#25|JUN24|2011 by Kyiv Post

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TOP STORIES INSIDE: • China’s president signs deals with Yanukovych. Page 2 • Kyiv Post exclusive: Ukrtelecom’s new CEO denies being front for oligarchs. Page 9 • Bolshoi Theater’s top dancer in Kyiv. Page 15 • Entertainment guide to this weekend’s summer festivals. Page 16

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vol. 16, issue 25

Ukraine’s ‘Most Important Task‘ At an investors’ meeting in Kyiv with President Viktor Yanukovych, European Bank for Reconstruction and Development President Thomas Mirow (right) told Ukraine’s leader that fighting corruption should be his top priority. Mirow also told the president to stop letting insiders monopolize sectors of the economy, start strengthening rule of law and more. Will Yanukovych listen? See full text of speech on page 10.

Ukrainian President Viktor Yanukovych (L) and European Bank for Reconstruction and Development President Thomas Mirow in Kyiv on June 23 during a meeting of investors. (Courtesy)

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

President Viktor Yanukovych on June 23 heard the same drumbeat of criticism that’s been playing in national leaders’ ears for more than a decade. If the message is getting through, it somehow isn’t getting carried out. “Address the systemic and pervasive corruption that…touches the lives of every citizen at every level,” Thomas Mirow, president of the European Bank for Reconstruction and Development, said at an investors’ council meeting chaired by Yanukovych. Some of the largest foreign and

Inside:

Æ EBRD leader Thomas Mirow delivers investors’ message to Yanukovych domestic investors in Ukraine came to tell Yanukovych what they thought of his plans to improve the economy and investment climate, two key components of the president’s plan to transform the country. The 30-member council includes global giants Microsoft, ArcelorMittal and Cargill, Ukrainian-Russian Smart

News Æ 2, 12, 14 Opinion Æ 4, 5, 11

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Holding and Russia's Lukoil, as well as local players, including EastOne Group under Viktor Pinchuk, Group DF headed by Dmytro Firtash and DCH controlled by Oleksandr Yaroslavsky. “I want to hear the point of view of investors, how they today view the regulatory framework in Ukraine and how legislation is being reformed,” Yanukovych

said. “We will certainly take into consideration the investors’ standpoint.” He mainly heard what local and foreign experts have been preaching since he first served as prime minister in 2002: combat corruption, strengthen the rule of law, improve the banking and agricultural sectors, make taxation fair, improve energy efficiency and simplify trade and customs procedures. “Across-the-board corruption and personal interests paralyze the implementation of your initiatives and don’t allow business to function, invest and create jobs,” Tomas Fiala, president of the European Business Association, Æ10 told the president.

Business Æ 6 – 10

Employment/Real Estate/ Lifestyle Æ 15 – 22, 24 Classifieds Æ 22 – 23

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June 24, 2011

Ukraine’s vanquished Jews from World War II Editor’s Note: On June 30, 1941, eight days after Germany declared war on the Soviet Union, Nazi troops marched into Lviv. They occupied a city overcrowded by refugees and traumatized by two years of brutal Soviet rule, which began in September 1939 with the beginning of World War II. While Ukrainians largely welcomed German troops in the hope that Hitler would support an independent Ukrainian state, it did not take long for many Lviv residents to realize Nazi rule was no better – and often worse – than Soviet. The situation for the city’s Jews was particularly precarious. Within hours of entering Lviv, pogroms were unleashed against its Jewish community. Over the next two years, Germans, often with the aid of local citizens, systematically annihilated the city’s Jews. By the time Germans quit Lviv in defeat on July 26, 1944, the Jewish community was decimated. To mark the 70-year anniversary of Germany’s June 22, 1941 invasion of the Soviet Union, the Kyiv Post begins a five-part series chronicling the life, death and remembrance of Lviv’s Jewish community. Undoubtedly, Jews throughout modern-day Ukraine suffered great losses in the Final Solution, Nazi Germany’s plan to eradicate Jews from Europe. As residents of Halychyna, a historic territory that comprises today’s western Ukraine and eastern Poland, however, Jews there found themselves at the epicenter of the Holocaust. What remains today are the echoes of a community that inhabited the region for over eight centuries and was the birthplace of many of the Western world’s leading religious, political and literary figures.

B Y N ATA LI A A . FE D U SC H A K FEDUSCHAK@KYIVPOST.COM

Part 1: Boris Orych and western Ukraine Jews LVIV, Ukraine – As advancing Nazi forces began bombing outlying areas of Lviv in September 1939, the headlines of local Jewish newspaper Chwila rang with hope: “Large losses for the German military on Æ14

2 News

JUNE 24, 2011

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June 24, 2011

Vol. 16, Issue 25 Copyright © 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. Газета “Kyiv Post” видається ТОВ “ПаблікМедіа”.

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www.kyivpost.ua: дайджест статей УКРАИНА: Чорнобиль закрили для туристів Світлана Тучинська В Чорнобильську зону перестали возити екскурсії, а прокуратура проводить там перевірки. Туроператори кажуть — відбувається перерозподіл туристичного ринку, який зростає кожного року. Досі існувала єдина державна компанія, яка влаштовувала поїздки до 30-кілометрової зони відчуження, Прип'яті та Чорнобилю Туристам теперь въезд в - "Чорнобиль Інтерінформ". Приватні турфірми, Чернобыль закрыт. які пропонують такі самі подорожі, замовляють тур у цій компанії, надають списки туристів та сплачують державний тариф за кожного туриста – близько 500 гривень за людину, в залежності від розміру групи. Тільки минулого року зону відвідало близько 8 000 туристів. В "Чорнобиль Інтерінформ" кажуть, що тепер їх хочуть усунути від прибуткової діяльності...

Chinese President Hu Jintao is welcomed to Kyiv. (AP Photo/ Sergei Chuzavkov)

Chinese presidential visit hyped up, but details on billion-dollar deals scarce B Y Y U R I Y O N YSH K I V ONYSHKIV@KYIVPOST.COM

КИЕВ: Київський Хрещатик у двадцятці найдорожчих вулиць Європи Оксана Гриценко Київський Хрещатик визнано однією із найдорожчих торгових вулиць Європи, згідно із підрахунками консалтингової компанії Colliers International. За ціною орендних ставок на торгові приміщення головна вулиця Києва стала 17-ю із двадцяти найдорожчих у Європі, обігнавши Невський проспект у СанктПетербурзі та Уестгейт в Копегагені...

A three-day visit to Ukraine by Chinese President Hu Jintao, coming at the end of a tour that included Russia and Kazakhstan, led to bold declarations with President Viktor Yanukovych. But it will take time to see if any of them, including a goal to increase bilateral trade to $10 billion from the current $7.7 billion a year, will come true. It also remains to be seen whether all of the announced agreements worth $3.5 billion will actually happen. The Chinese president ended his trip to Ukraine on June 20, after he bargained hard over natural gas prices during a Moscow visit. Yanukovych seemed satisfied with Ukraine-China relations. “According to our estimates, the financial value of agreements, projects and contracts signed during the visit is about $3.5 billion,” Yanukovych said. But neither he nor other officials revealed specific details breaking down where such a figure came from. In turn, Hu said the right words to his hosts: “The main aim of the Chinese government is to establish and develop China-Ukraine relations, a strategic partnership.” The strategic partnership declaration includes mutual support of state sovereignty and territorial integrity, respect for the development chosen by each of the states, mutual non-use of force or threat of force, economic

БИЗНЕС: «Гаврилівські курчата»: Ми не винні Оксана Гриценко Компанія-виробник “Гаврилівських курчат” говорить, що не має жодного стосунку до червневих отруєнь у Києві, і що продукцію Держсанепідемслужба не забороняла. Вину за несвіжих курей-гриль перекладають на супермаркет, який їх продавав. Кілька десятків людей отруїлися в Києві 8-10 червня через несвіжих курей-гриль та інші продукти із супермаркету “Велика кишеня” на вулиці Героїв Дніпра, - повідомляла агенція РБК із посиланням на головного санітарного лікаря Оболонського району Києва Еллу Вербіч. У захворілих людей, серед яких п'ятеро дітей, виявили сальмонельоз, а продукцію вилучили із супермаркету та відправили на експертизу... СТИЛЬ ЖИЗНИ: Маленькие радости президентов на пенсии Александра Романовская Вопреки расхожему мнению, президенты в отставке вовсе не обязательно занимаются политикой или общественной деятельностью. Удовлетворив политические амбиции путем успешного или не слишком срока, многие наконец-то могут позволить себе дело «для души». Римский император Диоклетиан задал тон в первом столетии н.э. Сделал он это с помощью капусты. Любовь Виктора Ющенко к пчелам 20 веков спустя показывает, что не многое поменялось. Первый президент США Джордж Вашингтон открыл прямо в собственном имении ликероводочный завод, а Томас Джефферсон основал университет в штате Вирджиния. В общем, президенты – тоже люди, и не все бредят политикой после того, Пчеловод Виктор как сложили полномочия... Ющенко Полный текст статей и блогов можно прочитать на www.kyivpost.uа

or other pressure, etc. This was the first visit to Ukraine by a Chinese president in 10 years, and the third meeting between Hu and Yanukovych since the Ukrainian president took power in 2010. Political analysts said the mere fact that a Chinese president visited is a success. “Chinese leaders don’t just do political tourism. This visit demonstrates China’s attention to and interest in Ukraine,” said Volodymyr Fesenko, head of the Kyiv-based think tank Penta. “The question is now how Ukraine will take advantage of that. It was very important that China, one of the biggest world powers, reminded that it is a guarantor of Ukraine’s security.” Ukraine said it landed a $372 million loan from China which will be used to build a high-speed railway connecting Kyiv and Boryspil International Airport using Chinese technology and companies. Discussions are also under way involving an additional $2 billion worth of infrastructure projects in Ukraine. In addition, Ukraine hopes to sell its airplanes to China and attract investment into its agriculture and coal mining sectors. Education Minister Dmytro Tabachnyk came away happy after China decided to give $12.3 million in technical assistance for educational programs that are intended to bring both countries closer together. Kyiv Post staff writer Yuriy Onyshkiv can be reached at onyshkiv@kyivpost. com

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June 24, 2011 Advertisement

At a glance: Agricultural market Grain Export Sequel

he European Business Association keeps a watchful eye on the recent legislative developments of the agro market and the long-awaited land reform. The country’s agrarians saluted the abolishment of grain export quotas for corn, wheat, barley, rye and buckwheat, when the Government has taken on board the appeals of business community and sanctioned the respective Resolution #566 dated May 25, 2011. Despite such meaningful steps, it is early to endorse a triumph, as the grain export quotas were swapped with export duties starting from July 1, 2011. On June 17, 2011 the President of Ukraine signed the bill #3387-VI stipulating export duties to be imposed till January 1, 2012, for the following grains: wheat- 9% of the customs value, but not less than 17 EUR per tonn; barley – 14%, but not less than 23 EUR per tonn; corn–12%, but not less than 20 EUR/t.

To rehabilitate its once world famous cerealbreeding sector, Ukraine shall act as a stable and reliable exporter. Customs duties on agricultural products, as de facto export quotas, caused a tide of discontent among the agribusinesses. Combined with vague scheme of VAT refund for agro traders, the decision to set export duties can be a weighty threat for Ukraine’s investment attractiveness, business climate and food security. The EBA foresees duty-free and quota-free grain trade as its long-standing aspiration and specifically appeals for the transparent and well-balanced grain export regime, since such reasonable policy action will reap additional benefits to country’s economic promotion.

ow do you assess the business environment within the agro market? If compared to 2010, are there mostly positive or negative trends prevailing? The second half of 2010 and the first quarter of 2011 were detrimental to the grain industry of Ukraine. Detention of ships loaded with grain, introduction of export quotas and their distribution, repetitive introduction of new legislative initiatives aimed at monopolizing the market, overall uncertainty about the future of the agrarian business in the country did not add optimism to market players and investors. We have seen the first positive developments only in May-June 2011. Presidential ban on the law of export quotas' auctioning, cancellation of export quotas, and postponement of export duties' introduction to July 1 are encouraging signals. We take them as an offer to start partnership dialogue with the Government and this is exactly what we have been looking for. How do you assess the scale of challenge facing the agricultural business growth? This challenge is formidable both in Ukraine and internationally. Our company runs business for almost 100 years and the challenges we face now are of incomparable magnitude. Climate changes, supply and demand imbalances, and political turmoil add up to local and global financial uncertainties. This does not make our life easier. But it also puts our company in a unique position as we can use not only our worldwide resources and experience to respond to challenges in Ukraine, but also our strong positions as a leading Ukrainian grain exporter to support our growth worldwide. What is your vision of the current regulatory conditions the agromarket players operate in? Regulatory conditions vary from country to country. The main feature of local regulatory framework is the uncertainty and unpredictabil-

ity. Agriculture with its pretty long production and business cycles depends on many factors that are unpredictable because of their nature, but nothing is more detrimental to our business than ever-changing rules and regulations. Is current legislation beneficial for export boost or does it create barriers for trade? We do not know yet. This sounds strange but before we get familiar with one legislative norm and start to understand all its implications we have a new one that turns everything upside down. For instance, according to the new Tax Code we are supposed to lose VAT refunds on exported grain as of July 1 but according to the amendments to Tax Code that may be adopted as early as July 5 we may get the status of VAT receivers again. We can do business with or without VAT but our business requires stable legislation and several months' advance notice on legislative changes. From July 1 the export of major grains is levied by the Government. This certainly is the export restricting tool, introduced by the Government, but we hope that the administration of this instrument of export regulation will be more transparent than export quotas. Export boost is possible on the basis of two factors – good crop and free market Do you support EBA efforts to abolish Amendment 474 to the Tax Code of Ukraine, which prescribes imposing VAT refund to a certain limited category of grain exporters? This norm if adopted would create privileged conditions for one or several companies and this is what we oppose. All market players should have equal conditions in terms of taxation and no exceptions should be made to this rule. This is our position but this is also a basic principle of Ukrainian and international legislation. We definitely support EBA efforts in this direction.

We believe that trust and stability is the foundation of our business. But the trust should be based on solid legislative and regulatory background. Level of trust in Ukraine’s agribusiness is very low yet and to build this trust regulatory foundation is badly needed. Toepfer operates in Ukraine for 20 years and we are among the biggest investors into Ukraine’s agricultural infrastructure. But we would be able to provide more financial resources especially to farmers if we would have the guarantees. Legitimizing the use of warehouse receipts and land rent rights as collateral to loans made to farmers are the most obvious and easy steps to be made. What are your predictions as to the harvest 2011 and the subsequent export in 2012? Despite the fact that the weather still can influence crop harvesting and the development of late crops, one can expect a regular crop at around 43-45 mio mt, which would theoretically allow around 20 mio mt of Ukraine's exports. The share of corn is expected to increase, while the barley crop will hardly exceed the 5 years' average. Regarding wheat, one can expect it around 20 mio mt or slightly higher, while the split of qualities will be seen only after the harvesting campaign. To summarize, it will be an average year without any extraordinary export figures. And naturally export numbers mentioned above are possible in case no restrictive formal and informal measures are implemented and the export market stays equal to all players and transparent commercial environment.

General Director Alfred C. Toepfer International (Ukraine)

5)*/(4 50 ,/08

Transparent VAT Refund for Agribusiness –a Head Start for Sound Grain Export he concerns over automatic VAT refund scheme that has been newlycounselled by state policymakers ran high among local and international agribusiness community. The euphoria over grain quotas cancellation has been overshadowed by the recently imposed customs duties for cereal traders and the vague scheme of VAT refund for grain exporters. The European Business Association safeguarding Ukraine’s agricultural businesses and farmers, has recently recommended a raft of supplements and appeals to the Draft Law on Amendments to the Tax Code of Ukraine, namely to the amendment No. 474 (“The Amendment”) to the Draft Law. The Parliament of Ukraine is currently actively brokering the Amendment which envisages VAT refund system for certain category of grain exporters thus causing additional

We can discuss a lot of the investment possibilities of major grain trading companies which would be beneficial for farmers and the country in general, but it is long overdue to start with those two steps.

IRINA Prisyazhniuk,

Export boost is possible on the basis of two factors – good crop and free market.

*O'PDVT

What other steps do you advocate as beneficial for agricultural products exporters?

obstacles for efficient grain market circulation and giving birth to unfair competition. Agrarian business community is cautious towards weighty risks resulting from the Amendment, as the rule stipulates that specific category of grain exporters, namely state agents involved in grain production and export are eligible for VAT refund. In case the norm is enacted grain market will see unequal conditions, as the state agents will have a favoured position compared to the private trading companies, since they will actually receive the state financial support through the VAT refund mechanism. Furthermore, the Amendment runs in conflict with current Ukraine’s legislative provisions, and WTO policy statements, which secure the smooth flow of agricultural products’ trade, removing barriers, unfair and discriminatory practices, thus shielding the level-playing field and protecting the inter-

est of all market participants. When Ukraine acceded to the WTO, it committed to the long-term objective of establishing a fair and market-oriented trading system. Based on this commitment in November 2011 at the WTO’s Fourth Ministerial Conference held in Doha, Ukraine undertook the obligations to minimize export tariff barriers and to substantially cut the trade-distorting domestic support in agriculture. The Association acting on behalf of not only grain majors, but also SME and farmers, reckons such alarming policy action as affecting the agrarian sector in all three pillars: market access, domestic support and export competition. Welcoming the full-scale changes in tackling the problem of VAT refund, taken by the Government, the EBA appeals to facilitate the preservation of the current edition of the relevant provisions of the Tax Code, which means no application of VAT on grain export.

