2003: THE YEAR IN REVIEW

Ukraine's foreign affairs: crisis management

Crisis management continued to dominate Ukraine's foreign policy in 2003. While relations with the West, particularly with Washington, warmed considerably, a slight chill descended on the normally cozy bond between Moscow and Kyiv.

Ukrainian leaders showed an ever-stronger inclination to clear the political hubris and begin building a concrete path towards Europe, especially after Russia attempted a diplomatically incorrect takeover of a small, Ukrainian-owned island located in the Kerch Strait.

Nonetheless, Ukrainian state leaders continued an unclear and confusing multilateral foreign policy, which included a decision to move into an economic union with Russia and two other former Soviet republics.

The year began with the continuation of a banking crisis from 2002 for which Ukraine could only blame itself. After finding itself unable to pass a comprehensive anti-money laundering law, which representatives from Western financial institutions had demanded for months, the country found itself blackballed by the Financial Actions Task Force (FATE), a Western banking oversight organization. Even though Ukraine's Parliament finally passed a law that met most of the demands put forward by the West, it was too late and Ukraine's commercial banks were blacklisted, which meant that limitations were placed on the type of transactions they could undertake at the international level.

On January 16, the Ukrainian legislature made a second belated attempt to assuage FATF and avoid implementation of a stringent regime of compliance by Western countries when it passed additional anti-money laundering measures. By that time, however, Germany had announced that it would begin strict monitoring of international financial transactions involving Ukrainian banks that exceeded $16,000. Four days later Great Britain announced it was also implementing compliance procedures.

On February 6 the Verkhovna Rada passed additional measures that finally met international standards. In return, Ukraine received good news on February 12 when German Ambassador Dietmar Steudemann announced in Kyiv that the recommendations and sanctions that had been enacted by FATF would be lifted within two days, after a decision to do so was agreed upon by FATF members during a summit in Paris. "Ukraine has successfully implemented FATF requirements and will have restrictions that were imposed against it removed," explained Mr. Steudemann. He added that Ukraine would remain on a watch list of countries for at least another six months, during which its banking transactions would continue to be scrutinized.

President Kuchma had told reporters on February 6 not to look at the FATF sanctions as a slight against Ukraine because, as far as he was concerned, Ukraine's lawmakers had been given plenty of time to pass the required legislation before the matter became a crisis.

Also just after the New Year, the Council of Europe, a European body of lawmakers that deals with human rights and democracy issues, reproached Ukrainian state leaders for issuing directives, known as "temnyky," to broadcast outlets on how to address political views. The reprimand came in recommendations published by the Parliamentary Assembly of the Council of Europe after hearings at PACE headquarters in Strasbourg, France, which were dedicated to the freedom of expression in European mass media.

At mid-year, Ukraine's human rights and free speech record failed to withstand more international scrutiny when the U.S. State Department, in its annual "Country Reports on Human Rights Practices," noted for Ukraine that, "the government's human rights record remained poor and in some cases worsened." It also noted, however, that, "there were also some improvements in some areas."

In mid-year several more European reports condemned Ukraine's policies on human rights and democracy. First the Organization for Security and Cooperation in Europe's (OSCE) representative on freedom in the media expressed dismay over a decision by Ukraine's Verkhovna Rada to give the country's security services the right to arrest journalist's who leak classified information, while also outlawing protection of journalists' sources. "It is ominous that your country, where the media situation has been steadily deteriorating for the past five years, should decide at this point to approve a highly restrictive law," explained the OSCE's Freimut Duve in a letter to Minister of Foreign Affairs Anatolii Zlenko dated July 15.

At about the same time, Freedom House, a human rights watchdog group, downgraded Ukraine's press status from "partly free," where the country's rating had lingered for several years, to "not free." The report explained that the decision to lower the standing in its evaluation came as a result of "state censorship of television broadcasts, continued harassment and disruption of independent media, and the failure of the authorities to adequately investigate attacks against journalists."

