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July 22, 2011

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vol. 16, issue 29

Powering Up Ukraine

Ukraine still gets about half of its electricity from environmentally-unfriendly fossil fuel burning generators such as this one in Kharkiv Oblast. (UNIAN)

Ukraine ranks alongside nations with much larger populations, territories and economies as one of the world’s top10 natural gas guzzlers. Lack of investment and bureaucratic hurdles keep industry and households dependent on ageold technologies.

Meanwhile, Russia, Ukraine’s main gas supplier, continues to hike gas prices. Can foreign investment and alternative energy spark a breakthrough? See Business Focus stories on pages 10-13.

This solar power plant was launched in Crimea this spring.

(Courtesy)

More environmentally clean wind power stations are popping up across Ukraine, including this one in Crimea. (Courtesy)

This farm in Kyiv Oblast is no longer just producing milk from its cows. It is also using the manure to generate energy via so-called biogas technology. (UNIAN)

Three British Ukrainians Ukraine’s Vanquished Jews: Wounds still sore 70 years after Holocaust caught up in center of Murdoch media scandal Kyiv Post Staff – Three British journalists with Ukrainian roots are caught up in one of Britain’s largest scandals in recent years, which hit the spotlight this month with the closing of the nation’s top tabloid newspaper by its embattled publisher, influential media magnate Rupert Murdoch.

Two former employees of the News of the World, shut down amid allega-

Inside:

tions that phone-hacking was used to find out information for stories, are Alex Marunchak and Greg Miskiw.

Miskiw’s ex-girlfriend, Terenia Taras, is also reported to be involved in possible illegal activity that took place at News of the World. Several separate sources close to the individuals have confirmed that they are members of Ukraine’s diaspora community in the United Kingdom. Both Æ2

News Æ 2 Opinion Æ 4, 5

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Editor’s Note: This is the final article in a five-part series that examines the Holocaust in Ukraine that nearly wiped out its 500,000-member Jewish community during Nazi Germany’s occupation in World War II. This segment looks at steps under way to reconcile the Ukrainian and Jewish communities.

BY NATA L IA A . F ED USCH A K FEDUSCHAK@KYIVPOST.COM

LVIV – Nearly 70 years after western Ukraine witnessed the decimation of its Jewish community, relations between Ukrainians and Jews often remain uneasy. Although Germans

initiated the Final Solution – the Nazi plan to eliminate Jews in Europe – many Jews have been particuth i larly angry at Ukrainians for their role in the Holocaust, at times even more so than at Germans themselves.

The reason, some Holocaust survi-

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vors say, is because Jews did not expect Ukrainians, people they had lived with side-by side-by-side for generations, to particip pate in terror against them. This is compounded, they say, by a failure of Ukrainians to examine their past in an unbiased way, even after the fall of the Soviet Union.

“When an outside danger comes from far away, it’s not the same as your own neighbor,” said Shimon Redlich, a retired university professor who survived the Holocaust in Æ2

2 News

JULY 22, 2011

July 22, 2011

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Vol. 16, Issue 29 Copyright Š 2011

by Kyiv Post The material published in the Kyiv Post may not be reproduced without the written consent of the publisher. All material in the Kyiv Post is protected

by Ukrainian and international laws. The views expressed in the Kyiv Post are not necessarily the views of the publisher nor does the publisher carry any responsibility for those views. ГаСота “Kyiv Postâ€? Đ˛Đ¸Đ´Đ°Ń”Ń‚ŃŒŃ Ń? ТОВ “Đ&#x;Đ°ĐąĐťŃ–ĐşĐœĐľĐ´Ń–Đ°â€?.

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Diasporans could tell who knew about phone-hacking Æ1 Marunchak and Miskiw are said to be about 60 -years-old.

Marunchak and Miskiw are alleged, according to British media reports, to have been involved in illegal tapping of phones and acquisition of information for use in the newspaper’s sensational reporting that has often exposed politicians and celebrities.

The allegations and ongoing investigations have triggered uproar in British media and society.

Murdoch, chairman and chief executive of international media conglomerate News Corp., which owns the News of the World and three other British newspapers, denied knowledge of the alleged phone hacking in front of a committee of British lawmakers on July 19.

The Ukrainian group worked at News of the World at the time the paper was headed by Rebekah Brooks, one of the closest people to Murdoch, and Andy Coulson, former press secretary of British Prime Minister David Cameron.

Brooks was detained for questioning by British police on July 17, days after she resigned as head of News International, a branch of Murdoch's News Corp. Coulson resigned as Cameron’s press secretary this year when the media scandal started to gain momentum.

Cameron was grilled by lawmakers in Parliament on July 20 and said he would not have hired Coulson if he had known about his alleged close connection to the phone hacking.

Both Brooks and Coulson maintain that they did not know of the alleged illegal activities involved in news gathering at the paper, but both admitted years ago that News of the World paid police officers for information.

If illegal or unsavory activity took place, Marunchak and Miskiw could be in a position to give testimony contradicting the accounts of Brooks, Coulson and Murdoch – all of whom claim not to have known about possible illegal activities.

Æ Closeknit group reportedly concealed activities by speaking Ukrainian According to a BBC report, Marunchak paid detective services for information and allegedly obtained hacked email correspondence of a British intelligence officer while head of News of the World’s Dublin office in 2006. Contacted by the Kyiv Post, Marunchak denied wrongdoing but was tight-lipped on details and declined

to discuss specific allegations. A report by the Daily Telegraph suggested he worked as a police translator while also working for the newspaper.

His colleague, former assistant editor Miskiw, is, according to British news reports, tied up in a separate alleged illegal transaction aimed at obtaining information for the paper. According to the Daily Telegraph, Miskiw is alleged to have signed a contract in 2005 with a private detective who tapped into the telephone conversations of Princes William and Harry. Miskiw has also denied wrongdoing.

The Ukrainian group, according to reports, specialized in obtaining sensational information and worked as a team. When Marunchak and Miskiw did not want their discussion to be understood by bystanders, they spoke Ukrainian, the Daily Telegraph reported. The newspaper reported that both also had a joint business importing vodka from Ukraine to Britain.

ТОВ Đ?Ф â€œĐžĐ›Đ“Đ? Đ?ŃƒĐ´Đ¸Ń‚â€? Đ— ĐżŃ€Đ¸Đ˛ĐžĐ´Ńƒ рОСПіщоннŃ? рокНаПи ĐˇĐ˛ĐľŃ€Ń‚Đ°ĐšŃ‚ĐľŃ ŃŒ: +380 44 234-65-03. Đ’Ń–Đ´ĐżĐžĐ˛Ń–Đ´Đ°ĐťŃŒĐ˝Ń–Ń Ń‚ŃŒ Са ĐˇĐźŃ–Ń Ń‚ рокНаПи Đ˝ĐľŃ Đľ СаПОвник.

Mailing address: Kyiv Post, Prorizna Street 22B, Kyiv, Ukraine, 01034 Advertising tel. +380 44 234-65-03 fax +380 44 234-63-30 advertising@kyivpost.com Editorial staff tel. +380 44 234-65-00 fax +380 44 234-30-62 news@kyivpost.com Subscriptions Nataliia Protasova tel. +380 44 234-64-09 fax +380 44 234-63-30 subscribe@kyivpost.com Distribution Serhiy Kuprin tel. +380 44 234-64-09 fax +380 44 234-63-30 distribution@kyivpost.com Marketing Iuliia Panchuk tel. +380 44 234-30-40 fax +380 44 234-63-30 marketing@kyivpost.com

Full reconciliaton between communities will take time Æ1 Berezhany, Ternopil Oblast, with the help of Ukrainians. “Germans have historical memory. They have confronted the past, something that Ukraine couldn’t have done during the Soviet period.â€?

For that reason, full reconciliation between the two communities may still be some time away. A number of Ukrainian historians have argued that it is impossible to come to terms with the Ukrainian role in the Holocaust until the country confronts its Soviet past. While the Nazi period was frequently shameful, Soviet rule was marked by repressions, arrests, deportations and the annihilation not only of the nation’s intelligentsia, but those who disagreed with the ruling system.

Seeds of reconciliation, however, are being planted by people who hope to

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promote understanding between the two communities. An important part of that process is for each side to hear the other, whether through publications, conferences or meetings.

There has recently been a boom in work dealing with the country’s multifarious past that once would have been unimaginable. Ukrainians are now hearing the Jewish side of the story.

Several autobiographies by individuals who survived the Holocaust in Ukraine have been translated into Ukrainian, as well as critical assessments of how the nation approaches its Jewish past, including works by Redlich and Omer Bartov, a Brown University professor and leading expert on genocide. “If we are to understand historical events, we have to put them in historical context. We have to rid ourselves of the habit of telling [stories] from one perspective,� Bartov said.

Ukrainians are also being given the chance to learn more about how outsiders assess the Soviet past, helping them better understand how the Holocaust fits into their nation’s history.

Recent books by leading Western scholars have assessed how Soviet and Nazi policies shaped Ukraine. “Bloodlands: Europe Between Hitler and Stalin,� an internationally acclaimed volume by Yale University professor Timothy Snyder, is expected to be available in Ukrainian shortly.

In June, Snyder told a conference of leading international scholars in Berlin that when considering relations between Ukrainians and Jews on the local level during World War II, it is important to recognize how they were impacted by the larger policies of Stalin’s Soviet Union and Hitler’s Germany.

To fulfill their political and military agendas, both powers “counted on the local population when things weren’t going to plan,� he said. “Ukraine is the very center,� Snyder said. “Ukraine was the deadliest place to be.�

Resurrecting historical memory has become a critical component of the reconciliation process. Lviv, which was

Holocaust survivor Janina Altman (left) returns in May to the building where she lived with her family in the Lviv ghetto during World War II. She is joined by Sharona Komem (right) and her husband, Itzhak (center), also survivors of the Holocaust.

(Natalia A. Feduschak)

once home to the third-largest Jewish community in pre-war Poland, is the backdrop for several initiatives.

Lviv’s city council is working with the Center for Urban History of East Central Europe, a non-profit private foundation, to create memorials at three places of Jewish history and culture. For the second year in a row, the center itself has sponsored a summer school in Jewish studies, which include courses in the history of western Ukrainian Jews, Jewish literature and Yiddish, the language spoken by Central and Eastern European Jews.

Sharing experiences with Ukrainians has taken on a particularly important role in promoting understanding. In May, Lviv hosted a conference to discuss the role of non-Jews who saved Jews during the Holocaust, known as The Righteous Among the Nations.

Among those present was Janina Altman, whose father was Henryk Hescheles, the long-time editor of the renowned Polish-language Zionist newspaper, Chwila, published in Lviv from 1919-1939. Her diary, penned at the age of 12 and first published in Poland in 1946, is finally available in Ukrainian. Altman, who said she never expected to return to Ukraine after she left, arrived in Lviv with her two

sons and a granddaughter the same age she was when she wrote her heartwrenching words. “In order to be a normal person, I tried to be a normal person,� she described how she dealt with life after the Holocaust.

Her sentiment was echoed by other Holocaust survivors, also present at the conference. Sharona Komem, a Lviv native, vividly remembers the day when the Nazis started pogroms against Jews after they entered the city in 1941. Her life was saved in part because a Ukrainian man warned her parents while out on the street that the Nazis were looking for Jews and took Komem in. She was returned to her parents several hours later because her mother was afraid she would never see her daughter again.

Over a period of several hours she patiently shared the contents of her Hebrew-language memoirs, displayed at Bergen-Belsen where she was interred with her family during the war. Of the Ukrainian man who made a split-second decision and took her in, no matter how short a period, Komem said “now I can appreciate what those people� went through. “It was spur of the moment,� she said.

www.kyivpost.com

3

July 22, 2011 Advertisement

Customs Clearance Diagnostics The EBA releases results of the 3rd wave of Customs Survey Average numPercentage of Percentage of Average number Rate of shipber of docurejections to cargo tariffs of days spent on ments selected change by customs apply the trans- ments required for physical customs clearper one action value authorities (%) ance of one inspection (%) shipment method (%) shipment

Recently the EBA released the results of Customs Index survey for the first half of 2011. Based on the expert poll among EBA Customs Committee mem- 1st half of 2011 2.5 26% bers, the project monitors the progress within the main challenges busi- 1st half of 2010 52% 2.0 ness faces when dealing with customs administration. EBA Customs Index 55% 2.4 continues a series of diagnostics of 1st half of 2010 interlocking customs procedures in Ukraine and serves as a practical tool applied has decreased adding value to the defining customs activities’ shortcom- well-balanced valuation work (52% versus ings and laying down customs reform 26%) The correlation of respondents’ percepdirections. tion of customs clearance duration (average H1 2011 results are slightly optimistic, number of days spent for customs clearance however achieving efficiency and transpar- of one shipment) in the first half of 2011 ency in customs procedures in Ukraine is varies slightly in comparison to H1 and H2 still a formidable challenge due to deep- of 2010. The same is observed within the rooted tradition of cargo clearance delay, indicator of red tape (average number of unnecessarily excessive and complex execu- documents required per one shipment) - the tion of documents and non-transparent con- median statistic (10 documents) remained duct of customs operations. The Association stable indicating no drastic changes. continuously develops a succession of meaThe 3rd wave of Customs Index poll testisures introducing linchpins on how best fied to the customs vulnerability to corrupto remedy the inefficiencies of customs tion and discretionary power of customs administration. administration. Corruption as a prevalent The dynamics phenomenon depict, that the undermines promotion of Every fourth company perceives the country’s repWTO-advocated utation and increase of corruption and bribery transaction value corruption practices. 62% of participants stated method of goods counter meavaluation takes that corruption level remained the same sures should its course and compared with the previous 6 months be in the attunes Ukraine first instance to international when respondents were reporting integrated trade standards. into customs elevated corruption The EBA is conreforms plan. vinced that furInstalling a ther strengthencompetent and well functioning customs ing of the valuation function in customs can administration that provides traders with be achieved by setting up an appropriate transparent, predictable and speedy clearlegal framework, private-public coopera- ance of goods is one of EBA policy vection enhancing and customs classification tors, closely tied with overall trade policy nomenclature update. environment. Customs modernisation and Customs Index results also point to the reform remain on the development agenda of fact that the rate of retrospective and inef- Ukraine and the EBA will continue monitorficient method of goods physical inspections ing customs activities’ efficiency.

*O'PDVT Business Trip Certificates Stamped Out

I

n June 2011 the Ministry of Finance of Ukraine has ratified the termination of Order on Approval of Business Trip Certificate #260 formerly issued by the State Tax Administration of Ukraine in mid-90s thus business trip certificate is no longer used as a mandatory document to confirm and reckon relevant business trip expenditures towards gross expenditures.

Rooted in a long-standing tradition, business trip certificate tend to be atavistic and to delay the process of business operations’ simplification. Back in 2007 when EBA Investment Paper ‘Barriers to Investment in Ukraine’ (as well as EBA Report 2009 ‘Overcoming Obstacles to Business Success’) was published, the EBA consistently stressed that weighty requirements for business trip confirmation do not comply with present-day tendencies of doing business, thus causing obstacles and misunderstandings when dealing with tax authorities.

The requirement to seal the business trip warrants by the host company combined with an extensive list of other supportive documents proved to be rather burdensome for business. The forcible argument rests in an absence of the document of the nature in European practices and corporate procedures.

In response to numerous EBA appeals and lobbying efforts the Government initiated the work on relevant legislation amending. According to the new Tax Code of Ukraine business certificates were excluded from the list of documents confirming business trip expenditures and recently as a result of these efforts the Order No 260 has been abolished.

We would like to thank all EBA members who kindly supported and contributed to EBA lobbying efforts that brought to this success.

8%

27%

9.8

6%

38%

10.9

N/A

34%

10.8

ANNA Derevyanko, EBA Executive Director

First, let me thank all those who kindly contributed to the completion of the 3rd wave of Customs Index poll. We all at the EBA hope that Customs Index will help the policymakers in defining clearly-stated objectives for the Government and monitor the perception of customs operations’ quality. The results of the first half of 2011 give hope for greater flexibility of customs operational matters. The concerted efforts of business community and the Government resulted in such optimistic results.

On behalf of Association’s business community I am grateful to the State Customs Service for their openness and commitment to an ongoing fruitful cooperation with business.

The checklist of top-priority issues to be considered by the EBA in conjunction with state customs officials contains the following: structuring the intricacies of customs nomenclature and valuation methods, cutting the red tape and the anti-corruption incentives establishing.

The EBA advocates that the customs value of goods, to the greatest extent possible should be transaction value method of customs valuation.

I would like to stress that customs valuation practices and structuring customs nomenclature present one of the most challenging aspects as valuation reform in the absence of comprehensive policy incentives is likely to disappoint. Thus, a combination of reform elements is a linchpin for setting a competent and well-designed customs system thus achieving a balance between trade facilitation and regulatory control.

Customs is regarded as one of the corruptionprone sectors, as the very nature of the work grants customs officials the authority to affect tariffs and duties of business or the admissibility of goods. The EBA underlines, that the first line of fight against corruption consists of the faceto-face contact between traders and customs officials reducing and strengthening the prosecution measures for the breach of integrity. To meet the mission, electronic systems of customs declarations’ submission and customs clearance should be established. A good starting point is to set realistic priorities anti anti-corruption incentives as a part of the overall smooth and well-balanced customs reform.

VLADIMIR Didenko Chair of EBA Customs Committee Partner, Magisters

Comparing the Customs Index survey results of the first half of 2011 with year 2010 we have to admit that figures look better.

Positive trend is noticed in such areas as: • rate of goods physical inspection - 26% comparing with 52% in the 2nd half 2010; • total number of rejections to apply 1st customs valuation method - 27% comparing with 38% in the 2nd half of 2010; and even • average number of documents per shipment - 9.8 comparing with 10.9 in the 2nd half 2010.

Positive trend in figures indicates some progress in area of customs clearance since the survey has been launched. However, even those importers who noticed customs clearance improvement still cannot be sure that they are safe.

