Key Economic Data 
  2002 2001 2000 Ranking(2002)
Millions of US $ 41,380 37,600 31,300 54
GNI per capita
 US $ 770 720 690 144
Ranking is given out of 208 nations - (data from the World Bank)

Books on Ukraine


Area ( 


ethnic groups 
Ukrainians 72.7%
Russians 22.1%
Jews 0.9%. 



Leonid Kuchma 


Update No: 285 - (01/10/04)

Beslan changes everything
The tragedy at Beslan in southern Russia has brought the Commonwealth of Independent States (CIS) into full solidarity with the Russians. 
At the CIS summit in the Kazakh capital of Astana, in mid-September, they decided to boost the role of the Anti-Terrorist Centre and draft a concept of cooperation in the fight against international terrorism and extremism, Ukrainian President Leonid Kuchma said on September 15th. Leaders of the CIS member states had adopted a statement to condemn terrorist acts, Kuchma, an outgoing head of the CIS, told a press conference following the CIS summit. 
They expressed their full solidarity with Russia in its struggle against terrorism and believed the spread of international terrorism can be prevented only by consolidating the efforts of the whole civilized world. 
The CIS, set up in 1991, is made up of 12 former Soviet republics. Russian President Vladimir Putin was elected new chairman of the council of the heads of state of the CIS at the summit. 
Speaking at the CIS forum, Putin lashed out at double standards in the struggle against world terrorism. "The atrocities we saw in Beslan gave grounds to say that the bandits are part of world terrorist forces," Putin said. 
"The struggle against terrorism envisages only one opinion -- law, concerted efforts and firmness," he stressed. 
The CIS leaders also discussed cooperation in the fight against organized crime, drug trafficking and illegal migration. 
Meanwhile, the presidents signed several documents, including a concept of cooperation in the containment of illegal migration, an interstate anti-crime program for 2005-2007, and a programme of cooperation against drug-trafficking until 2007.

Presidential poll looms
Everything in Ukraine depends on the outcome of presidential elections scheduled for October 31st. The incumbent, Leonid Kuchma, cannot stand again. Things are decidedly hotting up, with an attempt on the life of the challenger and defections from the establishment bloc, both in early September. The defections have ended the prolonged attempt by the pro- Kuchma forces to introduce constitutional changes switching power to the premiership away from the presidency, which the popular challenger, Yushchenko, looks increasingly likely to win, barring massive electoral fraud. This is looking more and more difficult to engineer by the day. He is currently on a roll.
The pro-establishment forces were already split, with both the present premier, Victor Yanukovych, the leader of the Party of Regions, and his predecessor, Anatoly Kinakh, the head of the Union of Industrialists and Entrepreneurs, standing. They are at loggerheads, Kinakh accusing the premier of being criminal. This in a straightforward electoral contest would be likely to let in the main opposition figure, also a former premier, Victor Yushchenko, the leader of Our Ukraine bloc, who was just ahead in the polls in July, even before recent highly dramatic developments in his favour. 
Nearly one half, 46.3%, however, believed In July that the current prime minister Yanukovych would win, including many not intending to vote for him. People know how elections are managed in Ukraine, as in October 1999 when Kuchma was re-elected on a patently rigged ballot.
Things might not be so easily arranged this time round. At least 1,200 foreign observers, including about 700 from the OSCE, will watch the elections. Deputy presidential administration head Vasily Baziv said earlier that the elections could be registered in the Guinness Book of Records for the number of foreign observers. But how many will even understand Ukrainian? They are no guarantee of a fair electoral process.
There is unusual public interest in the contest all the same, while the local bosses, who handed Kuchma a landslide last time, might be wary of doing his premier the same favour. Nevertheless, Yanukovych is the head of their own party, the Party of the Regions. Many of them will play safe; but enough to ensure the victory of the premier? Too much is at stake for many of them to do otherwise. If the Russian robber boyars are thick as thieves with the local governors and mayors, how much more so are their Ukrainian equivalents? There are too many secrets that should never be divulged. But this time round the outcome is very open. The latest developments seem ominous indeed for the incumbents.

