Gorshenin Weekly, Feb. 2-7

The Prosecutor General's Office of Ukraine has yet again denied former Prime Minister Yulia Tymoshenko permission to leave the country to visit Brussels

PGOU explained that they had scheduled certain investigatory actions on those particular dates requested by Y.Tymoshenko. 'Besides that, we have information that Yulia Tymoshenko intends to use this trip overseas in order to leave the territory of Ukraine and evade prosecution', - it says in the GPOU's statement.

Earlier GPOU expressed its readiness to let Y.Tymoshenko go to Brussels to meet with the Leader of the European People's Party. However, on January 25th, 2011 the investigator denied to grant the former Prime Minister permission to go to Brussels due to improper form of the invitation letter. In Brussels Y.Tymosehnko was planning on meeting with the President of the European Parliament Jerzy Buzek and other leading European politicians as well as make a speech at a major international conference.

As a reminder, PGOU suspects Y.Tymoshenko of misappropriation of funds obtained from the sale of green gas quotas regulated by Kyoto Protocol and also abuse of power during the procurement under the Government guarantees and the importation on the territory of Ukraine of the special medical automobiles Opel Combo.

The USA and the European Union (EU) expressed the concern that Ukrainian authorities were trying to get even with their opponents engaging the courts to achieve that goal.

The President of Ukraine Viktor Yanukovych announced that European politicians and international community are getting biased information as to the political situation in Ukraine. The Head of the Parliamentary faction of the Party of Regions Olexander Yefremov noted that the refusal on the part of the PGOU to grant Y.Tymoshenko permission to visit Brussels would not have any negative impact of the image of Ukraine. In his opinion, that some Ukrainian politicians intentionally badmouth the current Government and the whole country while visiting foreign states.

According to the Vice Prime Minister of Ukraine, Deputy Head of the Batkivschyna Party Grygoriy Nemyrya, the derangement of Y.Tymoshenko's visit to Brussels caused by the Government proves that the regime of President Viktor Yanukovych has nothing to do with the European democracy. 'Not allowing Y.Tymoshenko to go to Brussels V.Yanukovych and controlled by the President GPOU showed yet again that they are building an authoritarian regime in Ukraine. I have no doubt that the European Union (EU) and its institutions as well as the European politicians will denounce V.Yanukovych's actions which put Ukraine even farther from the European structures', - G.Nemyrya said.

As a reminder, earlier, on November 2010, the Minister of Foreign Affairs of Ukraine Kostyantyn Hryschenko offered G.Nemyrya to become an advisor to the Ukrainian Foreign Ministry.

The Head of the Parliamentary Committee on European Integration, Leader of 'Narodniy Rukh Ukrainy' Party Borys Tarasiuk announced that strong comments coming from the EU officials as to the fact that Ukrainian authorities denied former Prime Minister Y.Tymoshenko permission to go to Brussels only prove that their patience reached its maximum. Prosecutor General's Office of Ukraine is not allowing Yulia Tymoshenko to leave the country

Gorshenin Institute Expert Volodymyr Zastava thinks that the PGOU's refusal to grant Y.Tymoshenko permission to go to Brussels to meet with the President of the European Parliament could be interpreted as a demarche on the part of official Kiev against the European Union. 'Over the last two weeks Tymoshenko's petitions to go to Europe have been denied by the investigation only based on formalities. The final denial which was issued upon V.Yanukovich's return from Brussels was a bit of a demonstrative nature. I don't exclude the possibility that Y.Tymoshenko's statements as to the President's Administration's governing role in her case are not groundless', - the expert said. According to him, it's worth recalling that this is by far not the first move on the part of official Kiev that can be seen as a demarche against Europe. 'For instance, President V.Yanukovych unlike European politicians extended official congratulations to Alexander Lukashenko upon his victory in the recent elections", V.Zastava noted.

President of Ukraine V.Yanukovych signed the changes to the Constitution regarding the postponing of the elections to Verkhovna Rada of Ukraine till 2012

Earlier, on February 1st, 2011 Verkhovna Rada of Ukraine approved the amendments to the Constitution of Ukraine. According to the changes, the next Parliamentary elections will be held in October 2012 as opposed to March 2011 and the next Presidential Elections are scheduled for March 2015.

National Deputies of Ukraine from the factions 'BYuT-Batkivschyna' and 'NU-NS' announced that in the nearest future they would go to the Constitutional Court of Ukraine (CCU) asking to pronounce illegitimate the decision to make amendments to the Constitution of Ukraine that extended deputies' mandates. In particular, they claim that a number of national deputies, whose cards were used to vote in favor of amendments to the Constitution were not even in the session hall of the Parliament.