The survey shows increased number of issues with goods re-classification. This reflects reality as there is a number of cases of extremely "creative" treatment of goods classification, which result in higher import duty rate. Customs remains unpredictable fiscal body. The EBA Customs Committee continues to assist its members in keeping productive dialogue with the customs leadership.

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4 Opinion

July 22, 2011

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Editorials

Lesson for Kyiv The British public was rightfully shocked and outraged this month when it got a deeper glimpse into alleged crimes rooted in sleazy, close relations between its police, press and politicians. Centering on allegations of phone-hacking and other crimes, the scandal at the News of the World newspaper threatens to damage or even end the careers of once-influential journalists, senior politicians and a person many across the globe considered to be the mightiest of media moguls – Rupert Murdoch.

If the British public were to experience the everyday conflicts of interests between Ukrainian oligarchs and their pet politicians, they would suffer a heart attack. Unfortunately, the situation is out of control, in part because Ukrainians have long tuned out of politics and have grown far too accustomed to how they and their nation’s riches are being robbed by kleptocrats.

There are lessons for Ukraine to learn from the Murdoch media scandal.

First, President Viktor Yanukovych should watch closely. In the European Union to which he wants to bring Ukraine, top politicians, media moguls, businessmen as well as journalists are held accountable when caught or suspected of doing wrong. If Ukrainians want better living standards, they should campaign for the same accountability here.

Second, independent journalism can pay off, fulfilling its rightful role as the “fourth branch of government.” Cover-ups happen even in Europe. The British phone-hacking scandal was kept under the lid for years and could have passed if it were not for the relentless efforts of one reporter from the Guardian newspaper.

To successfully combat corruption – as Yanukovych claims he wants to – Ukraine needs more prying, not muzzled journalists. Investigations are needed to follow-up on what journalists uncover, even if it is something in the leader’s backyard.

NEWS ITEM: American pop diva Jennifer Lopez was reportedly in good spirits despite divorcing her husband after she earned a whopping $1 million in Ukraine’s Crimea this week by singing at a wedding of an Uzbek businessman.

The singer performed at the wedding of Azam Aslanov, the son of Amon Aslamov.

According to observers’ estimates, the wedding cost millions of dollars.

At the same time, the per capita gross domestic product in Uzbekistan was estimated at $3,100 last year, according to the CIA fact book. More than one-quarter of the 28-million population lives below the poverty line. Many in Ukraine, where GDP per capita is at around $6,700, also live close to poverty.

Probe needed The authorities’ desperation to prove there is no selective justice in Ukraine reached new heights of absurdity this week. Pro-presidential officials and lawmakers touted the arrest of a functionary with minor connections to the authorities as evidence that they are fighting a battle against corruption, not just the opposition.

But, at the same time, law enforcers have ignored evidence in a report on leading news website Ukrainska Pravda that appears to show that large payments for President Viktor Yanukovych’s use of a helicopter and airplane went to a company – without a tender – linked to the president’s family.

Vasyl Volha, former head of the State Committee on the Regulation of the Financial Services Market, was arrested on July 19 on accusations of taking a $500,000 bribe. Pro-presidential figures claimed this showed that the probes into opposition members, including former Prime Minister Yulia Tymoshenko, are part of a wider attempt to wipe out corruption, rather than a political assault. However, Volha was never close to the president, or in his Party of Regions. He is a former Socialist Party member who recently took part in a new left-wing political movement.

Meanwhile, leading Ukrainian journalist Serhiy Leshchenko published an investigation into the leasing of a helicopter and airplane for use by Yanukovych. His investigation, if true, reveals enough evidence of high-level conflicts of interest, murky dealings and possible corruption to warrant an immediate investigation.

In the article, Leshchenko wrote that a helicopter and airplane used by the president were rented without a tender from a firm called Centeravia. The chopper, according to Leshchenko, was rented at above market price. He added that the company was founded and, until recently, managed by Pavlo Lytovchenko, a lawmaker on the Kyiv regional council from the Party of Regions who is reportedly close to Yanukovych’s son. Previous investigations by Leshchenko revealed Lytovchenko’s role in companies that acquired and developed the lion’s share of land at Mezhyhiria, a luxurious compound outside Kyiv where Yanukovych lives.

Everyone knows that corruption is Ukraine’s most severe affliction, allowing leeches to suck the life out of businesses and ordinary citizens in order to provide themselves with lavish lifestyles. When evidence emerges that this could reach as far as the president himself, it must be investigated fully. Otherwise, there can be no other conclusion than that opposition members and current officials with limited connections to the president and his team are selected, while alleged abuses

by Yanukovych and his cronies are ignored.

If the president and his allies have done nothing wrong, then they would have nothing to fear from an investigation. But we don’t expect such a probe will happen, as Ukraine under Yanukovych appears to be swiftly becoming a country where impunity is the rule for the president, his family and oligarch friends, while the law and politically motivated prosecutions apply to those who oppose them.

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More stick, less carrot best in dealing with Yanukovych TA RA S K UZ IO, L UCA N WAY A ND SERH IY K UD EL IA

American political scientist Alexander J. Motyl has argued that a group of experts, including these three authors, are wrong to believe the European Union should take a tougher line against President Viktor Yanukovych over democratic regression since he came to power 18 months ago (See www. kyivpost.com/news/opinion/op_ed/detail/107488/).

Motyl believes that the strategic factor of denying Ukraine to Russia and the Customs Union outweighs any democratic failings and that, once inside the free-trade zone, the EU will have leverage over Kyiv and be able to gradually Europeanize Ukraine.

There are five problems with this argument.

First, we did not argue that Ukraine should be a consolidated democracy bound by the rule of law before it is invited into a free-trade agreement. But, after 18 months of democratic regression, the scorecard of democratic and rule of law gains should be at least 4-6 out of 10 that would give us hope that it could be improved once inside the free-trade area.

Second, we did not believe that we are faced with a clearcut choice between the “bad” Customs Union and Eurasia, on the one hand, and “good” Europe, on the other. The Yanukovych administration, like that of ex-President Leonid Kuchma, espouses the rhetoric of seeking EU membership while undertaking non-European policies at home. We did not therefore believe that either Kuchma or Yanukovych are genuinely committed to seeking EU membership.

The Yanukovych administration is seeking “EU enlargement-light;” that is, membership of the free-trade zone while preserving a monopoly on political and economic power inside Ukraine. In the same manner as the Yanukovych

Æ Brussels and Washington should coordinate a visa denial list to punish top Ukrainian officials administration seeks to keep Brussels from intervening inside Ukraine, so it does not want Russia to intervene in economic and energy affairs (while giving Russia inordinate influence over national identity and foreign and security policy).

Kuchma and Yanukovych are economic nationalists, like Belarusian President Alexander Lukashenko. Yanukovych and his oligarch allies seek the benefits of the free-trade deal and the Customs Union without interference from Brussels or Moscow. Ukraine and Belarus are seen as the personal fiefdoms of Yanukovych and Lukashenko, which can be asset-stripped and used as a source of corrupt rent-seeking for the benefit of insiders while their populations are treated as subjects with no rights.

The threat by Kuchma and Yanukovych to “go to Russia” if they cannot have their cake and eat it in Brussels is an empty threat, as Ukrainian officials know that a dialogue on equal footing with Russia is impossible.

The Yanukovych administration is seeking to freeze its monopoly of power and the partial transition between communism and a market democracy – not open the system to Europeanization after joining the free-trade zone. Most oligarchs, after all, have luxurious homes, offices and children in private schools in the EU and they have no need for the stringent criteria and EU interventionism of EU membership Æ5

Feel strongly about an issue? Agree or disagree with editorial positions in this newspaper?

The Kyiv Post welcomes letters to the editors and opinion pieces, usually 800 to 1,000 words in length. Please e-mail all correspondence to Brian Bonner, senior editor, at bonner@kyivpost.com or letters@kyivpost.com. All correspondence must include an e-mail address and contact phone number for verification.

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July 22, 2011

‘Friends‘ should stop digging Kyiv into a hole IN N A B OG O S L OV S K A

Dear David J. Kramer, Damon Wilson and Robert Nurich: As chair of the Ukrainian parliamentary commission that has investigated the 2009 gas agreement with Russia, I was somewhat at a loss after reading your July 15 open letter to the President of Ukraine (see "Mr President, time to stop digging yourself into a hole," Kyiv Post, July 15).

On the one hand, it’s clearly a letter from friends of Ukraine who feel very strongly about what they are doing and saying. On the other hand, I can’t help but notice that you are being overly emotional on the issues you raise.

In your open letter to President Viktor Yanukovych, you were right to take note of the tangible progress Ukraine is making under his leadership in implementing a whole number of long-overdue and urgently needed reforms.

At the same time, you are worried that this progress can be devalued by “the slide […] in the areas of democracy and human rights.” In your interpretation this “slide” is manifested in “selective prosecutions” against Yulia Tymoshenko, Yuriy Lutsenko and four other representatives of the previous Cabinet who just recently were in charge of the customs, energy transportation and state procurement.

In other words, despite ongoing investigations of over 400 representatives of the current Government (including a number of high ranking ones), charged on various accounts of corruption – you pick out six representatives of the former Cabinet and conclude that today’s government is selectively persecuting its predecessors.

The opposition claims all of “their” defendants are political victims and had nothing to do with the evil of corruption. Ukraine’s General Prosecutor’s Office claims the opposite. I am sure you will agree that in a constitutional democracy there is only one way to resolve this kind of argument – in a court of law.

However, the opposition doesn’t want to resolve it this way because the court is in their view “corrupt and nontransparent.” Indeed, the process is “nontransparent” because Yulia Tymoshenko publicly humiliates the judge and encourages her supporters in the court room to follow her suit in a live national

Æ Nation’s future should not hang on destiny of Tymoshenko broadcast during the proceedings. Would any U.S judge tolerate such a behavior?

In the court room, Tymoshenko appeals for transparency and strict compliance with procedural norms.

But I’ve been in the court-room. And I’ve watched the live broadcast from there and I’ve seen wide coverage of the trial in Ukrainian media. My conclusion, shared by many, is that the defendant’s demands are properly satisfied by the court.

Now, let me invite you back to 2009, behind the closed doors to a room in Moscow where Prime Minister Tymoshenko negotiated a natural gas supply agreement worth billions of U.S. dollars for the whole nation. Please note that senior officials and competent members of the Ukrainian delegation who should have been inside of the room were outside of it. Was she transparent? Did she comply with national legislation of Ukraine? The answer to both of these questions is: No. For these and other substantial grounds, the conclusion of the parliamentary commission that I have the honor to chair is unambiguous. High treason was committed.

Personally, I was struck with the scale of Tymoshenko’s political and financial gambling in Moscow back in 2009. Our report is published online and I invite you to consider its findings with a focus on facts, not emotions.

I am confident the President Yanukovych and other senior officials are the last people on earth who would be interested in sending citizens to jail for political reasons. We all know what it would cost Ukraine in terms of international reputation.

Moreover, we are painfully aware of the criticism pointed at Ukraine these days.

We definitely don’t want Ukraine and the European Union to lose their current (maybe last) chance for a tangible rapprochement. Ukraine’s European future clearly shouldn’t be buried at this truly decisive juncture – no matter how hard. Tymoshenko’s allies urge the EU to do otherwise. Precisely for these reasons,

the trials of former Cabinet members should be fair, but the country’s legal system should not be hostage to the opposition’s whims.

By the way, in your comprehensive report on Ukraine published earlier this year by Freedom House, you rightly called upon the EU to “finalize agreements on free trade and association as quickly as possible.”

But just months later, you urge Ukraine’s President not to “leave the EU with no option but to suspend negotiations.” This change of attitude reminds me of another op-ed published by the Kyiv Post recently.

In a very similar spirit, its co-authors connected Tymoshenko’s case with the success of negotiations on Ukraine’s association with the EU. And though we hear that Tymoshenko herself stands firmly against such linkage, we see her devoted supporters advancing this idea. Indeed, it is yet another illustration of the double game being played by dealers who are intent on holding about 46 million Europeans in Ukraine hostage to the fate of one politician.

I hope you will be consistent on this issue and the support prompt conclusion of the negotiations since bringing Ukraine even closer to EU is a goal we are all working hard to achieve.

Today, the simple truth is this: Tymoshenko’s fate is in the hands of the court. Nowhere in the democratic world will you find a situation where a criminal case gets opened or closed depending on a defendant’s claim that he or she is innocent or that he or she enjoys immunity from any persecution because of opposition's status. It can be won or lost depending on the attorney’s evidence and defender’s argument only.

On top of that, you cannot be oblivious to the fact that if the president followed your advice and interfered in the case at this stage it would be: (a) the strongest implication that independent judiciary in Ukraine is non-existent; and (b) a legal precedent making sure that things stay that way. As long as we see instituting the rule of law in Ukraine as our most important goal – wouldn’t such a move on the part of the president defeat the purpose?

To sum up, I would like to pick up on the metaphor you use so often these days when speaking about Ukraine. It’s not the president who is digging Ukraine a hole. It’s those who, for some reason, pin down Ukraine’s destiny with the destiny of one politician implicated in a whole array of shady dealings that led to Ukraine’s political and economic travails.

In one point you’re absolutely right: they should stop.

Inna Bogoslovska is a Ukrainian parliament deputy and chair of parliament’s commission to investigate the 2009 natural gas agreement with Russia.

Experts: Time to get tougher Æ4 or Russia’s overbearing arrogance and greed in the Customs Union.

Third, the EU is not offering Ukraine membership and the EU is therefore unable to balance the carrot of membership against the sticks of non-compliance to the Copenhagen criteria that determine whether a country is eligible to join the EU – including democracy and the rule of law.

Democratization is not an automatic outgrowth of trade and other ties, but happens when European governments explicitly demand it. The EU played a major role in the democratization of the Balkans not by passively waiting for it to happenm, but through intensive monitoring and conditionality. It is imperative to get Ukraine right before it joins the free-trade area.

Fourth, conditions on the ground in Ukraine may overtake our debate. The argument that the strategic priority of bringing in Ukraine outweighs all other considerations will be far more difficult to make if opposition leader Yulia Tymoshenko and Yuriy Lutsenko, her ally and former Interior Minister, are imprisoned over the summer.

Fifth, it is a false hope to think that the EU will have the ability to further influence Ukraine on the issue of political persecution and selective use of justice after Kyiv joins the free-trade agreement.

This is especially seen in the Yanukovych administration's reactions to Western criticism with the

standard Soviet response of “Don’t lecture us!” The Yanukovych administration is not a listening administration which is clearly seen in their unwillingness to halt the selective use of justice.

In launching political repression, the Yanukovych administration sends two signals: that it intends to remain in power indefinitely and that future elections will not be in accordance with democratic practices.

In addition, the aim of changing the election law is to ensure the Party of Regions receives a majority or constitutional majority; the current election law only gave it a plurality in the last two parliamentary elections.

With a badly crafted election law, decapitated opposition, media censorship, and most likely domination of election commissions by the party in power, there is only a remote possibility that Ukraine’s 2012 elections will be held in accordance with democratic practices. Indeed, recent discussions among policymakers and experts in Washington point to skepticism on the holding of free elections in Ukraine next year.

Brussels should coordinate three policies with Washington.

First, delay the signing of the free-trade agreement until after the 2012 elections and freeze negotiations if the elections do not meet democratic standards in the eyes of the OSCE. Second, recognize that if members of the oppo-

sition are given jail sentences, the Yanukovych administration will have crossed the line. In such an eventuality, Brussels and Washington should coordinate a visa-denial list consisting of the president, senior oligarchs, officials from the presidential administration, prime minister and government ministers with responsibility for law enforcement, the prosecutor-general and judges involved in show trials.

Third, introduce a visa-free regime for average Ukrainians and increase student and other exchanges that target young Ukrainians. While visa denials will prevent Ukraine’s elites the ability to travel to their homes and businesses in Western Europe, a visa-free regime will give average Ukrainians the right to freely travel throughout Europe.

The free-trade deal is the flagship of the EU’s Eastern Partnership and Ukraine is the most important country of its six members. It is therefore a test for Europe. It is imperative that Brussels adopts tougher criteria towards the Yanukovych administration while supporting the Ukrainian population’s right to be part of Europe.

Taras Kuzio is a senior fellow at the Center for Transatlantic Relations at Johns Hopkins University’s School of Advanced International Relations. Lucan Way is a professor at the University of Toronto.

Serhiy Kudelia is a professor at Kyiv Mohyla Academy University.

Opinion 5 VOX populili WITH A ANASTASIA FORINA

Where do you prefer to spend your summer vacation and why?

Anna Sokolova Interpreter “This year I can’t afford any trips.

I’m short of money. Last year I spent my vacation in Koktebel, Crimea. Of course, if I had enough money I would like to go somewhere abroad. The place of my vacation always depends on my financial situation.”

Kyrylo Tatarnykov Sailor “I would definitely stay in Crimea as I live there and find it to be the best place for a vacation.

I’m a sailor and have been to a lot of countries but still prefer to spend my holiday at home. Besides it saves a lot of money.”

Iryna Bogatyriova Librarian “I’m on holiday now.

This year I’ve decided to spend my vacation here in Kyiv. I’m from Russia, from the town of Magnitogorsk. This is my first time here and I really enjoy the beauty of the Ukrainian capital. I have relatives living in Kyiv, so I can afford to stay here for at least two weeks to visit all the well-known Kyiv sites.”

Andriy Triska Dentist “In a few weeks, I’m heading to the Shatsky lakes in western Ukraine. I also like to spend vacations in the Carpathian Mountains. I prefer travelling around Ukraine, as we have so many beautiful places that are really worth visiting. It’s much cheaper to spend a vacation in Ukraine than to go somewhere abroad.”

Anastasia Kozlovska Veterinarian “I’ve spent my vacation in Bulgaria this year. I’m happy. It was really great.