Attempt on Yushchenko fails
An indication that an upset could yet take place is that it looks very likely that someone has tried to kill Yushchenko by poisoning. Why would they do that unless they fear his victory?
Yushchenko fell ill on Sept 6TH. After his condition worsened, he was rushed to a hospital, sensibly away from Ukraine, in Vienna on Sept 10th where he was diagnosed with a viral infection and inflammation of the pancreas. Doctors also detected the presence of unidentified "chemical substances not usually associated with food products," Yushchenko's campaign chief Oleksandr Zinchenko said.
He suggested Yushchenko might have been poisoned. "Someone has tried to prevent Viktor from running," Zinchenko told reporters. The establishment are clearly badly rattled.
Yushchenko's health has improved significantly in the past few days and he appeared at a major opposition rally in the Ukrainian capital, Kiev, on September 18th. This survival from an assassination attempt is of course a prodigious gift for the challenger. He is acquiring an aura of invincibility that is decidedly turning things his way.

Pro-presidential bloc is crumbling. 
Events took an even worse turn for the establishment shortly after Yushchenko fell ill, quite possibly from widespread disgust at the resort to strong-arm tactics. They are so reminiscent of the Gongadze affair in 2000 when an investigative journalist looking into the murky practices of the regime, notably the rigged re-election of Kuchma the previous year, was found beheaded after the president had been 'taped' calling for him to be "dealt with." 
Ukraine's parliamentary majority has been a heterogeneous coalition cobbled together after the 2002 elections. Its thin majority could be seen in May 2002, when Volodymyr Lytvyn, head of the Agrarians, was elected parliamentary speaker by a one-vote margin, which resulted from the defection of one Communist deputy. The majority increased its size by another 15-20 deputies in 2002-2003 through intimidation and blackmail of opposition factions. These additional "recruits" were always likely to be the first to abandon the majority when the opportunity arose, as the Agrarians have just done.
The hard core of the pro-presidential majority in the Ukrainian parliament long consisted of presidential administration head Medvedchuk's SDPUo and Prime Minister Yanukovych's Regions of Ukraine party, representing the Kiev and Donbas clans respectively. Together these two factions make up 103 out of the 183 seats of what is left of the parliamentary "majority". A third member of the "majority" is led by Sergei Tyhipko, the head of Yanukovych's campaign. Tyhipko's Labor Ukraine party, although representing the important Dnipropetrovsk clan, is the smallest of the oligarchic parties with a bare 30,000 members. This faction adds another 30 deputies. 
If elected president, Yushchenko has promised to create a broad new parliamentary majority. This could include Tyhipko's Labor Ukraine (Tyhipko was a member of the 2000-2001 Yushchenko government), but would certainly exclude the SDPUo. Former President Leonid Kravchuk, the SDPUo parliamentary faction leader, has already stated that the SDPUo is ready, if Yanukovych loses the elections, to move from a party-of-power to an opposition party.
The pro-government bloc began to unravel when 15 of the 30 deputies in the moderate Democratic Initiatives-People's Power faction defected in early September. The split is a major blow to Yanukovych's electoral campaign. He immediately described the move as "treacherous," caused by the acute "politicization" of the 2004 presidential elections. "It is unpleasant for me to say this, but I have no choice but to do so: currently parliament is becoming an unproductive partner" of the government, Ukrayinska Pravda reported on 11 September. The move is especially harmful as this faction is headed by Stepan Havrysh, Yanukovych's own official representative in the Central Election Commission.
Another 21 deputies in the Agrarian faction have also withdrawn from the parliamentary majority, the faction led by Lytvyn, the speaker of parliament. Lytvyn was head of the presidential administration in 1997-2002 and head of the pro-presidential For a United Ukraine bloc in the March 2002 parliamentary elections. 
Along with these defections in parliament, Crimean branches of Yanukovych's Regions of Ukraine and Medvedchuk's SDPUo are defecting to challenger Viktor Yushchenko's "Our Ukraine". Members of Yanukovych's coalition, such as Ivan Czyzh's All-Ukrainian Union of the Left - Justice, have also defected in the key Donetsk region, and the Democratic Party's branch in the Crimea has also gone over to Yushchenko, local media reported. The rats are leaving the sinking ship.

