to the Constitutions and a transition to parliamentary-presidentialism. Changes to the Constitutions should have entered into force starting on 2 September 2005 after implementation of the administrative-territorial reform. However, due to the fact that the administrative-territorial reform has not yet been realized, the changes to the Constitution of Ukraine will enter into force on 1 January 2006. Regarding the reform, experts are quite skeptical about its success and predict that at best the reform will be dealt with only after the elections to the Supreme Rada in March 2006 and after the new government is formed.

On 28 November 2004 participants of the all-Ukrainian conference of people's deputies in Severodonetsk ruled that the decision of the Central Electoral Committee to announce Viktor Yanukovych's victory in the presidential elections had been legitimate and in correspondence with all the norms of the Constitution. Conference participants threatened to carry out a referendum on changing the administrative-territorial arrangement of Ukraine and on creating a South-Eastern Republic. Prime Minister Viktor Yanukovych, governors of Kharkiv, Donetsk and Luhansk regions, deputies of regional and city councils of a number of Eastern and Southern regions of Ukraine took part in the conference. Moscow's Mayor Yurii Luzhkov came specifically to support participants of the conference. Back then, criminal  charges with separatism were brought against, among others, the ex-governor of Kharkiv region and the current leader of the Party of Regions' electoral campaign, Yevhen Kushnarov.

NEWS CONFERENCE: Ukrainian President Viktor Yushchenko
State-Owned TV UT1, Kiev, Ukraine, in Ukrainian 1005 gmt 7 Oct 05
BBC Monitoring Service, UK, in English, Saturday, Oct 08, 2005
via AUR

KIEV - Ukrainian President Viktor Yushchenko highlighted the idea of national unity at a news conference broadcast live by three Ukrainian channels on 7 October.

...

The following is an excerpt from Yushchenko's two-hour news conference broadcast live by the Ukrainian state-owned television UT1 on 7 October; subheadings inserted editorially:

[Yushchenko] Esteemed friends, it is a great responsibility and honour for me to be here with you today and to discuss all the issues that have to do with the situation inside and outside the country.

I am ready to discuss a broad range of issues today relating to the concepts of home and foreign policy.

I think we have to pay special attention to the economic, humanitarian and political fields, as well as to the bloc of foreign relations, which, I would say, has radically changed over the last seven months, thus, sound knowledge, enough information and facts are obviously needed now to understand the direction of this process and where we are standing today in such an important sphere as foreign policy.

I am stressing its importance because 60 per cent of GDP is formed there. And depending on which concept or model we will work out - a positive and beneficial or, on the contrary, a negative one - we will find many answers to internal processes, including economic and political ones.

CRISIS DEFUSED, BUT CHALLENGES AHEAD

The main message I would like to deliver today is, FIRST of all, that over the last three months we have managed to make sure that the conflict within the government [which led to sacking of the Yuliya Tymoshenko cabinet, the resignation of the secretary of the National Security and Defence Council, Petro Poroshenko, and the dismissal of first presidential aide Oleksandr Tretyakov] did not grow into a political conflict.

We stabilized the situation in three weeks' time, formed a new cabinet and set up tasks, the major part of which remained the same for 2005, even though the cabinet has to make crucial changes to the economic policy's mechanisms and to formalize new principles, which [in the past] often did not translate from declarations into real deeds. This is the first position.

The SECOND position. I believe that we have got a nonpoliticized cabinet. This is a cabinet of people who know how to stop the trends that have transpired in our economy over the last seven months.

I will probably comment on this in the context of a question you put, but, as an economist, I will maintain that these trends are quite dangerous and the burden they have created is quite serious, affecting both the key general economic indicators and separate sectors' characteristics.

The THIRD part of challenges, which the current government team is facing today, is to ensure the complete fulfilment of the humanitarian social policy declared in the beginning of 2005. We can talk about this at length.

I believe that no political or civil force would have grounds to say today that weak trends have transpired in the wage or pension payment fields in the social segment of the [development] blueprint for 2005.