We welcome new members which have joined the EBA in June 2011! More at www.eba.com.ua

Production Sharing Legislation Settled

n June 17, 2011 the Parliament of Ukraine sanctioned the Law “On Amendments to Certain Legislative Acts of Ukraine on Product Sharing Agreement”. The Law outlines the regulatory framework for production sharing agreements (PSA), namely the state guarantees as per investorfriendly “stabilization clause”. According to the Law, the Government gives state warranties that the legislation in force on the date of entering PSA would apply to rights and liabilities of the investor under the respective PSA execution and closing, thus ensuring protection of investors’ rights from unfavorable changes of the legislation as the PSA projects progress. Preceding the adoption of the PSA stabilization law, the EBA addressed a letter to the respective Parliamentary Committee and to the President of Ukraine promoting the immediate adoption of the “stability clause” as a norm that would add value to the investment attractiveness of Ukraine. The EBA strongly upholds the investment protection and augmentation, thus voiced the appeals to guard PSA legislation during the series of meetings with the Delegation of the European Union to Ukraine, representatives of the European Commission in Brussels and Members of the European Parliament. CURRENT NUMBER OF EBA MEMBER COMPANIES

4 Opinion Editorials

“You have a telegram from the president. He is saying hello from Strasbourg.”

Blackout The public's difficulty in getting an accurate picture of Viktor Yanukovych’s presidency is underscored by two incidents this week. On June 23, some of the world’s most influential business leaders came to Kyiv to share their views on the investment climate by taking part in a presidential advisory council. But many independent journalists were not present. Why? Because the presidential administration’s press service notified journalists only by email early that morning – and then told them to show up within the hour. Even the journalists who could race to the event would have been out of luck – the accreditation deadline was 5:30 p.m. on the previous day. Some journalists that tuned in to Interfax-Ukraine, the news agency which reports favorably about those in power, found out about the accreditation deadline at about 4 p.m. on June 22, leaving this pro-government source of information even less than an hour to get accreditation. Some journalists don’t see anything sinister at play. This is just another example of unprofessionalism, they say, adding that notification about the accreditation deadline was posted on the presidential website on the afternoon of June 22. We suspect the motives are more calculated, especially considering Yanukovych's longstanding practice of letting only puppy dog-loyal journalists into the presidential pool. The journalists present at the June 23 event were, typical, those with little bark or bite. In another event worth noting, Yanukovych appeared at the Parliamentary Assembly of the Council of Europe on June 21, where he gave a speech and answered questions. According to journalists at the event, Ukraine’s state television broadcast his speech but ended coverage as European officials started raising questions about the troubling state of democracy in Ukraine, media freedoms and political persecution against former Prime Minister Yulia Tymoshenko and others in the opposition. While more subtle than outright censorship, we suspect these incidents demonstrate yet another layer of purposeful barriers to make it more difficult for citizens to get all sides of the story, in part by keeping out independent and critical journalists. The obvious aim of this media-muzzling strategy is to mimic Russia’s leaders, who bombard citizens with staged presidential speeches on state-controlled TV that portray statesmen at the helm, caring about citizens and in control. Leaders who can’t face tough but important questions from journalists and others don’t deserve the powers given to them. And they aren't leading nations that can be called democracies.

A true champion Yelena Bonner died on June 18 at the age of 88. The human rights activist and wife of nuclear physicist-turned-dissident Andrei Sakharov, who preceded her in death in 1989, was a true champion. She tirelessly fought for human rights both in the Soviet Union and, after its collapse, in Russia. Her powerful voice will be sorely missed in a part of the world that is still fighting to break free from the shackles of authoritarianism. Bonner was a founding member of the Moscow Helsinki Group in 1976. She shot to public attention when, after Sakharov was exiled to the town of Gorky, she became his lifeline to the outside world, ferrying out his writings. Foreign reporters recall how she provided a way for dissidents to communicate with the outside world, passing messages to correspondents and diplomats, despite constant attention from the KGB. She, too, was arrested and exiled in 1984. She traveled to the U.S. in 1985 for heart surgery, but was only given permission to travel after hunger strikes by her husband. When then-U.S. President Ronald Reagan met Soviet leader Mikhail Gorbachev in 1986, he handed over a list of political prisoners he wanted released. When Sakharov was allowed to return to Moscow, he refused unless a further 23 political prisoners were also released, including Mustafa Dzhemilev, the leading Crimean Tatar dissident. The couple finally made it back to Moscow in December 1986 as Gorbachev launched perestroika and glasnost. The collapse of the Soviet Union in 1991, two years after Sakharov’s death, did not end Bonner’s activism. She railed against the bloody Russian assault in Chechnya in 1994, and criticized the rise of KGB clans under Vladimir Putin, the prime minister and former president, himself a former spy. The need for heroes such as Bonner is as acute as ever. Russia is an authoritarian, one-party state. Ukraine is heading down the same path. Belarus is Europe’s last dictatorship. Bonner’s achievements were impressive. The countries of the former Soviet Union are crying out for others with her courage, conviction and devotion to freedom and human rights.

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NEWS ITEM: While former Prime Minister Yulia Tymsohenko was banned by prosecutors from visiting the Parliamentary Assembly of the Council of Europe this week, President Viktor Yanukovych went to Strasbourg, France, and on June 21 talked about the criminal investigation against her. He said he was “the least interested person” to have Tymoshenko under a criminal investigation, but said he could do nothing about it because the judicial system is working independently from the executive branch. “I would do anything so that this case would not exist,” he told the media. Yanukovych is under increasing international pressure because of criminal charges against his political opponents, while more serious allegations go uninvestigated. Tymoshenko’s case may go to trial on June 24.

Does Party of Regions have right strategy to keep itself in power? VL A D IMIR GRA NOV SK I

Editor’s Note: This is the first of a two-part series analyzing Ukraine’s ruling Party of Regions. The continuing success of a political party in power depends on its interactions with a range of other actors, at home and abroad. The Party of Regions has a plan for dealing with these actors – its own electorate, the opposition, political allies, the democratic international community and internal powerhouses. This plan manifests itself in public and goes some way to defining the party's image. Analyzing how the governing party handles its interactions with other players gives us an idea as of how long it will remain in power. With respect to its electorate, the Party of Regions – which backs President Viktor Yanukovych – has completely changed its rhetoric since the election, fearing criticism from the public-spirited population as well as the international community’s response. In Yanukovych’s election program, he targeted people who respect the history of Soviet Ukraine, perceive the leaders of the party of power as “friends” -- contrary to [the previous government of] “Orange” [Revolution] nationalists -- and look forward to integration with Russia. The idea of stability was a cementing element, which should have lead to

automatic prosperity in contrast to the instability under the previous government. Now, the ruling party says it is firmly set on European integration and unwilling to enter the Customs Union with Russia and its allies. Other pro-Russian policies, such as making Russian an official state language, have also not been implemented. The president has set a course to unify the country. He cannot just represent his electorate, but has to represent the interests of all Ukrainians. This, however, could lead him to lose his electorate while such actions will never bring voters in Kyiv and in western regions to support him. Yanukovych, therefore, will be losing members of his electorate, but the question is – how fast? This can be countered by the ruling party’s very effective strategy against the opposition. After the presidential election, the most dangerous opponent – Sergiy Tigipko, who placed third – was neutralized by bringing him into government as deputy prime minister. Other former members of the Orange camp, such as Andriy Portnov, Vladyslav Kaskiv and Viktor Baloha, have taken seats in the executive branch. The rest of the opposition looks decidedly weak or unelectable. Oleh Tyahnybok is in many ways doing them a favor by transforming the national patriotic movement into a far right one leaning towards Nazism, discrediting it and making it unelectable in the east and center of the country. Arseniy Yatsenyuk’s success depends on television appearances, money and his team, all of which are weak points. Æ11

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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June 24, 2011

Role of migration in shrinking Ukraine

Role of migration In the past 20 years, Ukraine has shifted from a relatively immobile society with limited freedom of movement to a country where migrants come from, transit through or stay. Out-migration will continue and future shortages on the Ukrainian labor market have the potential to be further accelerated as the populations of many traditional destination coun-

People stand in line in front of the Consulate General of Poland in Lviv on March 19, 2008. Ukraine’s population has shrunk from 51 million people in 1991 to less than 46 million people today. Besides low birth rates and high mortality rates, millions of Ukrainians have gone abroad seeking better lives. (PHL)

tries for Ukrainian migrants are also shrinking and aging, notably in the European Union and the Russia Federation. Their labor shortages might very well be filled by an ever-growing number of Ukrainian migrants in the future. Discouraging Ukrainians seeking employment abroad cannot be the solution. To mitigate the negative consequences and promote the positive impact of migration, Ukrainians should rather be encouraged to migrate circularly and return to invest their savings. This will simultaneously alleviate demographic concerns and also increase the development potential of migration. Few people realize the crucial importance of the money transferred home by migrants. Ukrainian migrants remit $5 to $9 billion per year, representing between 5 percent to 8.5 percent of national gross domestic product and equaling the amount Æ11

Æ Nation may need to attract immigrants to meet labor needs in nation losing 380,000 people a year

Who will volunteer for Euro 2012? AN D R I Y K R AV E T S

By becoming a Euro 2012 volunteer, you won’t earn money. During the tournament you will work for free almost the whole month of June. And that’s just absurd for locals, since the Euro 2012 soccer tournament is opening huge opportunities for small and medium business. Lots of foreigners willing to spend their money will come to Ukraine. According to different estimates, about 200,000 people are going to visit Kyiv just to watch the final game that will take place in the capital. Instead of volunteering, Ukrainians have a chance to earn some extra money, rest and watch this golden tournament. So who is going to work for free next year? Thousands? The organizers’ first step was to involve famous people. Boxing champion Vitaliy Klitschko will hold several interviews with volunteer candidates. “I will personally hold some of the interviews with candidates for volunteers. Perhaps it will be with you. Join us!” Vitaliy exclaims in a video addressed to Ukrainians. The boxer called everyone to register on the

VOX populili WITH A ANASTASIA FORINA

What’s your favorite way to spend more time outside in the summer during work hours? Larysa Yakymenko Government worker “I have to arrange the dates for a vacation in advance. An official job doesn’t allow you to get a day off when you want. I usually use my lunch break to spend some time outside.”

M A N F R E D P R OFA Z I

The population of Ukraine is shrinking and aging. To speak of a “dying nation,” as some commentators have suggested, is surely exaggerated. However, this trend is certainly a cause for concern as it will affect the economic and social development of the country. In 1990, the population of Ukraine was 51 million, while by 2010 it shrank by more than 5 million to 45.5 million. The World Bank suggests this trend is continuing, with the population decreasing by nearly 1 percent per year, or 380,000 people, roughly the population of Sevastopol. “Prediction is very difficult, especially about the future,” the Danish physicist Niels Bohr once said. However, demography is not about reading in a crystal ball. In circumstances of peace and disregarding migration, one can fairly accurately assess how many 20-year-old Ukrainians there will be in 20 years simply by counting the newborns of today. Ukraine’s fertility rate currently stands at 1.1, which is below the European Union average of 1.2 and far lower than the 2.1 required to maintain a steady population level. Moreover, demographic decline means the population is aging, with a continuously growing percentage of elderly persons in society. The population of Ukraine will continue to shrink and age. This is not prophecy, but simple extrapolation. In the near future, these demographic trends will result in shortages on the domestic labor market. Already today, some regions are short of construction and metal workers as well as electricians, to name just a few examples. It will also put pressure on the pension system and the public health sector, with less and less people of working age having to support a growing number of elderly persons.

Opinion 5

official Union of European Football Associations website and join the tournament to “gain a unique life experience.” The next step that UEFA made is giving volunteers a chance to get an internship in Switzerland. Eight places will be delegated to the best volunteers from each host city. After this, they will have an opportunity to get a job in UEFA. These steps look good. But UEFA’s announcement that the football association expects to earn record profit from Euro 2012 can mess up the plans. Many Ukrainians may fairly reject the offer to work for free at a time when UEFA earns 1.3 billion euros. Besides this problem, Euro 2012 organizers could meet another challenge. The main requirement for potential candidates in Ukrainian conditions is English fluency. Ukraine has a huge problem with finding English-speaking volunteers. It is far from the top skills of Ukrainians. Even most young people don’t speak English well. However if the government will gather the best people it can find, it should be enough to form a Euro 2012 volunteers camp. But what if some of these young people won’t be interested in taking part in the upcoming football championship? The Ukrainian government planned to teach English to local police officers so they could help guests. But officials said this program is failing. Ukrainian government is not able to teach enough police officers and other community representatives to allow them to help tourists.

In such conditions, the Ukrainian government has a few choices to consider. This problem can be solved with a massive promotion of volunteer opportunities among potential candidates. Ukraine has a number of linguistic universities with students who speak English fluently. So this is the market that the Ukrainian government should pay attention to. It is a great opportunity for students to practice their language skills, to get their first job experience, even though it’s volunteering, and to get some useful contacts. The second solution for Ukraine is to promote volunteering. The message that the Ukrainian government can give to these people is that becoming a Euro 2012 volunteer is a way to change your life. Let’s be honest, there are a lot of people who are disappointed with their current lives and looking for their chance. Becoming a Euro 2012 volunteer is just such a chance. Why not try at least? You lose nothing, right? So just do it. Don’t become one of these old people who, in the end of their lives, regret about what they didn’t do. It’s better to regret the things you did that didn’t work out than those things you haven’t even tried. So, on June 15, the selection process for future Euro 2012 volunteers opened. Will this campaign be successful? It depends on the government of Ukraine and its openness to new recruiting approaches and flexibility. Andriy Kravets is a freelance journalist and owner of Go2Ukraine.org website.

Artem Shcherbyna Accounting specialist “Well, I think I would call in sick but actually I’d prefer not to cheat my boss. I appreciate the place where I work. The dates for a vacation should be agreed in advance. I don’t think that cheating or inventing some excuses is a good way to get a day off.” Juliette Hasylo Film director “It’s not a problem for me. I work on television and have a nonstandardized working day. I have a flexible schedule and can afford to spend three hours perworking day doing what I like. Being a full-time worker, I think I would call in sick to spend more time outside.” Yaroslav Ponomarev Retail trade manager “I would never cheat my employer out of work hours. I would ask for a vacation in advance, two weeks at least. It’s obligatory. Otherwise, it can be a reason for dismissal. In our country as you may know it’s very hard to find a good job.” Maryna Lamko Worker “What are you talking about? I have an official job. That means some fixed days off and vacation. I won’t even try to cheat my employer, invent some clever excuse or anything else...as I have to follow the rules and arrange the dates for a vacation or let my boss know about my absence in advance.” 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

June 24, 2011

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Why Poland has a booming stock market, popular pension funds and Ukraine doesn’t BY K AT E RY N A PA N OVA

Æ Firms raise capital and get treated as kings when they list in Poland

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Dmytro Tarabakin, managing partner at Ukraine’s Dragon Capital investment bank, returned to Kyiv fazed last month after attending a conference focused on initial public offerings at the Warsaw Stock Exchange. While in Warsaw, he saw something happen that is unthinkable in his native Ukraine. The Polish president and entire government showed up in person to hand out an award to the best company to list on the Warsaw exchange through an IPO. It was even more painful to Tarabakin to see that the company receiving the award was Kernel, a leading Ukrainian sunflower oil producer. “The president of Poland gave a clear message: If you come [and list] here, we will love you, we will kiss you everywhere we can,” recalled Tarabakin. It is a stark contrast to how many investors are treated just outside the European Union borders in Ukraine. In this nation notorious for its terrible investment climate, investors often get the opposite treatment, including shakedowns by corrupt officials. In this homegrown culture of keeping investors out and roughing up those brave enough to arrive, even fast-growing domestic businesses whose owners have political clout no longer dare to raise fresh investment by listing on the local stock market.