Ukraine was sucked into two international border incidents in 2003, one of which nearly cost Ukraine friendly relations with its strategic partner to the north. Some political experts claim that the two border crises were interconnected, with the second a result of a lackadaisical approach by Ukraine in resolving the first one.

Moldova and Ukraine tangled diplomatically after Moldovan border guards on July 17 broke padlocks on gates and entered a Ukrainian hydroelectric plant, where they set up a makeshift border post. Afterwards they refused to allow workers of the facility to enter on the grounds that they did not have the proper documentation to cross Moldovan territory. The energy-producing facility is situated on the Dnister River at the Moldovan-Ukrainian border.

The hydroelectric facility's management complained to Kyiv and warned that a danger existed to the dam because water levels could not be monitored properly. The director of Moldova's Department of Border Troops, Dmytro Osoian, responded to allegations that his troops had seized Ukrainian territory by affirming that the post was erected on Moldovan lands. "The border post was established on Moldovan territory in strict accordance with the Moldovan-Ukrainian treaty on delimitation and demarcation of the border," said Mr. Osoian. He explained that the treaty stated that where bridges and dams spanned bodies of water, the border should be situated at the central point of these structures.

Ukraine acknowledged that Mr. Osoian had a point when Minister of Foreign Affairs Zlenko said on July 26 that Ukraine respected Moldova's right to set up border posts along its border but that the manner in which it was done should have been done "within legal frameworks, including those on cross border cooperation."

Some political pundits said the feeble way in which Ukraine allowed Moldova to forcibly intrude onto the territory of the Ukrainian hydroelectric station and the ease with which it caved in to Moldovan assertions of territorial right led to a second crisis with another neighbor just over two months later.

On August 29, Russia, one of Ukraine's proclaimed strategic partners, began building what Russian officials later identified as a dam in the Kerch Strait, ostensibly to control shore erosion that was destroying property on its Taman Peninsula. The rather lengthy dam eventually extended five kilometers into the strait, from the peninsula, part of the Krasnodar Krai, to within 100 meters of the tiny Ukrainian-owned island of Tuzla. Construction was halted only after Ukraine sent armed border guards to protect its territory and the presidents of the two countries stepped in to calm a crisis that was heading out of control. (See sidebar on the Tuzla crisis.)

While causing a distinct chill in Ukraine-Russia relations, the Tuzla crisis also brought to the fore the need to finally resolve the stalemate in the delimitation of the Azov Sea and the Kerch Strait. Russia had left negotiations at an impasse by refusing to back down from demands that the two bodies of water remain commonly held, while Ukraine wanted borders established along recognized international norms.

The Azov Sea and the Kerch Strait remained the only part of the Russian-Ukrainian border that remained undelimited. Earlier in the year, on January 28, the two sides had finally agreed - after five years of discussions - on the delimitation of their 1,300 mile border. The presidents of the two countries, Russia's Vladimir Putin and Ukraine's Leonid Kuchma, signed the document during a visit by Mr. Putin to Kyiv on January 27-29.

In the first days of the New Year, Kyiv also heard more criticisms from the United States southern neighbor in the wake of the Kolchuha scandal after the Financial Times published a story on January 9 in which a "high-ranking" Washington government official alleged that Ukraine had continued to scoff at United Nations-imposed sanctions against Iraq and had again sold military equipment to Saddam Hussein - this time military pontoon bridges and other field engineering equipment. The charges came just several months after the Bush administration had accused Kyiv of selling Kolchuha aircraft detection systems to Iraq. Those accusations, while never proven, resulted in a decided chill descending on relations between the U.S. and Ukraine.

While Iraq's Ambassador to Ukraine Mozher al-Douri on January 19 rejected suggestions that Ukraine had sold military equipment of any sort to his country, Washington officials said they would continue to keep Ukraine at arm's length, maintaining relations only through diplomatic channels.

The "deep freeze" that had descended on U.S.-Ukraine relations quickly thawed, after a three-month "policy evaluation" was completed. Deputy Assistant Secretary of State for European and Eurasian Affairs Steven Pifer, also a former U.S. ambassador to Ukraine, said in Washington on February 13 that the U.S. would not allow the Kolchuha impasse to continue to damage relations between the two countries. He said the Bush administration had decided, "to, basically, disagree," with Kyiv on whether Ukraine sold Iraq any Kolchuhas.