Looming defeat for the Kuchma crowd
Two factors help to account for Lytvyn's disassociation from Yanukovych. First, Lytvyn is naturally concerned for his personal survival in the post-Kuchma era. Lytvyn was one of those present during the meeting tape- recorded by presidential guard Mykola Melnychenko where President Kuchma ordered Interior Minister Yury Kravchenko to "deal with "opposition journalist Georgy Gongadze. Gongadze was abducted on September 16, 2000, and his decapitated body found two months later. The Gongadze issue remains unresolved and is a prime factor contributing towards Ukraine's poor international image.
Second, moderates in the pro-presidential camp are alarmed at a number of vexing issues. Personal hostility between Lytvyn and current presidential administration head Viktor Medvedchuk is acute, particularly since parliament condemned the blatant fraud in the April mayoral elections in Mukachiv. 
Since the summer Lytvyn has complained about Medvedchuk's Social Democratic United Party (SDPUo) decision to support the Peasant Party as a pliant alternative to Lytvyn's Agrarians, including attempts to poach its members. The withdrawal of Lytvyn's Agrarians has scuppered Kuchma and Medvedchuk's second attempt to railroad constitutional changes through parliament before election day. In March the first defectors from the pro-presidential camp created the Centre faction that led to the failure of the first attempt to switch key powers from the president to the prime minister.

Level playing field for all candidates
Communist Party candidate Petro Symonenko, who supports the constitutional changes, has therefore criticized the disintegration of the pro-presidential parliamentary majority. Meanwhile, Yushchenko, who always believed the constitutional changes were meant to take executive power away from him in the event of his election victory, welcomed its disintegration, Interfax-Ukraine reported on 10 September.
Moderates in the pro-regime camp have also long been unhappy with the choice of presidential candidate Yanukovych, both because of his criminal record and his Donbas links. Yet another factor is the way in which Yanukovych is conducting his electoral campaign which, despite pledges by himself and President Kuchma to hold free and fair elections, has been marred by massive violations.
Parliament, therefore, voted on 7 September for two resolutions. One resolution, which was supported by 390 deputies, called for an equal playing field for all presidential candidates, especially with regard to media access. Three television channels controlled by Medvedchuk (State Channel 1, 1+1, and Inter) provide positive coverage of Yanukovych and only highly negative coverage of Yushchenko. The second resolution, creating a commission to investigate campaign infractions, was only adopted because the Agrarians supported it. Not surprisingly, the SDPUo was the least supportive of both resolutions, as they were tantamount to criticism of the presidential administration's manipulative role in the election campaign. Yanukovych, whose faction also did not support the second resolution, ordered the Justice Ministry to provide a legal assessment of the parliamentary commission. The newly formed commission is headed by Lytvyn and includes one representative from each faction, the Central Election Commission, and different branches of the security forces.

Lukewarm 'majority' members
The remaining factions in the parliamentary "majority" are even more lukewarm members. The People's Democratic Party (NDP) has a joint faction of 17 deputies with Anatoly Kinakh's Party of Industrialists and Entrepreneurs (PPPU). This group unites Valery Pustovoitenko's NDP, which officially supports Yanukovych but is highly unenthusiastic, with Kinakh, who is a presidential candidate himself.
Kinakh is on record as stating that anybody with a criminal record (i.e. Prime Minister Yanukovych) should not be allowed to become president, according to Ukrayinska Pravda. Not surprisingly, Yanukovych has launched proceedings to revoke Kinakh's candidacy. His parliamentary vote is now down to only 183 deputies, compared to 198 members of the four opposition factions. The steadfast members of the pro-presidential camp are the SDPUo (40), Regions of Ukraine (63), and, to a lesser degree, Labor Ukraine (30). As one well-known commentator pointed out before these latest defections, "Viktor Yanukovych does not have real allies, except for the Regions of Ukraine Party." 

The honest man among thieves
Yushchenko has an arresting air of the plain-spoken, honest technocrat which for many years he was. He headed the central bank at the turn of the century just when the economy began to pick up. Hence his popularity. He has a clean record for a Ukrainian politician. Yushchenko mortgaged his flat to give the electoral deposit of 500,000 grivnas (about $100,000 ), whereas another candidate, parliament member Leonid Chernovetsky, the leader of the Christian Liberal Party, admitted to having an annual salary of $1.5 million from his post as chairman of Pravex Bank. A very large sum for an Ukrainian, which few believe could have been acquired honestly, although in this they may be mistaken. 
While Yushchenko is generally seen as the pro-Western candidate, he has actually pledged to remove all Ukraine's 1,600 soldiers from Iraq. The murky Kuchma, by contrast, keen to ingratiate himself with Washington, offered the contingent soon after the war, the largest after that of the UK, under Polish leadership. 