Who, instead, is getting exposure to the huge upside of Ukraine’s agribusiness companies? Not Ukrainians, because their shares are not even listed in Ukraine, and Ukrainian private pension laws prohibit citizens from investing a sizable part of their savings abroad. The investors capitalizing on hot Ukrainian stocks are foreigners buying up stocks on European exchanges – a mix of high-net worth individuals and average citizens building up their retirement savings through private pension funds. During the last three years, virtually all of Ukraine’s agriculture blue chips raised capital – tens to hundreds of millions of dollars each – by listing their stocks abroad, mostly via IPOs in Warsaw or on the London Stock

Largest IPOs of Ukrainian companies in 2008-2011 Year

Company

Sector

Raised, $ millions

Stock Exchange

2008

Kernel Group

Agriculture

Warsaw

2008

MHP

Agriculture

323

London

2008

United Media Holding

Media

Frankfurt

2008

Cadogan Petroleum

Oil & Gas

274

London

2009

Agroton

Agriculture

Frankfurt

2010

Kernel Group

Agriculture

Warsaw

2010

Avangardco

Agriculture

208

London

2010

Agroton

Agriculture

Warsaw

2010

Milkiland

FMCG

Warsaw

2010

Sadovaya

Coal Mining

Warsaw

2011

KSG Agro

Agriculture

Warsaw

2011

Industrial Milk

Agriculture

Warsaw

Source: Dragon Capital

Dmytro Tarabakin, managing partner of Kyiv-based investment bank Dragon Capital, longs for the day that Ukraine’s top companies will seek fresh capital on Ukraine’s stock market, as opposed to going public abroad. (Courtesy)

Exchange. Take for example Ukraine’s top poultry producer, MHP, sunflower giant Kernel, sugar group Astarta and egg producer Avangard. “Apart from [agribusiness company] Creative Group, which recently listed on the Ukrainian Exchange, the domestic stock market has no other attractive agro companies,” said Tarabakin. The big tragedy of this trend, investment bankers say, is still to be felt in future years. Ukraine’s government pledges to finally fix the nation’s pension system this year, introducing a three-pillar system which will encourage citizens to break their dependence on a state-mismanaged, get-what-you-pay-for system and place savings into private pension funds instead. The idea is that private pension fund managers, namely investment banks, will invest the money into Ukrainian stocks and other ventures, in turn helping to fuel the domestic economy. But if companies continue to list abroad only, there will be no domestic stock market at home to invest into. “Ukraine does not have long-term money. For it you have to go for Warsaw or London stock exchanges,”

said Vadym Samar, head of equity sales in Kyiv for BG Capital. Average daily turnover on the Ukrainian Exchange is $15.6 million, 27 times less than the $428 million in daily deals on the Warsaw Stock Exchange, and tiny compared to the same figure for the London Stock Exchange. Even if liquidity and trading volumes were to get big enough, many major foreign investors simply would not trust the stock market of Ukraine, where minority shareholder rights are routinely violated, explains Rostyslav Sedlachyk, general director of Concorde Asset management. Sedlachyk pointed to a recent episode where many investors got cheated. Earlier in June, the state securities commission surprised the market by freezing trades on one of the more liquid equities on the market, shares in Yasynivsky Coke Plant. The action was apparently triggered by a bitter legal dispute between major shareholders in the company. Details remained hazy, but in the aftermath, the market panicked. And although the company’s stock has since recovered, a few insiders

stood to have profited handsomely, leaving a bitter aftertaste for the other market participants. It is a story that stockbrokers and investors in Ukraine have experienced all too many times. “Who is to guarantee that it won’t happen again tomorrow to other equities?” asked Sedlachyk. Such incident send a very “negative message to investors. Good stock markets don’t allow such things,” he added. Government officials say they want to change all this for the better, reform the pension system and convince citizens to take their cash out from under their pillows, putting it into domestic stocks and bonds instead. Dmytro Tevelev, head of Ukraine’s securities commission, said legislation changes currently under review in parliament will likely make private pension funds more popular, in turn giving a boost to the domestic stock market. Oleg Tkachenko, CEO of the Ukrainian Exchange, is eagerly waiting. “According to estimates, Ukrainians have savings of approximately 50–90 billion euro under their mattresses, not working anywhere,” he said. Some investment funds in Ukraine have provided strong annual returns, in the 20-30 percent range. While such returns are far from guaranteed, they can be attractive considering the 10-12 percent annual deposit returns offered by banks usually don’t even cover yearly inflation levels. But when Ukrainians start investing into domestic stocks, it won’t take long for many of them to figure out how deeply rooted the market’s problems are. Their chances could be better at the local slot machines. Many investors are shocked to find out that listed companies often don’t provide public information about themselves, such as their quarterly profits, sales and management changes. Trying to find out who owns a company can take investors as far away as offshore islands in the Atlantic or Pacific Oceans. BG Capital’s Samar has serious doubts that Ukrainians will trust and rush to put their cash into Æ7

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Business 7

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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 BRAD WELLS

Mriya hopes to help harvest top farming talent Mriya Agroholding, one of Ukraine’s largest and fastest-growing farming companies, launched specialized training in the agriculture business this week in the hopes of educating the nation’s next generation of professionals. Based in Ternopil, the company said 17 young students took part in the first round of studies with the ultimate aim of obtaining a master's in business administration degree. The so-called “AgroSchool” strives to give students hands on experience at Mriya’s businesses (above). The studies are paid for by Mriya. (Courtesy)

ViOil hopes to raise $140 million via Warsaw IPO LONDON (Reuters) – Ukrainian sunflower oil producer ViOil launched a Warsaw initial public offering on June 20, which one source close to the deal said would raise at least $140 million from the sale of new shares. The offering, which is due to be completed in mid-July, could also include the sale of existing shares depending on investor interest. ViOil, which said it had around a 4 percent share of the global sunflower oil export market, plans to use the money raised from the offering

to fund growth. As well as organic growth, this could include acquisitions of storage and processing facilities, ViOil Chairman Victor Ponomarchuk said in a statement. The company had revenues of $220 million in the nine months to March 31 this year, up from $154.9 million in the same period the previous year, with net profit of $26.5 million. Credit Suisse is running the offering, which will target both retail and institutional investors in Poland as well as international institutional investors.

IPO on Polish exchange generates $34 million for egg maker Ovostar Ovostar Union, one of Ukraine’s largest producers of eggs and egg products, set the final offer price for its IPO on the Warsaw Stock Exchange at $ 22.79, according to a note to investors this month by BG Capital. According to the investment bank, the listing implies gross proceeds of for Ovostar of $ 34.2 million and a market capitalization of $ 136.8 million. According to BG Capital, Ovostar has said that it plans to use the proceeds

to reconstruct and modernize existing facilities and to enlarge its laying flock. BG Capital said that Ovostar had a laying flock of 2 million birds at end2010, and output of 546 million shell eggs, 3,447 tons of liquid egg products and 1,229 tons of dry egg products in 2010. The company reported 2010 revenue of $37 million and a net income of $9.2 million, according to BG Capital.

Securities market revival crucial to pension overhaul Æ6 domestic stocks. “90 percent of people here do not understand what a commodity is,” Samar said. Moreover, said Concorde’s Sedlachyk, “Ukrainians remember well the 1990s and the 2008 crisis, when capital markets collapsed.” If Ukraine is to preserve its stock market and give citizens a chance to fuel domestic growth by pumping money into private pension funds, it faces a huge uphill battle to rebuild trust and attracting a new wave of investors that will share the risk. Lessons can be learned from Poland, which embarked down this path more than a decade ago.

“Ten years ago in Warsaw, half of the city light boxes were advertising private pension funds. Television channels were informing citizens about the importance of private pension funds. More than $10 million was spent on promotion,” Dragon Capital’s Tarabakin said, recalling his recent visit to Warsaw. Now, with a population of 38 million people, Poland has more than 1 million private pension accounts with more than 30 billion euros under management in total. Experts said this money helped cushion Poland from the recent 2009 recession, which hit Ukraine’s commodity export-oriented economy hard.

Local financial market culture ignores carrot, needs more stick While the Ukrainian stock market’s fresh faces in recent years have been setting the gold standard in terms of respect for minority shareholders and promoting excellent corporate governance practices, the corporate culture among Ukrainian companies listed on the local stock exchange is stagnating. Importantly, these new market names have overwhelmingly been choosing to list on foreign exchanges. The hotspot for local initial public offerings is the Warsaw Stock Exchange, where six of the 10 Ukrainian placements in 20102011 have landed. There has not been an IPO in the last three years on either of Ukraine’s major trading platforms, the Ukrainian Exchange (UX) or the PFTS. The difference in corporate culture between companies listed abroad and those listed in Ukraine is stark. Both Warsaw and the other popular destination, London, promote good governance through a list of “comply or explain” rules – essentially requiring companies to get with the program or explicitly state why and how they don’t. As a result, their governance practices are far more developed and regarded by investors. In this regard, local financial market standards are clearly lacking. Ukraine’s Securities and Exchange Commission does have a Corporate Governance Code, but it is voluntary and was last updated in 2003. True transformation is impossible without mandated change. That’s why 2009’s “Law on Joint Stock Companies,” which significantly strengthened the legal protection of minority shareholders, was so important. That’s also why we’re closely watching another new legislative mandate – in early May, parliament passed a law requiring mandatory annual reports by International Financial Reporting Standards (IFRS) from public companies, banks and insurers beginning Jan. 1. Could it be that Ukrainian companies will finally learn to speak IFRS, the financial reporting language of choice for the discerning international investor?

Æ Adopting international accounting standards is one place to start To be sure, so far there has been little movement by public Ukrainian companies to pick up IFRS on their own. According to our sources, only 26 listed Ukrainian companies released public IFRS financial accounts in the last year. Tellingly, all but one these corporations were listed on international exchanges (mostly Warsaw or London) or were banks (where standards and regulatory oversight are stricter). This means the obligatory requirement to put out IFRS accounts should have a mammoth impact on the hundreds of companies with stock listed locally. Currently, locally listed corporations publish their financial results according to Ukrainian Accounting Standards, which in a high percentage of cases, leaves something to be desired. Concorde Capital has monitored the quality of these statements for a few years now. In 2011, we found evidence of “inventive” accounting by 29 percent of companies listed locally and abroad that our team of analysts looked at. Rather significantly, this group of several serial fibbers and transfer pricers with suspect financials includes 40 percent of the market’s blue chips: Alchevsk Iron & Steel, Avdiyivka Coke, Stakhaniv Wagon Factory, Stirol chemical plant, Ukrnafta hydrocarbon company, and Yenakiieve Steel. The new IFRS law follows years of market anticipation and government talk about a gradual transition to IFRS (a relevant program was initiated by the Securities & Exchange Commission in 2007). It also follows an announcement by neighboring Russian President Dmitry Medvedev a month earlier that Russia would require annual IFRS accounts by Russian public joint stock companies as of 2012.

Initiatives like this are important to ensure that the Ukrainian financial market matures in line with its larger eastern neighbor and as Ukraine moves further toward its strategic goal of European integration. Transparent financial reports according to IFRS are an important symptom of quality corporate governance. We are already seeing this with the aforementioned new market entrants: those companies aren’t flinching at investor demands for years of audited IFRS accounts and the only ones being successful are being successful raising new money now in IPOs. These fresh faces know they must be fluent in investor-speak and fervent corporate governance crusaders. Change is not going to happen overnight, especially with something like IFRS. This year companies have still been moving into full compliance with the 2009 “Law on Joint Stock Companies.” The move to IFRS could take even more time, considering training and updating of internal accounting systems, but any step out of the occasionally dark and murky netherworld of Ukrainian Accounting Standards is a clear step forward for the overall market. Legislators and regulators need to apply a bit of stick for Ukrainian companies to make that move, and we don’t think we’ll be alone in cheering if they continue to beat compliance with global governance standards into the local financial market with it. US-born Brad Wells is a corporate governance and political analyst at Concorde Capital, an investment company based in Ukraine that provides a full range of brokerage, investment banking and asset management services. He can be reached at bw@concorde.com.ua.

In case you missed them, read the last five Business Sense columns by experts online at kyivpost.com June 3 with Mark Khavkin and Christian Schuller: “Collecting debts could help unlock lending”

June 17 with Ron Barden and Slava Vlasov: “Repeal of tax exemptions on services to affect many”

June 10 with Oksana Polhuy researching the consequences of hydrofracking at DePauw University in Indiana: “Hydrofracking for shale gas stirs environmental worries”

June 3 with Andriy Yarmak, independent agribusiness expert: “Ukraine’s agriculture policy: perfect for hurting farmers”

June 3 with Leo Krasnozhon, visiting assistant professor and graduate advisor with the Department of Economics at the University of Texas in Arlington: “Robbing the ‘Breadbasket’”

8 Business

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June 24, 2011

ÆOn the move ANDRIY KOLOMIETS was

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.

NINA GUZEI

promoted to chief financial officer of ArcelorMittal Kryviy Rih, the largest of Ukraine’s steel mills, owned by ArcelorMittal, one of Ukraine’s largest investors and the world’s largest steel company. Kolomiets, who joined ArcelorMittal Kryviy Rih in 2009, had earlier served as deputy financial officer. Before joining ArcelorMittal, Kolomiets was a top manager at SaintGobain Zorya, based in Rivne. Kolomiets has almost 20 years experience with different companies such as McCain Food Ukraine and Russia’s First Medical Group. He completed a bachelor’s degree in economics at National University of Kyiv Mohyla Academy.

was promoted to board member of Fidem Life, a Kyivheadquartered life insurance company. Guzei will also continue her duties as chief operating officer, a position she took on after joining the company in 2009. Under Guzei’s management, Fidem Life automated its policy issuing and handling process and implemented various client service management solutions. Guzei has over 14 years of experience in the financial services and insurance markets. Prior to joining Fidem Life, she was chief financial officer at Generali Garant Life, another domestic insurance company. Guzei is a graduate of Kyiv National Economic University and the Institute of Professional Financial Managers, where she studied economics and financial management.

SERGIY KORDASHENKO was appointed managing partner in Ukraine for RosExpert, a Russian human resources company with 12 years experience on the Ukrainian market. Kordashenko has 15 years of experience in the human resources business. Prior to joining RosExpert, Kordashenko worked at various management levels for Russian, Ukrainian and international companies. Kordashenko graduated from Moscow Aviation Institute in 1994 with a focus on applied mathematics. In 2005, he obtained an International Executive MBA degree from the Stockholm School of Economics.

OLENA TKACHENKO became a partner at PARITET, a Kyiv-based law firm. Tkachenko will take charge of the firm’s tax law practice as well as development of practices in CIS markets. Upon joining the firm in 2010 as an advisor, Tkachenko already had more than 10 years of successful legal experience in servicing clients on dispute resolution matters, arbitration, taxes, finance, banking, corporate and commercial law. Before joining PARITET, Tkachenko worked for the following domestic and international companies: TNK, Interpipe /EastOne, law firms Arzinger as well as Werner & Partners. Tkachenko completed a law degree at Donetsk State University.

STA F F R E P OR T S

Belarus to sell its gas pipelines to Russia

Ukraine’s Antonov aircraft designer and Russia’s Ilyushin Finance Co. announced on July 21 at the Pair Air Show at Le Bourget that they had inked joint contracts worth $300 million to supply 10 An-158 short-haul passenger aircraft to Latin American countries in 2012-2014. The contracts mark a major success for the recently forged UkrainianRussian partnership to jointly produce, market and sell Antonov designed aircraft. Ilyushin Finance claims to have amassed definitive purchase orders and options from Russian and foreign customers for 150 An-148 and An-158 model aircraft it total. Ukraine and Russia have recently agreed to jointly produce the aircrafts and are considering closer cooperation in their aviation sectors, which were closely integrated in Soviet days. The 85-seat An-148 has a range

MINSK, Belarus (AP) — Belarus says it will sell its remaining stakes in its strategic natural gas pipelines to Russia’s Gazprom for $2.5 billion. The deal will help the Kremlincontrolled gas giant secure exports to Europe that have been affected by pricing disputes with Belarus and neighboring Ukraine in recent years. Gazprom already owns a 50 percent stake in Beltransgaz, the holding company of the network, under a $2.5 billion deal struck in 2006. Beltransgaz carries some 20 percent of Gazprom’s gas exports to Europe. The Belarus government said Thursday that First Deputy Prime Minister Vladimir Semashko is in Moscow, completing the deal to sell the company’s remaining 50 percent. The ex-Soviet nation of 10 million is gripped by the worst economic crisis in its post-Soviet history.

Ukraine’s Antonov teams up with Russia’s Ilyushin in $300 million plane supply contract

The An-158 was designed by Kyiv-based Antonov Design Bureau. Ukraine and Russia agreed last year to jointly produce, market and sell this and other Ukraine-designed aircrafts in the hopes of landing big contracts. Experts say that demand for such planes is high in developing countries.

of 5,000 kilometers. The An-158 can carry 99 passengers at a range of 2,500 kilometers. The An-158 made its Paris Air Show debut this week. In a note to investors, Kyiv-based

investment bank Dragon Capital said news of the contract “bodes well” for Zaporizhya based turbine manufacturer Motor Sich, “currently the sole producer of engines for the An-148 and An-158 planes.”

It implies a “stable order flow in the medium term. We maintain our positive outlook on Motor Sich and reiterate our Strong Buy recommendation on the stock,” Dragon added.

Best Western, ArtBuild forge partnership Rezidor plans to launch to launch mid-priced national hotel chain Radisson Blu hotel at Carpathian’s Bukovel STA F F R E P OR T S

Best Western International, one of the world’s largest hotel chains, announced on June 21 that it had inked a partnership with a Ukrainian company to support its big expansion plans for the country. Already one of the world’s largest hotel chains with more than 4,000 hotels in 90 countries, Best Western said it decided to “systematically develop” its business in Ukraine by forging a partnership with ArtBuild Hotel Group. According to a June 21 statement, the Ukrainian company acquired a master development license making it Best Western’s sole partner in Ukraine. The agreement follows an announcement in February in which a Sevastopolbased hotel became the first in Ukraine to operate under the Best Western brand. Rooms at the Sevastopol hotel start at about $100 per night. According to new agreement, Artbuild Hotel Group “will provide assessment of all developers & hospitality investment projects seeking to obtain membership into the Best Western hotel family and licensing

S TA FF R E PO R TS

Best Western’s hotel in Sevastopol (above) is the first in Ukraine to operate under the group’s internationally renowned brand.

association. Artbuild will assist in preparing all necessary paperwork and applications for suitable properties to join Best Western, in addition to due diligence on potential properties, as well as project evaluation in regards to Best Western’s standards

and requirements.” “Moreover Artbuild will develop their own properties under the Best Western brand and provide turn-key fee-development services for investors interested in the hospitality sector in Ukraine,” the statement reads.