Two weeks later, on February 27, Ukraine's Ambassador to the U.S. Kostyantyn Gryshchenko admitted that the bilateral relationship with Washington appeared to be turning the corner. "Recently, I believe, we have been concentrating more on the positive side of things to be done," explained the ambassador.

As relations changed, so did some of the players. On September 2 President Kuchma announced that he had replaced Foreign Minister Zlenko, who was required to retire at 65, an age he had reached in the summer, with Mr. Gryshchenko.

The U.S. rotated its top diplomat to Ukraine as well, when popular Ambassador to Ukraine Carlos Pascual left in mid-July to be replaced by John Herbst, a career diplomat who had served previously as U.S. ambassador to Uzbekistan. Mr. Herbst arrived in Kyiv in September.

With an announcement made by Mr. Pifer on February 13, Washington did not hide the fact that it was extending Kyiv a diplomatic morsel with the hope of bringing it into the coalition it was building in preparation for a military invasion of Iraq, which was the major global crisis of the year. "We also look to and hope Ukraine will make the right statements in how it talks about Iraq, and that means making the point that the onus, the burden, is on Saddam Hussein to disarm in an open and verifiable way," explained Mr. Pifer.

In the end Ukraine did not become a partner with the U.S. in the international coalition that overthrew Saddam Hussein. However, after much political debate, it became part of the international stabilization force developed to rebuild the country after the short war ended.

Kyiv witnessed several minor anti-U.S. demonstrations, held outside the U.S. embassy, during which Communist Party supporters, anarchists and anti-globalists expressed their disdain for President George W. Bush and the U.S. military intervention in Iraq.

On March 5, Lt. Gen. Viktor Lytvak told journalists in Kyiv that a battalion he commanded, which specialized in neutralizing the effects of nuclear, biological and chemical (NBC) contamination, could be ready for deployment to Kuwait for "peacekeeping and humanitarian work" should war in Iraq break out. Ukraine had agreed to consider sending a support battalion in a non-combat role back in February. As the first bombs fell on Iraq on March 20, the Verkhovna Rada approved the deployment of the NBC battalion, but only after heated and sharp debate.

The decision by President Leonid Kuchma to offer the 19th Special Battalion of Ukraine's Armed Forces for services in the Persian Gulf region passed by a comfortable margin of 258 to 121 votes. Voting in support of the action were most pro-presidential factions, as well a majority of lawmakers from the normally anti-Kuchma Our Ukraine faction. Communist and Socialist faction members expressed their opposition, questioning why Ukrainian military personnel were being sent to the region to face death.

On April 2 the Communist faction in the Verkhovna Rada introduced a draft measure ordering the return of the 19th Special Battalion from Kuwait in response to a speech by President Bush on March 26. In the speech President Bush listed Ukraine as one of the countries comprising the anti-Iraq coalition, in direct contradiction to claims that Ukrainian politicians and diplomats had repeated for weeks that the country's involvement was limited to humanitarian and peacekeeping work.

A poll taken in March showed that the leftist leaning political organizations were more in step with the nation's stand on the matter of invading Iraq than state leaders. A study conducted by Nelson, Taylor, Sofrez-Ukraine, a Ukrainian polling firm, showed that an astonishing 82 percent of Ukrainians held the view that "military operations in Iraq are not acceptable under any circumstances."

Ukraine's first casualty of the war was not a military person, as it turned out, but a journalist. Taras Protsyuk, a respected television cameraman employed by the Reuters News Agency in its Kyiv Bureau, was assigned to Baghdad to cover the war. He was filming U.S. military movements from the Reuters Baghdad offices in the Palestine Hotel when a tank fired a round at him in the mistaken belief that he was a sniper tracking them with a rifle scope.

While the reporter's death stirred more negative feelings for the Iraq War among Ukrainians, a report issued by the U.S. government found the U.S. soldiers involved in the incident blameless and called the matter an unfortunate and tragic accident.