Next year I’m going to explore some other European countries. As for Ukraine, I think that Crimea is the best place for a summer holiday.”

Vox Populi is not only in print, but also online at kyivpost.com with different questions. If you have a question that you want answered, e-mail the idea to kyivpost@kyivpost.com.

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6 Business

July 22, 2011

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Top law firms from Moscow and Kyiv merging to form CIS giant Kyiv Post Staff – Egorov Puginsky Afanasiev & Partners, a leading Russian law firm, and Kyiv-headquartered Magisters announced on July 19 that they are merging to form the largest legal group in the region with “a strong international outreach.”

Acting under the name Egorov Puginsky Afanasiev & Partners, the new firm’s offices will span beyond the former Soviet republics and into London and Washington, D.C., offering clients “unprecedented opportunities” in Russia, Eastern Europe and elseswhere. According to a joint statement, Egorov Puginsky Afanasiev & Partners’ leadership in the Russian market will be further consolidated by bringing in Magisters' international dispute resolution, corporate and public-private partnership practices in Moscow, while adding Magisters’ offices across the ex-Soviet states which will make the new firm “an absolute market leader in the region.”

“This merger is unprecedented for our market,” said Dimitry Afanasiev, chairman of Egorov Puginsky Afanasiev and Partners.

“We are a step ahead of any national or international law firm in size, market penetration and regional coverage in Russia and the CIS [Commonwealth of Independent States]. Growth through consolidation is necessary to sustain the positive momentum in our development as the leading firm in Russia.

Together we can do more,” he added.

“We will become the first megafirm originating from the CIS region in terms of size, scope of services

Andrew Mac, a longtime partner at Magisters, will now set up a Washington office for the newlymerged firm.

Serhii Sviriba, a longtime partner at Magisters, will now become acting managing partner of the Kyiv office for Egorov Puginsky Afanasiev and Partners.

Æ “We will become the first mega-firm originating from the CIS region in terms of size, scope of services and geographic reach.”

– Andrew Mac

and geographic reach,” said American Andrew Mac, who has served as managing partner of Magisters’ Kyiv office

since 2009.

According to The Lawyer European 100, EPA&P’s revenue was 97 million

Dimitry Afanasiev is chairman of Egorov Puginsky Afanasiev & Partners.

euros in 2010; Magisters firm wide revenue was about 20 million euros during this period.

The new firm will rank as Europe’s 17th largest independent law firm, thelawyer.com reported.

Before the merger, the EPA&P firm had more than 220 lawyers and 16 partners. Magisters had 100 lawyers and 11 partners. The new firm will have more than 300 lawyers and 27 partners servicing clients through offices in Moscow, St Petersburg, Kyiv, Minsk, Astana and associate offices in London and Washington, D.C. Mac said he will be spending most of his time in the near term establishing a Washington, D.C., office for the firm, while regularly visiting the CIS region.

“I will establish a DC office to better

service our client base,” Mac said. “It will provide for a stronger international outreach. There are a lot of inbound U.S. clients heading into the region. We are here to provide a hands-on presence, not to compete with domestic firms.”

Both law firms are known to be influential in their home countries and abroad. Vedomosti, the Russian business daily, reported on July 19 that one of EPA&P’s senior partners, Nikolai Egorov, was a classmate of Russian Prime Minister Vladimir Putin at a Leningrad university during Soviet days. He also taught Dmitry Medvedev, Russia’s president, according to Vedomosti.

Magisters was established by Oleg Riabokon along with partners. He and Yevhen Korniychuk, another former partner, left the firm in recent years after going into politics.

Current partners of Magisters claim they and other high-profile lawyers who have left the firm after going into politics no longer have any relation to it.

Another high-profile lawyer and former Magisters partner is Serhiy Vlasenko, a lawmaker who is currently defending ex-Prime Minister Yulia Tymoshenko in a corruption trial seen by many as politically motivated.

As a top Ukrainian law firm, Magisters serviced many large foreign and domestic clients in Ukraine, including state gas and oil company Naftogaz.

Earlier this year, Ukrainian prosecutors raided the law firm’s offices seeking documents relating to the operations of Naftogaz under Tymoshenko’s leadership as prime minister in 2007-2010.

Poultry tycoon launches fast food chain

Coal miner raises $79 million via Warsaw listing

Kyiv Post Staff – One of Ukraine’s top food industry tycoons has launched a new fast food chain, opening the first of several restaurants in downtown Kyiv.

Located at 114 Chervonoarmiyska Street, the Kryla (Wings) restaurant was established by Yuriy Kosiuk, Chief Executive Officer of London-listed MHP, Ukraine’s largest poultry producer.

At 240 square meters and seating about 70 people, it is the first of a chain of Kryla restaurants Kosiuk hopes to launch across Ukraine and possibly abroad. He envisions that another three Kryla restaurants will be launched in downtown Kyiv this summer: one on the city’s main street Khreshchatyk, and two more on Horkovo and Spaska Streets.

“We also plan to develop in the regions,” said Kryla director Oleksandr Ulanovych.

“I see potential in all regional centers for one or two objects in cities with population’s exceeding one million people.”

Kosiuk has already committed millions of dollars of investment to the project, Ulanovych said, adding that franchise arrangements will be considered to expand the chain much like the world’s largest fast food companies do.

Named after the wings of chickens, the Kryla restaurants are designed with an aviation and airport theme.

Kyiv Post Staff – Coal Energy S.A., a privately owned Ukrainian coalminer, raised $79 million through an initial public offering of its stock on the Warsaw Stock Exchange, according to Kyiv-based investment bank Investment Capital Ukraine.

Coal Energy was valued at nearly $317 million after floating 25 percent of its stock at a share price of about $7. Analysts said the company attracted 39 percent less than expected.

The timing of this, the most recent in a f lur r y of Ukrainian Warsaw listings, appeared to be bad. According to repor ts, two other Ukrainian companies have pulled out of plans to list in Warsaw due to unfavorable market conditions. The Polish stock market has lost about 4 percent in the past month, analysts said.

In a note to investors, Investment Capital Ukraine wrote: “Negative investor sentiment prevailing over the last month made Coal Energy’s IPO much less successful than the December 2010 IPO of its predecessor, coalmine group Sadovaya Group.”

According to the investment bank, the listing price valued Coal Energy at $2.3 per ton of coal produced in accordance with its enterprise value

They could be a perfect fit for airports, according to Ulanovych.

Kryla is not the first domestic fast food chain. But given that it is closely affiliated with Ukraine’s largest poultry producer, it stands a chance of developing into a formidable competitor for international fast food chains such as McDonalds that long ago entered Ukraine, or others that are eyeing the market.

Yuriy Kosiuk

The first Kryla fast food venue has opened its doors (above) in downtown Kyiv. Dozens more could appear in coming years. (Mykola Timchenko / The Day)

Æ Energy Coal raises 39 percent less than expectd amidst worsening market conditions as a fraction of proven and probable reserves. In comparison, the same figure for Sadovaya was $14.4 per ton.

Coal Energy posted a positive EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization) of $12.7 million in the financial year ending June 30 2010 compared to Sadovaya’s negative $3.2 million for the financial year ending December 31 2009.

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July 22, 2011

Business 7

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Incentives for Foreign Investors to Develop Energy Efficiency and Alternative Energy in Ukraine

S

Luhanskteplovoz, a leading CIS region producer of diesel and electric locomotives as well as commuter trains (above), will provide Ukraine’s state railway holding with 292 2EL-4 electric DC locomotives as part of a $1 billion contract.

(Ukrinform)

Luhanskteplovoz inks landmark $1 billion order with railway Kyiv Post Staff – Ukrainian locomotive producer Luhanskteplovoz, along with its Russian parent company Transmash-Holding, inked a landmark $1 billion agreement to supply 292 electric DC locomotives by 2016 to Ukrzaliznytsia, the state-owned Ukrainian railway monopoly.

The deal is part of the state railway

company’s plan to modernize its aged fleet by 2020. Ukrzaliznytsia is reportedly in talks with banks to finance the order, and plans to sign loan agreements by September, the investment bank reported.

“If realized, the order would be an important value driver for Luhanskteplovoz. By itself, it would

load the company’s locomotive production capacity 58 percent over the next five years,” said Alexander Paraschiy, an analyst at investment bank BG Capital. However the analyst said it remains unclear whether the railway company will be able to finance the order fully and on time.

UniCredit to launch rebranding in fall of top Ukrainian bank Kyiv Post Staff – Ukrsotsbank, one of Ukraine’s largest banks, will get a makeover this September to underscore closer affiliation to its parent company, Italy’s UniCredit Group, Interfax reported on July 20.

The bank’s CEO, Borys Timonkin, said that the rebranding process will last seven months. Nearly 400 bank branches, their ATMs and stamps will undergo changes to use the Ukrsotsbank and UniCredit brands in tandem.

Although the Ukrsotsbank brand has more recognition in Ukraine than UniCredit, the 18-25 age bracket asso-

ciates the Ukrainian bank with an “old-fashioned, Soviet type of bank,” according to Timonkin.

“Looking into the future toward new and active clients, perhaps it makes sense to change [the brand],” he said.

“In my opinion, we currently have found a favorable compromise [of using both brands parallel to each other].”

Ukrsotsbank was established in 1990. As of April it was the 6th largest bank according to assets with $5.16 billion among 176 financial institutions, based on Ukraine’s central bank calculations.

Ukrsotsbank CEO Borys Timonkin

AgroGeneration raises $16.3 million through Paris listing Kyiv Post Staff – French farming group AgroGeneration, a grain and oilseed producer in Ukraine, raised $16.3 million from the sale of a 16.4 percent stake in an initial public offering on the NYSE Alternative Exchange Paris, investment bank BG Capital reported in a note to investors on July 21.

Last year, AgroGeneration floated a

25 percent stake in Paris in a $17 million private placement. Both new and old shares were assimilated and admitted to trading on July 20. The company operates six farms covering 50,000 hectares in Ukraine.

Investment Capital Ukraine, a Kyivbased investment bank, said the offering was 43 percent oversubscribed,

well-above the 4.88 million shares initially offered. AgroGeneration farmed almost 40,000 hectares in the 2009/2010 marketing year and harvested 120,000 tons of grains, primarily wheat, corn and barely, as well as rapeseed and sunflower. The company plans to expand its land bank to 100,000 hectares by the end of 2012.

ince the end of 2010, Ukrainian lawmakers have adopted a number of legal acts to encourage foreign investors to bring investments into projects related to energy efficiency and alternative energy.

In an interview Yaroslav Petrov, associate at Asters, secretary of the Fuel & Energy Committee of the American Chamber of Commerce, will briefly elaborate on recent changes to legislation.

Has the new Tax Code introduced any incentives Yaroslav Petrov in the area of energy efficiency and alternative associate energy?

Indeed, the Tax Code introduced a number of incentives on payment of CPT and VAT. With respect to CPT the code provides that 80% of an eligible company's profit from sales of its own goods within the Ukrainian customs territory is exempt from corporate profit tax (23%), provided that the goods are on the list approved by the government. The Tax Code generally identifies the following types of goods as being subject to this exemption: a) equipment fuelled by renewable energy sources; b) raw materials, equipment and components for renewable energy generation; c) energy-efficient equipment and materials, and goods designated for more efficient and controlled use of fuel and energy resources; d) devices for measuring, controlling and operating fuel and energy resources; and e) equipment for producing alternative fuels.

The Tax Code also exempts 50% of all profits derived from the implementation of measures and projects relating to energy efficiency. In order to qualify for the exemption, the eligible applicant must be registered with the special state registry of companies, agencies and organizations that are involved in the use, development and implementation of energy efficiency activities and projects.

These incentives are effective for five years from the first year in which such project or activity generate profit.

In addition, a general tax exemption effective till January 1, 2020 will apply to: a) profits from sale of biofuel; b) profits from generation power and heat with the use of biofuels; and c) manufacturers' profits from sales of machinery and equipment produced in Ukraine designated for production of vehicles powered by biofuel and/or conversion of traditional vehicles into such biofuel-powered vehicles.

Energy companies are exempt from CPT on the sale of electricity from renewable energy sources for 10 years from January 1, 2011.

With respect to VAT, it should be emphasized that imports of the following goods are generally exempt from VAT (20%): a) equipment operating on renewable energy sources; b) energy-efficient equipment and materials; c) alternative energy / fuel measurement and monitoring equipment; d) equipment and materials designated for production of alternative fuels or alternative-source energy; and e) materials, equipment and components required for the production of: (i) equipment operating on renewable energy; (ii) raw materials, equipment and components for the production of alternative fuels or generating energy from renewable sources; (iii) energy-efficient equipment and materials; (iv) goods designated for fuel- or energy-saving; and (v) equipment for measurement and control of fuel and energy resources use.

The Tax Code also provides a temporary VAT exemption, effective until January 1, 2019, for: (a) the supply on Ukrainian territory of machinery and equipment specified in the Law on Alternative Fuels; (b) imports of equipment and machinery for the construction and reconstruction of enterprises producing biofuel and biofuel vehicles; and (c) imports of biofuel-powered vehicles. However, these import exemptions apply only if identical goods are not produced in Ukraine.

Do you think that the Green Tariff is a secure tool for return of foreign investments?

On June 3, 2011, Parliament approved changes to the Law on Electrical Energy that relate to state guarantees to incentivize the use of alternative energy sources applying the 'green tariff'.

In a nutshell, in 2009 Ukraine introduced the so-called 'green tariff' for electricity produced from alternative energy sources (with a few exceptions). The tariff is effective until 2030 and is one of the highest in Europe. As such, it is vital to attracting foreign investments: it not only sets a high rate, but also imposes a statutory obligation on the wholesale electricity market to buy all alternatively sourced electricity that is not sold to retail customers.

One of the government's priorities in the sector is to reform the Ukrainian electricity market in order to exclude the wholesale market from electricity transactions between generators and distributors, thereby enabling parties to enter into power supply transactions directly. However, the end result of the electricity reform - the liquidation of the wholesale market - may be unattractive to companies that are willing to operate under the green tariff, as at present the wholesale market provides the only mechanism for the state to purchase alternative energy on this green tariff basis.

In order to preserve the implementation of the tariff, the law declares that the state's obligation to purchase alternative energy at green tariff rates will survive the reform. However, if the wholesale energy market is liquidated, it is unclear how the green tariff will be implemented.

In our view, it yet remains to be seen whether the incentives will help Ukraine to become more energy efficient and less dependent on conventional fuels in the long term. However, green tariffs and customs and tax incentives should encourage foreign investors to make use of the Ukraine's investment potential.

Leonardo Business Center, 19-21 Bohdana Khmelnytskoho Str., Kyiv, 01030 тel. + 380 44 230 6000, fax + 380 44 230 6001 info@asterslaw.com, www.asterslaw.com

8 Business

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July 22, 2011

Zahoor hires Willard as Kyiv Post CEO

BY B R I A N B O N N E R

American J. Michael Willard, a veteran marketing, public relations and advertising executive with extensive experience in Ukraine, has been named chief executive officer of the Kyiv Post.

Mohammad Zahoor, owner of the Kyiv Post, made the announcement on July 18 in a meeting with the newspaper’s staff.

“I hired Mike because he has a successful track record in all the relevant areas: journalism, advertising, marketing, government relations,” Zahoor said.

“He has the kind of experience and contacts that the Kyiv Post needs to succeed in Ukraine’s very competitive media market. I brought Michael here to make this venture more successful commercially.”

Willard replaces Jim Phillipoff, also an American. Phillipoff will remain director of media and telecommunications for the ISTIL Group, Zahoor’s diversified company with assets in real estate, media and manufacturing.

“I am very much looking forward to the opportunity of leading one of the

J. Michael Willard, center, talks to the Kyiv Post staff after being named chief executive officer of the news organization. Kyiv Post owner Mohammad Zahoor is at left behind Willard, standing next to former Kyiv Post CEO Jim Phillipoff. (Yaroslav Debelyi)

finest news organizations in Ukraine,” Willard said. “I have long been a fan of the Kyiv Post, its brand of journalism and the current news team. At the same time, this is a business that needs

ÆOn the move VIACHESLAV YAKYMUK was

to increase its revenue and advertising to be able to continue to afford firstrate journalism and serve the community well.”

Willard said he will personally meet

to his journalistic roots. He started his journalism career with the Orlando Sentinel, working on the city desk at age 19 while still in college. Willard also worked with the Tampa Times and the Springfield (Mass.) Union.

The Kyiv Post is one of Ukraine’s leading news sources. It is Ukraine’s oldest and top English-language newspaper and will celebrate its 16th year of existence in October. For a year, the Kyiv Post has also published an online version in Ukrainian and Russian languages.

Zahoor, a native of Pakistan and British citizen who sold a Donetsk mini steel mill for close to $1 billion in 2008, purchased the newspaper two years ago from its founder, American Jed Sunden. The Kyiv Post currently has a staff of about 45 people, including 30 in its news division. When asked how he feels now about buying the Kyiv Post, Zahoor said: “I’ll never regret” the decision.

Kyiv Post senior editor Brian Bonner can be reached at bonner@kyivpost.com.

Kyiv Post staff writer Yuriy Onyshkiv contributed to this report. He can be reached at onyshkiv@kyivpost.com.

Send On the Move news to otm@kyivpost.com or contact Oksana Faryna at 234-6500. Items should include a photograph of the individual who has recently been appointed to a new position, a description of their duties and responsibilities, prior experience as well as education. Note: The Kyiv Post does not charge for publishing these notices or any news material.

ANDY KUZICH

appointed head of mergers and acquisition and director of the Kyiv office of Group DF, the holding company of Ukrainian billionaire Dmitry Firtash. In his new position, Yakymuk will focus on business development and raising debt and equity financing in the world’s capital markets. He will also concentrate on creating sector-leading companies and reinforcing best international practice and principles of corporate governance.

Yakymuk joins Group DF after spending 13 years with Austria’s Raiffeisen Banking Group, where he acted as managing director of Raiffeisen Investment Ukraine.