Rezidor Hotel Group announced this month that it will open its first hotel at a Ukrainian ski resort. The 252-room Radisson Blu Resort located in Ivano Frankivsk Oblast’s Bukovel is scheduled to open in the winter season. It will be Rezidor’s third hotel in Ukraine, the other two being in Kyiv and Alushta, a Black Sea resort town on Ukraine’s Crimean peninsula. Rooms at the group’s hotels in Ukraine are in the 300-500 euro range per day. “We are delighted to have signed a further property in Ukraine which is together with Russia and the further CIS countries one of our key areas for future business development. And at the same time we are pleased to add a new resort to our growing portfolio of contemporary and stylish mountainand beach resorts across Europe, Middle East and Africa,” said Kurt Ritter, president & CEO of Rezidor. Situated in the Carpathian Mountains in western Ukraine, Rezidor

Rezidor currently operates two hotels: one in Kyiv and another in Alushta, a Black Sea resort town on Ukraine’s Crimean peninsula.

described Bukovel as Ukraine’s “most modern ski resort.” Plans envision that the hotel will feature a full complement of food and beverages, several restaurants, a lobby bar, cigar lounge, saunas, an indoor pool and night club. A ballroom and 1,400 square meters of meeting space are planned, making the facility suitable for conferences and events. Leisure facilities will include a kids club, a game room, and retail shops.

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Business 9

June 24, 2011

Ukrtelecom’s new owner: ‘We are not fronting Akhmetov, the Russians or the Turks’ BY M A R I A S H A M OTA SHAMOTA@KYIVPOST.COM

The conclusion in March of the 10-year marathon of privatizing Ukrtelecom, the country’s leading fixed-line communications operator, has not passed without controversy. Some analysts, insiders and business community advocates say the government privatization was rigged in favor of the new owner, Austrian company EPIC, which they suspect represents the interests of oligarchs close to President Viktor Yanukovych. Experts also predict a huge cut in Ukrtelecom’s staff as part of an efficiency drive. Some say the possible sale of the company’s mobile business Utel could be the first step toward selling off the firm bit by bit. “Rubbish!” responded Peter Goldscheider, EPIC’s managing partner, in his first interview since the deal. He said that he and his partners, who bought Ukrtelecom for slightly more than the $1.3 billion auction starting price, have developed a strong business plan and a new organizational structure for the company. Goldscheider discussed with Kyiv Post how this new structure will look, to whom and why Utel is being sold, and what will happen with the company’s staff. Kyiv Post: The business community widely considers that the Ukrtelecom privatization wasn’t fair and transparent, that you represent someone else. Could you briefly tell us who the new owners are? Peter Goldscheider: Privatization of telecommunication companies is difficult for all governments. Everywhere this is politically extremely sensitive and all governments struggle to find a compromise between the best price and strategic priorities which should be taken care of. What made the Ukrainian government agree on the guidelines for

this specific auction? You’ll have to ask the Ukrainian government. I have been in Ukraine for over 20 years. I know the country very well as I know Russia very well. As I know pretty much all the countries in Central and Eastern Europe. As far back as 10 years ago we were advising Ukrtelecom’s management. So when we heard about the privatization I phoned my regular clients. I spoke to Deutsche Telekom, I spoke to France Telecom, to the Austrians – all of them longtime clients of ours. But we didn’t find a big interest. So we thought: Ok, why not bid ourselves? KP: Yourselves? But experts say you are a front-man representing interests of oligarchs... PG: I know all these rumors, and they are all rubbish. And I go on record for the thousandth time that we are not fronting the Ukrainian government, we are not fronting Akhmetov, the Russians or the Turks. We put our money at risk and time will tell if this is smart or not. We work in the telecommunication field and we know the big players. I have good relations in that industry. And you can talk to those people, they know me. I used to work for 10 years for IBM where we had over 250 000 employees. I worked for 10 years at Zurich Kosmos Insurance Company when the group also had tens of thousands of employees. I’m not afraid of big numbers. I’m really looking forward to this work. So I’m not fronting anybody here. I don’t have a pre-agreement with somebody that in 2-3 years he will buy Ukrtelecom from us. It’s our risk; it’s our work. We had the first Supervisory Board with new Supervisory Board member Klaus Hartmann, who was vice president of Deutsche Telecom. KP: He was? PG: He left there on May 31. So there is no conflict. Deutsche Telecom is informed about this. We think we know what we are going to do.

KP: Where did you get financing for the $1.3 billion purchase of Ukrtelecom? PG: We have got financing from Bank of Cyprus. Bank of Cyprus knows EPIC very well because we operate the holding company for our investments in Cyprus. EPIC is more a merchant- than only an investment-bank. Alongside M&A advisory and privatizations, we focus on our own investments. We hold big energy assets, especially in gas storage, we hold the largest hotel group in Croatia, we have a significant participation in RCS, the Romanian cable TV provider. We are more low-key. As a general rule, not always the loudest are the most successful companies. I understand that the media have an interest. But that we are not telling the world how rich we are, how successful we are doesn’t mean that we don’t have funds. KP: You named Deutsche Telekom, France Telecom etc. They are not interested in Ukrtelecom. How about in five years’ time? PG: A sale is a possibility, but for the next four to six years we don’t think about exit scenarios, we think about making this company successful. This will not come quickly; this is not something where we will make money quickly. This is a long-time process. The most likely exit will be IPO because even if we have no agreement with the government that we can’t sell to the Russians, that we can’t sell to Akhmetov or anybody else, politically an IPO will face less resistance. KP: What should the structure of Ukrtelecom look like in five years’ time in order to attract interest from potential investors? PG: We have to see that the tariffs and the roaming agreements with the mobile operators will be fair. Because

Peter Goldscheider, managing partner of Austria’s EPIC, denies market speculation that he and his company purchased Ukraine’s fixed-line phone company Ukrtelecom on behalf of oligarchs.

till now the mobile operators make huge profits and Ukrtelecom – losses, losses, losses. And this is not fair because a good part of the infrastructure is established by us and that is a huge investment to build and uphold. So we shall negotiate with all other stake holders to get a fair split of the revenues in the telecom sector. KP: You decided to reorganize Ukrtelecom’s mobile business as a separate entity for sale to a third party. Why now? PG: Georgii Dzekon will hold a press conference in a couple of weeks. We have adopted a business plan, we have adopted a strategy, we have adopted a new organization. Not all of what we have decided is for public consumption, but the media will get some information. But it will not come from me because I’m Chairman of the Supervisory Board. It will come from Dzekon, the CEO of the company. KP: Could you describe pro and contra of possessing 3G license for Ukrtelecom? PG: As I said we will not discuss it. KP: What is the future of Ukrtelecom’s unprofitable business? PG: I think it depends on negotiation with the government. In the EU there is clear regulation – no private

owner can be forced to carry on with a loss making activity for the interest of country. In the EU they have special funds for that. KP: Could we use the same solution for Ukraine? PG: A solution could be that we keep the service but the government pays the balance so that we get at least cost plus fees, or we shall find another solution. KP: Some media say you decided to fire Ukrtelecom’s staff... PG: That is not my biggest headache. Look at the last few years; the staff was up to 125.000 people. We will clearly find a solution which we shall implement in close cooperation with trade unions. KP: Returning to the question about Utel. Who are the most credible bidders? PG: You are intelligent enough to answer this yourself. It is quite clear who would benefit the most. KP: Don’t you represent this person who would benefit the most? PG: You never give up, do you? No, I am not anybody’s front man. Kyiv Post staff writer Maria Shamota can be reached at shamota@kyivpost. com

*ULY

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10 Business

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June 24, 2011

Investors’ message Editor’s Note: The following is a speech by Thomas Mirow, president of the European Bank for Reconstruction and Development, to the Domestic and Foreign Investors’ Advisory Council on June 23 in Kyiv, chaired by President Viktor Yanukovych.

President, Excellencies, Ladies and Gentlemen! I have the honor to speak on behalf of the foreign investors around this table. I would like to start by thanking President [Viktor] Yanukovych for establishing this Domestic and Foreign Investors’ Advisory Council. This initiative can play a leading role in helping to unleash Ukraine’s untapped growth potential. The focus of the activities of this council will be on making Ukraine a competitive and successful country in which to live, work and invest. We are all honored to be part of this endeavor. The challenges facing Ukraine are immense, and the ambitious goal the president has set for the country becoming a member of G-20 at the end of the current decade - is only achievable through the adherence to market-based economic principles. The most important element is to create and sustain a favorable investment climate that applies equally to domestic and foreign investors. Ukraine is a country of huge opportunities, but to innovate its economy it needs to attract investment and expertise. After the dramatic slump in 2009, Ukraine returned to growth in 2010 largely due to higher commodity prices and stronger external demand. Re-engaging with the IMF [International Monetary Fund] sent a strong message of stability. This demonstrates the crucial importance of maintaining an open economy and further developing trade partnerships in all directions and in accordance with the WTO rules. On behalf of foreign investors, I would like to highlight seven key priorities that we believe should be addressed quickly to ensure that Ukraine regains the competitive edge that has been eroded somewhat during the recent global financial turbulence.

1. Fighting corruption Addressing the systemic and pervasive corruption that plagues the Ukrainian society will be the most challenging but also the most important task. Corruption touches the lives of every citizen at every level from education and health care, to business and government. In the years since Ukraine’s independence many laudable things have been said about combating corruption. In this context, we welcome the recent adoption of the legislative anti-corruption package, but the key issue, and I cannot stress this enough, is its determined implementation. New rules to protect citizens and businesses from corruption will need to be developed and people who are engaged in corrupt activities need to be prosecuted, especially those who are in elected office and who are abusing the trust of the people. Corruption is undoubtedly the biggest impediment to Ukraine moving forward in economic development, becoming more competitive and attracting much needed investment. There are numerous ambiguities in existing legislation that leave room for interpretation and open the door to corruption. Through ongoing administrative reform, it will be essential to undertake a full operational and organisational review of the public services - ensuring a clear separation of the regulatory and commercial functions of each governmental body and state-owned company, the abolishment of inefficient functions and establishment of strict mechanisms to control the proper execution of the civil service functions as prescribed by the law.

2. Judiciary reform, strengthening law The rule of law is the cornerstone to all successful and competitive economies. To achieve the primacy of the rule of law in Ukraine, the judicial branch must be transparent and staffed with well qualified professionals who understand the importance of their role in strengthening rule of law.

4. Simplification of trade, customs An efficient, transparent system of customs clearance that used the highest standards of integrity is an important precondition to foster trade, investment and development. Making progress in this clearly defined area could go a long way in improving the business climate. On behalf of the foreign investors I propose three practical steps: • Move to electronic documentation for customs clearance and control. • Use transparent definitions of customs value and improve the procedure for the definition of royalties and inclusion into customs value. • Adopt the new Customs Code harmonized with WTO [World Trade Organization] principles and EU [European Union] best practices. To remove further barriers in trade, Ukraine would benefits from recognizing European certificates without additional inspections, including for the food safety system based on the similar EU norms Mr. President, I would now like to make a few points concerning specific sectors that my colleagues will surely elaborate on in their own interventions.

3. Tax administration, VAT refund

5. Developing more efficient, competitive agricultural sector

We welcome the adoption of the new tax code, and are closely following the amend-

A growing global population is raising a food security problem but also

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ments that are now under consideration at the Verkhovna Rada. Addressing the inconsistencies of tax administration, and the overdue VAT [value-added tax] debt in particular should now be the key issue on the agenda. To enable Ukraine’s export oriented industries to compete in the global markets, the state must meet its obligations for VAT refund in accordance with the law. The automatic VAT refund system must really be operational not only available for the “chosen few” but rather for all companies, both domestic and international. Further improvements should include abolishing the use of the so-called principle of joint responsibility, through which honest taxpayers can be made responsible for the tax evasion of third parties.

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provides an opportunity to Ukraine to double its agricultural production in the next 10 years by attracting investment to introduce new technologies, better equipment and inputs. The sector needs significant private investment that will only materialize if Ukraine provides a predictable, transparent and market-based environment. Recent developments towards the monopolization of grain exports have raised serious concerns. These measures seriously threaten Ukraine’s opportunity to become one of the major global food suppliers. Equal treatment is of the essence, irrespective of how well-connected they are or how close to the state. Furthermore, creating reliable legislation for Ukraine’s land market is of the essence to unlock Ukraine’s agricultural potential. Farmers need to be allowed to own and trade their land in order to access to financing. An important step would be to cancel the moratorium on the sale of agricultural land and to adopt the laws on land market, on state land cadastre and on land auctions. This would contribute to the development of an efficient and highly productive agricultural sector that would, in turn, become one of the main engines of Ukraine’s economic development and improved international competitiveness.

6. Improving energy security, efficiency We welcome the improved dialogue and the easing of tensions with Russia, which caused serious disruptions to gas supplies in 2009. The task now is to build on this progress and address the crucial issues of energy efficiency and security in Ukraine. I would suggest to give first priority to improving energy efficiency, because this will at the same time improve energy security, reduce costs, and protect people’s health and the environment. Secondly, it will be important to stimulate investment in the oil and gas sector. As a first step, transparent licensing for domestic exploration of hydrocarbons needs to be introduced, both onshore and offshore, giving investors all the information neces-

sary for assessing the offered fields. A consistent legislative platform is needed to encourage investment. The current situation, in which conditions for exploration and production are governed by the annual budget law, does not facilitate the much needed investment.

7. Strengthening banking, developing local capital markets Renewed stability and trust in the banking system is critical for the economy to recover from the crisis. This can be accomplished through consistent enforcement for all banks of the minimum capital and capital adequacy ratio levels. Compulsory IFRS [International Financial Reporting Standards] accounting standards in the financial sector will give confidence in the integrity and comparability of financial statements and will harmonize the provisioning rules at banks. Ensuring independence of the regulators and supervisors as well as improving relevant laws and regulations should be another priority. Lending remains subdued: the banking system is yet to generate sustainable loan growth. Structural reform in the banking sector is a key challenge going forward. Liberalising foreign exchange rules, developing foreign exchange hedging instruments and developing long term local currency instruments should remain as priorities in the financial sector. To summarize, Mr. President: By improving the political and institutional stability in the country, your administration has fulfilled an important condition for further progress. Now the opportunity exists to build on this vigorously and determinedly and to create the conditions for unlocking investments – foreign and domestic – to make Ukraine flourish. We believe that now is a historic window of opportunity through which the country can embark upon systemic and comprehensive reforms and, in turn, attract investments which will support the development of a more competitive economy. Thank you for your attention.