Ukraine became more centrally involved in the Iraq matter after the war officially ended when an Iraq stabilization conference, held in London in the spring, which Ukraine was invited to attend as an observer, extended an invitation to Kyiv to send troops as peacekeepers to work in the territory under Polish control. Ukraine's National Security and Defense Council Secretary Yevhen Marchuk, who would replace Gen.Volodymyr Shkidchenko as minister of defense, refrained from expressing support for such a move and explained that Ukraine's decision would depend on how NATO proceeded. He also noted that it was questionable whether the Verkhovna Rada would approve such a decision considering the rancorous debate that occurred before approval was given to send the NBC force to Kuwait.

Mr. Marchuk's NDSC gave its recommendation to President Kuchma in favor of sending a stabilization force of some 1,800 soldiers to Iraq on May 27, after the United Nations passed a resolution in support of such a peacekeeping force for the embattled country. "This resolution gives legitimacy to the coalition forces and safeguards the stability and security of Iraq, as well as identifies the U.N. role in the post-war rebuilding of the country," said President Kuchma, who took part in the NSDC proceedings.

A week later, the Verkhovna Rada voted to approve the involvement of Ukrainian troops in such a force by a vote of 273-103. Most criticism came from the Communist, Socialist and Tymoshenko factions, who called the international team the U.S. was assembling "an occupying force."

On August 7, the first 69 of the Ukrainian peace keepers left for Iraq, after listening to recently appointed Minister of Defense Marchuk give words of encouragement and receiving the blessing of a Ukrainian Orthodox priest.

Ukraine's involvement with the Arab world and the Mideast in 2003 was not limited to the Iraqi crisis. At the very beginning of the year, President Kuchma toured several Persian Gulf countries to develop economic ties and promote business investment. In a quick, four-day jaunt through the region on January 18-22, Mr. Kuchma stopped in the regional capitals of Riyadh, Beirut, Kuwait City, Abu Dhabi and Bahrain. While the Mideast tour was a major success, with the Ukrainian president signing trade agreements in several of the capitals, it also gave Mr. Kuchma a chance to present his view on the then developing U.S.-Iraq crisis. He said that he believed war could be averted only by U.N. involvement in peaceful resolution of the problems and that the Security Council needs to approve a second resolution before any invasion should take place.

Ukraine's most determined and comprehensive efforts in foreign affairs were, as always, in its relations with Russia, with whom it announced that it would join in developing a common market in the region, and with the European Union, which finally recognized in 2003 that Ukraine should have a chance at membership within the organization.

One of the more unexpected developments of 2003 was the appointment of President Kuchma as head of the Commonwealth of Independent States, the organization that came into existence after the Soviet Union disintegrated, whose 12 member-countries are all former Soviet republics. Mr. Kuchma became the first CIS chairman who was not also the leader of the Russian Federation. Even though the CIS members had stipulated a rotating chairmanship when the organization was founded, only Russian leaders had led the group, something that had to change, explained Russian President Putin in nominating the Ukrainian president during the CIS summit held in Kyiv on January 29. Mr. Putin also mentioned that President Kuchma had made interesting comments about the future development of the CIS during its previous summit, which was held in Chishinau, Moldova, and should have the ability to implement his ideas.

In the end, as it turned out the changes that Mr. Kuchma had mentioned became an initiative to have the three largest economies of the CIS - Russia, Ukraine and Kazakstan - plus Belarus, which was already tied to the Russian economy to some extent, form a common market called the Single Economic Space (SES). The leaders of the four countries met in Moscow on February 23 and announced they had developed a blueprint for economic integration. The plan was based on the free-trade-zone initiative that Mr. Kuchma had been pushing for the CIS since the Chishinau CIS summit. Although only the four countries were to initially make up the SES, the four leaders did not exclude the possibility that any of the other former Soviet republics could join later.