Knife-edge result likely
There are other candidates in the field, but they have little chance, even the communists, who attract the poor and elderly, usually impoverished in Ukraine. They and the socialists and liberals may play a spoiling role, benefiting Yanukovych, much as Ralph Nader inevitably helps the Republicans in the US. 
The distance between Yushchenko and Yanukovich became shorter in August to one percent from July's five percent, according to a poll conducted by the Russian foundation, Public Opinion. Twenty-eight percent then would have voted for Yushchenko and 27 percent for Yanukovich. The poll was conducted among 2,000 people in 111 residential areas in Ukraine's all regions and the Crimean Autonomous Republic. But note the provenance of the organisers of the poll.
An even more recent poll shows the gap widening again to five percent once more. All these results are well within the margin of sampling error. Moreover, they date from prior to the latest turn of events in the challenger's favour.
A candidate needs to gain over 50 percent of votes to win the elections. If none gains the required number of votes, two leading candidates will come to the second round. 
The Ukrainians will know their fate at about the same time as the Americans. Every bit as much is at stake for them as for the inhabitants of the US. The world will not pay so much attention to it. But in one capital there will be keen interest, Moscow. Putin will be hoping that Kuchma's man comes through. Yanukovych is just the type of apparatchik that the Kremlin likes to deal with, a safe pair of hands in every sense - no nonsense about democracy with him! 

Ukraine's PM changes tack with Brussels over EU membership
Premier Yanukovich has moderated his approach to the European Union, proposing more limited ties rather than demanding an early promise of membership, Britain's Financial Times newspaper said on September 10th."In the past the idea of Ukraine's entry into the EU was declared but nothing concrete was done," Yanukovich told the newspaper. "Sometimes the impression was created that Ukraine is breaking down the door to Europe but the EU is holding it shut." 
He said he hoped a new step-by-step approach would still lead to Ukraine "one day becoming a European Union member". His comments are significant because he is widely considered as less pro-Western and closer to the Kremlin than his chief electoral rival, Yushchenko. 
Actually, there is nothing more likely to give a new big push to Ukraine's EU bid than a victory for Yushchenko. The republic may be on the brink of very historic developments indeed. 



Kiev and Beijing to draw up new space programme

Ukraine and China are to draw up before June 2005 a new draft long-term cooperation programme on research and peaceful use of space for 2006-2010, the National Space Agency of Ukraine said recently. On August 25-27th Kiev hosted the fourth meeting of the Ukrainian-Chinese intergovernmental sub-commission for cooperation in space industry, Interfax News Agency reported.
During the meeting, the parties agreed that closer cooperation is needed in the implementation of joint projects. In addition, the parties said the new programme would introduce joint implementation of large-scale projects. A joint ad hoc team will be created by the year-end to elaborate the draft programme, Interfax said.
In addition, the parties adjusted new directions of joint work including in research, joint use of satellite viewing data, and joint data processing in frames of international space projects.
The new programme is due to be confirmed at a regular meeting of the sub-commission to be held in the fourth quarter of 2005 in Beijing. During the meeting the parties also discussed execution of the cooperation programme for 2001-2005 and confirmed a cooperation plan for 2004-2005. The meeting participants noted that Ukraine's enterprises of the space industry have completed about 50 contracts worth US$20m since 1991.

Aviant plant to sell 15 cargo planes to Mideast

Ukrainian aircraft manufacturer, Aviant, recently announced the sale of 15 cargo planes to customers in the Middle East next year, Interfax News Agency reported.
All cargo planes will be the An-32 twin-engine propeller aircraft, said Oleg Schevchenko, Aviant director general.
Customers will include national airlines or private air transportation companies in Libya, Turkey and the United Arab Emirates, he said. During 2004, Aviant delivered or expects deliver up to five An-32 aircraft to the region.
Schevchenko declined to make public other customers or financial details of the sales. An An-32 costs between US$500,000 and US$1.5m, depending on the equipment and previous usage.
The An-32 is a Soviet designed, short-range plane known for its ability to operate in rugged conditions, if not always offer its maximum 40 passengers modern comfort. It is most commonly used for military cargo and personnel movements.
State-owned Aviant has expanded production in recent years to develop and produce the An-140, a modern twin-engine passenger plane now produced under licence in Iran.
Other Aviant projects include the joint development of a four-engine military transport plane with Russia, and domestic development of a twin-engine jet cargo aircraft for the Ukrainian Air Force.