Thus, the National Deputy from 'NU-NS' faction Volodymyr Aryev announced that during the voting on the matter of constitutional amendments he was in the USA with his voting card only to later discover that his vote was “in favor” of making amendments to the Constitution of Ukraine. In response to this statement the National deputy, member of the Party of regions Parliamentary faction Volodymyr Makeyenko, called V.Aryev's statement a political technology.

Head of the 'BYuT-B' Parliamentary faction Andriy Kozhemyakin announced that BYuT is collecting signatures to file a claim with the CCU regarding the change of the Parliamentary elections date to the fall of 2012.

Along with that V.Yanukovych expressed his certainty that the CCU would recognize the changes made to the Main Law to be constitutional. 'I am sure that the CCU would support the changes. This case is a mere formality', - the President said. He also expressed his opinion that the rescheduling of the elections to a later date – October 2012 – would stabilize the situation in Ukraine.

Minister of Justice of Ukraine Olexander Lavrinovych also expresses his doubts that the CCU will find the amendments unconstitutional. In his opinion, even if a certain breach of the procedure is established it will have no bearing on the essence of this case.

Editor-in-Chief of the internet portal LB.ua Sonya Koshkina says that the political reform, that lead to the expansion of the presidential powers and the extension of Viktor Yanukovych prolonged the National Deputies' mandates the current parliamentary term is a ticking bomb under the legitimacy of the current Government. 'In the European Law you can limit the powers without the people's consent, not to expand them. Therefore, anybody who tried to reinstate the latter Constitution would try to reinstate the constitutional order. Any opposition to the Government at this point is in fact a return to the constitutional order in the country', - she said.

President V.Yanukovych has signed the Law 'On access to public information' and the Law 'On information'

National Deputy, from the Party of Regions, President's Representative in the Parliament Yuriy Miroshnichenko thinks that the signing of this legislation into law by the President proves that Ukraine is not only aspiring to integrate into European structures but is capable to take democratic steps that bring the Ukrainian legislation closer to the world standards in the sphere of access to public information.

In his opinion, these laws are revolutionary in their essence as they give every single Ukrainian, every non-profit organization and media representative an opportunity to get their inquiries satisfied in a very timely manner. 'The president sees these laws not only as the element of openness and controllability of the Government but also as very important instruments of administrative reform, increase in transparency of all government institutions and the fight against corruption',- noted Y.Miroshnichenkо.

The President of Ukraine V.Yanukovych is strongly criticizing the Minister of Foreign Affairs of Ukraine Kostyantyn Hryschenko

According to the Ukrainian media, this incident occurred during the last meeting of the National Council on Security and Defense on February 2nd, 2011.

The Head of State is not satisfied with K.Hryschenko's performance as the Minister of Foreign Affairs, in particular the unsatisfactory preparation for a number of most recent V.Yanukovych's meeting with foreign dignitaries, namely in Davos.

According to a number of Ukrainian politicians and experts, this criticism might be the sign of an imminent dismissal of the Minister of Foreign Affairs and his replacement by Ruslan Demchenko, currently the First Deputy Minister of Foreign Affairs of Ukraine.

The Head of the Central Command of the Armed Forces of Ukraine Hryhoriy Pedchenko announced that Ukraine was planning to expand its cooperation with Russia in the military field

According to him, such agreement was reached with the Head of the Central Command of the Armed Forces of Russia Mykola Makarov during their meeting in Brussels on January 27th, 2011. Namely, H.Padchenko announced the following:

-Ukraine will expand its cooperation with Russia in the military field, this is a very strong step forward.

- As early as this year we will conduct a number of joint central command exercises as well as joint tactical exercises with participation of army personnel. Viktor Yanukovych has signed the Law on 'Access to public information' Ukraine is increasing its military cooperation with Russia V.Yanukovych is criticizing the Minister of Foreign Affairs of Ukraine Kostyantyn Hryschenko

- This will allow us to increase our operative capabilities, to train our military and learn from the experience of not only NATO and EU forces but our strategic partner – Russia.

- Russia has quite a wide experience, specially considering the fact that it had conducted combat activities. It has many well-trained officers and experienced experts

PACE Vice President, National Deputy, member of the Party of Regions Ivan Popesku thinks that Ukraine's cooperation with the Commonwealth of Independent States (CIS) is as important as its cooperation with the EU

He also noted that simultaneously Ukraine is holding talks with the EU about the creation of the Free Trade Zone and the creation of the Free Trade Zone based on the WTO principles with the CIS countries. Along with that he noted that in 2009 the EU countries' share in Ukraine's trade volumes was 29%, CIS countries accounted for 39% of the Ukrainian trade volumes, in particular the trade volumes between the Customs Union (CU) members (Ukraine, Belarus and Kazakhstan) constituted 33% of Ukraine's total trade volumes.