While Mr. Kuchma maintained that for Ukraine the most important element was to develop a free-trade zone for the region - he went so far as to state that Ukraine would most likely opt out of any other forms of economic integration - Russia made it clear almost immediately that it saw a customs union and a single currency as the core components of the common market and a free-trade zone as merely the first step in the process of economic integration.

As the details of the intended agreement became known, Ukrainian officials had to deflect charges that the Kuchma administration had begun a process of political reunion with Moscow. Mr. Kuchma's advisor, Anatolii Orel, attempted political spin control by stating during a press conference that the document signed by the four presidents was merely a proclamation and that Ukraine's European direction remain unchanged. "There is nothing political here, and it has no language that calls for a supra-state or organization. The words are about how to enter Europe: either barefoot and naked, or with economic respect," explained Mr. Orel.

In an attempt to convince increasingly wary Ukrainian officials that the SES agreement was in their best interest, Russia's Foreign Minister Igor Ivanov said during a meeting of representatives of Ukraine's and Russia's foreign ministries in Kyiv that economic union would help the Ukrainian economy grow. "The realization of this very important project would not only quicken the economic development of our countries, but would also strikingly improve our international standing," explained Mr. Ivanov.

Some Ukrainian political leaders were not so sure, however. Former Foreign Affairs Minister Borys Tarasyuk, now a lawmaker and the head of the National Rukh Party, said it was nonsense to believe that Ukraine could move politically and economically towards the European Union, an intention it had officially expressed, while simultaneously becoming part of a Eurasian single economic space with certain members of the CIS.

However, the current foreign affairs minister, Anatolii Zlenko, did not agree. He said that Ukraine could not afford to ignore Russia in order to continue economic development even as it moved westward into Europe. "I believe there is no alternative to Ukraine's perspectives regarding membership in the European Union. However, we have no choice but to strengthen our friendly, neighborly relations with Russia," Mr. Zlenko argued.

Ukraine's Cabinet of Ministers initially rejected the proposed agreement, after three ministers voiced concerns over the document's constitutionality. The government's decision to send the SES proposal to the Constitutional Court for review put in doubt whether a signing ceremony would take place between the leaders of the four countries involved on September 18-19 in Yalta as had been planned.

Foreign Affairs Minister Gryshchenko, Minister of Justice Oleksander Lavrynovych and Minister of Economy and European Integration Valerii Khoroshkovskyi stated during a fiery two-hour session that they saw several contradictions with Ukraine's Constitution including a passage that did not allow any supranational body to impose its rule over the country.

Indeed, the document called for a supranational body to establish customs and currency policy with the votes of the four countries divided in proportion to their economic largesse. This, in effect would give Russia at least 70 percent of the voting power and limit Ukraine to some 20 percent.

On September 17, with the three ministers absent, the Cabinet of Ministers pushed through an endorsement of the SES agreement, adding a stipulation that the document the Ukrainian president was to sign could not expound any ideas or goals that contravened Ukrainian legislation or its Constitution. That same day the Verkhovna Rada passed a similar resolution in support of the SES.

However, newly arrived U.S. Ambassador to Ukraine John Herbst, in his first official comments, noted that by entering into such an agreement Ukraine could make its path into the World Trade Organization and Euro-integration much more complicated.

Two days later, on September 19, President Kuchma, who continued to maintain Ukraine would only go as far as a free-trade zone, signed the historic SES framework agreement with the three other state leaders in Yalta during an annual meeting of the CIS heads of state and government.

Responding to widespread criticism that the accord was the first step to the return of Russian imperialism over the region, Russian President Putin called it idle chatter. "This is nonsense. They do not understand what they are talking about," Mr. Putin said. "That was a very complicated page in our history. The page is turned. The train is gone."

Ukraine, in fact, did keep its sights on Europe, and the European Union, in turn, promised Ukraine it would eventually receive membership in the international organization once it met all the requirements. During a trip to Kyiv on February 7, EU Secretary General Javier Solana gave guarantees during discussions with President Kuchma that an artificial border would not arise after Poland entered the EU in 2004 and underscored that the EU would maintain a close political dialogue with the country. The proclamation came as the U.S. continued to isolate Ukraine, a policy that would change in the next months.