Aval gets US$45m foreign syndicate loan

The Kiev-based bank Aval has received a US$45m syndicated loan organised by Deutsche Bank AG London, Raiffeisen Zentralbank Osterreich AG and Raiffeisenbank Ukraine under a deal signed August 16th.
Interfax quoted Aval's press service as saying recently that Abu Dhabi Commercial Bank, ABN Amro Bank NV, Commerzbank AG and Dresdner Bank AG are also involved in the loan.
The lead managers are American Express Bank Gmb, Bank Austria Creditanstalt AG, Bankgesellschaft Berlin AG, BRED Banque Populaire and Export-Import Bank of the Republic of china. The managers are AKA Ausfuhrkredit-Gesellschaft Gmb, Banco Internacionale do Funchal and SA OKO Bank.
The syndicated credit is for one year at an annual Libor+3.8%. The terms of the deal specify that the loan funds are to be used for crediting trade projects under foreign economic contracts.
The payment agent for the syndicated agreement is Deutsche Bank Trust Company Americas.



Ukraine produces more coal

Coal mining enterprises in Ukraine increased coal extraction 4.2% year-on-year to 47.5m tonnes in January-July, Interfax reported recently, citing data from the Ukrainian Fuel and Energy Ministry. Coal production slipped 0.8% year-on-year to 6.6m tonnes just in July. Coking coal production increased 0.6% to 21.8m tonnes in January-July. Output of power-generating coal increased 7.5% year-on-year to 25.7m tonnes in January-July, 4.5% to 3.7m tonnes in July. Ukraine produced 79.255m tonnes of coal in 2003, 3.2% more than in 2002. The country plans to produce 80.3m tonnes in 2004.

Ukraine's Naftogaz to bid for MOL gas assets

Ukraine's oil and gas firm Naftogaz Ukrainy said on August 30th that it was interested in buying the gas units of Hungary's oil and gas group, MOL, Interfax News Agency reported.
"Naftogaz Ukrainy sent the Hungarian oil and gas company MOL a request to take part in the privatisation of MOL's transportation and storage units," Naftogaz said in a statement. Naftogaz gave no other details. MOL's board of directors decided in February of this year to look into selling its three gas division subsidiaries - Foldgaztarolo, Foldgazszallito and Foldgazellato or find a strategic partner. According to a recent statements by senior MOL officials, MOL is likely to sell 75 per cent of the three companies and to retain the remainder. MOL will announce the number of bids it received by Friday September 2nd. Potential bidders are likely to include Russia's Gazprom, Germany's Ruhrgas and Gaz de France, which, together with Austria's OMV spokesman said on August 27th, however, that his company had not submitted a bid. OMV owns 9.1 per cent of MOL.

Ukrtransnafta filling Odessa-Brody pipeline

Ukrtransnafta, the operator of Ukrainian oil pipelines, has filled 280km of the Odessa-Brody pipeline with 130,000tn of oil, which is 30% of the technological oil needed for the pipeline's functioning, Interfax reported recently.
A total of 250,000tn of technological oil from Russia had been cleared through customs and supplied to Ukraine by August 25th, said the Ukrtransnafta press service. The oil is being transported to the Odessa-Brody pipeline through Dnieper trunk pipeline, the report added.
Ukrtransnafta says all of the 425,000tn of technological oil, which is being delivered under contract with the TNK-BP joint venture between Russia and the United Kingdom, will be pumped into the Odessa-Brody pipeline in September.
Ukrtransnafta and TNK-BP signed a contract in July 2004 to deliver 9m tn of oil through the Odessa-Brody pipeline to the Yuzhny sea terminal within 3 years.
They also signed 4 supplements to the contract, which enable Ukrtransnafta to receive up to US$108m in loans to buy 425,000tn of technological oil and as a guarantee against financial risk.
The contract was signed on terms of 100% advance payment for oil delivery and fines for the refusal to transport the specified amount of oil.
Ukrtransnafta started filling the Odessa-Brody pipeline from its 52nd km on August 1st. The first 52km of the pipeline were filled with Urals oil at the end of 2002, which enabled the Yuzhny oil terminal to start transhipment of Russian oil supplied by Dnieper trunk pipelines.