I.Popesku announced that, in may 2011 Ukraine will hold parliamentary hearings on the state and the prospects of the economic relations with the EU (Free Trade Zone) and the CU.

Ukrainian State Company 'Yadernoye toplivo' has reached an agreement with the Russian company 'TVEL' as to the Draft Charter of the Joint UkrainianRussian Nuclear Energy Company

This agreement has been reached during the third joint session of the working groups on January 27th-28th, 2011.

As a reminder, TVEL and 'Yadernoye Toplivo' have signed an agreement to create on the territory of Ukraine a joint venture on the basis of parity, each party owning half of the enterprise, to produce nuclear fuel using Russian technologies for VVER- 1000.

The Prime Minister of Ukraine Mykola Azarov says that the revision of the conditions to get a loan from the IMF is possible

'Due to the fact that the world markets are in the state of uncertainty, we are experiencing serious problems. The plans that we had with the IMF mission are first of all tied to the economic development and can be reviewed if our domestic market doesn't grow as fast as we hoped for', - he said.

In particular, Ukrainian Prime Minister has an intention to convince the IMF that Ukraine in order to decrease the budget deficit and obtain certain revenues from 'Naftogaz Ukrainy' - conditions that the parties agreed upon - Ukraine does not have to increase gas prices for the population to level them with the prices the country is paying for the exported gas, because to satisfy population's domestic needs Ukraine is using domestically produced gas.

The Prime Minister M.Azarov announced that Chevron Corporation intends to invest in shale gas production in Ukraine

According to him, Chevron is going to invest in shale gas production in Ukraine. These reserves are very hard for extraction and need big investments. However, Chevron is ready to make this commitment. On two conditions - political stability Ivan Popesku - the EU and the CIS are equally important to Ukraine Ukraine and Russia have moved forward with regard to the creation of the Joint Venture in the nuclear energy sector Mykola Azarov sees possible the revision of conditions to get a loan from the IMF Chevron is interested in Ukrainian gas and the unchangeability of tax laws and regulations', - M.Azarov said.

The Director of the Energy Community (EC) Secretariat Slavcho Neykov announced that as of February 1st, 2011 Ukraine is a member of the EC

He noted that this step is a very important moment for the whole organization as it expands the sphere of its activities. According to him, the parties have also begun the practical implementation of the agreement by developing an action plan which will reflect the EC's evaluation of the current energy situation in Ukraine.

The European Commission has expressed its hope that Ukraine's active and responsible participation in the Energy Community will secure the energy supplies to Europe and will put both Ukrainian people and Ukrainian business closer to the European energy market.

The Government of Ukraine intends to reach a settlement agreement with the company Vanco Prykerchenska Ltd in February 2011

This was announced by the first Vice Prime Minister, the Minister on Economic Development and Trade Andriy Klyuyev. Along with that he noted that the agreement will not impose any sanctions on the state and the agreement with Vanco Prykerchesnka in its essence is very beneficial to Ukraine. 'The contract with Vanco presents a lot of advantages for Ukraine. I was involved in the preparation of this contract in 2006-2007 and signed it with these very hands and I don't deny it', - A.Klyuyev said.

As a reminder, in October 2007 Vanco Prykerchenska has obtained a license to extract oil and gas on the Black Sea Shelf within the limits of Prykerchenkska oil and gas reserve. Later, in April 2008 the Ministry of Environment and Natural Resources of Ukraine, headed by Georgiy Filipchuk, annulled the license that had been issued to Vanco Prykershenska.

One of Vanco Prykerchenska owners is a Ukrainian businessman, the National Deputy, member of the Party of Regions Rinat Akhmetov.

The former Minister of Environment and Natural Resources F.Gilipchuk has been arrested and is facing criminal charges. He's being accused of abuse of power.

Ukraine has put off the talks with Cyprus aimed at reaching an agreement that would eliminate double taxation

This was announced by the Advisor to the Minister of Finance of Cyprus in these negotiations, member of the Board of Directors of the PricewaterhouseCoopers (PwC) Panikos Tsialis.

'Cyprus is not blocking these negotiations to eliminate double taxation. I have visited Ukraine before Christmas and we have conducted the negotiations during which we agreed to continue the discussions', P.Tsialis said. He added that Ukraine wants to avoid certain consequences that the tax changes bight bring in Ukraine. Therefore, we have been asked to wait for Ukrainian authorities to take certain legislative steps", - P.Tsialis said.