Yakymuk graduated Kyiv’s Taras Shevchenko National University in 1986, completing a postgraduate diploma in international economy. He also obtained a Securities & Investment Institute Certificate in International Capital Markets In 1998.

with all staff and will “come up in six weeks with a strategy of how to move forward.” He sees opportunities in tapping into new audiences for the Kyiv Post’s journalism. And, when it comes to advertising, Willard doesn’t like the word. He thinks it’s better to “sell hope, ideas, messages – not ads.”

Willard, 66, will also remain chairman of The Willard Group, a Kyivbased public relations and marketing firm with offices in Moscow and Istanbul. The firm was acquired last year by British-based All About Brands, but continues to operate under the Willard name with more than 75 employees. From 1994-1998, he was managing director of Burson-Marsteller public relations and advertising in Ukraine and Russia and a member of the B-M European board of directors.

Willard bought the Kyiv office of B-M in 1998.

In the United States, Willard worked for eight years as an adviser to the late U.S. Sen. Robert Byrd and also for U.S. Sen. Jay Rockefeller, both of West Virginia. He also worked with United Press International from 1968 to 1976, so this appointment returns Willard

was appointed business development director in Ukraine for PwC, one of the world’s so-called Big Four accounting and auditing firms.

Kuzich’s will focus on assisting companies in finding solutions to their business issues using the vast amount of expertise and resources of PwC. Kuzich is returning to his old firm, as he originally helped establish Coopers & Lybrand Ukraine (later merged with Pricewaterhouse to become PricewaterhouseCoopers, now known as PwC) as head of taxation in the early 1990s. In between, Kuzich has amassed a great deal of experience in Ukraine and Russia, serving as chief financial officer at several mobile phone companies.

Kuzich graduated from University College in London, UK, and holds an engineering degree.

BERTRAND BARRIER was

ELENA GRINEVA

appointed head of the Kyiv office of Gide Loyrette Nouel.

He will replace Karl Hepp de Sevelinges, who established and headed the firm’s Ukrainian practice for the past five years.

The latter will be leaving shortly for the U.S. to represent Gide Loyrette Nouel in New York.

Barrier joined Gide Loyrette Nouel Paris in 2002 and co-headed Gide Loyrette Nouel’s German practice in Paris. In 2008 Barrier joined GLN Kyiv as head of the corporate and mergers and acquisition practice.

Barrier has extensive experience in M&A, corporate law, restructuring and contractual law. He has also participated in numerous investment projects in France and Ukraine.

Barrier graduated from the University of Paris XI in 1999. He was admitted to the Paris Bar in 2001.

was appointed country director in Ukraine at ANCOR Holding, a recruitment agency operating in Ukraine.

Grineva will focus on expanding expert activities and developing the group’s business on the Ukrainian market. She brings more than eight years of experience within the recruitment business. She started working in human resources in 2003, at ANCOR’s office at Rostov-on-Don, Russia.

In 2005, Grineva was appointed director of a new ANCOR office in Volgograd, Russia.

Since 2010, Grineva has headed the group’s activities in Russia’s Southern Volga region.

Grineva graduated from Taganrog State Teacher Training Institute as a certified teacher of the English and Spanish languages.

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Renaissance Capital: Ukraine-IMF deal unlikely before 2012 elections Kyiv Post Staff – The government is unlikely to push through gas price rises to secure the next part of a $15.6 billion International monetary Fund bailout ahead of parliamentary elections next year, investment bank Renaissance Capital said.

Analysts from the bank wrote in a July 18 report that the drop in support for the pro-presidential Party of Regions and improving macroeconomic conditions will likely mean that the authorities will not raise household natural gas prices – a potentially unpopular move – in order to secure the next tranche from the Fund.

“The immediate urgency of winning IMF support is much weaker than in 2008,” analysts said.

Ukraine has already received two installments totaling $3.4 billion after pledges to cut the budget deficit. The third tranche was delayed after the government stalled on increasing the retirement age and raising household gas prices.

Parliament voted this month for pension reforms, including a rise in retirement age for women. But Renaissance Capital said it is unclear whether the government would go ahead with the gas price rises that will help state gas company Naftogaz to balance its books.

40 35 30

Gross Reserves, National Bank of Ukraine $, billion

25 20 15 10 5 2001 2002

2003

2004

2005

2006

2007

2008 2009

2010 2011

Source: Dragon Capital

“The key to understanding the current and future policy and economic dynamic and, by implication, the all-important relationship with the IMF is, in our view, the juxtaposition of the party approval ratings and the external financing gap for this year and next,” the bank wrote.

Without further IMF support, Ukraine’s reserves will drop to $33 billion by the end of 2011 from the current $37 billion, before falling to $22 billion in 2012, the report said.

“Ukraine can survive without this money before the elections,” Ivan Tchakarov, chief economist for the bank Russia and the former Soviet Union, told Bloomberg news agency.

“In the longer term, it’s clear they will need IMF help.”

Analysts said the government would likely adjust policies to secure an IMF disbursement after the elections, before the end of 2012 in order to replenish reserves.

Æ “We are not only assembling washing machines. We have a complete production cycle.”

– Alessio Bonfati materials, plastic and metal components, not with pre-made components,” Bonfanti said.

Electrolux completed the acquisition of the long-idle factory from Italy’s Merloni, a competitor, in 2010. Merloni purchased it in 2003 from domestically-owned appliance manufacturer Nord in 2003 but faced numerous hurdles to making the investment work.

About 93 percent of the washing machines produced are being exported to Russia, while 7 percent are sold on the domestic market, Bonfanti said adding that exports have also commenced to Poland, Romania, Hungary and the Czech Republic. About 66 percent of the washing machines are sold under the Zanussi brand, 34 percent as Electrolux machines.

Ukraine gets $308 million pledge for gas system (AP) Two European investment banks have pledged to lend Ukraine $308 million to upgrade its ailing natural gas transport and storage system.

The European Bank for Reconstruction and Development together with the European Investment Bank on July 19 promised to fund the modernization project, if Ukraine pushes ahead with reforming its troubled gas sector.

The Ukrainian government must cut subsidies to households for heating and hot water and improve management at the state energy firm Naftogaz.

Naftogaz is also obliged to contribute some $200 million (141 million euros) for the project.

Ukraine's natural gas transit system is crucial to European countries, which receive much of their gas imports from Russia via pipelines that cross Ukraine.

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Ukraine’s Energy: Here and Now ith recent legal developments, Ukraine keeps improving energy W sector regulation. That directly concerns “green energy” projects, their development and state support. At the same time, Ukrainian oil and gas

Electrolux starts spinning out Ukraine-made washing machines Kyiv Post Staff – Stockholmheadquartered Electrolux, a global leader in household and professional appliances, has jumpstarted production of washing machines at a Ukrainebased factory that it acquired last year for 19 million Euros.

“The plan for this year is to produce 220,000 washing machines,” said Alessio Bonfanti, director of Electrolux Ukraine, according to InterfaxUkraine.

Bonfanti, manager of the facility located in Ivano-Frankivsk, western Ukraine, said the 44,000 square meter plant, which employs 260 people, commenced full-scale production in April.

It is currently producing about 850 washing machines per day. To boost production, the plant started introducing two separate shifts per day in mid June, he added.

“We are not only assembling washing machines. We have a complete production cycle. We start with raw

Business 9

July 22, 2011

is still attractive for investments in terms of shale gas exploration. At the current stage, Ukraine’s energy market might be a good object to attract foreign investment along with the recent settlement of the Vanco International dispute, which might be viewed as a green light for investment opportunities for large foreign investors.

In terms of environment issues, sustainable energy projects are the hot topic in the world. What has Ukraine undertaken in the area of sustainable energy projects recently? What is the legal framework?

Pursuing “Ukraine’s Energy Strategy to 2030,” a long-term plan approved in 2006 by the Cabinet of Ministers, Ukraine is only now seeing the results of its policy implementation. Despite a serious downturn in Ukraine’s global economy, several large “green tariff” projects were implemented during recent years. Such intensive development of sustainable energy projects could only be explained by the state authorities’ perception of the importance of the green energy issue. As a result what we see is a rather “fair” and transparent state regulation of sustainable energy market, which is indeed very uncommon for Ukraine’s energy sector.

Going back to its roots, the “green tariff” was initially introduced in 2008 through amendments to the Law of Ukraine “On Electric Energy Industry.”

Since then, the law has undergone numerous amendments, the most recent of which were introduced in 2011. The amendments generally concern 1) guarantees on procurement of “green tariff” electricity and payments settlement; 2) increase of a Ukrainian origin share in prime cost of main assets, services, inputs and solar modules up to 50% by 2015. Changes to prime cost structure also mean state support and internal/local market development with respect to production of relevant sustainable energy production and materials. Development of a sustainable energy market is also assured through Tax code provisions which envisage tax exemption for 80% of income generated from sale of own-produced energy efficient (green energy) products and/or materials.

Settlement of Vanco International dispute might be viewed as a green light for large foreign investors What about the traditional energy market of oil and gas?

With respect to more traditional energy resources in 2010 and until now we can see a very high interest in shale gas exploration within Ukraine. Such exploration is of interest for large international companies as well as for small and medium foreign companies. To some extent such interest could be explained by local investors’ offers which sell companies with granted subsoil use licenses. Earlier (and actually now) it was cumbersome to obtain a subsoil use license for a local investor as well as for a foreign one. Thus the easiest way to obtain a license for any investor was and is to buy a company which already owns such license. Sale of companies could be driven 1) by a lack of funds or investments for self-exploration of shale gas deposits; 2) change of investment portfolio; or 3) consideration of other investment opportunities.

Nevertheless with the current situation, more foreign investors can access the market and as a result Ukraine may increase amount of foreign investments and have a good chance of improving its investment perception among the foreign business community.

Are there any interesting ongoing or future projects in the area of energy and natural resources?

The highlights of the energy sector are the following: t The Ukrainian government is planning to sell in 2011 at least seven energy companies. The list includes energy distribution and generation companies. An auction is to be held at the end of the year; t ENI keeps its expansion by entering Ukrainian market. Ukraine and ENI have signed a memorandum on cooperation in traditional and alternative energy production. ENI is Italy’s main energy company which operates in more than 70 countries and is involved in the South Stream gas pipeline project; t Ukrainian authorities have made a decision to sell 25% of shares in the state-run oil and gas company Naftogaz. The sale is planned to be held through IPO in 2012; t Construction of a new solar energy power station in Crimea is finalized.

The newly built solar plant capable of producing 25,000 megawatt-hours of environmentally clean electrical energy per year is aimed at lessening (traditional) energy consumption by 30 percent by year 2015; t At the end of June 2011, the National Electricity Regulatory Commission of Ukraine increased the “green tariff” for July 2011. Green tariff energy includes energy generated from wind, solar power, water and biomass; t In July 2011, amendments to the Law of Ukraine “On Production Sharing Agreements” regarding state guarantees on investors’ rights and obligations took effect.

Taras Rozputenko Attorney at law Gvozdiy & Oberkovych Law Firm

Prime Minister Mykola Azarov (R) marked the start of natural gas pipeline modernization work at a July 19 ceremony near Kyiv. (Ukrainian photo)

19B Instytutska str., Suite 29 01021 Kyiv, Ukraine

Tel. +380 44 581-12-21 Fax. +380 44 581-12-22 E-mail: info@golaw.ua www.golaw.ua

10 Business Focus

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July 22, 2011

Special news coverage ahead on the following topics in Business Focus: August 26 Education in Ukraine and abroad

September 9 Top Law firms

September 23 Top 100 companies in Ukraine

Surging gas prices force nation to go green or bust

BY MARK RACHKEVYCH RACHKEVYCH@KYIVPOST.COM

Ukraine’s energy sector is stuck in the 1970s.

It generates and distributes energy through inefficient monopolies using an obsolete infrastructure to an energy-intensive economy and wasteful residential sector that costs the nation billions of needless dollars annually.

Aging, Soviet-designed power plants and corroding pipelines contribute to inefficiencies throughout the energy system, as well as increased production and transportation costs.

Investment to improve efficiency and tap alternative energies is kept at bay because of the market’s non-transparency, a sea of bureaucratic barriers, not to mention lengthy green tariff permit issuance, experts told the Kyiv Post.

Globally, Ukraine is a top-10 natural gas consumer and is the 12th largest energy market. Gas is mostly used to heat homes and water, and produce steel and chemicals. Yet the country only satisfies about 25 percent of its gas needs locally, and has a smaller population size than other leading gas guzzlers Russia, the U.S., Canada, and Germany, all of which have more developed economies with greater energy needs.

More than 15 percent of all Ukraine’s imports amount to increasingly expensive Russian natural gas, out of which the municipal sector consumes almost half, worth some $5 billion, said Grzegorz Gajda, project manager of the International Finance Corporation’s Ukraine Residential Energy Efficiency Project. He estimates that nearly $10 billion, or 6.3 percent of Ukraine’s gross domestic product, is wasted due to inefficient structures in the municipal and residential sectors.

Overall, the entire post-Soviet region, accounts for just under one-fifth of world gas consumption, despite having less than one-twentieth of the world’s population, a July report by the Oxford Institute for Energy Studies reads.

Ending waste Improving energy efficiency in Ukraine’s residential sector alone could reduce 25 percent of Russian gas imports, or 10 billion cubic meters, according to the European Bank for Reconstruction and Development. EBRD estimates $85 billion of investment is required to absorb energy efficiency in housing.

Two-thirds of the nation’s residential high-rises were built between 1956 and 1991 with an area of more than 300 million square meters in 460 settle-

1.2 1.0 0.8

Electricity (kilowatt hour) consumed to produce $1 of gross domestic product

0.6 0.4

World average

0.2

Japan

Germany

USA

China

Ukraine

Source: International Energy Agency, World Statistics 2009

ments with outdated centralized heating systems, said Roman Zinchenko from Greencubator, a non-profit that supports energy innovation programs.

Simple solutions are available.

Installing heating sub-stations in multi-floor residential buildings that regulate heat along with balancing valves inside buildings and thermostats on individual radiators cost on average $2,000 per 50 square meters, said Gajda. Annual savings from this could be close to $2 billion for the nation’s residential buildings.

Zinchenko said energy conservation practices first must be promoted to break the wasteful energy consumption habits of Ukrainians who grew up with heavily subsidized utilities.

It’s a sustainable concept he calls, “trias energetica” that emphasizes saving energy, optimizing the use of current generation energy sources while introducing renewable and alternative energy sources.

Homeowner associations should start installing rooftop solar panels to heat their water, pay for roofing and wall insulations, and install smart light bulbs and better windows, among other simple solutions, said Zinchenko. Billing residents must be based on actual consumption, not living space, as most municipalities calculate energy rates.

This could reduce water consumption by 30 percent, Zinchenko added.

“Watching the meter run when using water does have a psychological effect,” said Zinchenko.

According to National Utilities Regulatory Commission member Yuriy Khivrych, only 40 percent of flats are equipped with water meters, and 23 percent have heat meters.

Meters aren’t enough, Gajda said, since much heat and water is leaked or

Middle East

lost along the way because of aged pipes and inefficient equipment.

Industry also plays a part, the Economist Intelligence Unit reported. Ranked amid the world’s top ten steel producing countries, Ukraine has done much to upgrade polluting metallurgical factories in recent years. But they are still the largest source of industrial carbon dioxide emissions. Many steel plants still use open-hearth furnaces, which consumes 1.5 to 2 times more energy than those using electrical processes.

In 2010, Ukraine’s industrial sector used 24 billion cubic meters of natural gas, 6.4 billion of which in metallurgy, according to Energobusiness magazine.

The nation’s natural gas-intensive chemical sector would also benefit from cheaper liquefied natural gas, which needs to be imported and deliquefied. All sectors would also benefit from converting methane into energy and extracting shale gas located where Ukraine has coal mines in the east and west.

But Ukraine has only begun to explore the possibility of using the potentially environmentally risky shale gas extraction process.

Green energy At present the use of renewable energy in Ukraine, excluding large hydropower, is less than 0.5 percent of total primary energy demand, the EBRD said.

“Renewable energy with wind, solar and biomass makes less than one percent for Ukraine’s energy market,” said EBRD director Andre Kuusvek. “It could be raised by up to 10 percent in the next five years. And hydro energy could be also lifted up from 7 to 10 percent.”

Ukraine’s government plans Æ24

November 4 IT business solutions

October 7 International Accounting Firms

Ukraine shows signs of opening energy sector to investors B Y V LA D LAV R OV LAVROV@KYIVPOST.COM

While Ukraine has made some progress in recent years in encouraging alternative energy production through wind and solar projects, experts say the only way to wean the country off expensive energy supplies from Russia is to attract foreign investment and expertise.

There are signs that Ukraine’s government is finally starting to listen and may be prepared to open up the energy sector, long monopolized by powerful oligarchic groups, to major international energy giants. Those foreign companies that haven’t been deterred from facing years of barriers from operating in Ukraine may finally find more luck in developing unconventional gas resources, such as shale and methane gas, or investing in the country’s first liquefied natural gas (LNG) terminal.

At the moment, none of the potential deals have progressed further than preliminary discussions, indications of interest and the signing of non-legally binding memorandums of understanding. But such unexpected activity in the energy sector has prompted many experts in Ukraine and abroad to claim that the government has finally seen the light.

“Our government seems to have finally realized that Ukraine’s economy will have a bleak future if it continues to neglect the development of the country’s own [untapped alternative energy] power and primarily oil and gas base,” said Olexander Martinenko, senior partner at the Kyiv office of international law firm CMS Cameron McKenna. For more than a decade, Martinenko has represented the interests of a leading international oil and gas company eyeing opportunities in Ukraine.

Analysts from Wood and Mackenzie, an Edinburgh-based research and consulting firm specializing in energy and metals industries, went even further in a recent report, calling the current state of affairs in Ukraine’s energy sector “a golden

opportunity for a renaissance in the country’s upstream industry.”