Earlier that week President Kuchma had indicated that his efforts to break the icy relationship with Washington, which had begun after the Kolchuha affair, had proved fruitless thus far. Mr. Kuchma also said that with regard to EU membership, Ukraine had decided that it would move toward Europe with practical, concrete steps coordinated with Brussels. Mr. Solana said that for Ukraine the most important item was to continue with political and administrative reform, emphasizing that the country would have to make changes to allow for a free and unfettered mass media to operate.

Meanwhile, Foreign Affairs Minister Zlenko warned that with the new visa requirements imposed on Ukrainians who wanted to travel to Poland, as a result of Poland's entry into the EU, there was a risk that a new political "curtain" could descend upon Europe.

Part of the new relationship that Europe proposed was to accord Ukraine certain privileges by giving it "friendly neighbor" status as part of its "Wider Europe" program. The program was to give countries ranging from Eastern Europe to northern Africa a special trading relationship with the members of the EU. Ukraine's Prime Minister Viktor Yanukovych came out in support of the EU program on March 18, stating that the designation could give Ukraine a better foothold for its products in the EU market.

Speaking in Brussels during the sixth annual EU-Ukraine cooperation conference, Mr. Yanukovych said he believed a free trade zone to include Ukraine and the EU could become a reality with some effort. His words differed markedly from remarks made by President Kuchma earlier in the year after EU officials had first announced the Wider Europe program. Then Mr. Kuchma had said he saw few benefits for Ukraine.

Mr. Kuchma continued to vent exasperation with EU policy toward Ukraine on the eve of the EU-Ukraine summit in Yalta, in what some political experts believed was an attempt to put pressure on the EU to begin negotiations on a concrete timetable for Ukrainian membership. On September 30 Mr. Kuchma said he was frustrated by Brussels' unwillingness to move the country along a distinct path to EU membership. "How long can Ukraine sit on the sidelines? We have grown quite weary of this," he stated.

The Ukrainian president blamed the EU for the paralysis in relations and noted that it had failed to act on repeated requests by Ukraine for associate membership. He also said he didn't understand why the EU was unwilling to guarantee the country membership should it fulfill the requirements.

Perhaps this time the EU leadership heard the president's words. One result of the EU-Ukraine summit that began the week after Mr. Kuchma's remarks was a verbal guarantee that Ukraine would eventually become part of the EU. "Without any doubt Ukraine is a European country. We did not discuss a date, but (membership) is on the agenda," Mr. Prodi said on October 7 in Yalta.

The EU president enumerated the stages to Ukraine's membership in the EU: intensification of relations and trade; acceptance into the WTO, recognition of Ukraine as a free market economy by the EU, the development of a free trade zone, and associate membership followed by full membership.

Mr. Prodi also asserted that the closer economic relationship Ukraine was planning with Russia and two other CIS countries was "not an obstacle to the development of relations between the EU and Ukraine."

A week after the successful meeting, Ukraine made an effort to obtain reimbursement for the revenue it would lose in lost trade with Poland, the Czech Republic, the Baltic states and the other neighboring countries that would enter the EU in 2004. With membership, the trade agreement the countries had with Ukraine - including a free trade zone with the Baltic States - would be voided as the countries took on the rules and regulations of the EU. First Vice Minister of Foreign Affairs Oleksander Chalyi said that Ukraine could lose as much as 10 percent of its trade revenue, inasmuch as these countries were among its closest trading partners. He said that the EU-Ukraine treaty on friendship and cooperation stipulated recompensation to Ukraine in the first year of EU enlargement and that Ukraine would seek relief on that basis.

Mr. Chalyi explained that he wanted the EU to offer Ukraine simplified visa regimes for students, businesspeople and professionals in the humanities, and the relaxation of some tariffs and quotas as compensation for the country's trade losses. EU Commissioner Chris Patten replied to Mr. Chalyi's demands during a visit to Kyiv on November 10. He told reporters that the EU would not offer any sort of compensation. He said loss of trade or negative trade balances were not areas in which the EU and Ukraine had compensation agreements.