Ukrainian premier, Iraqi president discuss cooperation

Ukrainian Prime Minister, Viktor Yanukovych, has stressed during a meeting with Iraqi President, Ghazi Yawar, that Ukraine will continue to develop bilateral cooperation with Iraq in political, economic, military, technical and humanitarian areas, UNIAN News Agency reported. 
The press service of the Cabinet of Ministers quoted Yanukovych as saying that the leadership of the Ukrainian state and the Ukrainian people closely follow developments in Iraq. Yanukovych stressed that there are traditional historical ties between Ukraine and Iraq.
Yanukovych expressed confidence that a necessary foundation is currently in place to deepen cooperation between the two states at a qualitatively new level. "We are confident that the Iraqi side will appreciate us as a reliable partner and friend," Yanukovych said. Ukraine sees Iraq as a country with a great future, he added.



Kiev eyes stabilisation of Russia-Georgia relations

Ukraine is hoping for the stabilisation of Georgian-Russian relations and is willing to provide aid to Georgia in reaching stability, Interfax quoted Foreign Ministry spokesman Markiyan Lubkivsky as saying. Commenting on Georgian President Mikhail Saakashvili's statement that his country is on the verge of war with Russia, Lubkivsky said: "We hope the situation will stabilise, and such statements, if they were made and if they were interpreted and reported exactly as the Georgian president said, will not harm the negotiating process." Lubkivsky assumed that Saakashvili's statement was pure "rhetoric and an emotional conversation." 



Industrial growth seen at 14%

The Ukrainian Economies Ministry recently said that industrial production will grow14% in 2004, Interfax reported. Industrial production will grow by 14.5% in January-August over 2003. In January-July it grew 14.7%. "The industrial growth is within the forecast and the growth in January-September may be expected at about 14.5% and in 2004 - 14%," the ministry said in a press release, cited by Interfax. The ministry said it expects that the favourable conditions will remain in the traditional markets for Ukraine's engineering industry: the ministry expects stable supplies by the aircraft industry to Russia, China, Iran, Africa, and Asia, as well as gradual growth of electronic equipment exports to the CIS countries. The external demand for products of Ukraine's metallurgy will remain as well. The main clients will be China, the CIS countries, countries of the Mideast and the EU. The ministry forecast that the demand for products of oil and chemical industry will remain high also. Since the ministry expected the growth of individuals' incomes, it forecast that there will be growth of consumption and, as a consequence, growth of production in foods industry. At the same time, the ministry said it does not expect growth of dairy and meet products due to previous reduction in livestock and poultry.



Kiev firm buys major stake in Ukrainian shipyard

The Yevroresurs company (Kiev) has been declared winner of an 83.61 per cent stake in the Kherson-based shipyard. The head of the bidding directorate at the State Property Fund of Ukraine, Volodymyr Cherdakov, said that the winner offered 52.171m hryvnyas [over US$9.7m] for the stake, with the starting price set at 46.345m Hryvnyas, Interfax-Ukraine News Agency reported. 
The other bidders for the stake were the West-Invest limited company and the Leninska Kuznya Trading House [the latter is reportedly controlled by businessman and MP Petro Poroshenko, who is close to opposition Our Ukraine bloc leader, Viktor Yushchenko].



Number of cellular subscribers increases to 9m

The number of mobile communications subscribers in Ukraine increased 7.0% in July 2004 and 38% in the first seven months to reach 9.0m people. The cellular subscriber base expanded 70% from the end of July 2003 to the end of July 2004.
The press service of Ukrainian Mobile Communications said that 4.96m people currently subscribe to the company's services, which is 48% more than at the start of 2004. The number of UMC subscribers increased 120% in the year ending July 31st, 2004, including a 7.0% increase in July.
Interfax quoted a source in ZAO Kievstar GSM as saying the company services 3.86m subscribers. The company's subscriber base increased 7.2% in July, 29% since the start of the year and 54% in the past year. OOO Golden Telecom (Kiev) said that company's subscriber base increased 29% in the year ending July 2004.




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