Investors: Nation must combat high corruption Æ1 Some wonder whether this direct dialogue will lead to more than lip service from Ukraine’s fourth president. Since taking office on Feb. 25, 2010, Yanukovych’s administration has adopted unpopular but needed austerity and transparency measures demanded by the International Monetary Fund in exchange for a $15 billion line of credit. Household utility prices have been hiked towards market rates. The number of civil servants has been reduced. The moratorium on the sale of farmland may end by January. And lawmakers may hike the pension age for women, from 55 to 60. But as Mirow and others noted, the key issue is implementation of freemarket reforms that could improve the investment climate. “Investors will closely examine and assess how favorable these changes are to them, these will be the determining factors,” said Svitlana Kononchuk of

the Ukrainian Center for Independent Political Research. Foreign direct investment is expected to reach $5.81 billion this year, due to “reforms carried out by the Ukraine state and an improving climate for investment,” Ernst & Young’s 2011 Ukraine foreign direct investment report stated. In 2010, FDI inflows stood at only $4.15 billion. Ukraine ranked 10th in Central and Eastern Europe for the number of FDI projects – 178 – and number of jobs created – 7,487 for the years 2006-2010. Ukraine is a high-risk destination for investment. According to the June Euromoney Country Risk Survey, Ukraine remains among the 10 riskiest countries in Central and Eastern Europe. Kononchuk said government government institutions need to be strengthened, laws adopted that treat everyone equally. Speaking at the investment council meeting, Ukraine’s richest man, a

longtime backer of Yanukovych, was upbeat. “We’re going in the right direction,” said billionaire Rinat Akhmetov. “There’s a favorable investment climate in Ukraine today.” Speaking with the Kyiv Post, Cargill’s CEO Greg Page stressed that a vast amount of investments could pour into Ukraine to help develop the nation’s promising agriculture sector, double harvests within a decade and, in turn, feed an increasingly hungry world. But he warned that if protectionist policies such as last season’s grain export restrictions persist along with preferences for insiders, Cargill, which has invested $150 million in Ukraine thus far, could roll back on investments. “This is a great place for the world to grow more food. But all the gifts that nature provides can be undone with bad policies,” Mr Page said. Kyiv Post staff writer Mark Rachkevych can be reached at rachkevych@kyivpost. com

www.kyivpost.com

Opinion 11

June 24, 2011

Granovski: Will Regions seek full monopolization of power? Æ4

One way to weaken the opposition is to increase the threshold for parties to get into parliament in elections next year, although this could backfire if the electorate mobilizes and actively opposes the ruling party. Parliament could become more unruly, as under previous presidents, given that self-nominated candidates will also be able to stand for parliamentary seats in the elections. It is possible, of course, to rely on repressive measures, but in today’s world, these methods are fraught with bad endings. The Party of Regions’ main advantage in parliament is its ability to bring effective and experienced politicians onto its side without forming a bloc. This has allowed the party to maintain cohesion in its ranks. A key issue now is whether to involve current allies with their own parties, such as Volodymyr Lytvyn and Tigipko, or let them go it alone while raising the threshold for parties to get into parliament from 3 percent to 5 percent of the popular vote, probably shutting them out. The question is what strategy will be more efficient: full monopolization or the creation of the effect of democracy. The latter strategy allows for allies to be used for radical policies, such as Tigipko pushing for an unpopular increase in the retirement age for women. The ruling party’s interactions with

the international democratic community are facing a number of challenges. In recent months, the authorities have been accused of repressing freedom of speech and carrying out reprisals against members of the previous government, who are now in opposition. Accusations persist that corruption is growing, and that the country is moving into the geopolitical and economic field of Russia’s interests. It is interesting that the authorities react most painfully to the latter accusation. They are also highly concerned about claims that it is clamping down on freedom of speech. The accusations of political repression and corruption fall almost on deaf ears, however. These priorities have been chosen incorrectly in the way they influence Yanukovych’s public positioning. He is constantly trying to prove that he and his team are trying to implement European values, while accusations to the contrary are black PR attacks by the opposition. The democratically-oriented and pro-European electorate hears criticism of Yanukovych from the global and European community and does not trust his words. And the eastern electorate considers his pro-European rhetoric to be a rejection of promises to move closer to Russia, leading to disappointment. This is a dilemma. It demonstrates that the era of multi-vector policy, which Leonid Kuchma relied upon to find a balance between Russia

Ukrainian members of parliament and Ukrainians living in France and Germany protest against President Viktor‘s Yanukovych in Strasbourg, France, outside the Parliamentary Assembly of the Council of Europe on June 21. (Volodymyr Ariev)

and Europe while he was Ukraine’s president from 1994-2005, is outdated. Russia and the European Union will not allow any Ukrainian leadership to sit on two chairs anymore. The fourth issue for the authorities to deal with is the role of Ukrainian elites. The role of those grouped around the president drastically increased after the Constitution was changed last year to increase his powers. Since the distribution of state and public goods, in their opinion, now depends on the president,

Profazi: Some leave, others come, others pass through Æ5 that foreign companies invest in the country. How this inflow of money could be increased and better used for development is an issue which needs to be addressed. Traditional laborsending countries like Mexico and the Philippines have long realized the enormous development potential of migrant transfers and have successfully created substantial support structures to increase and better utilize remittances. The current migration debate focuses mainly on Ukrainians going abroad and citizens of other countries transiting through Ukraine. However, in the future it will become increasingly necessary to include the need for immigration into this debate. The population of Europe as a continent is shrinking and aging, while the world population continues to grow. Ukraine’s neighbors are beginning to realize that due to increasing labor shortages, more immigration will become necessary to fill this gap. Countries like Germany, Sweden and Russia, for example, have started looking into their immigration needs. The European Union’s eastern neighborhood policy also reflects the need to establish more legal employment opportunities for labor migrants from the region. To a certain extent, this means Ukraine will be competing with other countries in the future in terms of attracting foreign labor and also employing its own Ukrainian citizens. It is therefore of vital importance that Ukraine considers how to attract migrants to work in Ukraine legally and

Ukrainian border guards and their dog walk by the then-unopened border crossing at Maly Selmentsi village on the Ukraine-Slovakia border in 2005. (AFP)

promote circular and return migration for their own nationals. It is important to note that migration cannot be regarded as the sole solution to demographic decline. The challenges accompanying shrinking and aging societies are far too complex to be solved by simply importing labor. Increasing the fertility rate is among those questions that have to be addressed. However, if managed well, migration can become one of the tools which will stem the negative effects of demographic decline and promote

sustainable economic growth. Ukraine is currently about to address several demographic and migrationrelated issues, such as pension reform and the revised Statute of Foreigners Act that is currently being discussed. Demographic decline will affect the country no matter what. The question is how to respond to it and how migration can help to alleviate the consequences of this trend. Manfred Profazi is the chief of mission of the International Organization for Migration in Ukraine.

the violation of any balance in the system of power or in the system of economic interests can lead to a considerable aggravation of the internal inter-group conflicts and to the emergence of entirely new political motivations on the part of these groups. They can seriously affect the controllability of the system as a whole and, in the worst case, even lead to betrayal. This happened in the groups around Kuchma when he was president and repeats itself under Yanukovych. When

the popularity of the leader falls, his circle starts looking for a new leader. The position of the ruling party is very strong, but there are no guarantees that the chosen strategy will yield results in the long term. Much depends on the president’s choices. Will he rely on the Party of Regions to fill executive roles, or involve outsiders? Will he rely on political alliances with people like Lytvyn and Tigipko, or will he try to monopolize the political field? What strategy will he choose for dealing with the oligarchs? Will he continue leading the country toward the EU? How will he deal with economic challenges? The key question is how to respond to the question of what Ukrainian democracy is. Is it like in Kazakhstan, Belarus or Russia, or somehow different, like, for example, Poland? For the time being, none of the post-Soviet leaders of these countries knows how to win the next election in democratic conditions, and when choosing either force or democracy, force is chosen. While president of Ukraine in 2005-2010, Viktor Yushchenko chose democracy and lost. For the time being democracy is a very complicated mechanism that is largely not understood by post-Soviet elites in terms of state administration and electoral procedures. Vladimir Granovski has been a consultant to politicians and businesses since the 1990s. His clients have included President Viktor Yanukovych and the pro-presidential Party of Regions.

12 News

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June 24, 2011

Palestinianâ&#x20AC;&#x2122;s wife sues over husbandâ&#x20AC;&#x2122;s arrest BY O K S A N A G RY T SEN KO GRYTSENKO@KYIVPOST.COM

The wife of a Palestinian man held in an Israeli jail after authorities removed him from a train near Kharkiv has filed a lawsuit against Ukrainian officials. The Ukrainian woman is demanding that officials investigate and reveal the details of what led to her husbandâ&#x20AC;&#x2122;s arrest in February. Dirar Abu Sisi, a 42-year-old engineer at a power plant in the Gaza Strip, has been charged with building rockets and training fighters for the Palestinian militant group Hamas. He denies the charges and believes he was kidnapped by the Israeli Mossad spy agency while on a train journey from Kharkiv to Kyiv. Ukrainian police investigated the case, but said they didnâ&#x20AC;&#x2122;t find information. The Security Service of Ukraine, known by its SBU acronym, told Abu Sisiâ&#x20AC;&#x2122;s wife, Veronika, that investigators had no information that he had been transported to Israel by force. But she doesnâ&#x20AC;&#x2122;t believe law enforcement officials and suspects that Ukraine was involved in her husbandâ&#x20AC;&#x2122;s detention and removal from the nation. She filed a lawsuit on June 15 against the Interior Ministry, the Prosecutor Generalâ&#x20AC;&#x2122;s Office and the State Border Guard Service, demanding that they disclose details of his mysterious disappearance and â&#x20AC;&#x153;send a request to Israelâ&#x20AC;? to bring her husband back onto Ukrainian territory. â&#x20AC;&#x153;If the Ukrainian law enforcement forces had no relation to the kidnap-

Dirar Abu Sisi

Veronika Abu Sisi believes that Ukrainian authorities helped Israelâ&#x20AC;&#x2122;s Mossad spy agency take her husband from a Kharkiv-Kyiv train in February. Officials in Ukraine and Israel are saying little; Dirar Abu Sisi is suspected of militant ties. (Joseph Sywenkyj)

ping of my husband â&#x20AC;Ś his arrest on the territory of the sovereign Ukrainian state and the following transportation abroad without sanction from Ukrainian officials, [then this] was a gross violation of Ukrainian and international laws,â&#x20AC;? according to the lawsuit filed in a Kyiv court. Abu Sisi also said she has filed a lawsuit on June 22 against President Viktor Yanukovych, demanding that he intervene. The Palestinianâ&#x20AC;&#x2122;s mysterious disappearance has raised concerns from the United Nations High Commissioner for Refugees, while the Palestinian Ambassador to Ukraine, Mohammed Al-Asaad, called the furtive transfer of Abu Sisi into Israel â&#x20AC;&#x153;an international crime.â&#x20AC;? The Foreign Ministry demanded in late March that the Israeli Ambassador to Ukraine, Zina Kalay-Klaitman, explain what happened, but has yet to receive any reply. â&#x20AC;&#x153;We are doing all we can,â&#x20AC;? ministry spokesman Oleksandr Dikussarov said. An Israeli court in the city of Beer Sheva on June 16 ordered Dirar Abu Sisi held until trial because of the severity of the charges. Abu Sisi denies the allegations and claims his detention is a mistake.

Ă&#x2020; Wife tries to ďŹ nd out why husband is imprisoned His lawyer says Israeli authorities captured Abu Sisi because of an erroneous belief that he knew the whereabouts of Israeli soldier Gilad Schalit, captured by Gaza militants five years ago. The Israeli Defense Ministry says the investigation is a secret and officials there have repeatedly refused comment. Abu Sisiâ&#x20AC;&#x2122;s Israeli lawyer, Tal Linoy, said even he has not been allowed to receive reports. â&#x20AC;&#x153;I think that despite what the Ukrainian law enforcement agencies are saying, they were involved in this disappearance,â&#x20AC;? Linoy said. â&#x20AC;&#x153;Otherwise, I canâ&#x20AC;&#x2122;t understand how it could all happen.â&#x20AC;? Kyiv Post staff writer Oksana Grytsenko can be reached at grytsenko@ kyivpost.com

Tymoshenko appeals to European court (Staff & Wire Reports) Ukraineâ&#x20AC;&#x2122;s former Prime Minister Yulia Tymoshenko asked the European Court of Human Rights on June 21 to recognize domestic criminal probes against her as politically motivated. Now in opposition and barred by prosecutors from travelling outside Kyiv, Tymoshenko has been charged with misallocating hundreds of millions of dollars while in office. She is to stand trial on one of three charges starting June 24. Denying all the charges, Tymoshenko said that she hopes the European court will find that the charges against her amount to â&#x20AC;&#x153;political repressionâ&#x20AC;? that is masterminded by President Viktor Yanukovych, her rival. â&#x20AC;&#x153;We filed an appeal [on Tuesday] laying out our case that political oppression is under way in Ukraine,â&#x20AC;? said Tymoshenko.

Yanukovych insists the investigations are no more than an attempt to combat corruption. He denies accusations that â&#x20AC;&#x153;selective justiceâ&#x20AC;? is at play and points, as proof, to criminal charges against other officials, including ex-President Leonid Kuchma. According to the London-based Financial Times newspaper, the development comes amid rising concerns in Europe and the U.S. that Kyiv, which hopes to sign free trade and associate membership agreements with the EU this year, is veering away from democracy one year under Yanukovychâ&#x20AC;&#x2122;s rule as president. Citing the Tymoshenko case, alleged censorship of media and a flawed regional election held last fall, Freedom House, the U.S.-based democracy watchdog, presented a report last week in Kyiv warning that Ukraine is sliding towards authoritarianism under Yanukovych.

Criminal case relaunched into Melnychenko tapes B Y Y U R I Y O N YSH K I V ONYSHKIV@KYIVPOST.COM

A Kyiv court on June 23 ordered the reopening of a criminal investigation against Mykola Melnychenko, the former bodyguard of ex-President Leonid Kuchma. The aim of the renewed probe is to find out who was behind the bugging of the presidential office more than a decade ago. The taping allegedly captured hundreds of hours of incriminating conversations in which Kuchma and his top circle of plotted numerous crimes. Kuchma and others implicated have always denied the accusations and disputed the authenticity of the tapes. Among those crimes allegedly caught on tape was the Sept 16, 2000 murder of journalist Georgiy Gongadze, a crime for which Kuchma now faces charges of exceeding his powers. Melnychenko disclosed the tapes made in Kuchmaâ&#x20AC;&#x2122;s office between 1999 and 2000, including the conversations allegedly confirming Kuchmaâ&#x20AC;&#x2122;s involvement in the Gongadze murder. The tapes are considered evidence in the case.

The June 23 court decision was pushed through after Kuchmaâ&#x20AC;&#x2122;s lawyers argued that a state treason investigation against Melnychenko was closed illegally in 2005. â&#x20AC;&#x153;A pretrial investigation was closed without any grounds. The resolution by the Prosecutor Generalâ&#x20AC;&#x2122;s Office must be cancelled,â&#x20AC;? reads the court ruling. Melnychenko denies the charges, saying his secret recordings of Kuchma were motivated by public interest. Melnychenko told journalists that the ruling was expected. Yuriy Boychenko, spokesperson for General Prosecutor Viktor Pshkonka, had no comment, saying prosecutors â&#x20AC;&#x153;just read this online but did not get a copy of the court ruling.â&#x20AC;? Valentyna Telychenko, a lawyer of Gongadzeâ&#x20AC;&#x2122;s widow, Myroslava, welcomed the new probe. â&#x20AC;&#x153;To determine the truth in the Gongadze case, it is needed to find out who, when, under what circumstances and for what purposes was recording the president,â&#x20AC;? Telychenko said. Kyiv Post staff writer Yuriy Onyshkiv can be reached at onyshkiv@kyivpost. com

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Ukrainian wine market: prospects and opportunities for investors F

amily winemaking has for decades dominated the wine industry in many European countries (France, Italy, Spain and Germany). Due to this, in these countries, for the most, major wine companies are privately owned, those that â&#x20AC;&#x153;grew upâ&#x20AC;? on the basis of those family businesses (in Italy, for example, Chianti, Barolo, the brands known throughout the world). In the countries of the USSR, a state monopoly dominated the market. After the collapse of the Soviet Union, some countries got rid of publicly-owned assets in the wine sector of economy that helped to bring the industry to the new level.

According to MEMBR in 2010 the share of FUWMH in the retail market of soft wines constituted 10.4%. In 2011, 50% of the shares of the Holdingâ&#x20AC;&#x2122;s wine business were acquired by the Swedish investment funds Horizon Capital and Hartwall Capital for about USD 25 million. This was the first investment in the wine business in the Ukrainian market. According to open sources, Logos plans until 2016 to make an IPO on one of the foreign stock-exchanges, obtain extra investments for the business development and become the major international wine holding in Ukraine. For instance, in 1990 Hungary entered a new stage in the development of win- Excellent management, six years and three privatized public companies. emaking: state ownership of the vineyards was abolished. Large state wineries were privatized and assigned into private ownership. A number of modern Trademark Company wine-making companies with their own vineyards were launched and began INKERMAN The First National Winemaking Holding to produce high-quality wines. Now the Hungarian wine industry is experiencMassandra NPJSC â&#x20AC;&#x153;Massandraâ&#x20AC;? ing real growth. European investments have been implemented to study and develop the traditions of the Hungarian wine industry with application of the latest technology of wine-making and modern equipment. International grape varieties are planted in Hungary to study their potential in the Hungarian lands.

2. Lease of Going Concern (GC) According to Ukrainian laws a GC includes fixed assets, current assets, cash, goods and securities (assets), which compose the commercial object with a complete cycle of production of goods (works, services) together with land, on which it is located, autonomous communications and system of energy supply. CG can be composed of all the assets of a publicly-owned company or of its structural subdivision. Lease of state property is governed by the Act of Ukraine â&#x20AC;&#x153;On Lease of State and Municipal Property" dated 10 April 1992 No.2269-XII. Location

Vineyards

Sevastopol, Crimea

5 500 hectares

Crimea

4 018 hectares

Koblevo

National Alcohol Traditions LLC

Mykolaiv Region

2 450 hectares

Mikado, Oreanda

Krymsky Vinny Dom (Oreanda)

Crimea

2 500 hectares

PRIVATIZATION OF INDUSTRY & PUBLIC-PRIVATE PARTNERSHIP

It is necessary to emphasize that the objects of state property, which produce excisable goods and which are forbidden to be privatized cannot be subject of lease. Peculiarities of lease of GC: t JOWFTUPS SFDFJWFT POMZ UIF SJHIU PG B MPOH UFSN VTF PG UIF PCKFDU t B GPSFJHO JOWFTUPS XJMM OFFE UP FTUBCMJTI B TVCTJEJBSZ JO 6LSBJOF UIBU XJMM CFDPNF UIF UFOBOU UP UIF BTTFUT t B UFOEFS JT UP CF IFME TFWFSBM CJET GPS MFBTF PG UIF TBNF PCKFDU BSF GJMFE t UIFSF JT BO BQQSPWFE TUBOEBSE GPSNBU DPODFTTJPO BHSFFNFOU UIBU JT OPU TVCKFDU UP BOZ TJHOJGJDBOU BNFOENFOUT t MFBTF BHSFFNFOU JT UP CF OPUBSJ[FE UIF GFF GPS OPUBSJ[BUJPO DBO CF RVJUF substantial.