Ukraine also made progress with NATO, another European structure Kyiv desired to join, when the Atlantic Alliance agreed to an action plan with the country on January 22. The purpose of the plan was to clearly identify Ukraine's strategic objectives and priorities in pursuit of full integration into the Euro-Atlantic security structure. The plan laid out jointly agreed-upon principles and objectives in five sections: political and economic issues; security, defense and military issues; information, protection and security; legal issues and mechanisms of implementation.

Meanwhile, a nationwide poll conducted in December by the Social Monitoring Center and the Ukrainian Social Studies Institute found that confidence in NATO among Ukrainians had dropped significantly since the previous summer. Only 28 percent of them said they trusted the North Atlantic Alliance, down 11 percent from last August. Likewise, 44 percent said they did not consider NATO a trustworthy organization, down from 34 percent.

In October outgoing NATO Secretary-General George Robertson paid a last visit to Kyiv in his position to once again underscore that Ukraine needed to pursue democratic and market reforms to their conclusion, including the establishment of a free press, as well as to meet the defense and military requirements in order to assure itself membership in NATO. He noted that relations between Ukraine and NATO had grown considerably warmer since the icy days of the Prague summit last November, just after the Kolchuha scandal hit its peak.

Ukrainian Prime Minister Yanukovych made his first visit to Poland, a NATO country and one of Ukraine's strategic partners, on January 8 to confirm that Poland would retain a flexible visa policy toward Ukraine as it entered the other major European structure, the EU, in 2004. Polish Prime Minister Leszek Miller told his Ukrainian counterpart that "visas will be cheap, multi-entry and affordable," and that certain categories of individuals, including businessmen and young people, should be allowed to enter Poland without visas."

The two prime ministers also continued talks on Warsaw's cooperation in extending Ukraine's Odesa-Brody pipeline through Polish territory to the Baltic Sea. The Polish side, however, continued to demand that a consortium of Polish investors finance the project, which would also require that a major oil company express an interest in utilizing the pipeline once it was completed.

On February 13, Ukrainian President Kuchma and Polish President Alexander Kwasniewski met in the Ukrainian village of Huta, Ivano-Frankivsk Oblast, where Mr. Kuchma has a presidential retreat, and agreed on a cost-free visa regime, which had already been discussed with EU leaders. Mr. Kuchma called the agreement, "Mr. Kwasniewski's personal achievement."

However, the policy would remain in force only until Poland acceded to the Schengen Accord, an agreement among most of the EU members that allows open, unfettered travel among the member states. Mr. Kwasniewski acknowledged that was a problem. Yet he remained optimistic that the problem, which the two countries would encounter sometime in 2005, could be worked out.

The two state leaders also seemed to resolve another point of friction between the two countries by deciding that in the 60th anniversary commemorations of the bloody conflict between the Poles and Ukrainians in the Volyn region in 1943 all the victims of the tragic events would be remembered equally. (See section on the Ukrainian diaspora for the reaction of Poland's Ukrainians.)

The decision resolved what had been turning into a bitter matter between the two countries. Poles wanted Ukraine to admit guilt and apologize for what they said was the murder of thousands of Poles living in Volyn by members of the Ukrainian Insurgent Army. In turn, Ukrainians accused the Polish Armija Krajowa of taking part in massacres of Ukrainians in the region as the German Nazi forces retreated before a Soviet onslaught.

On July 11, days before the commemoration, the Parliaments of the two countries almost simultaneously passed identical resolutions commemorating the events in Volyn in 1943, after the document was painfully pieced together by an inter-parliamentary committee representing both countries.

Pope John Paul II sent a letter to the Ukrainian and Polish communities in Ukraine through Papal Nuncio to Ukraine Mykola Eterovic in which he praised them for their ability to put the matter behind them.

President Kuchma and President Kwasniewski traveled to the area on July 12 to mark the events. In the village of Pavlivka, Volyn Oblast, where some of the worst atrocities occurred, both leaders called for mutual forgiveness and reconciliation as they attended prayer services, laid wreaths to the victims and unveiled a commemorative monument.