I do believe there is no such political force. Everyone welcomes such social policy, although it has often been and continues to be now on the verge of macroeconomic balances [as heard].

At the same time, the trends that transpired in the economy may jeopardize the fulfilment of certain programmes. To prevent this from happening, we have to face the third challenge - to fulfil the humanitarian social indicators, as decreed by the state budget for 2005.

Moreover, today we are talking about creating a national financial reserve in order to accumulate several billion hryvnyas for the cabinet to deal with any challenges occurring in any markets, so that we can protect our budget system, our systems of investments, pensions, wages and so on.

Again, we can talks about this in detail, but I believe that we cannot live the way we lived before, when the country did not a have even a weekly supply of petrol, gas, financial resources, grain or sugar and the state reserves almost ceased to exist. [Passage omitted: repetition]

Now let's begin our conversation.

HIGH EXPECTATIONS OF NEW CABINET

[Correspondent] Mr President, you have almost finished forming the new cabinet. You are quite optimistic about it. What is this optimism based on? What is the difference between this team, these individuals and the previous ones? What changes do you expect them to make in the country?

[Yushchenko] From my own experience, I can say that the same people can behave in a different way under different circumstances. The key issue the [former] cabinet had to deal with in the last seven months was not the cabinet's lack of knowledge or professionalism but the fact that the cabinet's priorities began shifting from economic and pragmatic towards
political ones. [Passage omitted: more in the same vein.]

I believe that people who are joining the team now have one big advantage - this is a nonpoliticized, consolidated team, which has harmonious relations with the security council and the presidential secretariat. I have full information about the frequency of their meetings, their dialogue and so on.

Therefore, I believe the main lesson they have to learn is to develop a team spirit, joint intellectual effort and the ability to produce transparent decisions. On other words, these people have everything needed to change the existing situation. There are 11 new ministers, which gives me reason to call this team a new cabinet.

But this is not a matter of a tag - a new cabinet or a seriously reshuffled old one. I believe this is a cabinet with a new climate. You will witness transparent decisions and discussions, professional and team-oriented approach. This is what really matters.

...[Dan: I cut out a section on the Russian Black Sea Fleet for space]

IMMUNITY FOR LOCAL COUNCILLORS

[Presidential press secretary Iryna Herashchenko] Lots of the notes that we have received are about deputy immunity. The question is as follows: you spoke out against deputy immunity, but at the same time signed a law giving the go-ahead for this. What is the Ukrainian president's stance on deputy immunity?

[Yushchenko] We have a precedent in Ukraine where people's deputies of Ukraine enjoy this special status, this immunity. When I conducted my election campaign, I stated unambiguously that I do not subscribe to this approach and I will do my best to see it abolished.

In this context, the Supreme Council [parliament] several weeks ago passed a decision to extend this status to people's deputies of other levels. By the way, the decision was backed by as many 270 or more MP votes.

To which I said - understanding and accepting parliament's stance on this issue, I order that an inquiry should be drafted to be submitted to the Constitutional Court as regards the constitutionality of this provision.

This constitutional inquiry will be submitted very shortly. I am convinced that [immunity should be abolished] across the board, not selectively for these or those deputies, but across the board - this is the only solution that I see to this problem - [changes tack].

We should not have first-class or second-class Ukrainians depending on whether you are a member of a legislature or not. I am convinced that the Constitutional Court will give the only right answer to this question. And this will draw a line under this subject.

In my opinion, this is the shortest path towards a settlement of this problem. I don't see the prospect of settling this problem via the Supreme Council hall - for obvious reasons.

NO POLITICAL COERCION

[Passage omitted: obscure question from a journalist about abuse of the government machinery for partisan purposes]

[Yushchenko] I would like to start by saying that it is my earnest conviction that from now not a single political future can be built by issuing ideological instructions or telling someone what to do. If someone wants to lose an election or suffer political defeat, they should start to build their party by whip and coercion. They will lose in six months' time.