As Niall Rowantree, an unconventional gas analyst with Wood and Mackenzie points out, such optimism in Ukraine’s assessment, first and foremost, is explained by the fact that in the past, foreign investors simply couldn’t get any access to Ukraine, while the current government says it’s open to negotiations.

“What we are seeing is that things are moving positively in Ukraine,” said Rowantree. He added that even though they are not moving as fast as they could, there is very strong evidence that Ukraine is being seriously considered by the global energy giants as the place to be.

Major international players such as Shell, TNK-BP, ExxonMobil, Chevron, Total and Eni have recently expressed their strong interest in entering Ukraine’s energy sector.

While in most cases the companies remain tight-lipped about their negotiations with the government, TNK-BP went as far as to pledge $1.8 billion of investment over the next 6-7 years into Ukraine’s shale deposits in the eastern Donetsk Oblast. The British-Russian company is targeting six licenses that could potentially produce up to 3 billion cubic meters of gas annually. Citing data from the US Geological Survey, Ukrainian officials say their nation’s shale gas reserves could be 1.5-2.5 trillion cubic meters, enough to cover consumption at the current rate for more than 30 years.

Another potential project that government officials hope will help lure foreign investment into the country is the billion-dollar construction of a liquefied natural gas (LNG) terminal intended to help the country diversify its gas supplies. Currently, most of Ukraine’s gas imports flow in from Russia, which accounts for nearly two-thirds of the 50 billion cubic meters Ukraine annually consumes.

Vitaliy Demianiuk, deputy head of the State Agency for Investment and National Projects Management, said that nearly 50 major international companies have expressedÆ13

Europe’s top liquefied natural gas importers billion cubic meters 75 Total imports Liquefied natural gas imports

54

49

36 28 Spain

37

19

14

9

8

United Kingdom

France

Italy

Turkey

Source: Cedigaz (provisional), GIIGNL

www.kyivpost.com

July 22, 2011

Business Sense

Business Focus 11 Editor’s Note: Business Sense is a feature in which experts explain Ukraine’s place in the world economy and provide insight into doing business in the country. To contribute, contact senior editor Brian Bonner at bonner@kyivpost.com

WITH ANDREI LIAKHOV

Rising oil prices stand to hit energy-inefficient Kyiv hard Since the late 1980s, it has been clear to most experts that the only way for oil prices is up, up and up again. The reasons for this trend lie primarily in the combination of such diverse factors as decreasing investment into exploration, dropping numbers of oilmen worldwide, lack of modern offshore drilling rigs and lack of easy oil. The majority of new finds either have very complicated geological characteristics, are located in difficult areas or require innovative extraction techniques like oil sands.

It’s a mystery why the sorry state of the international oil industry is usually disregarded in calculations of the growth of demand. The growth in demand from China cannot on its own account for the leap in the oil price as China re-exports much of this oil in the form of everything from plastic toys to motorcars.

A substantial share of the increasing Chinese energy-intensity simply reflects the geographic relocation of industrial activity, as the West cedes the manufacture of almost everything to cheap economies.

None of this was ever a surprise.

What was a surprise was the current crisis in the Middle East, as angry populations attempt to unseat authoritarian leaders. The crisis has revealed the dangerous fragility of the global energy supply system.

Fortunately, it stopped just short of Saudi Arabia, the place where a doomsday scenario could have begun.

The controversial concept of Peak Oil – the time when maximum output is reached, after which it will enter terminal decline – appears to be drawing nigh. Depletion of the world’s super-giant fields is fairly advanced, and, while new oil is being discovered, it is very inconveniently located, with extraction costs mandating an ever-higher break-even price.

Currently, to extract one barrel of oil on average requires energy equal to that contained in a barrel of oil.

After dropping during the 2009 recession, oil prices are back at $110 per barrel levels or higher. There is a good bit of financial speculation in the oil price, with speculators driving

Æ Heavily dependent on one supplier and inefficient, Ukraine will suffer the consequences of an oil price spike more than the rest of Europe the price up and down and creating volatility.

But the price is given added volatility by Western policy decisions, most notably the air strikes against Muammar Gadhafi’s regime in Libya.

This conflict is heading toward stalemate and has an unpredictable outcome.

In addition, the West has lost credibility among the Gulf monarchs for having abandoned Egyptian lead-

er Hosni Mubarak, as well as their perceived failure to block Iranian advances in the Gulf. A nightmare scenario for oil prices would materialize if the Sunni oil-states launch a desperate solo attack on Iran. Were this to happen, and the missiles to fly, there would simply be no available source to compensate for the huge loss of oil output, threatening the global economy with a collapse into a new ice age.

What does this mean for Ukraine?

First, it means higher prices for natural gas, the majority of which Ukraine imports from Russia. Since the 2009 gas agreement, Ukraine buys Russian imports at prices pegged to that of oil and gasoil.

That means that heating bills this winter will bite harder. Second, almost one-third of Ukrainian commercial cargo traffic is powered by various oil products. Any hike in the oil product prices will be passed on to end consumers, kicking inflation higher.

Third, despite more than 20 years of heated debates and hand combat in parliament, there has been no serious attempt to create a more energyefficient economy, cutting reliance on hydrocarbon fuels.

The inevitable result is that Ukraine will suffer the consequences of an oil price spike even more than the rest of Europe, which for a long time has been trying to limit its dependence on black gold.

Andrei Liakhov is a partner at Integrities, a Kyiv-based law firm.

12 Business Focus

www.kyivpost.com

July 22, 2011

Business Sense

Editor’s Note: Business Sense is a feature in which experts explain Ukraine’s place in the world economy and provide insight into doing business in the country. To contribute, contact senior editor Brian Bonner at bonner@kyivpost.com

WITH SVITLANA ROMANOVA

Time to fix laws on renewables The need for Ukraine to pursue energy independence has long been a parable and very often is viewed as a mere political declaration rather than a defined and well-planned direction of Ukraine’s development.

Over the years, the process of achieving this goal of independence has transformed into a series of short sprints made by legislators at various times in order to achieve immediate gains for a particular politician or a political party. The absence of a clear-sighted, systematic and consistent approach to these issues resulted in a bulk of concepts and declarations documented in various laws which are often found to be contradictory and, as a rule, lack detailed implementation mechanisms.

Thus, for example, Ukraine has a number of laws related to renewable energy sources – Laws “On Electricity,” “On Alternative Energy Sources,” “On Energy Efficiency,” “On Combined Production of Thermal and Electrical Power (Co-Generation) and Utilization of Waster Energy Potential,” “On Alternative Types of Fuel,” and so on.

Despite the fact that some of these laws have been around for quite some time, they still remain largely inoperative and do not provide for a clear and unhampered mechanism for tpopular-

ization of renewable energy sources in Ukraine. On the other hand, in those cases where such mechanisms do exist, they tend to be burdensome and nontransparent.

One such example is the so-called “green tariff” for electricity produced by alternative sources of energy, which was introduced into the Electricity Law in 2008. Presently, the law declares the following mechanisms for stimulation of utilization and development of renewable energy: • green tariff – a special tariff for purchase of electricity which is established for the renewable energy producers until Jan. 1, 2030; • obligation of the wholesale electricity supplier to purchase the renewablesource electricity not sold directly to the consumers or distribution companies; • prohibition for the electricity suppliers that carry out the transmission of electricity by means of their own electricity networks to refuse renewable electricity producers to access such networks; • renewable electricity producers should receive full payment in monetary form for electricity produced with no set-off; • electricity suppliers have the right to include losses incurred by connect-

ing renewable-source electricity producers to their networks into their investment programs; and • the wholesale electricity tariffs may include costs of financing of renewable energy development.

The successful implementation of the green tariff will depend on a number of factors.

The Electricity Law is silent on the funding source of the green tariffs, which is a state subsidy to remunerate the renewable-source electricity generators above the market price. This creates uncertainty for generators and investors, despite the “guarantee” wording contained in the Electricity Law. There are essentially two options for the source of funding: the state budget and a surcharge to the electricity prices. While it appears that the second option was meant by the Ukrainian legislators – in which case such producers will be compensated by Energomarket State Enterprise, raising these funds from adjusting the wholesale market price – the subsidy source for direct sales to end consumers or distribution companies remains unclear.

Furthermore, there is no absolute clarity regarding which renewable energy facilities are eligible for the special tariff. Three distinct aspects which need to be clarified are:

Eligibility of renewable energy producers that starter operation before the introduction of the green tariff; Protection against changes in law for renewable energy producers that are in the process of construction, as currently only renewable energy generators that have started operation and are already receiving the green tariff are protected.

This creates uncertainty for investors, who have undertaken their investment planning based on the existing green tariff system.

As the law states that a minimum of 15 percent of Ukrainian content (materials, assets, works, services) is required in the construction of the energy object as of Jan. 1, 2012 in order to obtain the green tariff, increasing to 50 percent by 2014, the definition of “Ukrainian content” and how it is calculated should be clearly defined to protect investors.

Yet another serious drawback of the Electricity Law is that it establishes the green tariff only for vegetable biomass. Such a definition fails to meet the definition given in the Law “On Alternative Types of Fuel” whereas “biomass” means biologically renewable organic matters that undergo biodegradation, such as agriculture waste, crop growing and cattle breeding, forestry and related industries, as well as the organic part of industrial

and municipal waste. The rationale for such differentiation is not clear and it essentially demotivates investors from developing renewable energy facilities working on non-vegetable organic biomass.

It is also notable that the green tariff establishes a single rate for all biomass produced energy. Even with the current narrow definition of biomass this is a very substantial problem. A single tariff for biomass cannot reflect the wide range of biomass fuels, conversion technologies and scale. This may lead to distorted development of biomass electricity production in Ukraine favoring production from selected types of biomass only and based only on certain technologies.

The above illustration is not complete and can be continued to be painted with further examples and commentaries. It is clear, however, that Ukrainian legislation on renewable energy sources has many areas where improvements would be very important and are necessary for the further successful development of alternative energy sources in Ukraine.

Svitlana Romanova is a partner in the Kyiv office of Baker & McKenzie, an international law firm. She is actively engaged in natural resources projects in Ukraine, both mining and oil and gas.

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July 22, 2011

Business Sense

Business Focus 13 Editor’s Note: Business Sense is a feature in which experts explain Ukraine’s place in the world economy and provide insight into doing business in the country. To contribute, contact senior editor Brian Bonner at bonner@kyivpost.com

WITH REINER SCHLATMANN

Will nation’s cities become more energy efficient after Euro 2012?

The Euro 2012 soccer tournament offers Ukraine a unique opportunity – not only to attract tourists and showcase the country, but also to explore the advantages of efficient use of energy.

New constructions for the tournament – roads, hotels, sports stadiums, airports and other transport – have been made from scratch, and they definitely are more energy efficient than the old ones. For Euro 2012 to have a positive legacy, it is crucial that the authorities learn how to integrate the energy-hungry new buildings into city plans, coordinating development of the local area to improve its energy efficiency, and make sure that the objects are used afterward.

Lighting is a typical example of how planning and long-term visions can help increase energy efficiency and save money by cutting energy bills.

Euro 2012 objects have mostly been designed by leading architectural studios that place an emphasis on energyefficient lighting and energy solutions.

The best architects understand that they may pay a little more today for better technology, but this will allow money to be saved in the future. A good example of this way of creating an efficient object is the Donbass Arena in Donetsk, one of the most

modern stadiums in Europe where energy efficient solutions were used.

For example, the latest development of high efficient sports floodlights allowed the number of projectors used to be reduced by 10 percent while still maintaining necessary light levels. This means a decrease in energy consumption of 10 percent compared to any other alternative lighting solution.

Even though modern buildings are more energy efficient, the truth is that they actually consume more energy than their predecessors. Imagine an old stadium and its energy needs: a couple of floodlights and some lighting in the director’s office and changing rooms. The modern stadium is not just a lawn and stands for spectators.

It’s a complicated object with wide food courts, powerful media centers, numerous advertising constructions and office facilities. All these features require a lot of energy.

The same holds true for other objects: New Ukrainian airports are larger than the old ones and consume more electricity. Connecting such facilities to the cities’ energy networks creates the problem of energy capacity shortage. Local authorities have to tackle this problem by putting new capacities into operation.

Æ Installing better lighting is an easy way to increase efficiency and cut energy bills The point here is that the plan for Euro 2012 should not only include the construction of new objects, but also the renovation of surrounding areas as well as nearby roads. In this work, local authorities can use the smart solutions learned and implemented in the modern buildings in order to reduce energy consumption. Such energy planning may compensate for the increase in consumption by the new facilities and mitigate the need to create additional energy generating capacities. Thus, the overall energy efficiency of the city will be improved, and as a result, the burden on local budget will decrease.

Unfortunately, no one appears to be taking the lead at the moment. When there are several budget holders at one facility, it usually results in no one seeing the whole picture. Because all state and local budgets are tight, every

Expert: Talk of opening energy sector to investors is lip service Æ10 their interest to take part in the tender to perform a feasibility study of the LNG project and come up with a business plan.

According to Demianiuk, the winning bid will be determined in August, and by early next year they hope to form a consortium of potential investors, expected to put from $1.5 billion to $2 billion into construction of the terminal. Demianiuk hopes that it will start receiving gas, primarily from Azerbaijan, as early as 2014. Once up and running at full capacity, it will be able to receive up to 10 billion cubic meters of liquefied gas, or nearly 20 percent of the country’s annual needs.

It is also hoped that having its own LNG gas terminal would help the country in its tough negotiations with Russian state gas company Gazprom.

Demianiuk said his agency has already been contacted by the Belarus government, inquiring if they could tap in into some of the Caspian gas that the terminal will be receiving. Belarus is even more dependent on Russian gas than Ukraine, the source of frequent conflicts with Moscow.

So far, so positive. But skeptics see talk of opening up Ukraine’s energy sector as nothing but lip service and doubt projects will materialize.

Dmytro Marunych, head of Kyiv-based Energy Studies Institute and former longtime spokesperson for state gas company Naftogaz Ukrainy, said the current agreement with Gazprom, which stipulates fines for consuming less gas than agreed, could scupper the LNG project.

In addition, Marunych questioned who will have access to the cheaper gas from

Consumption of natural gas in Ukraine billion cubic meters 120

Total Including residents and utilities

100

80

60

40

20

1988

1990 1992 1994

1996 1998 2000 2002 2004 2006 2008 2010

Source: Naftogaz Ukrainy

the terminal once it’s up and running, as the government may choose to hand this to oligarch-controlled industrial groups, which might become the project’s investors.

“It’s crucial, that by the time the terminal is ready the gas market is liberalized and Ukraine starts playing according to European standards,” Marunych said. “But honestly I don’t see any real desire by the government to change the way things are done on the energy market, as the interests of powerful groups are involved.”

Likewise, Marunych doubts that Ukraine’s energy sector will be opened up to large amounts of foreign investment. Real contracts and licenses, not more declarative memorandums of understanding, will be the only sign that the government is ready to put its words into action.

Alan Riley, a professor at the City University in London who specializes in energy issues, said Ukraine needs to move fast, or otherwise it risks losing the opportunity to attract any foreign investment in its energy sector.

“It used to be the case that there were limited resources and huge amounts of capital chasing them, so the government would have some leverage,” Riley said.

“But today there are huge amounts of [both conventional and unconventional] gas resources and limited funds due to the financial crisis. So, the government can’t play this game anymore.

If the government in Ukraine doesn’t follow through [on their promises], the capital will go away,” Riley added.

Kyiv Post staff writer Vlad Lavrov can be reached via lavrov@kyivpost.com.

person responsible for lighting in cities and on roads is interested in buying the cheapest lighting solution on the market with limited consideration of the problems that might arise in the future. Among them are higher energy consumption, more maintenance spending and shorter service terms.

The choice of city lighting does not only affect energy consumption.

In fact, our research in various countries shows that high-quality, pleasant lighting makes streets safer, enhances tourism potential, increases time spent by tourists in cafes, restaurants and souvenir shops. After all, Ukraine wants to earn from tourists, doesn’t it?

Ukrainians are working very hard to meet deadlines. The biggest deadline for the Ukrainian infrastructure is coming quickly, and of course we all hope, that Euro 2012 projects will be finished

on time. But the most important thing for the country is to not stop moving forward. We all know the example of the Olympic Games in Greece in 2004, where inefficient use of Olympic facilities brought more problems than benefits to the country.

The main mistake of the Greek Olympics was the lack of thought put into the construction of some objects and inability to change them after the Games to fit the country’s needs. As a result, today some of the facilities, such as a baseball field, are not in use.

If these freestanding objects were surrounded by entertainment zones, they would be more popular. And this is an important lesson for Ukraine.

It is not always enough to build a huge modern object. To be successful, it should be situated in a zone of high interest with a lot of extra benefits for the visitors, and coordinated to fit into a wider city plan.

Ukraine should create a strategy for infrastructure development and focus on its realization. There is still some time to benefit from past experiences and make sure we build for the future beyond Euro 2012.

Reiner Schlatmann is general manager and chairman of the management board at Philips Ukraine.

14

July 22, 2011

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Lifestyle

World in Ukraine explores nation's tion's ties with h Belgium.

July 22, 2011

Play | Food | Entertainment | Sports | Culture | Music | Movies | Art | Community Events

Green tourists seek out nature, roots

Green tourists head to Ratundul Mountain near Bereziv village in the Carpathians. (Daryna Shevchenko)

BY OK S A N A G RY T S EN KO AND DA RY N A S H E VC HEN KO GRYTSENKO@KYIVPOST.COM, SHEVCHENKO@KYIVPOST.COM

When Volodymyr Kitseliuk inherited a three-story wooden shack deep in western Ukraine’s countryside, it changed his life completely. He quit his job to live out his childhood dream and open the place up to eco-tourists.