Despite these circumstances, the Ukrainian wine market is not yet completely saturated by products and manufacturers yet, and is still very attractive for in- Currently in Ukraine most of the companies within the industry (wineries and vestments. farms) are owned by the state. Among the major players in the market are two Experts have appraised the wine market in Ukraine at approximately 23 mln state associations: Massandra, which consolidates about 8 state wineries, and Gosvinprom (previously known as Krymradgospvynprom), consisting of about decalitres of wine or USD 800 million. 85% of wine is produced by Ukrainian 19 companies. companies and 15% is imported. It ought to be mentioned that in most cases state-owned winemaking comIn 2008, the 10 largest wine manufacturers had 56.5% of all sales in the seg- panies are prohibited from privatization and are in an extremely unstable situment. In 2009, the stake increased up to 61.1%. Meanwhile, the national wine ation. Main assets of these companies are significantly out of date, they have market is growing as well. Experts believe that potential annual growth of wine debts for salary payments before the employees, and some of them have unconsumption in Ukraine for the next several years will be about 17.5%. dergone bankruptcy procedures. 3. Joint Venture Agreement (JVA) In 2009 22,512,000 decalitres of wine were produced in Ukraine. While dur- Representatives of the Ukrainian authorities are also aware of the need for This is a form of public-private partnership that implies consolidation of assets ing the same period for the last year 20,901,000 decalitres. Increases in sales in substantial restructuring and modernization of the industry and are seriously and/or business activity of two or more parties, one of which is a state com2009 of wine were 13% compared to 2008. For 8 months of 2010, the volume of thinking about beginning mass privatization of the industry. pany, without establishing a separate legal entity. Legal framework for JVAs is grape wine production in Ukraine increased by 62,3% if compared to the corIn 2010 the President of Ukraine Victor Yanukovych defined privatization as set forth in the Civil Code of Ukraine. responding period of the previous year, and export of grape wine by 25%. one of the key directions of the Economic Reform Program of Ukraine for 2010- Peculiarities of JVAs: t +7" NVTU CF BQQSPWFE CZ UIF $BCJOFU PG .JOJTUFST PG 6LSBJOF 2014 and as a wide-scale social and economic project. He emphasized that the t +7" NVTU CF SFHJTUFSFE XJUI UIF TUBUF UBY BVUIPSJUJFT majority of the economyâ&#x20AC;&#x2122;s sectors would be privatized, except for those, which WHO IS WHO IN THE MARKET t DPOUSJCVUJPO PG B QBSUJDJQBOU UP B KPJOU BDUJWJUZ DBO JODMVEF DBTI BTTFUT ensure the state's core functions, as well as national and economic security. other property, professional and other knowledge, skills and abilities, as The Ukrainian wine market does not fall within the list of the exceptions. It is TRADEMARK MANUFACTURING COMPANY XFMM BT HPPEXJMM BOE CVTJOFTT DPOOFDUJPOT confirmed by the fact that at the end of April 2011, the draft Act of Ukraine on INKERMAN Inkerman Vintage Wine Factory LLC t TIBSF PG UIF TUBUF JO B KPJOU WFOUVSF NVTU CF NPSF UIBO delisting of 24 Crimean alcohol plants (wineries and farms, liquor companies) t BGGBJST PG KPJOU BDUJWJUZ BSF NBOBHFE CZ UIF QBSUJDJQBOUT KPJOUMZ VOMFTT from the list of companies prohibited for privatization was registered with the Massandra PJSC â&#x20AC;&#x153;Massandraâ&#x20AC;? otherwise is stipulated by the JVA. Parliament. Koblevo PJSC â&#x20AC;&#x153;Koblevoâ&#x20AC;? According to experts, within the next year we should expect the mass privatiza- 9 June 2011 President of Ukraine signed the amendments to certain Acts of tion of the state wineries, which has every chance of completely changing the Ukraine governing joint activity. Following these amendments it is prohibited Vinia â&#x20AC;&#x153;Kotnarâ&#x20AC;? + Vinia Traian Ukrainian wine market. However, transformation of the market needs strategic to contribute to the joint ventures assets owned by the state that are not Golden Amphora Alef Vinal LLC foreign or domestic investors. Investments, as well as the Western business ex- allowed for privatization. perience and high technologies can make this sector very profitable and com- 4. Trust Management Shabo Shabo LLC petitive in world markets and repeat the success of Ukrainian vodka giants. According to the trust management agreement one party (Trustor) assigns to Mikado Krymsky Vinnyi Dom Privatization of state property is a lengthy and expensive procedure. In practice another party (Trustee) for a fixed period of time assets for management, and the other party assumes obligations for a fee to manage these assets for the other options of assets acquisition are applied. Oreanda Krymsky Vinny Dom benefit of the Trustor or a specified third person (Beneficiary). Under the laws of Ukraine the state-owned objects are managed by the CabiHolliday Collection Sandora LLC net of Ministers of Ukraine and by the central and local executive authorities on An object trust management agreement can be GC, real estate, securities, its behalf. Therefore, implementation of any of the below options is possible property rights and other assets. Tarutynski Vyna Business of Wine only if a number of approvals and permits from the state authorities (Cabinet Peculiarities of trust management: t USBOTGFS PG BTTFUT JOUP USVTU NBOBHFNFOU EPFT OPU FOUBJM BTTJHONFOU PG of Ministers, the Antimonopoly Committee of Ukraine, the State Property Fund PXOFSTIJQ SJHIUT UP UIFTF BTTFUT UP 5SVTUFF of Ukraine, etc.) are in place. According to MEMRBâ&#x20AC;&#x2122;s report there are several major wine manufacturers in t USVTU NBOBHFNFOU BHSFFNFOU NVTU CF OPUBSJ[FE BOE BQQSPWFE CZ UIF Ukraine: The First National Winemaking Holding (INKERMANTM), â&#x20AC;&#x153;Massandraâ&#x20AC;?, Among the alternatives to privatization are the following: $BCJOFU PG .JOJTUFST PG 6LSBJOF â&#x20AC;&#x153;Koktebelâ&#x20AC;?, â&#x20AC;&#x153;Alef-Vinalâ&#x20AC;? (Golden AmphoraTM), and â&#x20AC;&#x153;Koblevoâ&#x20AC;?. These trademarks t 5SVTUFF JT FOUJUMFE UP B GFF GPS NBOBHJOH UIF BTTFUT BT XFMM BT UP SFJN 1. Concession cover 41,8% of all sales in Ukraine. bursement of all necessary expenses incurred while managing the In 2010, sales leaders were the following: INKERMAN, Massandra and Koblevo. It is a form of public-private partnership that prescribes for the right of invesBTTFUT Large wineries in Ukraine typically are vertically integrated holding companies, tor to create (build) an object of concession and (or) manage (operate) it. t "TTFUT JO USVTU NBOBHFNFOU NVTU CF BDDPVOUFE CZ B 5SVTUPS PO B TFQB which consist of one or two wineries and a few collective farms with a total Concession requires the following conditions to be met: rate balance sheet and all the accounts must be kept separately as well. t UIF QVSQPTF PG DPODFTTJPO JT UP TBUJTGZ UIF TPDJBM OFFET area of vineyards up to 5,000 hectares. For instance, INKERMAN, the leading The choice of form of public-private partnership depends on several factors t DPODFTTJPO BHSFFNFOU JT NBEF GPS B GJYFE UJNF BOE NVTU QSFTDSJCF GFFT Ukrainian winemaker, has 5.5 thousand hectares of vineyards, Koblevo â&#x20AC;&#x201C; 2.45 ranging from type and size of business to those guarantees and obligations, t D PODFTTJPOBJSF VOEFSUBLFT UP DSFBUF CVJME BOE PS NBOBHF PQFSBUF thousand hectares, Massandra â&#x20AC;&#x201C; 4 thousand hectares. As a rule, winemakers which an investor is to provide/assume while investing in the state sector of the object of concession, responsibility and possible business risks. try to use their own wine materials to avoid external purchases. Because of this, the area of vineyards is directly proportional to a companyâ&#x20AC;&#x2122;s sales volume. Concession activity in Ukraine is governed primarily by the Commercial Code economy. of Ukraine dated 16 January 2003 No.436-IV, which stipulates the general pro- Taking into account the market opportunities and prospects for mass privatizaSUCCESS STORIES visions regarding concessions and the Act of Ukraine "On Concessions" dated tion the Ukrainian market can give investors a unique opportunity: to enter the Despite long-lasting traditions of Ukrainian winemaking, the majority of 16 July 1999 No.997-XIV. domestic market by investing in potentially attractive wineries and become domestic companies are very young. Only a few of them can boast more than the leader or one of the main players in the wine market of Ukraine. Peculiarities of concession: a 10-year history. Letâ&#x20AC;&#x2122;s look at one example of the development of a current t transfer of property into concession does not entail assignment of ownUkrainian winemaker. ership rights to that property to the concessionaire, and does not termiThe First Ukrainian Wine-Making Holding (FUWMH) was established by the OBUF TUBUF PS NVOJDJQBM PXOFSTIJQ BTTFUT DSFBUFE VOEFS B DPODFTTJPO Logos Corporation in 2003. Initially, the Company was focused import and BHSFFNFOU HP JOUP TUBUF PS NVOJDJQBM PXOFSTIJQ manufacturing of cognacs. Then the corporation obtained the exclusive t a foreign investor will need to establish a subsidiary in Ukraine that will distribution rights to the products of the Inkerman Factory of Vintage Wines The article was prepared by CFDPNF UIF UFOBOU UP UIF BTTFUT Associate partner of ILF (INKERMANTM). t concession agreement is concluded for a period that cannot be less than Elena Parkhomenko BOE OPU NPSF UIBO ZFBST In 2004, Logos started to cooperate with the primary wine-growing and wineand financial consultant of ILF t there is an approved standard-format concession agreement that is not making foundations â&#x20AC;&#x153;Chernomoretsâ&#x20AC;? and â&#x20AC;&#x153;Kachynskyi+â&#x20AC;? to create a complete cycle Dmitry Babayev. TVCKFDU UP BOZ TJHOJGJDBOU BNFOENFOUT of wine-growing and winemaking. In 2005, Logos acquired them both together t concession agreement must be registered with the State Property Fund with Closed Joint-Stock Company â&#x20AC;&#x153;Wine-Making Institute.â&#x20AC;? Soon the manufacturer of Ukraine. of cognacs under the brand â&#x20AC;&#x153;Tavriyaâ&#x20AC;? also became a part of the holding.

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June 24, 2011

The remains of the Golden Rose Synagogue in Lviv, built in 1582, as seen on June 5. Nazis bombed the place of worship in 1942. (Pavlo Palamarchuk)

How a thriving community disappeared Æ1 the Western front”; “Why Hitler will have to lose the present war; the Third Reich’s catastrophic economic and financial situation.” In the weeks before these articles on Sept. 10, stories ran of life continuing despite the approaching storm: a series on Jewish history by renowned historian Majer Balaban, a drawing competition for a trip to a local resort and personal ads from a landlady looking for a lodger to a doctor offering help to the sick. But this issue of Chwila turned out to be the last. Lviv, then part of Poland, found itself at the conflux of two marauding armies – Stalin’s Red Army from the east and the Nazis from the west. Both brought with them ideologies that proved devastating to the city’s population, most of all its Jews. Under Soviet occupation, which lasted until June 1941, all of Lviv’s Yiddish organizations were liquidated and its leaders arrested. Much worse was to come. By the summer of 1944, Nazi

Æ By 1944, only 700 of 220,000 Jews in Lviv were alive efforts to eradicate Jews from Europe forever changed Lviv. The city’s Jewish population, which comprised one-third of the 340,000 residents before the war, was nearly destroyed. Only 700 Jews survived of more than 220,000 who were present in Lviv during the war. The way of life chronicled by the Zionist Polish-language daily Chwila came to an abrupt end – the final curtain for the rich and complex tale of the Jewish community that for centuries had made Lviv its home. A fuller picture of the life of western

Timeline: World War II in Lviv Aug. 23, 1939 – Nazi Germany and the Soviet Union sign the Molotov-Ribbentrop Pact in which both powers pledge to remain neutral if either country were attacked by a third party. The treaty contained a secret protocol dividing Northern and Eastern Europe into German and Soviet spheres of influence. As part of the pact on: Sept. 1, 1939 – Germany invades Poland Sept. 17, 1939 – Soviet troops cross the Polish border. Sept. 22, 1939-June 30, 1941 – Lviv falls under Soviet rule. The period is marked by deportations and executions of all nationalities, particularly the elite and those opposed to Soviet rule. Lviv’s Jewish population, which numbered 110,000 before the war, swells to 200,000. June 22, 1941 – Nazi Germany invades the Soviet Union at 3:15 a.m., violating the Molotov-Ribbentrop Pact. June 23-26, 1941 – Nearly 7,000 inmates – mostly Ukrainians and Poles, but also Jews – are murdered at three area prisons, including infamous Brygidki. The event becomes a negative milestone in Ukrainian-Jewish relations. June 30, 1941-July 26, 1944 – Lviv is occupied by Hitler’s Germany. So-called Aktion Reinhard – the Nazi code name for operations to round up Jews to send to concentration and death camps – begin immediately. Over the next two years, some 12 Aktion Reinhard occurred in Lviv, decimating the city’s Jewish population. July 27, 1944 – Lviv again falls under Soviet rule. May 7, 1945 – Germany signs the document of unconditional surrender in Reims, France. All told, the Nazis imprisoned and exterminated an estimated 9 million people, 6 million of whom were Jews.

Boris Orych, who died this year, stitched together a history of Lviv’s lost Jewish community.

Ukrainian Jews started to be pieced together with the opening of archives following the collapse of the Soviet Union. Scholars, journalists and individuals like Boris Orych started combing through the city’s archives and libraries, read through the historian Balaban’s works, a plethora of Yiddish-, Polish-, German- and Ukrainianlanguage documents, as well as Chwila, which the Soviets had locked away and classified as top secret. Even though more than 20 tons of archival documents had been removed from Lviv and hauled to Moscow after the war, little by little these individuals began to reconstruct the Jewish community’s past. Orych, who died shortly after his 90th birthday earlier this year, was considered a walking encyclopedia of Lviv’s Jewish history. For countless years, this spritely man could be seen, rain or shine, giving tours of Jewish Lviv. Orych had thrust himself into archival research in 1991 just as he was turning 70. The task of reconstructing Lviv’s Jewish history was very personal to him, he told the Kyiv Post in one of his last interviews. “People should not forget the past,” he said. Orych’s parents died in Auschwitz in 1943; keeping alive the memory of those Jews who had perished during World War II also meant

The last issue of the Chwila newspaper, which provided news to the Jewish community, came out on Sept. 10, 1939. Image courtesy of periodicals department named after Mar’yan and Ivanna Kotsiv, V. Stefanyk Lviv National Academic Library (Pavlo Palamarchuk)

keeping alive theirs. The Jewish past in Lviv stretches back to the city's beginnings. Jews settled there shortly after the city was founded in the 13th century during the reign of King Danylo Halych. They established two communities – one within the city limits itself, and the other in the Krakiv suburb district. Both districts were given relative internal autonomy in 1360 by Polish King Casimir the Great, who had conquered Lviv 20 years previously. Involved primarily in trade and handicrafts, the community flourished. The latter part of the 16th and first half of the 17th centuries was a “golden period” for Lviv’s Jews, Orych said. Its members achieved significant social status as financiers, doctors and teachers, while religious and cultural thought swiftly developed. The outstanding monument of Jewish culture in Lviv was built during this period, in 1582: the Golden Rose Synagogue. Orych, who came to Lviv as a refugee in 1939, remembers the Golden Rose’s beauty. “I was struck by the magnificent ornamentation of the interior: the amazing beauty of the brass lighting, supported by deer horns, the sumptuous holy ark, the bimah on which a chair was placed for circumcision,” he wrote in 2005. Three years after his visit, the synagogue was destroyed by a Nazi bomb. The period of the Austro-Hungarian Empire, which lasted from 1772-1918, proved to be more problematic as Jews fought for their civil rights and against assimilation. Lviv became a center for several religious movements, which were sometimes at odds with one another, Orych said. One such movement, Hasidism, was popular in Lviv. Founded in the mid18th century by Rabbi Israel Baal Shem Tov, who was born in Okopy in today’s Ternopil Oblast, Hasidism was characterized by religious zeal, spirit of prayer, joy and charity and gave many Jews hope in difficult economic times. Today, it is part of Ultra-Orthodox Judaism and pilgrims frequently make

visits to sites where revered religious figures are buried. Orych wrote extensively about those individuals who established Jewish religious schools in Lviv, as well as those who were proponents of Haskalah, or Jewish Enlightenment. Haskalah, which grew among European Jews in the 18th and 19th centuries, advocated adopting values of enlightenment, pressed for better integration into European society, and increased education in secular studies. In 1844, Lviv’s first progressive synagogue, the Temple, was established, as well as the city’s first secular Jewish school, which sat close to today’s Opera House. By World War I, Lviv’s Jewish community had grown in strength and importance. Its Jewish quarters quickly developed, new synagogues were erected, schools, education and culture were on the rise. But the community also suffered a period of terror – pogroms which spread throughout Poland in 1918. Up to 150 Jewish residents were killed, hundreds were wounded and looting was carried out by Polish soldiers, citizens and criminals from Nov. 21-23 that year. The newspaper Chwila was established in 1919 as a reaction to those events and to give the community a louder voice; other Jewish papers had previously been published in Lviv, but none carried its weight. Devoted to political, social and cultural affairs, for two decades its contributors included some of the region’s most prominent Jewish figures. Chwila’s demise in 1939 signaled the start of a new period of terror for Jews in Lviv. Kyiv Post staff writer Natalia A. Feduschak can be reached at feduschak@ kyivpost.com.