This is an obvious thing. I am the president of all Ukrainians. I am not the president of Our Ukraine [pro-Yushchenko party]. I would like to stress that the idea with which I and most of you stood in Independence Square [during the Orange Revolution] is something that will not be revised and in which we believe strongly.

We are convinced that, in order to instill democracy, freedom of speech and the supremacy of law into this country, one has to pay - with a different face [referring to his own face disfigured by poisoning during the election campaign], with relations with partners, with criticism from the press.

It is all worth it because I know that dozens of previous generations wanted this. Extremes do occur at times because this is apparently the rule of the pendulum.  [Passage omitted: more on pendulum]

ELECTION WILL BE FAIR

If we talk about the use of the government machinery, I give you a personal instruction. We will respond personally to every such act. I have sent quite a few telegrams to lots of people - from uniformed ministers to heads of regional administrations - on how to treat public and political forces and, most importantly, people.

I pledge that, together with you, we will make the 2006 election a truly democratic one for the first time.

I have addressed the OSCE when we were arguing about stopping monitoring, and personally asked them not to stop monitoring Ukraine's compliance with democratic standards. Be with us. Moreover, we will accept as many observers as any political force wishes to deploy to ensure that the political election process is clean.

NO PERSECUTION

On the other hand, dear friends, I would ask you to show civic patience and dignity when it is said that 18 heads of regional administrations are being investigated, as are 70-odd heads of district administrations and some 80-90 of their deputies.

I would ask you not to interpret this as political persecution. I know virtually none of these people, and believe me, I am not really keen on knowing them.

But I would like to say that if we want to demonstrate the supremacy of lawin this country, everyone should be equal before the law - those who stole Kryvorizhstal [giant steelworks] and those who stole 4,000 ha of land in Crimea.

For some reason, these happen to be representatives of the previous authorities. I understand that this is a coincidence. But I would be insincere if I said that if this were winked at, you and I would never believe in the supremacy of law - never ever.

Therefore, there is an easy interpretation - is this responsibility before the law or is this political persecution? I give you my word - I am ready to accept any mechanism enabling a journalist to sense the transparency and purity of these processes at first hand.

I do not rule out that degrading instances both for you and me may happen somewhere. I am ready to put them right. I am a capable person, believe me.

SEPARATISM

[Herashchenko] There are a lot of questions about the memorandum [of understanding] signed with the leader of the Party of Regions [Yushchenko's main presidential rival Viktor Yanukovych]. Does the signing of the memorandum mean that the vote-riggers have been forgiven?

[Yushchenko] Dear friends, I will start by saying that when we stood in Independence Square there were days when our boys and girls took food and warm clothes to the Dynamo stadium for the people brought there [Yanukovych supporters]. There seemed to be nothing but vodka in those tents.

There was an important slogan in Independence Square - west and east are together. It was probably then that we realized better than ever before that a split in Ukraine, the exploitation of an alleged conflict between these regions, a historical or geographic or linguistic or religious one, found such a prominent place in political speculation that after Severodonetsk [a separatist congress in eastern Ukraine].

I think many politicians sensed that we were just one step away from the creation of a certain autonomous state system in Ukraine, which was at variance with the constitution. We were several steps away from Ukraine splitting up. That was because the outsiders were exploiting the topic of differences. I am convinced that such a policy would rob Ukraine of its future.

Exploiting it is, first of all, illegal and anticonstitutional and, therefore, the four criminal cases instituted on charges of separatism will end up in court.

MEMORANDUM FOR THE SAKE OF NATIONAL UNITY

On the other hand, I am convinced that the political elite should be able to give an answer on how to accept these challenges. Each nation has been through tests and trials of varying complexity. What has the elite demonstrated? As a rule, understanding and an example for society to emulate.

Two weeks ago, after the government was sacked and great behind-the-scenes work began to prevent the formation of a new government - and unfortunately this was not only through the efforts of our opposition, moreover, it did not come from the opposition - [changes tack].