After 20 years of gradual decay, the ramshackle building in the village of Bereziv in Ivano-Frankivsk Oblast has been given a new lease of life welcoming adventurers who flock there to learn how to milk a cow, eat with their

bare hands and fall asleep to tweeting birds instead of the rumble of traffic. “The first thing people get to learn here is to love everything that surrounds us. They churn butter, grind flour, weave rugs, and pick herbs, among other things,� said Kitseliuk, 30, over a cup of flavorful Carpathian tea.

He had just picked up his guests from the railway station in Kolomyia, and within a half-hour was already showing the group of four travelers from Kyiv his own museum in the attic. The museum is a treasure trove of local culture, including traditional dresses, wooden utensils and cutlery, and even a trembita, a three-meter

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musical instrument played by Hutsuls, an ethnic group from the region’s Carpathian Mountains. “I started my collection in my granny’s attic when I was a schoolboy,� said Kitseliuk. Then, from Bereziv, he moved to Lviv to study psychology.

But upon graduation, he couldn’t find a decently paid job to put his skills to use. “It was hard to survive on a psychiatrist’s wages,� he recalled. But then someone asked his help with buying an old chest, full of old collectibles, and Kitseliuk “dared to go back to his old interests.�

This put him back in touch with his roots in Bereziv, and opened his eyes

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$PNJOH 4PPO 4XJU[FSMBOE August 5, Confederation Day

Æ18 8

to people’s ongoing interest in their country’s traditions. He also offers a service tracing people’s ancestors in the region and drawing up a family tree.

The mountainous regions of western Ukraine are rich in ethnic traditions and breed many entrepreneurs like Kitseliuk. According to the Kyiv-based Union for Promotion of Green Tourism Development, there are some 1,000 households that entertain eco-tourists, and more than half of them are located in western Ukraine. “More and more people choose to move away from the usual holiday destinations and noise. They want Æ21

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City y e Life WITH RY Y CAITLIN CLEARY

Brush up on your taxi etiquette From the moment you arrive at Boryspil airport, taking a taxi in Kyiv can be one of the most stressful and expensive experiences of living here.

With rusting Soviet-era gypsy cabs fighting for business against registered taxis, and fares decided by barter rather than by a meter, it’s difficult not to get ripped off in the confusion.

It’s best to book a cab in advance. Away from peak times (morning and early evening), it usually takes about 12 to 15 minutes for the car to arrive. The operator will usually either give you a description of the car (for example, a black Daewoo Lanos – Kyiv taxi drivers’ usual vehicle of choice), its number plate, and its estimated time of arrival, or you’ll receive the details by text message. You can check the fee with the operator.

At peak times, the operator will often tell you there are no cabs available in your area and you’ll be left with no other choice but to stick out your arm to hail a cab and hope for the best. It’s a practice best tried if you have at least some limited Russian or Ukrainian.

First, make sure you are visible when waving your hand. If you don’t like the look of a car or driver, just wave it past.

Second, make sure you agree a price for the journey before you get in the car. When the driver winds down the window or opens the door, shout out the place you are going and a suggested price. They’ll either try to push the price higher, or shake their head and drive away.

If a taxi driver sees that he is dealing with an inexperienced foreigner he will inflate the price of the ride astronomically. If you think you’re offering a fair price, hold firm and bargain downward, but be prepared to offer an extra few bucks if you want to get going in a hurry.

Whatever you do, do not make the mistake of trying to cut the price in half after you’ve arrived at your destination. It’s an argument you’re bound to lose.

The average cost of a taxi trip in the center of Kyiv is around Hr 45 (about $5.50), but shorter trips can be had for less. Expect to pay premiums for travelling during rush hour, and for trips outside the city. The price for a taxi to Boryspil airport should be around Hr 170.

The best places to pick up cabs are busy intersections and Æ21

16 Entertainment Guide

www.kyivpost.com

July 22, 2011

Friday-Sunday, July 15-17

July 30 - Aug 28

Odesa suburb’s beach festival

Ukraine has many open fields to rival Britain’s Glastonbury music festival or Hungary’s Sziget. For the whole of August, the Black Sea coast will play host to Summer Sound Griboffka International Music Fest. Only 30 kilometers from Odesa, the village of Gribovka should have more parties that Ukraine’s fun capital.

Night-long parties by the sea, the 125-meter bar and non-stop live music – don’t miss the hottest event of this summer. Ukrainian and foreign bands will play hip-hop, disco and rock. Green Grey, TNMK, Boombox and Pianoboy have confirmed their attendance.

Stay tuned to find out which global stars will travel to Odessa beach suburbs.

July 30 - Aug 28, village Gribovka, bus #560 from Odessa’s Privoz market, summersound.org. Tickets: Hr 400 per week.

No more words: Russian theater with a silent play “The theater whose name we cannot mention” is a theater troupe from St. Petersburg that considers words superfluous. It will perform the silent play “Focus” in Kyiv, combining elements of plastic theater, pantomime, clownery, puppet-show and fire-show.

The genre of the play is an optical thriller, so prepare for games of light and darkness.

With the help of modern technologies, actors will try to make you feel a part of an oldfashioned theater.

Saturday, July 23, 7 p.m., Master-Klass Cultural Center, 34 Mazepy St., metro Arsenalna, www.masterklass.org/eng, 594-1063. Tickets: Hr 50.

(slavskerock.in.ua)

Glitzy, fast and furious powerboats from all over the world will cut through the Dnipro River next weekend. Formula 1 is not just about cars. The rules of powerboat racing, however, are nearly the same, and speed is really the only thing that matters.

Powerboats are just as fast as F1 cars as they can accelerate from standstill to 160 kilometers per hour in only four seconds.

The town of Vyshgorod, half an hour from Kyiv, will host the competition.

Preparations are underway with the roads, seating areas, parks and hospitals being renovated at the last minute.

July 29 - July 31, city of Vyshgorod, bus #397 from metro Geroyiv Dnipra, www.f1h2oukraine. com.ua/index.php/en/, tel.

(093) 500-07-70, (050) 418-28-26. Tickets: July 29: Hr 100, July 30: Hr 250, July 31: Hr 200.

(dj-ms.com)

(f1h2oukraine.com.ua)

July 29 - July 31

(vkontakte.ru)

Formula 1 on the water

July 29- July 31

Music picks: (jamalamusic.com)

Jamala and The Maneken Jazzy pop singer Jamala will share the stage of Arena Concert Plaza with house-music stars The Maneken in a joint concert.

It’s a natural combination as the two have worked together for some time.

The founder of The Maneken, Evgeniy Futskiy (aka DJ Major), plays house-music since 2002. He will present his second album “Soulmate Sublime,” while Jamala will sing her best works from the English-language debut record “For Every Heart,” which was produced by Futskiy.

Friday, July 22, 8 p.m., Arena Concert Plaza, 2 A Baseyna St., 222-8040, metro Ploscha Lva Tolstoho, www.arena-kiev.com.ua. Tickets: Hr 200.

(wiredgypsy.com)

(celebies.com)

"Cry Baby" party Whether you are a tireless rock-n-roll dancer or a big fan of Elvis Presley, you will love Cry Baby party.

Those who’ve seen the movie "Cry Baby" with Johnny Depp know perfectly well what the dress code should be: curls, stockings, cute spot dresses or skinny jeans back from the ’60s.

If you are a blond woman (or Johnny Depp!), you will get a free tutti frutti drink at the bar if you arrive before midnight.

Saturday, July 23, 11 p.m., Crystall Hall, 1 Dniprovsky Uzviz St., 288-5069.

Tickets: Hr 100.

Robert Plant Robert Plant is a British singer-songwriter best-known as vocalist in legendary rock band Led Zeppelin.

He will rock Kyiv with his new album, “Band of Joy,” spiced up with Led Zeppelin’s hits.

Plant started his solo career in 1982, producing successful records on his own, playing duets with such icons as Jimmy Page from Led Zeppelin and creating short-term bands. He brought together the Band of Joy last year, the same name as his very first group in the 1960s.

This year Plant decided to surprise Kyivans and invite rock band North Mississippi Allstars from Memphis to join the concert. They have released 11 albums to date and won a Grammy for best contemporary blues album.

Sunday, July 31, 7 p.m., Palats Ukraina, 103 Velyka Vasylkivska St., 247-2303, Tickets: Hr 300-3,000.

Compiled by Elena Zagrebina

Rock festival in the Carpathians This three-day festival in the green pastures of western Ukraine is about music, nature, sports and art.

In winter, this little town in the foothills of the Carpathian Mountains welcomes thousands of skiers. In summer, Slavske lures fans of rock, folk, blues, jazz and hiphop from famous Ukrainian and foreign bands. In its fifth year, Slavske Rock Fest will host Haydamaky, Tartak, Pikkardiyska tertsia, Ot Vinta and DrymbaDaDzyga, among others. Rent a bike to explore the emerald pine tracks if you are tired of music, or try out various arts and crafts,from body art to pottery.

Bring your own tent to stay at the camp site or rent one for Hr 40-100. If you need a roof, Slavske villagers will only be too happy to rent a room in their house, or you can book a hotel.

July 29- July 31, Slavske village, direct trains run from Kyiv and Lviv, slavskerock.in.ua/en/, tickets: Hr 50 per day or Hr 100 for the whole event.

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July 22, 2011

Entertainment Guide 17

Movies

Live Music July 26 Tres Deseos Latino Party, free admission July 27 Rockin’ Wolves, free admission July 28 Mr Och, free admission BOCHKA PYVNA ON KHMELNYTSKOHO 4B-1 Khmelnytskoho St, metro Teatralna, 390-6106, www.bochka.com.ua Concerts traditionally start at 9-10 p.m.

July 22 Beefeaters July 23 Foxtrot Music Band

Party with ‘Red Rocks’ in Docker Pub on July 23. (Courtesy) ART CLUB 44 44B Khreshchatyk St., 279-4137, www.club44.com.ua Concerts traditionally start at 8 – 10 p.m.

July 22 Angie Nears, Hr 50 July 23 MJ Project, Hr 50 July 24 Soiuz 44 Jam Session, free admission July 25 Les Gendarmes, Bludens, free admission July 26 Mulholland Drive, free admission July 27 Vexlarsky Orchestra, free admission July 28 TyGyDym Party, free admission DOCKER’S ABC 15 Khreshchatyk St., 278-1717, www.docker.com.ua Concerts traditionally start at 9:30-10 p.m.

July 22 Strong Time, Red Rocks, Hr 70 July 23 Motor’Rolla, More Huana, Hr 70 July 24 Vostochny Express, free admission July 25 Animals Session, free admission July 26 Gera and Second Breath, Hr 20 July 27 The Magma, Hr 30 July 28 Chill Out, Hr 30 DOCKER PUB 25 Bohatyrska St., metro Heroyiv Dnipra, www.docker.com.ua Concerts traditionally start at 9:30-10 p.m.

July 22 Motor’Rolla, Vostochny Express, Hr 70 July 23 Fleet, Red Rocks, Hr 70 July 24 Foxtrot Music Band, free admission July 25 Gera and Second Breath, free admission

PORTER PUB 3 Sichnevogo Povstannya St., 280-1996, www.porter.com.ua Concerts traditionally start at 7:30 p.m.

July 22 Brawn Shugar July 23 Slow Row July 24 Portmen July 27 Ivan Bliuz July 28 Abbey Road JAZZ DO IT 76A Velyka Vasylkivska St., 289-56-06, http://jazz-doit.com.ua Concerts traditionally start at 8:30 p.m.

July 22 Jam Duo July 23 Dmitriy Garkavenko July 27 Alexander Marchenko Other live music clubs: GOLDEN GATE IRISH PUB, 15 Zolotovoritska St., 235-5188, http:// goldengatepubkiev.com/ TO DUBLIN IRISH PUB, 4 Raisy Okipnoi St., 569-5531, http://www.to-dublin.com.ua/ PIVNA NO.1 ON BASEYNA, 15 Baseyna St., 287-44-34, www.pivna1.com.ua DRAFT 1/2 Khoryva St., metro Kontraktova Ploshcha, 463-7330 KHLIB CLUB 12 Frunze St., www.myspace. com/xlibclub CHESHIRE CAT 9 Sklyarenko St., 428-2717 O’BRIEN’S 17A Mykhaylivska St., 279-1584 DAKOTA 14G Heroyiv Stalinhrada St., 4687410 U KRUZHKI 12/37 Dekabrystiv St., 5626262.

Compiled by Svitlana Kolesnykova

A scene from the simple but fun comedy ‘Hall Pass.’ (catalinolaru.wordpress.co) Editor’s note: Although Kyiv theaters rarely show films in the original language, there are other ways of getting hold of movies without irritating dubbing or subtitles. Buy a film at an online video shop (some of them deliver to the door) or pick up a movie in DVD stores across Kyiv. Here’s a list of latest releases.

EXIT THROUGH THE GIFT SHOP USA-UK 2010 Starring and directed by Banksy Genre: documentary, comedy Where to buy: Yakaboo, Hr 45 http://www.yakaboo.ua/ru/catalog/all/ exit-through-the-gift-shop-194843 The story of legendary graffiti artist Banksy told by himself is finally out on the DVD in Ukraine. The world-famous artist, whose work can be seen on the buildings’ walls in many countries, carefully guards his anonymity. This movie tells a story of an eccentric French shop keeper on a mission to find Banksy. “It’s basically the story of how one man set out to film the un-filmable. And failed,” Banksy

Compiled by Alexei Bondarev

described his work whose identity is still unknown.

UNKNOWN USA 2011 Directed by Jaume Collet-Serra Starring Liam Neeson, Diane Kruger Genre: top-notch thriller Where to buy: Yakaboo, Hr 57 http://www.yakaboo.ua/ru/catalog/all/ unknown-212185 A man wakes up from a coma and finds out that someone has taken on his identity.

Nobody believes him, even his wife. He has to get his life back, and there is only one person to help him – a mysterious young woman. Liam Neeson, who plays the victim of this highly intelligent fraud, is a very talented and truly charismatic actor. The movie is built around him, and

he manages to make it almost as thrilling as The Taken (2008), his last international hit. Don’t miss this movie; it’s a perfect time-killer.

HALL PASS USA 2011 Directed by Jason and Peter Farelly Starring Owen Wilson, Jason Sudeikis Genre: stupid but funny comedy Where to buy: Yakaboo, Hr 57 http://www.yakaboo.ua/ru/catalog/all/ hall-pass-215349 Best buddies Rick and Fred are both married and are both tired of family ties. Their wives grant them one week to become bachelors again. Drunk and happy from the feeling of freedom in the beginning, they soon feel that singlehood is highly overrated.

It’s one of those stupid Hollywood movies that does its job perfectly. You just sit and laugh and forget all your troubles. The film is naturally recommended to married couples. Bachelors won’t be able to understand all the details.

Old Kyiv trams are available for hire

BY M A R K R AC H K E VYC H RACHKEVYCH@KYIVPOST.COM

Kyiv has come up with an unusual way to celebrate any special occasion – by hiring a tram and rumbling through the city while eating, drinking and even dancing with your guests.

Podil’s tramcar depot offers singletramcar rentals to a number of destinations within city limits starting from 10 a.m. to midnight.

They have seating for up to 26 passengers and are equipped with video and audio entertainment systems including an MP3 player and microphone for karaoke.

And they’re suitable for just about any occasion ranging from birthdays, romantic dates, leisure rides to the woods, to bachelor and bachelorette parties. Clients can bring their own food, beverages and are free to decorate as they please.

Five routes are available, all originating in Podil and lasting at least two hours – the minimum order.

Four set out from Kontraktova Ploshcha and go as far as the woods in Pushcha Vodytsia, a northwestern suburb. This leg lasts three hours. Others go as far as Obolon in the north and back, while others cross through the neighborhood into Pushcha Vodytsia before completing the roundtrip. One takes passengers directly from the tramcar

depot across from Spartak Stadium on Frunze Street into the Pushcha Vodytsia woods along tramcar line no. 5.

Passengers can choose from one of the three trams, each furbished for a specific function.

Dating back to 1892, the antique “retro” tram is the only one that has an outdoor compartment to enhance the scenic view of Kyiv. It seats 26 passengers and is usually used by parties wishing to take leisurely rides. It has no tables, though one is provided upon request and has narrow aisles.

It’s the noisiest of the three trams and has a hard wooden interior that was refurbished in 2006 with funds from the Committee of Kyivans for Public Transportation.

Trips on the “retro” tram cost Hr 350 per hour, available 10 a.m. to 8 p.m.

The Kyiv Post rented the “café” tram for a birthday bash. It’s perfect if the gathering involves lots of food and drinks. It has a kitchen area in the Monday thru Friday (per hour) Hr 300 – 10 a.m. to 2 p.m.

Hr 350 – 10 a.m. to 10 p.m.

Hr 500 – 10 p.m. to midnight Saturday thru Sunday (per hour) Hr 350 – 10 a.m. to 7 p.m.

Hr 400 – 7 p.m. to 10 p.m.

Hr 600 – 10 p.m. to midnight

Retro trams at Podil offer fun rides ideal for parties. (www. tramvaj-kafe.kiev.ua)

back where a buffet can be set up and a cooler can be stored. There are softcushioned seats that face each other, divided by tables that have special bottle and cup holders on the side to mitigate accidents on the sometimes jolting ride. Aisles here are also narrow.

There’s a small dancing area in the back for up to six people. It was refurbished in 2007 and seats up to 21 persons.

A Hr 100 discount is given for the four-hour trip: Kontraktova Ploshcha – Pushcha Vodytsia – Obolon – Kontraktova Ploshcha.

The “furshet” tram maximizes space for dancing and movement. Management told the Kyiv Post that this one is a favorite for girls-night-out and bachelorette parties. It has single-row chairs on each side for up to 24 passengers and a dance floor in the back. Musicians sometimes are invited to perform in this area while people dance in the wide, middle aisle. A large wooden table is provided for food and drinks in the front.

It was refurbished in 2008.