Ukraine’s Vanquished Jews Part 1 (June 24): Boris Orych and western Ukraine Jews Part 2 (July 1): The killing grounds Part 3 (July 8): Surviving the Holocaust in Lviv. Part 4 (July 15): Saving Jewish heritage Part 5 (July 22): Reconciliation?

Put on your vyshyvanka for Krayina Mriy y festival.

June 24, 2011

Bolshoiâ&#x20AC;&#x2122;s top dancer is global superstar BY I R I N A S A N D U L

Nikolai Tsiskaridze is a ballet â&#x20AC;&#x201C; and box office â&#x20AC;&#x201C; phenomenon. A mere 15-minute performance in May at the Kyiv National Opera House brought a standing ovation from an audience that had paid up to Hr 2,000 for tickets. Tsiskaridze, 37, is the leading dancer at Russiaâ&#x20AC;&#x2122;s Bolshoi Opera and Ballet Theater, a global superstar and, to put it mildly, a bit of a showoff. At the show on June 3, which featured dancers from the top Russian ballet companies, he performed a dance from Raymonda with the leading ballerina from the Kirov Ballet, which largely boiled down to self-satisfied posing by the dancer. The audience was applauding before he had even taken his first leap. At the Bolshoi he is famous for his demanding character. His relationship with Anatoly Iksanov, the theaterâ&#x20AC;&#x2122;s general manager, is falling apart at the seams. The dancer irks the Bolshoiâ&#x20AC;&#x2122;s administration with his public criticism, complaining about the poor state of dancersâ&#x20AC;&#x2122; changing rooms, the uncomfortable dance floor and equipment that needs replacing. â&#x20AC;&#x153;Maybe I irritate him; I donâ&#x20AC;&#x2122;t care,â&#x20AC;? said Tsiskaridze in an interview after a rehearsal for the show. â&#x20AC;&#x153;The theaterâ&#x20AC;&#x2122;s managers come and go, and I will stay,â&#x20AC;? he added. A spokesman for Iksanov declined to comment on their relationship. When he is reproached with not being modest enough, he always answers: â&#x20AC;&#x153;Modesty is the best policy only for those that have nothing to be proud of.â&#x20AC;? The Bolshoiâ&#x20AC;&#x2122;s star dancer speaks with the self-importance of a man sure of his talents and achievements, at the same time exuding charisma in the same copious quantities as the sweat pouring from him after another tough rehearsal. Being this good is hard work. Tsiskaridze undeniably has plenty to be proud of. He grew up in Tbilisi, Georgia, the son of a single mother who was a school teacher of math and physics. He never knew his father. Dancing ballet from the age of 11, by 13 he had already moved to Moscow to continue studies there. His graduation exam at the Moscow Academy of Choreography was Ă&#x2020;20

Nikolai Tsiskaridze during a rehearsal in the Kyiv National Opera on June 3. (Anastasia Vlasova)

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Food Critic WITH VLAD LAVROV LAVROV@KYIVPOST.COM

Discovering restaurant Prague after two decades in oblivion Donâ&#x20AC;&#x2122;t go back to the places where you felt happy, the old saying goes. Ignoring the well-known maxim, I revisited Prague Restaurant, home to some of the most vivid moments of my childhood, which reopened in April after nearly two decades of abandonment. Back in the 1980s, Prague was the first restaurant I sampled in my life. I was five or six at the time and most restaurants were hard to get in to, but Prague â&#x20AC;&#x201C; sitting in a luscious green park in the southern end of the capital â&#x20AC;&#x201C; was an exception. The place is housed in a twostory white building with pompous columns strangely reminiscent of colonial style houses. It survived the Soviet decay just like the large exhibition center next door built to show off the achievements of socialist economy. Getting a table back then didnâ&#x20AC;&#x2122;t involve waiting for hours in line or bribing a doorman. All this had turned Prague into the number one neighborhood restaurant for local residents. It may sound impossible, but I do recall looking on a beetroot salad as a starter in the menu. Being the cheapest dish, it cost less than one Soviet ruble (between a quarter to one U.S. dollar, depending on whether an official or a black market exchange rate was used). I was puzzled as to why restaurant cooks decided to cook something that you could eat at home. Yet, the darn cheap beetroot salad, swathed with mayonnaise and seasoned with chopped garlic, was also the Pragueâ&#x20AC;&#x2122;s most popular dish and one of the house specialties. It still escapes me why this salad was so popular. It might have been due to the sliced prunes, a delicacy hard to find in Soviet grocery stores. Nearly three decades on, the restaurant has reopened. Its building, which a couple of years ago seemed on the verge of collapse, underwent a fancy restoration that must have cost a fortune. A pond nearby that had dried out and overgrown with grass now has water and a couple of white swans graciously gliding in front of the guests. Ever since the place reopened in April, I wanted to compare the new Prague, which promotes itself as â&#x20AC;&#x153;legendary,â&#x20AC;? to the place I remember from childhood. More importantly, I wanted to see if its food matches the location, the money invested and the new status. And so I ended up with Ă&#x2020;19

16 Entertainment Guide

www.kyivpost.com

June 24, 2011

Till Sunday, July 17

(drugoi.livejournal.com)

(katardat.org)

Saturday, Sunday, June 25-26

Krayina Mriy ethnic festival

Constitution Day: classical art and fashion (www.shodydoneba.com.ua)

Tueday, June 28

To mark the 15th anniversary of the Ukrainian Constitution, European Square in Kyiv will host a high-end classical concert. Bringing together famous opera, ballet and jazz artists, the festival, “Stairs to the Sky,” aims to give the beauty of classical art broad exposure. The festival was founded 14 years ago but got a second life only last year. A highlight of this year’s performance is well-known Russian opera singer Dmitry Khvorostovsky, who collaborated with the world’s best opera houses. In Kyiv, he will be joined by prima ballerina from Russia’s Bolshoi, Ilze Liepa, and other talented artists. They will be accompanied by the Ukrainian National Symphonic Orchestra. For more elegancy, Ukrainian designer Olha Symonova will show her new collection of evening dresses during the event. Tueday, June 28, 9 p.m., European Square, www.shodydoneba.com.ua. Free admission.

Ukrainian avant-garde The artistic vacuum in the Soviet Union – where all artwork had to conform to the party line – couldn’t stiﬂe the creative spirit in Ukraine altogether. Painter Vasyl Yermylov was one of those artists who had a major inﬂuence in shaping the avant-garde movement. Born in 1894 in Kharkiv, he worked in a factory designing match boxes. A talented painter, he was asked to draw Communist propaganda posters. But Yermylov preferred Pablo Picasso and futurist artists’ work, which led to his dismissal from the artists’ union in 1949. The painter was criticized for “cosmopolitism and submission to rotten Western culture.” In Kyiv, you can see more than 200 of Yermylov’s works drawn together from different museums and private collectors, both in Ukraine and abroad. Till Sunday, July 17, open 11 a.m.-8 p.m., Mystetsky Arsenal, 12 Lavrska St., 288-5226, www.artarsenal.in.ua. Tickets: Hr 10-25.

Monday-Sunday, June 27-July 3 (www.themuslimbride.com)

“Krayina Mriy,” or “Country of Dreams,” is a well-tailored collection of gigs with an ethnic ﬂavor. Organizing it for the eighth time, musician Oleh Skrypka has become a national pride, of sorts. “Country of Dreams” will present a two-day, open-air cocktail of music and crafts, dancing and singing, eating and drinking. Ukrainian culture won’t be the only focus of the festival. Tatar and Moldovan dancing classes, a demonstration of Japanese calligraphy art and origami and workshops on book-publishing techniques are among the highlights. Skrypka will traditionally close the festival with Zabava jazz band. Saturday, Sunday, June 25-26, Spivoche Pole, metro Arsenalna, www.krainamriy.com. Tickets: Hr 30-80.

TEN H G I BR THEIR RE FUTU

Moroccandays

Nursery school opening • • •

First nursery school teaching in English, French and Ukrainian Classes for ages 2 through 7 years All teachers native-speakers of English or French

• Call soon; class size limited Located near Maidan Nezalezhnosti 5/24, Irynynska street. Kyiv • Tel.: +(38) 050 448 46 46

www.ptitcref.com • kiev@ptitcref.com

If you are still planning where to go on a holiday, this week-long festival of Moroccan culture can help you decide. The North African kingdom on the coast of the Atlantic Ocean has a rich culture and stunning landscapes to share. Each day of the fair, craftsmen from coppersmiths to jewelers will demonstrate their work. You can learn how to crush an argan – a plant, whose nuts are used to make oil – and learn Arabic calligraphy. Moroccans will no doubt play traditional music and make henna drawings on your hands if you wish. To literally taste the culture, you can have a cup of traditional tea with Moroccan sweets. Drop by any time and dive into discovering the mysterious oriental world. Monday-Sunday, June 27-July 3, 11 a.m.-9 p.m., Ukrainsky Dim, 2 Khreshchatyk St. Free admission.

Compiled by Nataliya Horban

www.kyivpost.com

June 24, 2011

Movies

Entertainment Guide 17 Live Music

Why there are no ﬁlms in original language shown in Kyiv any more Editor’s note: You’ve probably wondered why our section “Movie Listings” was getting thinner and thinner each week. We have bad news for you: This vacuum will last for a while. Here’s why. BY O K S A N A FA RY N A FARYNA@KYIVPOST.COM

The list of Kyiv cinemas with movies in their original languages boils down to four. Kinopanorama, Zhovten, Kyiv and Butterfly Ultramarine, however, no longer treat filmgoers with original voice tracks, simply because there are not enough of them. “The audience votes with a ‘ruble’ for dubbing,” explains Denys Ivanov, president of Arthouse Traffic distribution company. Now his company manages to screen films in foreign languages only during film festivals when other sponsors, including embassies, pitch in. “We used to receive film copies on tape in original language to preview [before ordering a dubbing] and could screen them in cinema,” said Halyna Tymoshenko from Kinomania, an official distributor of Warner Brothers and New Line Cinema in Ukraine. “Now we get movies in electronic files, which cannot be used for screening. The cost of an additional copy and other expenditures make the whole business unviable.” The reason for not showing films in the original language with Ukrainian subtitles is a question of habit. The tradition of dubbing stuck with many viewers since the Soviet times. Film

Brad Pitt (R) stars in ‘Tree of Life’ film, which Kyiv theaters show only in Russian with Ukrainian subtitles. (www. filmofilia.com)

critics say that many Ukrainians tune out when they hear a foreign language on screen and find subtitles irritating. The existing demand for all the sounds and undertones in “King’s Speech,” for example, is simply not enough to feed the supply. “If we look at two-three weeks of the originals’ screenings, they will account for only 25 percent of the box office receipts compared to what movies in Russian or Ukrainian make,” said Pavlo Gordeladze, manager at the Zhovten cinema. Last time Zhovten treated its foreign viewer was with a collection of short films “Shorts Attack!” in spring. “We won’t be ordering additional copies [in the original language] because the audience likes them much less anyway,” Gordeladze said. Ukrainians are not used to subtitles. They prefer voice-overs, the cost of which has recently gone down. Many distributors also try to benefit from the new law, which allows for no dubbing

Good old rockabilly by ‘Ruki v Briuki’ band on June 30 in Docker’s ABC. (Courtesy)

of art house films into Ukrainian. If there are less than 10 copies to be distributed among movie theaters, there’s no need to translate them and they hit the screen in Russian with Ukrainian subtitles, explained Gordeladze. Take this year’s winner of the Cannes festival “The Tree of Life” with Brad Pitt. You can catch it in Kyiv cinema but that’s, of course, if you know Russian or can read the subtitles in Ukrainian. “If we were more educated and had better knowledge of foreign languages, then original films would be in more demand,” said Anna Li, the head of advertising for Kyiv cinema. Cultural center Master Class has been filling the niche with old time classics once a week, but even they close their movie hall for the summer. Tune back in October and meanwhile enjoy films on DVD. Kyiv Post staff writer Oksana Faryna can be reached at faryna@kyivpost. com

Best classical picks • Saturday, June 25: Opera “Dido and Aeneas” performed by soloists of National Philharmonic of Ukraine and Kyiv chamber orchestra at 8 p.m., Lavra gallery, 1 Lavrska St. Tickets: Hr 100-300. • Sunday, June 26: German and American pianists will perform pieces by Liszt at 8 p.m., Lavra gallery, 1 Lavrska St. Tickets: Hr 100-300. • Monday, June 27: Musicians from

Austria and Russia, including famous cellist Natalia Gutman, will perform pieces by Schumann and Beethoven at 8 p.m., Lavra gallery, 1 Lavrska St. Tickets: Hr 150-500. • Tuesday, June 28: Ballet “Vienna Waltz” by Johann Strauss I, Johann Strauss II and Josef Strauss at 7 p.m., National Opera, 50 Volodymyrska St., 279-1169, www.opera.com.ua. Tickets: Hr 20300.

• Wednesday, June 29: Ukrainian jazz evening, as part of Oleksiy Kohan’s regular series “Theme with variations” at 8 p.m., Cultural center Master-Klass, 34 Mazepy St., metro Arsenalna, www.masterklass.org/eng, 594-1063. Tickets: Hr 40. • Wednesday, June 29: Opera “Madame Butterﬂy” by Puccini at 7 p.m., National Opera, 50 Volodymyrska St., 279-1169, www.opera.com.ua. Tickets: Hr

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ART CLUB 44 44B Khreshchatyk St., 279-4137, www.club44.com.ua Concerts traditionally start at 8 – 10 p.m. June 24 AC/DC Cover Party, Hr 50 June 25 Tribute to Michael Jackson, free admission June 26 Soiuz 44 Jam Session, free admission June 27 Alexei Bogolyubov Quintet, free admission June 28 Legkiy Flirt, Hr 20 June 29 Hobot & Ko, free admission June 30 Balkan Party, Hr 20 DOCKER’S ABC 15 Khreshchatyk St., 278-1717, www.docker.com.ua Concerts traditionally start at 9:30-10 p.m. June 24 Sobaki V Kosmose, Red Rocks, Hr 70 June 25 CHilibombers, Foxtrot Music Band, Hr 70 June 26 Animals Session, free admission June 27 Karnavalnaya Zhara, free admission June 28 Tres Deseos Latino Party, Hr 20 June 29 Rockin’ Wolves, Hr 30 June 30 Ruki v Briuki, Hr 30 DOCKER PUB 25 Bohatyrska St., metro Heroyiv Dnipra, www.docker.com.ua Concerts traditionally start at 9:30-10 p.m. June 24 Antitela, Hot Guys, Hr 70 June 25 Leningrad Band Tribute: Green Silence, Gera and Second Breath, Hr 70 June 26 Foxtrot Music Band, free admission June 27 Animals Session, free admission June 28 Chill Out, free admission June 29 The Magma, free admission June 30 Vostochny Express, 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. June 24 Beefeaters, G Sound June 25 Carte Blanche June 30 Carte Blanche PORTER PUB 3 Sichnevogo Povstannya St., 280-1996, www.porter.com.ua Concerts traditionally start at 7:30 p.m. June 24 Shubin Band June 25 Brown Sugar June 26 Maks Tavricheski June 29 Ivan Bliuz June 30 Juke Box JAZZ DO IT 76A Velyka Vasylkivska St., 289-56-06, http://jazz-doit.com.ua Concerts traditionally start at 8:30 p.m. June 24 Tatiana Areﬁeva June 25 Alexander Marchenko June 29 Elena Nikolskaya 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

June 24, 2011

www.kyivpost.com

Lifestyle 19

June 24, 2011

Food Critic: Author returns to place of boyhood memories

â&#x20AC;&#x2DC;Swan Lakeâ&#x20AC;&#x2122; in restaurant Prague

Ă&#x2020;15 a group of friends at a table on the winter

â&#x20AC;&#x2DC;Swan Lakeâ&#x20AC;&#x2122; ballet under the open sky

Two ballet dancer watch fireworks near Prague restaurant.

A spacious and cozy terrace of the Prague restaurant

Prague Restaurant, 1 Akademika Hlushkova Prospekt, tel. 526-9990, praha-restaurant.com

Two people watch swans gliding on the Pragueâ&#x20AC;&#x2122;s lake. Restaurateur Viola Kim (C)

To celebrate Prague Restaurantâ&#x20AC;&#x2DC;s recent reopening, an outdoor ballet â&#x20AC;&#x153;Swan Lakeâ&#x20AC;? was staged near the lakefront on June 15. A spacious summer terrace and lush greenery of the surrounding park provided an elegant setting. Prague has live music on weekends.