When efforts began to implement constitutional changes [shifting some power from the president to the government and parliament] from 1 October and so on, it was clear to everyone - a final stage of fulfilling a Ukrainian chaos scenario started.

The first way of ending this was not to allow a political crisis. I called on the heads of leading parliamentary factions - all but two, the USDPU [United Social Democratic Party of Ukraine] and the Communists, actually it was a mistake, I think, I should have called on all of them though reaching an agreement would have been more difficult and would have required more time and effort - [changes tack].

There was only one purpose. Seven months are left till the election. We could live those seven months as if in keeping with a road map, understanding what we do every day for this country regardless of our political colours, or we could live in chaos, as was being proposed, without a government, without a budget, with myths, with recordings, with gossip and constant scandals - starting from families to international relations.

I chose option one for our colleagues in parliament, friends. For seven months, if we serve Ukraine, we should work out an action plan that would give answers to key seven or eight questions wanted by the nation. Is it in our interest to see this country with a budget? Yes, it is.

Is it in our interest to see the 2006 election being held honestly? Yes, it is. But it is not only the president who should strive for this. We want this country to have a law on the president, a law on the government, a law on the opposition. We talked about this in all squares - I think all of us, from the left wing of the political spectrum to the right. Why don't we do this? Let's do this.

Why don't we do Ukraine a favour and pass five WTO-related laws in October, or rather one law and 14 amendments? It is in our interest - the 8bn dollars that we would gain from unifying our presence in the WTO [as heard]. This money isn't just lying around. Is it in our interest? Yes, it is.

Let's look at the SES [Single Economic Space of Russia, Ukraine, Belarus and Kazakhstan]. The grain to be separated from the chaff for Ukraine is worth accepting, isn't it?

It is, regardless of who we are. I can talk about the SES in great detail. In these three months, I have had to study this model as thoroughly as no-one else probably. If we see that there is something to it, why can't it be the subject of a declaration? For the sake of Ukraine's future.

I won't comment on other actions, but I am ashamed to see the topic of political repression being exploited.

Friends, I lived amid political repression for three years, and every person that stood next to me up to the seventh circle of relatives was held accountable by the Kuchma regime. I bear no grudge. I seek no vengeance, although I'd probably have a moral right - more than anyone else.

I say it is not my profession to persecute anyone. I know that we will win our political future with our intellect and righteous deeds. But let's sign a memorandum for this. We signed a basic declaration, which lists all these issues.

I ask each political force - what's so bad about this document, which has brought parliament's political elite to the round table? Because three structures did not sign it? It is their choice, friends. It is their choice.  There are political games.

But let's start with what was written in the slogan in Independence Square. The administration that will answer the question on how to consolidate east and west will probably be the first administration to build a fundamental, promising and consolidated Ukrainian policy for years to come. It is not easy.

Rebuke could be showered on Yushchenko - why has he signed it with Yanukovych, who had not yet congratulated him on his election. I am with the 13m Ukrainians who saw a different choice.

That's what I am talking about. It must have been on more than a dozen occasions that I have reminded myself and you about the apt expression by the president and general, [Charles] de Gaulle, who said, you know, the opposition is always difficult.

Sometimes I am reluctant to talk to it. But I will always talk to it. Why? Because the opposition is also France. We talked about this in Independence Square.

Why are you crucifying me now, calling it capitulation? It is a conversation between the authorities and the opposition. These relations should be formal, friends, not secret.

VOTE-RIGGING

As regards vote-rigging, friends. My comment will be very simple. [FIRST] More than 4,000 vote-rigging cases have been instituted so far, it seems. The lion's share naturally targets scapegoats. Why did a teacher in a village or a doctor in a town or district centre resort to vote-rigging with absentee ballots?

Someone has run away for a few weeks or months. Someone is being searched for. But we all understand very well that these are not the people who are de facto responsible for starting the phenomenon called vote-rigging. Those indeed were scapegoats.