As a reminder, currently this field is being regulated by the agreement signed by Cyprus and USSR. This document is being strongly criticized for creating tax loopholes. Ukrainian Parliament has been repeatedly asked to denounce this agreement but this initiative does not have the support of the parliamentary Ukraine has become a member of the Energy Community Ukraine has postponed the talks with Cyprus regarding the elimination of double taxation. A settlement agreement with Vanco Prykerchenska will be signed in February 2011 majority yet.

Vice Prime Minister Sergiy Tigipko has expressed his intend to denounce this agreement as well, but later Prime Minister M.Azarov found it impossible to unilaterally denounce this document.

NB: According to the State Statistics Committee of Ukraine, over the three quarters of 2010 the total sum of direct investment to Ukraine from Cyprus was 9.6 billion dollars, 22.5% of all foreign direct investments.

Ambassador of Ukraine to Russia Volodymyr Yelchenko is sure that Moscow and Kiev will be able to resolve the Kerch Strait issue in 2011

'I have a feeling that this year this matter will be taken off the agenda', - he announced at the press-conference in Moscow.

Earlier the Minister of Foreign Affairs of Ukraine K.Hryschenko announced that in the nearest future the practical work on the demarcation of the Ukrainian-Russian border will begin. 'We are already starting the demarcation of the border. Very soon we will organize a meeting of a joint demarcation commission which will put an end to the preparatory phase, and we are already beginning this process which will take a certain amount of time', - the Minister said. As to the delimitation of the Sea of Azov and the Black Sea as well as the Kerch Strait, the Minister called these negotiations a complex matter.

As a reminder, Ukraine and Russia have been trying to divide the Kerch Strait since 1996. The problem is that Ukraine's position in this matter is based on the Soviet maps where the border between the Crimea oblast of USSR and Krasnodar oblast of the RSFSR lied right in the middle between the shoreline. Russia does not agree with this position and insist on putting the border in the middle of the fairwater.

Ukraine is calling for the resolution of the Transdnestria conflict only using political methods

This was announced by the Special envoy of Ukraine on the Transdnestria conflict resolution Igor Kharchenko during his visit to Moldova on January 25th-27th, 2011. Along with that he added that the conflict resolution should be based on the principles of sovereignty and territorial integrity of Moldova while granting Transdnestria a special status within Moldova.

I.Kharchenko announced that Ukraine is willing to support the renewal of fullyfledged negotiations in '5+2' format and activate the work of Moldovan - Transdnestrian working groups within the framework of realization of the 'program of trust' between Moldova and Transdnestria. Ambassador of Ukraine to Russia: Ukraine and Russia will divide the Kerch Strait in 2011 Ukraine in calling for giving Transdnestria a special status within unified Moldova.

The position of the President of Ukraine Viktor Yanukovych as to the shale gas entirely goes along with the global and european trend. This opinion was expressed by Gorshenin Institute expert Nataliya Klauning in her comment as to the positive remarks given by the President of Ukraine in Davos regarding "Shell"s decision to start the extortion of shale gas in Ukraine.

'Based on the evaluation performed by the National Agency on Efficient Use of Financial Resources (NAER), Ukraine has almost 32 trillion cubic meters of shale gas. The development of this industry, according to many experts, presents a lot of opportunities for our country. That's why the position of the President of Ukraine concerning this matter goes along completely with the global and european trend', - Nataliya Klauning said.

The expert reminded that, it is thanks to the alternative projects, including the extraction of the shale gas - that the US took away from Russia the world leadership in gas production. "Along with that in the USA 40% of gas is extracted from the alternative sources, by 2020 this number is estimated to be 60%. And in a long run, the USA will be able to stop importing gas altogether", the expert added.

She also drew Europe as an example where that same trend is being observed. 'The European Union in recent years has been trying to diversify gas supplies in order not to be dependent on Russia, buying, for instance, more and more gas from Qatar. According to many experts, in the upcoming years we can expect the decrease of EU's dependence on russian gas supplies', - N.Klauning says.

According to the expert, Russia will actively oppose the exploration and extraction of shale gas in Ukraine. 'Today Ukraine is the main european consumer of russian gas, it will be much less dependent on it in 5 to 7 years', - N.Klauning says. She also noted that along with that it is very important to understand whether in Davos President V.Yanukovych voiced Ukraine's real intentions.

'The question remains whether this statement has been made only to convince the european community that Ukrainian Government is being progressive and to gain their support. It is a fact that today the Ukrainian Government is being strongly criticized by Europe. Or perhaps Ukraine has truly decided to move towards Europe with regard to its gas industry ignoring the interests of its northern neighbor in this matter', - Gorshenin Institute expert said.

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