Rates are Hr 300 from 10 a.m. to 7 p.m.; Hr 350 from 7 p.m. to 10 p.m.

A Hr 50 discount is given on the four-hour ride: Kontraktova Ploshcha – Pushcha Vodytsia – Obolon – Kontraktova Ploshcha.

Orders are taken online at www. tramvaj-kafe.kiev.ua/carriage/ but only available in the Ukrainian language. It’s worth taking a look at the trams at the depot before completing an order. Or call Oleksandr Sharafan at 097-4241054 for more information.

Kyiv Post staff writer Mark Rachkevych can be reached at rachkevych@kyivpost. com.

18 Lifestyle

www.kyivpost.com

July 22, 2011

World in Ukraine

Editor’s Note: On July 21, Belgium celebrated its 180th National day, which commemorates the occasion when first Belgian King Leopold of Saxe-Coburg swore allegiance to the Belgian constitution in Brussels. It happened one year after the country gained its independence from the Netherlands in 1830.

Waffles keep BelgianUkrainian relations sweet

BY K AT YA G R U S H E N KO GRUSHENKO@KYIVPOST.COM

There may be only 120 Belgians in Ukraine, but they have a secret weapon that spreads the popularity of their small nation among locals – delicious Belgian waffles.

Some 2000 sweet vanilla and cinnamon treats are sold across Kyiv every day from kiosks run by the company Gofre, founded in 2008 by two Belgians who wanted to capitalize on their country’s specialty.

One of the co-owners, Miguel Iribarren, is a 50-year-old cook who came to Ukraine in 2008 after selling his restaurant in Brussels to start a waffle adventure abroad. He was invited by Etienne Vauthier, a Belgian who switched from real estate to waffle kiosks when Kyiv’s housing market plummeted in 2008.

As for most Western firms, the toughest problem for Belgian companies is finding the right local partners.

“While 80 percent of the Belgian economy is small- and mediumsized businesses, those who want to experiment in Ukraine usually can’t afford the unconsidered risks,” said Jana Zikmundova, the ambassador of Belgium in Ukraine.

Gofre, however, had a head start.

Vauthier hired some people from his real estate team to start the waffle trade, so he could have a team that he could trust. Iribarren said this was crucial to the company’s success.

While Iribarren was adapting the recipe of Liege waffles to Ukrainian tastes, his partner was solving issues with numerous state inspections to open their business.

The first waffle from Gofre (from the French word “gauffre,” meaning “waffle”) appeared in Kyiv three years ago on July 21, just in time for Belgium’s National holiday that celebrates the inauguration

Miguel Iribarren is both a businessman and a cook.(Oleksiy Furman)

of the first king of the Belgians after the country gained independence from the Netherlands in 1830.

“The only item that we import [to make our waffles] is Belgian sugar,” said Iribarren, who makes all the waffles himself in his bakery near Shuliavska metro station “with no preservatives or flavor enhancers.” The special Belgian pearl sugar, unique to the country, is made from refined beet sugar, which is compacted under very high pressure. It doesn’t melt in the waffles but becomes soft and sweet in the mouth.

The dough is then frozen and distributed to the 30 selling points in Kyiv where the waffles are baked spreading

the delicious aroma. Gofre also sold franchises to Lviv and Skadovsk and has three kiosks in Moscow. At the end of 2011, the Belgian duo plans to open their first selling point in Shanghai.

“We dream globally. …But Kyiv remains our hub for producing waffles for now, as it’s advantageous for the costs,” Irribaren said.

There is another reason why expanding to other countries is a good idea.

“Five Gofre kiosks in Kyiv were lifted and taken away [by the Kyiv municipal services] even though the documents were in order,” Iribarren said.

“Of course, this kind of behavior scares away Belgians who are inter-

ested in investing in Ukraine,” said Katerina Bassova, 35, president of the Belgian-Ukrainian chamber of commerce that was established last year and so far has 30 members.

Belgians, however, have their own peculiarities, the understanding of which is important to have the good economic ties that are now marked by a modest annual bilateral trade turnover of 800 million euros.

For example, the endless squabbling between Dutch-speaking Flanders in the north and and French-speaking Wallonia in the south manifested itself all the way in Ukraine.

“It used to be that there were separate representatives for trade at the embassy for Wallonia and Flanders. …

When the department was reduced to only one Wallonian representative, businessmen from Flanders were much less interested in Ukraine,” Bassova said.

The nature of Flanders and Wallonia’s disputes lays in the economic inequalities, where Flanders is more powerful economically than Wallonia, as well as the linguistic divide. The country has had no government for more than a year with warring factions unable to form a coalition and previous prime minister Yves Leterme, continues to head a caretaker government.

“The problems with the government during the last three years are, of course, unpleasant…but it doesn’t change much for the average lives of Belgians”, said Bassova who travels often back and forth. “It isn’t comparable to Ukraine being without a government,” she added.

Bassova, a native of Cherkasy, has first-hand knowledge of Belgium.

When her family was going through a difficult time in 1993, she was sent as a 17-year-old to Belgium to a distant family friend, instead of attending a medical school in Ukraine.

“The first four years were very dif-

ficult. … I would clean houses and wash dishes in the morning and take classes in logistics and economics in the evenings. My dream was not to clean the toilets, but do professional work,” Bassova reflected.

Having started work in a transportation company in the port of Antwerp, she met a Belgian who ran a logistics company in Dnipropetrovsk and invited her to manage a project in Ukraine.

After moving to Ukraine, she also set up an agricultural company for the same investor growing wheat. In 2006, she left the business and now helps Belgians access Ukraine’s market.

“As I didn’t choose to move to Belgium, I don’t regret coming back to Ukraine,” she said.

And because of two entrepreneurs from Belgium, she doesn’t have to go without her sweetest memory from her time there – waffles.

Kyiv Post staff writer Katya Grushenko can be reached at grushenko@kyivpost. com.

• Location: Western Europe, bordering the North Sea, between France and the Netherlands • Population: 10,4 million • Major cities by population: 1.9 million in Brussels; 961,000 in Antwerp (2009 figures) • Ethnic groups: Fleming 58 %, Walloon 31%, • Languages: Dutch (official) 60%, French (official) 40%, legally bilingual (Dutch and French • Belgian export to Ukraine: 510,6 million euros in 2010 • Exported products: Chemicals, machines, plastic materials, food products • Ukrainian export to Belgium: 283,2 millions euros in 2010 • Imported products: Grain, minerals, metals, textiles

More to Belgian culture than just beer and tasty chocolate

BY N ATA L I YA H OR B AN

The country of Belgium is just a little larger than Zhytomyr Oblast, but with three official languages – Dutch, French and German – and a rich culture stretching far beyond wellknown chocolate and beer, the home to the capital of Europe proves that not everything is about the size.

If there is something that 11 million Belgians take seriously, it must be food. The time Belgians spend enjoying their meal is never considered wasted, whether it’s a home-cooked dinner or a night out at a restaurant with some wine or beer.

Beer and chocolate are part of their national pride, that’s why Belgians would be very happy if the world finally

stopped doubting whether their beer is better than Germany’s and their chocolate tastier than Swiss. There are more than 350 brands of beerr available in em still the country, most of them eries produced in monasteries or artisanal breweries.. A ate great variety of chocolate om is found everywhere, from large supermarkets to tiny tier stores, and any chocolatier is proud to sell his own pralines.

No Belgian thinks that waffles are a trivial matter. ere are In the sea of flavors, there two types of waffles. While a Brussels waffle is squaree and has p, a Liege sugar sprinkled on top, stes sweeter one is round and tastes

with sugar dough.

added

to

the

Ask Belgian grannys where they buy their waffles – th they would know best. com to French fries, or When it comes frieten, Belgian Belgians won’t let you forget that it was Be Belgians, not the French, who invented them back in the 17th century, so it w would only be fair, they say, to chang change the name to Belgian fries.

B But before that happen there’s one more pens, thi they can complain thing ab about, as it seems compla plaining is part of their na national character too.

Kin Kind-hearted Belgians There are two basic types of waffles wa sold in Belgium.

don’t just do it because they are grumpy – it’s just their way to socialize.

They’ll complain about anything: from the slippery cobblestone roads in some cities to the country’s politics.

And there’s plenty to grumble about there, as the country in February broke Iraq’s 249-day record without a government. Divisions between Flemish and Walloon parties since election in June 2010 left Belgium with a caretaker government.

If you know about this Belgian train, it doesn’t mean you can whine freely in Belgium. If visitors start complaining, Belgians will argue back saying that their country is the best in the world.

Being in love with the country’s nature and history is a must for Æ19

www.kyivpost.com

Czech roots give Belgian ambassador insight into Ukrainian culture, mentality

BY K AT YA G R U S H E N KO GRUSHENKO@KYIVPOST.COM

Belgian Ambassador Jana Zikmundova is new to Ukraine, having started her work in Kyiv in March. But when asked about her personal aim for her time in Ukraine, she stated an ambitious goal: to help a low-cost carrier start up a direct flight between Kyiv and Brussels, the capital of Belgium and the European Union. Zikmundova, 55 years old, already knows plenty about links between Ukraine and the EU, having monitored negotiations on the free-trade agreement from 2008 to 2010. She has worked in various roles for the United Nations and the Belgian Foreign Ministry.

Although she may not yet be fully attuned to its peculiarities, Zikmundova said she has empathy toward the history and mentality of the people here, as she was born in what was then Czechoslovakia in the Soviet Eastern Block. Below are extracts of an interview that she gave to the Kyiv Post.

Kyiv Post: Could you tell us about your origin?

Jana Zikmundova: I was born in the town of Roudnice on the Elbe, 50 kilometers north of Prague. My father, a musician, came to Belgium in 1968 when normalization [the rolling back of reforms] was in a full swing in Czechoslovakia. If our family had returned to Czechoslovakia we would have been arrested for betraying the motherland. I studied history at the University of Liège, and in 1984 I passed exams to enter the Belgian diplomatic service. I wanted to do something useful for a democratic country such as Belgium.

I keep going back to the Czech Republic to my hometown Roudnice, and I am happy to observe the development of the economy there and general integration of the Czech Republic into the EU. KP: Do you think your origin has an influence on your work in Ukraine?

JZ: I understand what the communist period meant for Ukrainians. I learned about the Holodomor [the 1932-1933 famine] from my father, who had a keen conscience and knowledge of the horrors of Stalinism. So, I understand what the totalitarian period meant for Ukrainians, and this helps me to grasp your history and your mentality.

KP: Where does Belgium want to see Ukraine?

Advertisement

OUR FUTURE IS CHALLENGING BUT LOOKING BRIGHT

O

nce a Soviet republic with a command economy, now Ukraine has one of the fastest-growing GDPs in Europe. However a new-born democracy with it’s market economy is still reviving from world financial crisis that hit every second Ukrainian according to the EBRD. One of sectors that felt recession the most is the real-estate market. According to official data construction decreased by nearly half. But now things seem brighter, says Mr. Bart De Sitter, CEO of ULogis that develops industrial and logistics space all over Europe and has a good track record in Ukraine.

Mr. Bart De Sitter, Mr. De Sitter can we say that crisis in the real estate ULogis CEO market is over?

During the past year there has been an increased demand for warehouse spaces. Need of warehouse space is a direct result of consumer spending. This increased warehouse demand is therefore a clear evidence of post-crisis recovery.

Also the regions are very active, Dnepropetrovsk is reviving now. We can say that in the short term the logistics real estate market will continue to develop in Odessa, in the longer-term perspective - in Kharkov.

Nevertheless, we are convinced that the crisis has changed the market significantly and for a long period. Rent prices remain quite low compared to pre-crisis levels, bank financing is still very difficult to obtain and clients are much more prudent and therefore renting smaller surfaces for shorter lease terms. It’s clear that despite of our positive view on the market in general we are convinced that the real estate market will remain very challenging for quite some time.

Does doing business in Ukraine differ from doing business in Belgium?

Jana Zikmundova

JZ: Belgium would like to see Ukraine integrating very actively into the EU and assimilating the EU’s principles.

We hope that it will accelerate with the signature of the association agreement and deep comprehensive free-trade agreement.

KP: What’s Belgium’s attitude toward the trials of the former members of Ukraine’s government, such as Yulia Tymoshenko and Yuriy Lutsenko?

JZ: The European Union and Belgium are monitoring the trials, but it’s not for us to prejudge the outcome.

Belgium is concerned that there could be some political motivation behind the cases. But we mostly operate in the EU framework. It’s not so much for us to decide [how to react to the trials].

KP: Where do relations between Ukraine and Belgium stand now?

JZ: Bilateral economic relations are evolving in a promising way, with a growth of Belgian exports of 32 percent in 2010. They are considerable, but could be more important if the business climate improves. So far, the biggest investors are Inbev with a couple of breweries here, and Materialise Ukraine, an Internet technologies company that employs around 300 young Ukrainians. Belgian companies such as Scherder and Reynaers are also strong players.

are the th the he problems pro prob blems of ble KP: What are th Belgium B l i b i it the business community here?

JZ: Belgium is a very small country.

The successes and problems of the Belgian firms here are very quickly known in Belgium. The major issues [that the Belgian companies have] are with unreliable Ukrainian partners.

There are some problems when business disputes hit the judicial system.

The companies are worried that justice will not be done.

Ukraine is also a country of contrasts where one firm’s serious problems can revert to a more positive situation in a matter of weeks, and vice versa. We see that with the contracts for Euro 2012, for example. Some firms appear to be excluded, then a couple of months later, they are on board. Many times, the embassy has to step in, and these interventions take a lot of our time.

We have a Belgian business club that meets every two months, where our representatives exchange information and give advice to each other.

KP: There was an issue six years ago when an attaché from the Belgian Embassy, Elisabeth Perleau, tried to smuggle Ukrainian antiques out of the country. Do you know if she has been prosecuted in Belgium?

JZ: That sad page of our relations was turned. I don’t know what happened to her, but I would not wish anyone to have the media attention that she had upon returning home.

Kyiv Post staff writer Katya Grushenko can be reached at grushenko@kyivpost. com

Home bird Belgians choose the North Sea whatever the weather Æ18 any Belgian. For example, never say that the North Sea is not much to be proud of. Despite piercing winds and muddy water, it’s a favorite vacation spot for many Belgians.

Though the weather is often rainy, Belgians know how to entertain themselves. They love their cable television and a large choice of comics books.

They even have a Belgian Comic Strip Center in Brussels, which tells the history of Belgian comics with its 700piece collection.

Belgians are family-oriented and love spending time with their family or fixing their house. A popular saying

Lifestyle 19

July 22, 2011

goes that a Belgian has a brick in his belly, which means they are ready to spend any amount of time or money to make their homes cozy.

They also enjoy playing sports, and the favorite is football, followed by cycling and tennis. Because they tend to be very attched to their hometowns, Belgians tend to support their local football teams with great zest and energy, no matter how small or successful it is.

They are also known for their developed sense of respect for any profession, be it a top manager or a street vendor. Therefore, the job satisfaction

in Belgium usually ranks quite high.

Nevertheless, shows and parties are a must to keep Belgians happy. There are many festivals for all tastes, like Pukkelpop, an alternative music festival, Ghent Festival with music and theater performances, or Werchter festival, a rock music gig.

Sources: • Informal report compiled by the Belgian Embassy in Kyiv; • Use-it Guide, a non-profit organization that writes tourist guides (www. use-it.be).

ULogis has large experience in construction logistic warehouses in Western and central Europe. We also have a track record in Ukraine. There are significant differences.

Our strength is that we managed to combine and to take the best from two cultures; I mean Western and Eastern European cultures. This is reflected in our mixed Belgian/ Ukrainian team. By having a good mix in the team we are able to bridge these differences.

What are the main obstacles that foreign investors face when doing business in Ukraine?

There are several obstacles. In my opinion the main obstacles are the existing administrative barriers and the constant changes in legislation. The heavy administrative and very formalistic approach remains a drawback in creating a professional network and solving problems. Small events can take a lot of time and efforts. Changes in legislation create the continuous need for adaptations of how business is structured.

In recent years Ukraine has the trend towards openness. The intention of Ukraine is to create a favorable climate for investors. It’s clear that for a successful and rapid development it’s necessary to attract experience and resources of countries that have undergone a long way in market economy. We have seen many positive changes, but they are mostly happening as little steps down the road in the right direction.

What goals you set for your teams in Ukraine?

ULogis is specialized in the realization of tailor-made industrial real estate projects.

Our ambition is based on our unique know-how in logistics and process engineering, combined with project engineering and project management.

From the start of the detailed preliminary design until the delivery of a fully operational warehouse, assembly, light manufacturing or production facility, ULogis is responsible for the engineering, development, funding and asset management of the project.

We apply high technical standards to all our work through the involvement of highly qualified, in-house staff with years of experience. We can rely on our own resources and our collaboration with various strong partners to ensure the quality and efficiency of our services.

We believe in working with our clients and not just for them. A successful project is one in which the creativity of all our departments and partners is combined and results in efficient and seamless team-work.

Your company already has a good track record in Ukraine, how many industrial parks you already have here, what portfolios are of interest to ULogis?

We are developing a modern class A warehouse portfolio in Kiev and in regions.

Although our first aim is to develop these warehouses ourselves we are investigating opportunities to acquire existing warehouse space.

ULogis owns 3 land plots in Kiev, Odessa and Kharkov regions. Our sister company, dealing with agro and fruit sector, owns one land plot in Kahovka. On these 4 locations we are able to offer warehouses for our future clients.

In Kahovka the works have already been started and the first phase is close to completion. In Kashtan Park (Kiev region), located in Zhitomyr highway the construction works are on preparation stage and should start very soon. Odessa and Kharkov parks are still under preparation. Our focus for Odessa and Kharkov parks is to complete the permitting phase in order to be ready to capture future market demand.

Next to this, we are also investigating in Dnepropetrovsk to start up a new park development.

What are your forecasts considering the future of semi-industrial and logistics real estate market in Ukraine?