I am telling you now, without anticipating an answer - society should have a think. Perhaps now we should talk of vote-rigging in the context of those who organized that vote-rigging. Because raising the issue of vote-rigging by the other side [Yanukovych] is proof of vote-rigging in itself. That's something already.

SECOND, are organizers and simple participants in this process. I am convinced that the winning authorities will realize - because it is characteristic of the winner - that an overwhelming majority of citizens passively involved in vote-rigging and the whole nation have learnt a lesson.

For the first time in 14 years someone has been held responsible for vote-rigging. For 14 years we talked about rigging, but not a single case was opened. Now we have several thousand cases. So this is good food for thought.

I am not talking about the responsibility of the people who organized the work of the transit server processing election reports, which was housed not by the CEC [Central Electoral Commission]. These people will be brought to justice. I have instructed law-enforcement bodies to this effect.

... [Dan: I cut out talk of Yushchenko getting nominated for the Nobel Peace Prize and his son's spendthriftiness]

JOURNALISTS NOT TO BE PERSECUTED

[Herashchenko] There are many questions about the law on elections, which is believed to restrict journalists' work in a way. Mr President, are you ready to initiate a moratorium on checks of the mass media [by the authorities] in the run-up to the parliamentary election [in March 2006.]

[Yushchenko] Esteemed friends, I am ready to do so. I think that by the time of the parliamentary election, I will meet with leading Ukrainian media representatives, politicians, leaders of [parliamentary] factions more than once in order to work out a policy that will grant immunity, in the best meaning of this word, to journalists and mass media to ensure their independence during the parliamentary election campaign.

I believe a number of mechanisms should be found [to attain this]. But I do not rule out that abolishing all kinds of checks during the parliamentary election could be one of the mechanisms. I would like to stress that this is just one of the mechanisms. I am not sure that this mechanism will do. We will think it over. If you have any ideas on the matter, I am ready to consider them.

GONGADZE CASE

[Correspondent] The day before yesterday, the Parliamentary Assembly of the Council of Europe [PACE] adopted a resolution, which negatively assessed the investigation of the [slain journalist Heorhiy] Gongadze case in Ukraine. The person who actively lobbied for this point of view [MP Serhiy Holovatyy] was appointed justice minister the following day.

Can you explain whether you share the PACE's negative assessment of the process of investigation? Can you also say whether you, as chief commander of all law-enforcement forces in Ukraine, can make sure that this murder is investigated in accordance with resolutions of the Council of Europe? Thank you.

[Yushchenko] To be honest with you, I am surprised to hear a reproach from a journalist when it comes to the Gongadze case. If you know what you are talking about, then you should be aware that in January when I became the president of this country, there was nothing on the Gongadze case. Do you know this?

[Correspondent] Viktor Andriyovych, this was a question, not a reproach.

[Yushchenko, interrupting her] You must have known this. I gave guarantees regarding this case, which no other president gave, to resume the investigation and to obtain testimonies which people were afraid of giving for four years. I put my name on the line. I hid these people.

If need be, I will probably describe what was done to obtain what we have today. In seven months, investigation bodies established the names of the killers, collected evidence, carried out a forensic test, finalized the case and opened it for familiarization a few weeks ago.

I know more could have been done. You know that we were pumping water out of ponds in winter, looking for personal effects, although we could have waited until summer. But I said I would not do this.

I said go ahead and put pumps and search for everything - telephones, jackets, boots, socks and so on - to keep up a dynamic and active investigation. I would say that the first four months [earlier this year] were the most active stage of the investigation.

I believe the Prosecutor-General's Office withstood a lot of political pressure in connection with this case.

The main question remains unanswered - who ordered the murder. In my view, there is certain progress in this stage of the investigation too. At least the world and Ukraine know who the key witness is [Gen Oleksiy Pukach, who fled Ukraine] and who can shed light on the matter.

There are certain problems, including international ones, connected with this part of the investigation. I will be thankful to all international forces which will help Ukraine to carry out this stage of the investigation quickly and effectively.