"We cannot change this history, nor can we question it. We cannot silence it, nor excuse it. Instead we need to find the courage to accept the truth; to call a crime a crime, inasmuch as only with respect to the truth can we build the future," read a statement issued by the two presidents.

Two weeks later, on July 31, Poles and Ukrainians agreed on a different and no less important matter when Prime Minister Leszek Miller of Poland and Ukraine's Prime Minister Yanukovych signed documents in which they agreed to continue the Odesa-Brody pipeline to Plock, a Polish city near the Baltic Sea. Developers and the governments of both countries hoped the pipeline would be the final link of an oil transport corridor that would take oil from the Caspian Sea through Russia, Ukraine and Poland via pipeline and eventually to Central and Western Europe through the Baltic Sea.

The project took on a new impetus after an analysis by a major international accounting firm, issued at the end of the spring, showed that the pipeline could be economically viable. Helping as well was support from the EU. Perhaps the last needed push came when U.S. Ambassador Carlos Pascual noted at the beginning of July that such an oil pipeline would not only help Ukraine but would be a positive development for the global demand for diversified oil sources.

But not everything was as tidy as it seemed, because Russia increasingly was calling for using Odesa-Brody in reverse mode. On July 17-20, while on a visit to the Crimea, Russian Prime Minister Mikhail Kasyanov told journalists that Russia would not sign an oil transit agreement with Ukraine to move 79.5 million tons of crude to Western markets on an annual basis through 2018, as it had planned to do. Mr. Kasyanov suggested that it would be more practical to move Russian oil through the Prydniprovia pipeline to Brody and then onto Odesa, where it would be shipped to Europe via the Black Sea and the Dardanelles.

The project had been first proposed by the Tyumen Nafta Kompania (TNK) of Russia as part of a joint project with British Petroleum. Initially, Ukrainian energy officials, including Energy Minister Serhii Yermilov, maintained that the pipeline would be used as originally intended, to move oil to European markets through Poland. However, UkrTransNafta, the government entity responsible for oil transport across Ukraine voted by a 4-3 margin to recommend that TNK get the right to fill the Odesa-Brody with lower-grade Russian crude and obtain a three-year option to pump it in reverse fashion.

UkrTransNafta President Oleksander Todiichuk criticized the decision made by his supervisory council and stated that pressure was brought to bear upon the group by TNK and Russia. Mr. Todiichuk rejected assertions made by TNK that the pipeline was corroding as it lay empty and noted that it was filled with a special substance to preserve it. He also pointed out that, after the three-year duration of the contract, Ukraine could be left with no oil to pump because the transportation routes for moving Caspian oil to Europe will have been worked out. He also cast doubts on TNK's ability to guarantee that 9 million tons of oil would flow through the Odesa-Brody line. He surmised that this was a ploy by Russia to reserve the Odesa-Brody line for itself and keep Ukraine out of the lucrative Caspian market.

The Ukrainian Cabinet of Ministers approved the plan on November 26, but Foreign Minister Gryshchenko stated that the agreement was an intergovernmental document and that a separate agreement would be needed to determine whose oil would flow through it and in what direction.

On December 5, after a visit from Russian czar Anatolii Chubais, the chairman of Russia's state-owned Unified Energy Systems, President Kuchma dismissed Vice Prime Minister of Energy Viktor Haiduk and Energy Minister Yermilov. Although the official reason given by Prime Minister Yanukovych for the firings was that the two energy officials had failed to resolve many problems that existed in the energy sector, political pundits believed the moves were a result of the Chubais visit and were more than likely due to reservations by the two government officials regarding cooperation with Russia in the field of energy.

Just before the announcement of his dismissal, Mr. Haiduk told a press conference that a joint venture of the oil giant Chevron and the government of Kazakstan had expressed interest in moving oil westward, but the proposal had not been acted upon.

Copyright © The Ukrainian Weekly, January 11, 2004, No. 2, Vol. LXXII

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