Ukraine is still undersupplied in terms of modern industrial real estate compared to other markets. Combined with a potential growth of the country's economy we see a long term structural demand for industrial real estate. On the other hand, for many reasons Ukraine remains a difficult environment to operate in. Therefore we see limited supply in the future.

Certainly we are looking with optimism to the next years. We have plans to grow together with the Ukrainian economy and have development plans in Kiev and in the regions. So our future is challenging but looking bright.

ULOGIS Ukraine BC HORIZON 4 N. Grinchenko Str. Kiev 03038, Ukraine Tel: +380 44 391 38 30 Fax: +380 44 391 38 31 www.ulogisgroup.com

20 Paparazzi

www.kyivpost.com

July 22, 2011

A day at the races

Four-year-old horses raced in a derby at Kyiv’s horse track on July 17. The sport lost its popularity after the collapse of the Soviet Union because of low funding. Private sponsors occasionally organize races to revive the sport.

(Natalia Kravchuk)

Gambling is illegal, but these men actively take bets before the race.

(Natalia Kravchuk)

A racer has to cover 1,600 meters to win the derby. (Natalia Kravchuk)

If you want Kyiv Post Paparazzi to cover your event, please send details or invitations to news@kyivpost.com or contact photo editor Yaroslav Debelyi at 234-6500

Jennifer Lopez sings at lavish Uzbek wedding in Crimea Kyiv Post Staff – American and Ukrainian media was buzzing last week with rumors that pop star Jennifer Lopez would be coming to Crimea to sing for a Ukrainian billionaire.

She did take to the stage in Crimea Jennifer Lopez sings at a wedding in Crimea on July 19. (www.lifenews.ru)

on July 19, but the man who paid her reported $1 million fee was Uzbek oil baron and millionaire Azam Aslanov.

The pop diva, 41 years old, performed at the wedding of Aslanov’s 33-year-old son Amon.

The name of his brunette Uzbek wife is still kept in secret, but Ukrainian tabloids report that the couple met through Russian social network “Odnoklassniki.ru.”

The wedding took place in Aivazovsky recreational complex on the Black Sea coast near Yalta. Yalta is a historic party town in the Crimea, where stars, businessmen and all types of wannabes like to converge in summer.

A large marquee was built on the beach to host a 500-guest party. All the staff in the hotel complex were sent off on holiday, and an event agency was brought in to organize the Orientalstyle party.

JLo reportedly landed in the Crimea on July 19 at 5 a.m. with a large group of dancers, backing vocalists, make-up artists and 20 tons of sound equipment. She stayed in a penthouse at the Villa Elena hotel, located 100 meters from Yalta’s posh pier.

The popular singer stayed in a suite costing $4,100 per night, accord-

Jennifer Lopez (C) waves goodbye as she leaves Villa Elena hotel, where she briefly stayed on July 19. (Sergei Zhizhoma)

ing to the hotel manager Yekaterina Komarova. “It seems they were very tired after the flight, spent the whole day in the hotel and left it only once for a rehearsal,” Komarova said.

“Lopez was very amicable, she said hello to everyone and was smiling a lot. Before departure, she left autographs and even allowed herself to be photographed, which is pretty rare.”

Her team lived in Oreanda hotel in

Yalta. Lopez’s fans flocked to the hotel but couldn’t catch the sight of her. She was guarded by Ukraine’s best-trained bodyguards from the same squads that guard visiting presidents.

The gig took place just four days after Lopez announced the end of her seven-year marriage to Mark Anthony, a Spanish singer. Many popular Russian pop-stars performed at the wedding, the details of which leaked out through their Twitter micro blogs.

www.kyivpost.com

Lifestyle 21

July 22, 2011

Cows, Kozaks and other joys of green tourism Æ15 to stay closer to nature, eat homemade food and enjoy the hospitality of rural residents,” said Volodymyr Vasyliev, the head of the union.

Getting close with nature, however, doesn’t mean sleeping in a haystack all day. Holidaymakers have to do everything on their own: from cooking lunches and washing dishes to baking bread for a trip to the mountains on horseback.

Kitseliuk attempts to recreate the daily life of his ancestors. No plastic cups or plates can be used during a stay, only wooden dishes and crockery.

No matter how many people gather around the table, they all must eat from one plate. One night at Bereziv costs Hr 150 including meals.

One of the guests, Anna Liubunya, a 25-year-old immunologist from Kyiv, described her rural escape as therapeutic. “At first, it doesn’t seem like it could change anything, but if you stay here at least a week, I think you could reassess some of your life goals,” she said.

Another “green” entrepreneur, Mykola Cherep, 38 years old, has gone through the same thinking process as Kitseliuk. After military service in the Soviet army and several years of profitable but unsatisfying work as a private bodyguard, he decided to settle in the village of his ancestors.

Wearing a Ukrainian embroidered shirt, or vyshyvanka, Cherep has a Kozak-style scalplock on his head.

He constructed his home on more than five hectares of picturesque territory in Petrushivka village in Chernihiv Oblast, where he moved his big family, and now practices Bereziv Hut Village Vyzhniy Bereziv, Ivano-Frankivsk Oblast Tel. 067-967-1759 E-mail: v.kiceliuk@gmail.com vlotko.livejournal.com Falcon Homestead Village Petrushivka, Chernihiv Oblast 68 Naberezhna St. Tel.04633-24134, 067-956-6751 www.hutir.net

Gypsy cabs in airport soon to be replaced Æ15 bus stops, but beware: the

Mykola Cherep (C) practices martial arts on his Falcon Homestead.

(Oksana Grytsenko)

traditional Ukrainian martial arts, collects antiques and welcomes numerous guests.

“I am still engaged in military affairs on my homestead as a Kozak,” he said in a serious tone. It was hard not to believe him looking at the whip in his hand and the saber behind his back.

Cherep’s Falcon Homestead is an eco-tourism center hosting up to 20 visitors who can live in six houses decorated in 17th- and18th-century Ukrainian style, but equipped with hot showers, fridges and satellite television.

Horses, cannons, kites and even an ancient Kozak warship, or chaika, dominate the center. Cherep charges Hr 120-160 per night to enjoy this collection. For an additional fee, he treats his tourists to traditional Kozak meals cooked on firewood, a sauna and an ethnographic museum. He can also teach them how to fight with saber, ride a horse and share his dreams to

Homemade dumplings, or varenyky, with cheese and potatoes

open a school of Ukrainian martial arts.

Both Cossack Cherep and psychiatrist Kitseliuk say their businesses are not yet profitable, but remain optimis-

tic about the potential of green tourism in Ukraine.

What prevents their nature escapes from greater success is “the mentality of our authorities and an absence of information on both central and regional levels,” said Vasyliev from the green tourism union.

But it seems like there’s no shortage of tourists. Even foreigners make their way through the woods to find Kitseliuk, an English-speaker. He charges a just rate of Hr 150 per night, including food.

“What I teach here is basic, nothing special. Some of my guests start telling their family stories as we climb the mountains, others wipe tears when milking a cow. I don’t stage any dramas here, but what I do touches people and this is very important for me,” explained Kitseliuk.

Kyiv Post staff writers Oksana Grytsenko and Daryna Shevchenko can be reached at grytsenko@kyivpost. com and shevchenko@kyivpost.com.

competition for a cab at 5:30 p.m. on Friday afternoon can be cut-throat, and taxi drivers are all too happy to take advantage of the situation by doubling or even tripling the fare.

If you have a bulky suitcase or a bulky family, you should request a so -called “universal” taxi, which is slightly more expensive, but larger and with more trunk space.

Do not be alarmed if you find that your cab has no seatbelts. Wearing a seatbelt implies that you are anticipating a crash, which implies that you have doubts about your driver’s driving abilities. To avoid being insulted by insensitive passengers, most drivers have the belts hidden away or removed altogether.

Though hailing a regular car or a “gypsy cab” for a ride is not uncommon here, as a foreigner, it may be safer to use a taxi from a registered company. In Boryspil airport, authorities promised to replace hectic service with a fleet of 500 new Hyundai cabs transport passengers starting from October. The trip should cost some Hr 165 to the center of Kyiv.

The cars will have meters, so let's hope we can bid farewell to tedious bargaining after a flight.

Several taxi services in Kyiv have English-speaking operators. Though convenient, these companies tend to be more expensive than non-English speaking services: • Kiev Taxi Service (331-3091); • Airport Transfer Services (2030309); • VIP Taxi (332-6418); • Life Car Services (499-6565)

Some non-English speaking taxi companies in Kyiv: • Etalon/Эталон (063) 237-54-54; • Allo /Алло 237-75-75; • Evro /Евро 249-40-40; • Fortuna/Фортуна 063-822-02-02, 096-220-02-02; • Elite/Элит 238-82-38;

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July 22, 2011

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Grants and Subcontracts Accountant Duties and Responsibilities: s Conduct grants pre-award and subcontracts post award responsibility determination (financial aspects) s Perform detailed review of grant application budgets and eligibility of costs in accordance with USAID regulations and AgroInvest project requirements s Review grantee financial reports and back-up documentation s Monitor grantee budget and expenditures to ensure they are allowable, allocable, and reasonable s Serve as a resource to all grantees/subcontractors on financial management issues s Participate in supervision of all grants and subcontracts awarded by the AgroInvest Project (financial aspects) Job Qualifications: s Bachelors or equivalent degree in accounting, finance or related field required. s At least five years of experience in accounting and/or financial management. s Previous USAID or other international donor experience, and operational experience with NGOs and Grantees preferred. s Language Skills: Advanced English speaking and writing skills. Fluency in Ukrainian and Russian. s Computer Skills: Advanced skills in using word processing and spreadsheet as well as electronic communications programs, accounting software. s Travel (Required) - Available for travel within Ukraine (including overnight stays for up to several days) as required by the overall needs of the project.

Please submit your resume and cover letter to chemonics.inc@gmail.com by July 29, 2011 with the position in the subject line. No telephone inquiries, please. Finalists will be contacted.

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To be considered, please send CV to Brian Bonner, chief editor, Kyiv Post at bonner@kyivpost.com

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July 22, 2011

How to place an Employment Ad in the

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Prices for ads (UAH) Size (mm)

Kyiv Post

By Fax, Phone or E-mail (from 9 a.m. to 6p.m.

Ask for Nataliia Protasova) Tel. +380 44 234 6503 Fax. +380 44 234 6330

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THE IDEAL CANDIDATE SHOULD: Have fluency in English, Ukrainian and Russian.

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Please send CV, three writing or editing samples and an explanation of why you want to work for the Kyiv Post, one of Ukraine’s top news sources, to:

e-mail: protasova@kyivpost.com

Brian Bonner, chief editor, Kyiv Post at bonner@kyivpost.com

All prices are given without VAT. 4&37*$&

WE NEED GOOD SKILLED DJANGO PROGRAMMER FOR INTERESTING, OUT OF THE ORDINARY PROJECT

Send your CV to voronkov@ kyivpost.com

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Kyiv Cricket Club gladly welcomes teams participating in the Kyiv Cricket League: KCC, BUCC, Seniors, Friends, Kagarlyk, Combined XI & EverGreen XI The League’s competition begins on May 28 through August 14, 2011 with games at the Voskhod Stadium at 6 Pryvokzalna Street, Kyiv.

You are invited with family, friends & colleagues!

Cold beer & snacks available to beat the heat & enjoy watching the game.

Next weekend matches:

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July 23 Saturday July 24 Sunday July 25 Monday

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Leagu

Kagarlyk vs Friends BUCC vs Seniors KCC vs Combined Seniors vs BUCC Seniors vs Combined Friends vs Combined

09:30 AM 04:00 PM 09:30 AM 04:00 PM 09:30 AM 04:00 PM

Results of Kyiv Cricket League held on July 16-18, 2011:

July 16 Saturday

July 17 Sunday

Seniors vs EverGreen

Seniors won by 18 runs

Friends vs KCC

Friends won by 6 runs

EverGreen vs Combined

EverGreen won by 39 runs

Seniors vs KCC

KCC won by 4 wickets

Combined vs BUCC July 18 Monday

Friends vs Seniors

Man of the Match: Sajjad Man of the Match: Puneet & Rashid Man of the Match: Bimal Man of the Match: Sajjad

Combined won by 43 runs Man of the Match: Nadeem

Seniors won by 1 wicket Man of the Match: Sajjad

Seniors: 190runs/5 wickets EverGreen:172 runs/7 wickets Friends: 150 runs/7 wickets KCC:144 runs/8 wickets EverGreen: 218 runs/1 wicket Combined: 179 runs/ All out Seniors: 103 runs /All out KCC: 107 runs/6 wickets Combined: 145 runs/7 wickets BUCC: 102 runs/All out Friends: 159 runs/9 wickets Seniors: 162 runs/9 wickets

Thanks to everyone involved in the Kyiv Cricket League!

Please let us know if you would like to play. To register please contact Mr. Wayne, KCC, at +380 50 358-88-49 or Mr. Shailesh, KCC, at +380 50 355-61-16 For more information please visit kyivpost.com/projects/cricket

CRICKET

24 Business Focus

www.kyivpost.ua: дайджест статей СТИЛЬ ЖИЗНИ: Свадьба по-узбекски: Дженнифер Лопес отгуляла в Крыму Елена Загребина Американская звезда Дженнифер Лопес выступила на свадьбе в Крыму, но не у украинского олигарха, как сообщалось ранее. Узбекский нефтяной магнат Амон Асланов выдал 33-летнего сына Азама 19 июля под сладкие переливы Лопес Дженнифер Лопес и еще 15 российских звезд недалеко от Ялты, в поселке Партенит. По сообщениям разных СМИ, цена выступления только одной американской звезды составила от одного до двух миллионов долларов. Весь же банкет, похоже, перевалил за 10 миллионов долларов... БИЗНЕС: Новий податковий кодекс життя підприємцям не поліпшив Олена Абрамович Новий податковий кодекс, через який збиралися майдани, працює вже півроку. Але проміжні результати його діяльності невтішні. З одного боку, уряд сипле позитивними цифрами, які мають проілюструвати його ефективність у виконанні задачі наповнення бюджету. З іншого, підприємці говорять про те, що статистика є штучно завищеною, а ускладнення для бізнесу, в тому числі з податковим обліком — абсолютно реальними. Крім того, з січня до закону прийняли вже близько 300 поправок, і процес цей триває. «Прибрали дуже погані норми. Погані – лишилися», говорить Оксана Продан, голова Всеукраїнського об’єднання малого та середнього бізнесу «Фортеця»... КИЕВ: В Києві встановлять автомати з молоком, якого стає все менше Оксана Гриценко Скоро в автоматах можна буде купувати не лише каву, чай чи газовану воду, а й свіже молоко. Губернатор Київщини Анатолій Присяжнюк оголосив про наміри до кінця року встановити по області з півсотні молочних автоматів, чеського виробництва. Водночас, експерти не знають, де візьметься те молоко, виробництво якого щороку скорочується... Полный текст статей и блогов можно прочитать на www.kyivpost.uа

www.kyivpost.com

July 22, 2011

Investment key to cleaner energy, more efficiency Æ10 to make alternative energy account for 30 percent of the total over the next four years.

Although solar and wind power projects are starting to pop up across the nation, their impact have yet to be felt to jumpstart a thriving market.

“A small number of successful projects are not enough to create a critical mass when the process becomes selfsustaining: more projects lead to higher demand for services, which decreases the costs of such services and eventually leads to even higher demand,” said Dragon Capital analyst Denis Savka.

Worldwide in 2010, wind continued to dominate in terms of new financial investment, with $94.7 billion compared to $26.1 billion for solar and $11 billion for biomass and waste-toenergy, according to a recent report financed by Bloomberg.

“However these numbers do not include small-scale projects and in that realm, solar, particularly via rooftop photovoltaics in Europe, was completely dominant,” reads the report.

Greencubator’s Zinchenko said Ukraine has five times the solar power potential of Germany, which is currently rolling out an ambitious renewable energy campaign while phasing out nuclear power.

Southeast regions of Ukraine, especially Crimea, possess the largest potential for solar energy. The average amount of solar energy received annually in Ukraine is about 1,200 kilowatt hours per square meter.

In June, Ukraine finished building its first solar power station in Crimea

Æ Wind farms could account for up to 30 percent of electric power – European Bank for Reconstruction and Development

capable of supplying 5,000 households with electricity.

The same EBRD report says that wind farms, if brought online, could account for 20 percent to 30 percent of Ukraine’s demand for electric power.

“The greatest wind energy potential is located in the vast areas adjacent to the Black Sea and the Azov Sea, as well as the Carpathian, Transcarpathian and Lower Carpathian areas,” the EBRD report read.

As for biomass, Ukraine currently gets under one-half of one percent of its energy from these resources and biofuels, despite a substantially large agriculture sector that produces livestock manure that can be converted into energy. EBRD estimates that Ukraine could produce more than 10 times its current level.

Obstacles But investment into Ukraine’s energy sector is delayed because of corruption, complications with receiving useful land plots and underdeveloped energy-related services, said Dragon Capital’s Savka.

The country’s recently implemented green tariff, though favorable, is

cumbersome for investors. Ukraine still has much to do to bring green tariff terms and conditions in-line with international standards and practices.

Investors are usually granted the tariff at the final stage of their project, an investment discouragement.

“Since the introduction of the Green Tariff [in 2009], there is an opinion on the market that the situation when the tariff is granted only when a wind park is ready for operation (i.e. the final step of the project) is not investor-friendly and contradicts… world practices, where green tariff is granted at the initial step of the project,” said Asters law firm associate Yaroslav Petrov.

Moreover, Petrov said, investment into renewable energy encounter problems connecting to the nation’s main energy grids.

“In this respect it would be essential to suggest changing terms and conditions for granting the Green Tariff and regulating the procedure for connecting of projects to the grid,” he said.

Pauline Tillmann contributed to this artivle. Kyiv Post staff writer Mark Rachkevych can be reached at rachkevych@kyivpost.com.