I would like to separately ask politicians not to mention the murder in vain. This is a matter to be resolved by professionals exclusively. Stop mentioning Gongadze's name in vain.

Third. I have appointed Serhiy Holovatyy as justice minister. This person can hardly be accused of prejudice when it comes to this and other criminal cases. I believe that given his authority, his status and his abilities, Ukraine will make considerable progress in the investigation. Thank you.

[Passage omitted: Yushchenko promises more visits to the regions, says some governors may be replaced, talks about free economic zones and the need to attract foreign investment.]

RELATIONS WITH FORMER ALLIES

[Herashchenko] Are you ready to take the hand extended to you by Yuliya Tymoshenko?

[Yushchenko] You know, I did not pull my hand away from Tymoshenko, Poroshenko, [former State Secretary Oleksandr] Zinchenko or anyone else. Nor am I going to do this.

They are my friends, and I regard them as outstanding and important people, but I ask them to have the courage to draw conclusions, to be honest and courageous. I am convinced that they should take a pragmatic and honest stance in the name of Ukraine. Then everything will be plain and clear. I am convinced that those who have taken offence will undergo cleansing. I am convinced.

An answer to the question what political democratic forces should do in Ukraine. My view is this: they must be consolidated. Going to foreign countries to drum up support is not becoming in terms of national interests.

It is not becoming - no matter who does this. It is painful and it hurts me. One has to be consistent and honest. There is no tragedy. There is even no drama there.

After Independence Square, we got a second chance to breathe with both lungs. I'd say there is no need to be so sad or upset about the mistakes made if there is an opportunity to correct them effectively. This is the most optimistic thing about the problems that have emerged in recent months and weeks.

My task was to preserve the team and the team spirit. I have no problems in relations with anyone. I have not changed my attitude, but my demand remains basic and fundamental.

The authorities should be united, should work as one team and with the same team spirit, should not be embroiled in intrigue, should not take alternative decisions in forests which are at odds with state objectives.

They should work for the benefit of Ukraine and Ukrainian democracy. I am sure that this is the key theme that can unite even those people who have left the team for known reasons and who are living emotionally, it seems to me...

[Maidan-Inform, 01-10-2005, translation courtesy of Leo of Leopolis]

On the 30th September 2005 the Chief Prosecutor of Kirovohrad oblast and three of his deputies were relieved of their duties on the orders of the Prosecutor-General of Ukraine. On the same day Oleksandr Hardetskyi was introduced to the Kirovohrad Prosecutor collective to serve as acting Chief deputy, and has been empowered to form a new team.

Oleh Levytskyi, who until yesterday held the post of Chief prosecutor of the oblast, declared that he was illegally fired and the laws of Ukraine concerning the Proscutor's office were seriously transgressed. He intends to challenge the Prosecutor-General's decision through legal channels.

Levytskyi is convinced that the main reason for the sackings is a recently-opened criminal case which impinges on the business interests of highly placed government officials. He is quoted as saying, "The Kirovohrad oblast Prosecutor's office has encroached on the business of Prosecutor-General of Ukraine Piskun's wife, the head of the Supreme Court of Ukraine Malarenko's wife, the former minister and chief of Tax administration Azarov's wife, and also a family member of the Prosecutor-General of Ukraine."

Levytskyi stated that the commercial structure, 'Planeta Investytsyi' Limited company, in contravention of current laws, contracted to rent the entire "Novoukrainskyi kombinat khliboproductiv" state [bread-baking] enterprise. The founders of the company, by utilizing shadow schemes, taking advantage of a profitable state enterprise, and utilizing corrupt connections, caused losses to the state totalling several million hryvnya.

Note: A previous order by the Prosecutor-General of Ukraine to dismiss Oleh Petrovych Levytskyi from his position of Chief prosecutor of the Kirovohrad oblast was declared invalid by the Kirov city court on 10th August. He was reinstated on 19th August 2005 as a result of this court decision. [The source given by maidan.org.ua is 'Vyedomosti Plus' - a Kirovohrad oblast weekly.]