Get your free copy of the 5 ( * 'SJEBZT " #FTBSBCTLB 4RVBSF *M 1BUJP /BCFSF[IOPÂ&#x160;,ISFTDIBUZUTLB 4USFFU 4BLTBHBOTLPHP 4USFFU " #FTTBSBCTLB 4RVBSF 7FMZLB 7BTZMLJWTLB 4USFFU

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terrace â&#x20AC;&#x201C; overlooking a nice park and a childrenâ&#x20AC;&#x2122;s playground â&#x20AC;&#x201C; as it was too cold to eat on the lake terrace. Despite being very friendly with a waiter, we only got one menu per table. It turned selecting our meals into a team-building exercise with three of us nearly bumping our heads impatiently turning the pages. What happened next was a bit more unpleasant, as the restaurant seemed to have run out of anything we tried to order. Even though the Prague menu is far from extensive and, excluding the Japanese dishes we decided to skip, has only five pages, gone were most of the fish dishes and nearly half of the desserts. Feeling embarrassed, the waiter said that we came at the end of a busy weekend; hence they were short of supplies. Yet it seems a little strange and unprofessional that after investing so much into Pragueâ&#x20AC;&#x2122;s state-of-the-art renovation that the managers would not bother to fill up stocks to last the whole weekend, including Sunday. Finally, after an annoying trial-and-error selection process, we ended up with salmon fillet with spinach (Hr 125), trout with almond sauce (Hr 114), a Porterhouse steak (Hr 380) and a salad with melted cheese and cedar pine nuts (Hr 110). When it came to the fish, my friends thought that it was too plain for its price and the â&#x20AC;&#x153;legendaryâ&#x20AC;? status, but it still tasted as good as a simply grilled fish does. Ordering the pricey steak, my friends seemed a little surprised that the waiter never asked how it should be done â&#x20AC;&#x201C; well, medium or rare. Yet, the meat turned out pretty good, if just a little dry. Munching away, we noticed the room getting busier. The most amazing thing was seeing many families with small children despite the fact that thereâ&#x20AC;&#x2122;s no smoke-free zone. Diners in casual wear, with some sporting shorts and flip-flops, looked too relaxed to care about anything. When it came to desserts, four of the nine menu items were missing. Yet the waiter, who seemed more knowledgeable about the sweet section than any other, quickly talked us out of ordering the most expensive item â&#x20AC;&#x201C; Tollegio and Gorgonzola cheeses with pumpkin jam and nuts for Hr 125. Instead, he recommended that we try the carrot and ginger pie (Hr 57). The pie was arguably the best (and also the cheapest) dish we ate at Prague that evening, which distantly reminded me of the story of the garlic beetroot salad from when I was a child. Polishing our dinner off with cold white house wine (Hr 99 for a half liter), we stayed there for some five hours. Exploring the restaurantâ&#x20AC;&#x2122;s classy and smart interiors with its own library full of old books, I even thought that I recognized a posh reincarnation of the table that my family always took back then. All in all, it was refreshing to discover that even age-old maxims can be wrong: I donâ&#x20AC;&#x2122;t regret coming back to Prague and will do it again. Kyiv Post staff writer Vlad Lavrov can be reached at lavrov@kyivpost.com

on Fridays in the following places: 1MBOFUÂ&#x160;4VTIJ 4BLTBIBOTLPHP 4USFFU ,ISFTDIBUZL 4USFFU 7FMZLB 7BTZMLJWTLB 4USFFU

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20 Lifestyle

www.kyivpost.com

June 24, 2011

Gadget Guru

TV gets smarter, may replace PC if prices drop AL E X E Y B ON DA R E V BONDAREV@KYIVPOST.COM

Television sets will never be the same again. After mobile phones started to get smarter and smarter to the point of evolving into a subclass of “smart” phones, it’s now time for TVs to follow suit. A couple of years ago, some of the manufacturers (Samsung, LG, Sony, etc.) started adding Internet features to their top models of TV sets. You could connect your TV box to your local network and see some web content on your screen. Later, a WiFi function was added. And now the TVs are getting really smart as they acquire features of

a typical PC from a browser to being able to install software. I had a chance to test a Samsung 7 series TV with a so-called Smart TV function. Here is what I found out: The picture quality is typical for Samsung, which means the best on the market. A 3D function is also nothing new, as it has been added last year. And yes, the new TVs can play 3D content – if you can find it, of course. That’s the problem with 3D: There are only a dozen or so movies to choose from. Other features of the Samsung Series 7 are great, but not new. It can play movies from your external hard or flash drive connected through a USB port. It can play movies stored on other computers through your local network. What makes smart TV unique is Internet. You can easily connect your TV to the Internet with the help of

a WiFi adapter (it takes only a few seconds to set up the connection). Then you press a “smart” button on your remote...and hold your breath. Because what you are about to see is overwhelming. In the menu, you can find Facebook, Twitter, Skype, YouTube, browsers and other things that are not typical for a TV set. The browser can upload any website, including those with flash technology. It can even play online videos from the popular ex.ua website. The YouTube application is very convenient and allows you to watch videos in high definition quality right on your big screen. The Skype application is useful, of course, but only if you buy a camera. The idea of having Facebook and Twitter on your TV might sound funny. But only until you try it. For example, if

Series 7 Samsung Smart TV (product-reviews.net)

you are watching a movie and want to share your comments with your friends on Facebook, you can do it instantly. You don’t have to pause the movie and run to your PC or a laptop. All you have to do is press the button: The movie will continue playing in a small window in the corner while you are posting away on social networks. There is a Samsung applications online store, so you can always download new functions. The smart TV can radically change the role of television in your home. Everything is better on a big screen, be it watching videos or browsing the web. You might throw away your regular PC after you buy the smart TV. So there are lots of pros and a few cons. The worst feature is the price, of course. The 40-inch Smart TV Series 7 costs a bit less than $2,000 in Ukraine.

The second biggest problem is the remote control, with which Samsung decided not to fuss about. Useful to flick through the channels, it’s awful when it comes to typing. There is an optional remote control device with a keyboard, but its battery dies pretty quickly. The only decent solution is using a smart phone as a remote control with the help of special software on your Android smart phone or iPhone. But none of the applications I tried were truly comfortable and user-friendly. If you already own a big TV set, there is no urgent need to upgrade it since the technology is still a bit raw. But if you were planning to get a new plasma anyways, the smart TV is a good option. It will definitely change the way you spend your free time. Alexey Bondarev can be reached at bondarev@kyivpost.com

Bolshoi’s Tsiskaridze finds little to be modest about, so do his fans Æ15 held by Yuri Grigorovich, then chief ballet master at the Bolshoi. “An ‘A’ to the Georgian and take him to the Bolshoi,” Tsiskaridze quotes Grigorovich as saying when he was informed that there were no more places at the theater. The dancer said Grigorovich took the list and wrote his name at the top, which set Tsiskaridze on a path to dancing stardom.

“With whom do the masses associate classical dance? With Tsiskaridze,” said Denys Matvienko, a leading dancer of the Kirov Ballet and a former star of the Kyiv Opera and Ballet House after the concert in Kyiv. “He is a phenomenon in dancing; he has become a superstar.” He has been recognized as a People’s Artist of Russia and in France as a Chevalier of the Order of Arts and Letters. He has also transferred his talents from stage to the small screen, appearing on Russian television in various pop-music shows. Tsiskaridze said it’s a way to fund his lifestyle, which is markedly different from the youth he spent living in a communal apartment. “I have very significant needs because I have gotten used to living well,” he said. Tsiskaridze’s students at the Bolshoi are also excited about their teacher. Denis Rodykin, 20 years old, said Tsiskaridze is unique because “he understands what he is dancing.” “When one looks at him on stage, one sees that his lightness makes him different from others. He has both the technique and the ability to get into his role,” added Rodykin. “There are, of course, equals to him. But nobody can copy him.” Tsiskaridze is also a frequent guest at Opera Garnier in Paris, but he has no plans to emigrate from Russia, as a full-time slot in France is out of the question. “They invite non-French dancers to the Opera Garnier, some exclusive artists. But they don’t take them forever. All the rest in the world is of no interest to me,” he said. So he continues to live in Moscow,

Nikolai Tsiskaridze (R) during practice in Kyiv’s National Opera on June 3. (Anastasia Vlasova)

which he adores. “There isn’t a city more luxurious in the world. Not according to its wealth, nor its chic, nor its level of life,” he said. Tsiskaridze is just one year away from the traditional retirement age for ballet dancers of 38, but is showing no signs of slowing down. During a rehearsal for the Kyiv performance, sweat flicked off him as he spun in a perfect pirouette on the beautiful long legs that are the

foundations of his fame. At one point, however, he stumbled and fell on his knee, sending the choreographer into panic. Tsiskaridze tore ligaments in his knee in 2003 while performing at the Opera Garnier and was off stage for a year, leading some to doubt he could return. This time, Tsiskaridze got up quickly. Later, he said he will dance at the Bolshoi “for as long as I wish,” wiping

another stream of sweat from his brow with a towel. “But I don’t think that I would wish to do it for long,” he said, adding that he would later like to work as general manager of the Bolshoi. But not yet. This New Year’s Eve he will perform, as every year, in The Nutcracker. “I’ll do it for as long as I can. This is my gift to myself, to my good self. To no one else,” he said.

www.kyivpost.com

June 24, 2011

Lifestyle 21

Here’s a trip worth taking BY A N A S TA S I A F O R IN A FORINA@KYIVPOST.COM

After a hard week of hot work in Kyiv, there’s nowhere better to escape traffic jams and cigarette smog than Feofaniya, a half-hour drive from the city center. Here, you can relax and enjoy the beauty of the recently renovated park in Holosiyivsky forest: ducks paddling in ponds, green glades covered with trees, lovely flowerbeds and even play-

grounds make this an ideal place for a family or a romantic trip. It has become very popular among newlyweds from Kyiv, as well as people from other regions who go there not only for beautiful pictures, but also to take water from the St. Michael and St. Nicholas springs, which are considered to have healing powers. Many people queue up in front of small taps in open gazebos to wash their face, take some water home or just slake their thirst in the hot weather. Taste it and try your luck!

Feofania Park is a favored destination for photo sessions of newlyweds. (Yaroslav Debelyi)

Kyiv bishop Feofan discovered this place in the early 19th century. It was named after him not long after. The 20th-century monastery of St. Pantheleimon, patron of healers, is located on the territory of the park and also attracts lots of visitors. Destroyed during the revolution and World War II, it was renovated after Ukraine became independent and turned into a nunnery. It is closed for visitors, but you can order a walking tour from the park’s administration to get inside. One more interesting but rather notorious place is located nearby – a state of the art hospital that is known to be reserved only for officials and deputies. Set in luscious greenery, it often works as a lovely hide-away for officials on the days of important hearings or voting. The park’s territory is watched by guards charged with maintaining its cleanliness and by preventing peoplefrom drinking alcohol. Visitors’ cars are usually parked on the way to the park as it’s prohibited to drive in. No stands with beverages and snacks can be found there – only a few shops near the entrance cater to visitors craving chocolate, crisps or a drink. Various walking tours for any taste and budget are held regularly. You can also rent a bicycle right there and discover the park’s great territory (approximately 150 hectares). Kyiv Post staff writer Anastasia Forina can be reached at forina@kyivpost.com

St. Pantheleimon Monastery provides a gorgeous view in the Feofaniya Park. (yani-mako.livejournal.com)

Don’t be put off by Feofaniya’s out of town location, as it’s possible to get there even by public transport. Take trolleybus #11 or bus #156 from Lybidska subway station to get to Metrolohichna bus stop; bus #548 will take you there from Universytet subway station. It will take you an hour by public transport or a half an hour by car. Entrance is free of charge. For more information, visit www.feofaniya.kiev.ua

22 Lifestyle

www.kyivpost.com

June 24, 2011

St. Sophiaâ&#x20AC;&#x2122;s ancient gospel BY N ATA L I A A . F E D US C HAK FEDUSCHAK@KYIVPOST.COM

Guides at Kyivâ&#x20AC;&#x2122;s famed St. Sophia Cathedral like to tell a story about this architectural wonder from the Kyivan Rus period. Sometime in the 1920s, when tyrant Josef Stalin was demolishing churches throughout the Soviet Union, the government decided to tear down the 11th century cathedral. The plan was to transform its grounds into a park commemorating a 1917 Crimean Red Army victory. Along with others who lobbied the dictator to leave the cathedral alone were the French. St. Sophia, they said, also had important cultural meaning for them: Their 11th century queen, Anna, hailed from Kyiv and a book she

A page from the Reim's Gospel (www.unesco-ci.org)

carried to her new home was the one on which French kings for generations had taken their oath. The Soviets relented and St. Sophia was saved. Now, a millennium after Anna left Kyiv, Ukrainians are able to get a better understanding of what all the fuss was about with the 2010 publication of the Reimâ&#x20AC;&#x2122;s Gospel of Anna Yaroslavivna. Covered in red velvet and embossed in gold, the book provides high-quality copies of the 32 pages that remain of Annaâ&#x20AC;&#x2122;s manuscript as well as translations of the text into Ukrainian, English and French from Old Slavonic â&#x20AC;&#x201C; the written language of the time. While it is unknown how many pages the original book contained â&#x20AC;&#x201C; parts of it were removed centuries ago â&#x20AC;&#x201C; historians say it is certain that Annaâ&#x20AC;&#x2122;s book is both Kyivâ&#x20AC;&#x2122;s oldest-known original manuscript and the oldest liturgical book. It is quite possible the book was produced specifically for Anna within St. Sophiaâ&#x20AC;&#x2122;s walls as she prepared to leave her homeland and marry Franceâ&#x20AC;&#x2122;s Henry 1 Capet. Furthermore, some believe she even swore her royal oath on the text when marrying him on May 19, 1051 in Reims, the traditional site where French kings were crowned. Despite its importance, the Reims Gospel is still under-researched and â&#x20AC;&#x153;has not found its rightful place among Ukrainian cultural achievement and, in fact, still remains fairly unknown,â&#x20AC;? writes Volodymyr Aleksandrovych, who holds a doctorate in the science of history, in the bookâ&#x20AC;&#x2122;s introduction.

An outstanding feature of the Reims Gospel is that is actually two religious books in one. Little is known about the whereabouts of Annaâ&#x20AC;&#x2122;s manuscript after she arrived in France. The manuscript disappeared during the Hussite wars in the first half of the 15th century and then reappeared in Reims where it was used as the coronation gospel for French kings. Toward the end of the 18th century, it again disappeared from Reims Cathedral where it had been stored. Contemporary knowledge of the book, however, dates back only to 1717 when it was viewed by Russian Tzar Peter I during his stay in France. The language in which the book was penned was strange to the French; the Tzar said it came from â&#x20AC;&#x2DC;Rus.â&#x20AC;&#x2122; It was the Russian writer Alexander Turgenev who finally rediscovered the book in 1835 in the Reims municipal library during a European journey in search of materials for a history of Russia. By then, its precious binding had been removed. The newly-published Reims Gospel only focuses on the section in Old Slavonic since it is the part most important to Ukrainians, said Zinovii Matchak, the director of MS publishing house in Lviv. â&#x20AC;&#x153;People can be thankful that is was preserved,â&#x20AC;? he said. â&#x20AC;&#x153;It should be popularized in Ukraine.â&#x20AC;? Bringing Annaâ&#x20AC;&#x2122;s manuscript back to life for the modern reader would not have been possible without the help of Father Rafael Turkoniak, who won the

French queen Anna from Kyiv left a manuscript in the 11th century, on which French kings took oath for centuries. (liveinternet.ru)

2007 Shevchenko prize for his work on the Ostovska Bible. As one of the few individuals who can easily translate from Old Slavonic, Turkoniak worked with digital copies provided by the Reims municipal library. The text was written most likely on calf leather, he said. Because producing each sheet was such a laborious process, Turkoniak said those who produced texts in the 11th century often used a type of short-hand instead of writing out an entire word to save space on a page. â&#x20AC;&#x153;A lot of it is guesswork,â&#x20AC;? he said when translating texts from the Old Slavonic. The publication of the Reims Gospel

is not a commercial project, said Matchak. Only 1,000 copies of the book have been printed, with the rest being distributed mostly to libraries and academic institutions. Readers are able to download the book for free on the publisherâ&#x20AC;&#x2122;s website at msvitu.com/ pages/medical-books/yaroslavna/ yaroslavna_low.pdf The project to translate and publish Annaâ&#x20AC;&#x2122;s Reims Gospel was initiated by Oleh Ivanusiv, the president of the Encyclopedia of Ukraine Foundation, from Canada. His family has sponsored several other projects related to Ukraine. Staff writer Natalia A. Feduschak can be reached at feduschak@kyivpost.com

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24 Photo Story

June 24, 2011

www.kyivpost.com

A Red Bull summertime adventure Arguably the hottest and the speediest event of June was the Red Bull Soapbox – a street rally of unusual self-assembled vehicles. More than 45 car enthusiasts demonstrated the power and distinctive character of their four-wheel inventions on June 18. Despite the scorching sun, more than 30,000 revelers came to cheer on the racers. The selection was impressive: from a drum set and a bird’s nest to a spiky heel of a ladies’ shoe and a death train on four wheels. Vehicles were not allowed to have engines or be powered by any type of fuel. For the safety of drivers and viewers, the street curbs of the 450-meter long track were stacked with 46 tons of hay. The train with a skull won the first prize for a spooky design and fast-rotating wheels. Along with the second and third runners up, the train driver will head to Abu Dhabi to meet the German star Sebastian Vettel, the world's youngest Formula-1 racer. Story by Nataliya Horban Photos by Anastasia Vlasova, AFP