[23.10.03]

Political Developments

President Kuchma Visits Contentious Russian Dam. Ukrainian President Kuchma, who cut short his Latin American tour due to the border dispute with Russia visited Tuzla island in Kerch Strait today to see the construction of a Russian dam that is reportedly only some 100 meters from the Ukrainian border. While there Kuchma met with Ukrainian border guards on the island. Kuchma also spoke over the telephone with the Russian President Putin who reportedly after the conversation with Kuchma telephoned the authorities of Russia’s Krasnodar Region to cease construction of the controversial dam. Prime Minister Yanukovich is scheduled to travel to Moscow on Friday to follow up on the situation with his Russian counterpart Mikhail Kasyanov.

Meanwhile, Ukrainian Parliament yesterday adopted a resolution by a vote 369 to 5 which call for the removal of the threat to Ukraine’s territorial integrity posed by Russia’s construction of the controversial dam on Tuzla island. The resolution also recommends to raise the dam dispute in various international fora, including in the UN General Assembly and OSCE Parliamentary Assembly. During the parliamentary debate, one of the deputies from "Our Ukraine" bloc reportedly said that because of this crisis Ukraine needs to restore its nuclear arsenal.

Comment: If the construction of this controversial dam is not halted and the crisis is not resolved quickly, Russia’s aggressive behavior should raise questions in Washington about Moscow’s true ambitions and intentions toward its neighbors. This is the first time since the break up of the USSR, that Russia tried to grab land from its neighbor.

Washington foreign policy goals are a democratic and friendly Russia and a democratic, independent and nuclear-free Ukraine. These goals are put in jeopardy by Russia’s current infringement on Ukraine’s sovereignty in the Kerch Strait. An expansionist Russia cannot be democratic and undemocratic Russia will likely be confrontational rather than friendly to the US. As for Ukraine, if it will fear for its independence and territorial integrity from Russia, more of leaders might come to believe that the only way to deter aggression from its northern neighbor is by rebuilding its nuclear arsenal.

Now U.S. and NATO clearly showed, that they wouldn’t interfere. Similarly, Polish president Kwasniewski said he isn’t going to try somehow play a role of "peacemaker".

US Congress Condemns 1932-33 Famine In Ukraine As "Mass Murder." The U.S. House of Representatives passed a resolution on 20 October honoring the victims of the 1932-33 famine in Ukraine and branding the tragedy as a "deliberate act of terror and mass murder against the Ukrainian people" perpetuated by the Soviet regime of Joseph Stalin.

Comment: The resolution was introduced by the Chairman of the House International Relations Committee Henry Hyde, and co-sponsored by the Helsinki Commission Chairman Christopher Smith and Ranking Member of the House International Relations Committee Tom Lantos. The resolution was adopted by a vote 382-0.

Agrarian Party Chooses New Leader. At its 5th Convention last Friday the Agrarian Party elected Vice Premier Ivan Kirilenko as its new chairman. The party’s former head Mikhailo Hladiy, was demoted to the position of deputy chairman. Prime Minister Victor Yanukovich attended the convention and gave a speech promising making bank credits more affordable to agricultural producers.

Comment: Yanukovich and his cabinet are being blamed for Ukraine’s current grain shortages and steep price increases on grain products. His participation at Agrarian Party Convention is designed to do some political damage control and to cultivate this important political constituency for the upcoming presidential elections in 2004.

Economic Developments

Skoda Auto To Expand Operations In Ukraine. Skoda Auto (SA), the Czech Republic’s biggest carmaker, announced this week that it will expand its assembly plant in Ukraine.

SA is planning to increase the capacity of its plant in Solomonovo from the current 15,000 cars per year to up to 40,000 annually by 2005. The number of cars assembled in Ukraine reached 1,965 in 2002. SA will assemble 6,000 cars ther this year and 11,000 in 2004. SA began operating in Ukraine two years ago, turning out its Octavia model. The Fabia model was added to production in 2002, and assemble of the luxury Superb sedan began this year.

So far, SA cars assembled in Ukraine are sold there. But the company spokesman did not rule out the possibility that SA cars produced in Ukraine could be exported to other markets in CIS.

Comment: SA is the biggest importer of Central and West European cars in Ukraine. The company’s sales in Ukraine reached 5,583 in 2002 which was an increase of some 33 percent over the previous year. The company expects to sell 6,750 cars in Ukraine this year.

Wimm-Bill-Dann Foods OJSC Launches Production Of Yogurts In Ukraine. The company announced earlier this week that a new production line has been installed and launched at the Kharkiv Dairy Plant PJSC in Kharkiv. The total cost of the project is approximately $8.1 million.

Using this equipment the Kharkiv Dairy Plant is going to produce a range of milk yogurts under "Frogurt" trademark in packages with natural peach, raspberry, cherry, strawberry and appricot-mango flavors.

Comment: Previously these products were made at Wimm-Bill-Dann’s manufacturing facilities in Russia and imported to Ukraine.