Nemtsov to Advise Ukraine's President

KIEV -- Ukrainian President Viktor Yushchenko has tapped liberal politician Boris Nemtsov, an old friend who stood at his side during the Orange Revolution, as an adviser to help boost Russian investment and mend ties with Russia.

"The decree on my appointment clearly outlines my task: I must attract Russian investments, and thus help improve Ukraine's investment climate," Nemtsov said Monday.

"I am not a Ukrainian government official and I am not a Russian government official, so there won't be any thick-headed lobbying," he said by telephone.

Nemtsov -- a former leader of the Union of Right Forces party who has held various government posts over the past decade, including a 1997-98 stint as deputy prime minister -- said he will continue living in Moscow and receive no salary as Yushchenko's adviser.

Yushchenko spokeswoman Irina Gerashchenko said Nemtsov will not join the presidential staff but will act as an external adviser -- and, as such, not receive a paycheck. Ukrainian law prohibits the president from hiring non-Ukrainian staff members.

Gerashchenko said Nemtsov was appointed in a bid not only to increase Russian investment, but also to bolster Kiev-Moscow ties. "Right now there are a lot of myths about Ukraine in Russia -- myths that we are anti-Russian," she said. "If this can help show that that's not the case, that would be wonderful."

Nemtsov is the second liberal in the Russian business and political elite to be tapped by a government of a former Soviet republic. Last year, industrialist Kakha Bendukidze was named a Georgian minister after Mikheil Saakashvili became president in that country's Rose Revolution.

Nemtsov strongly backed Yushchenko during the Orange Revolution, the weeks of national protests over a fraudulent Nov. 21 election won by Kremlin-backed Viktor Yanukovych. The election was annulled, and Yushchenko won a repeat vote in late December.

Nemtsov and Yushchenko struck up a friendship in 1997, when Nemtsov was deputy prime minister and Yushchenko was the chairman of Ukraine's Central Bank, Nemtsov said.

During the election crisis, Nemtsov made a serious effort to persuade the Kremlin to adopt a friendlier stance toward Yushchenko, a source close to the Kremlin said.

Nemtsov also stood at Yushchenko's side on Kiev's Independence Square when it was packed with tens of thousands of protesters. "A union between a chekist and a recidivist is perverse," Nemtsov told the crowd the day after the Nov. 21 election, in a reference to President Vladimir Putin career in the KGB and Yanukovych's criminal record.

"We need a democratic Ukraine the same way as we need a democratic Russia," he said.

Nemtsov on Monday kept up his criticism of Russia's leadership and suggested that Russian businesses might move to Ukraine if the investment climate does not improve at home. "It is no secret. Many of my friends and acquaintances look at Ukraine enviously. And many are considering a permanent move there should the situation become unbearable here," he said.

Russian business leaders are very worried about their investments, capital and personal safety, he said. "But instead of parking their money in some offshore accounts, they would gladly invest it into the Ukrainian economy," he said.

The legal assault on Yukos, stalled reforms, vast corruption and signs of a crackdown on civil liberties have caused grave concern among investors, political observers and some of the public.

Nemtsov said many Russians see the Orange Revolution as an opportunity for change, but "I am not talking about exporting revolutions. That is a very wrong approach." Instead, he said, they are heartened by Yushchenko's drive to bring Ukraine closer to Europe and to adopt democratic reforms. "If they are successful, that means that Russia also has a chance," he said.

One of Nemtsov's first tasks as adviser will be to deal with fears that Ukraine might reverse shady privatizations carried out under President Leonid Kuchma. Just Monday, Kiev announced that it had voided the sale of the Kryvorizhstal steel mill to a member of Kuchma's family last year. The plant was sold for nearly half the price offered by other bidders.

"My position is that there should be a law limiting such re-nationalizations to a specific list, so others will know that they are safe," Nemtsov said, adding that he will urge Yushchenko to back the needed legislation.

Market observers said Nemtsov's appointment is partly a symbolic gesture of Yushchenko's commitment to economic transparency, democratic freedoms and the fight against corruption -- platforms that Yushchenko's Our Ukraine party and Nemtsov's SPS emphasize.

Andriy Blinov, a senior economist with Kiev's International Center for Policy Studies, said Yushchenko is trying to strike a sharp contrast between his promises to level the playing field for business and Putin's style of government. "Yushchenko's policy is to be rather anti-Russian, not in any ethnic sense, but in the sense that he is against Putin's power vertical," he said.

Blinov said the appointment may ruffle some feathers in Moscow. "Many politicians will probably see this as an unfriendly act," he said.

Dmytro Tarabakin, head of sales at Dragon Capital, Ukraine's biggest brokerage, said Nemtsov should be able to boost trade ties -- even though Russian interest in Ukrainian assets is already sky-high. Ukraine's economy shot up 12 percent last year, and more than 9 percent in 2003. The benchmark PFTS index grew by over 200 percent last year, and is up about 30 percent since Jan. 1.

"There's been a tremendous pickup from practically all the Russian brokers," Tarabakin said. "Before, we were going to Moscow to meet them. Now they come to Ukraine to meet us."

Sergei Markov, a former Kremlin consultant, noted that while Nemtsov's appointment could be seen as a slap in the face, it would probably be overshadowed by other controversial appointments, such as Yulia Tymoshenko as prime minister.

Valeria Korchagina reported from Moscow, and Greg Walters reported from Kiev.