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DEVELOPMENTS IN THE AFTERMATH OF THE ORANGE REVOLUTION
HEARING: Committee on International Relations
Subcommittee on Europe and Emerging Threats
United States House of Representatives
Washington, D.C. , Wednesday, July 27, 2005
PART II
"THE ACTION UKRAINE REPORT - AUR" - Number 533
Mr. E. Morgan Williams, Publisher and Editor
morganw@patriot.net, ArtUkraine.com@starpower.net
Washington, D.C. and Kyiv, Ukraine, FRIDAY, July 29, 2005
------INDEX OF ARTICLES------
"Major International News Headlines and Articles"
1. DEVELOPMENTS IN THE AFTERMATH OF THE ORANGE REVOLUTION
TESTIMONY: By Ambassador Daniel Fried
Assistant Secretary for European and Eurasian Affairs
United States Department of State
House International Relations Committee
Subcommittee on Europe and Emerging Threats
Washington, DC, Wednesday, July 27, 2005
The Action Ukraine Report (AUR), Number 533, Article One
Washington, D.C., Friday, July 29, 2005
2. DEVELOPMENTS IN THE AFTERMATH OF THE ORANGE REVOLUTION
TESTIMONY: By Ambassador Nelson C. Ledsky
Regional Director, Eurasia
National Democratic Institute (NDI)
House International Relations Committee
Subcommittee on Europe and Emerging Threats
Washington, DC, Wednesday, July 27, 2005
The Action Ukraine Report (AUR), Number 533, Article Two
Washington, D.C., Friday, July 29, 2005
3. DEVELOPMENTS IN THE AFTERMATH OF THE ORANGE REVOLUTION
STATEMENT: Of Chairman Elton Gallegly
House International Relations Committee
Subcommittee on Europe and Emerging Threats
Washington, DC, Wednesday, July 27, 2005
The Action Ukraine Report (AUR), Number 533, Article Three
Washington, D.C., Friday, July 29, 2005
4. PRIME MINISTER TYMOSHENKO REJECTS U.S. CONCERN
OVER UKRAINE'S ECONOMIC PERFORMANCE
By Natasha Lisova, Associated Press Writer
AP, Kiev, Ukraine, Thursday July 28, 2005
5. TYMOSHENKO PROMISES NO ECONOMIC CRISIS IN UKRAINE
Ukrainian News Agency, Kyiv, Ukraine, Thu, July 28, 2005
6. UKRAINIAN STATE RESERVE AND KHLIB UKRAINY PLAN TO BUY
GRAIN AT 10-15% HIGHER PRICES THAN PAID BY GRAIN
TRADERS ACCORDING TO PM TYMOSHENKO
PM supports major government intervention into private markets
Ukrainian News Service, Kyiv, Ukraine, Thu, July 28, 2005
7. UKRAINE DISAPPOINTS THE WEST
European investors do not rush ahead with investment
programs for the Ukrainian economy
PRAVDA.RU, Moscow, Russia, Thursday, July 28, 2005
=============================================================
1. DEVELOPMENTS IN THE AFTERMATH OF THE ORANGE REVOLUTION
TESTIMONY: By Ambassador Daniel Fried
Assistant Secretary for European and Eurasian Affairs
United States Department of State
House International Relations Committee
Subcommittee on Europe and Emerging Threats
Washington, DC, Wednesday, July 27, 2005
The Action Ukraine Report (AUR), Number 533, Article One
Washington, D.C., Friday, July 29, 2005
TESTIMONY (As prepared)
Mr. Chairman, Members of the Committee, I am pleased to be here today
to discuss with you current developments in Ukraine.
As requested, I shall provide our assessment of the situation in Ukraine
seven months after the historic Orange Revolution. I will also discuss our
bilateral agenda with Ukraine, as laid out in the Joint Statement of
Presidents Bush and Yushchenko in April of this year, and our views on the
way ahead in U.S.-Ukrainian relations. I would also like to share some
impressions from my recent visit to Kiev, my first to Ukraine as Assistant
Secretary for European and Eurasian Affairs.
THE ORANGE REVOLUTION AND U.S. POLICY
At a pivotal moment in their nation's history, the Ukrainian people rejected
a stolen election and chose freedom, democracy, and the rule of law over
corruption and intimidation. In the weeks following the fraudulent November
21 second-round presidential vote, hundreds of thousands of ordinary
Ukrainians braved snow, frigid temperatures, and a real threat of violence
in order to peacefully take back control of their country's destiny and
freely choose their leadership. Their courage and conviction captured the
imagination of the world. We were, I submit, witnesses to a Ukrainian
national identity taking shape through and thanks to a democratic
transformation.
The consolidation of such a democratic transformation in Ukraine would
have a profound and beneficial impact on its region. A democratic, free,
and prosperous Ukraine would encourage reformers in neighboring
countries, and in nations to its east. Our stake in this effort is high. The
United States does not seek any sort of geopolitical advantage in Ukraine.
Nor do we need to. As we learned beginning in 1989, the advance of
American interests in what used to be known as the Soviet Union and
Soviet Bloc is inextricably linked to the success of common values.
I am therefore proud of the role the U.S. and our European allies played in
support of the Ukrainian people at this historic moment. Well before the
election, we made clear to then-President Kuchma that we took him at his
word when he said he would not run for a third term. The U.S. government
never favored a specific candidate, and pledged to work with whoever won
a free and fair election. Our objective was to seek to bring about
conditions so that Ukrainians had an opportunity to choose their next leader
without coercion or manipulation.
To that end, we helped train and field domestic and international observers;
educated judges on Ukraine's new election law; funded exit polls, media
monitors, and parallel vote counts; and stressed that we viewed the conduct
of the election as a test of Ukraine's commitment to democracy. U.S.
assistance was fully transparent and focused on improving the integrity of
the election process so that Ukrainians could better determine their own
future. I am proud of our efforts.
We also warned that, should the election be judged less than free and fair
by international standards, there would be consequences for our
relationship, for Ukraine's hopes for Euro-Atlantic integration, and for the
individuals responsible for perpetrating violations. In fact, even before
election day, several individuals clearly implicated in corrupt electoral
manipulation did face consequences, for example, being told they would
be unable to obtain a visa to travel to or conduct business in the United
States. Such actions stained the reputations of key actors and served as
a deterrent for others.
After credible reports of widespread violations and fraud, we made it known
that we did not recognize the legitimacy of the November 21 results. We
stressed that we expected the will of the Ukrainian people to be upheld, and
that the use of force against peaceful demonstrators was unacceptable. In
this effort, we worked closely with Europe, especially the European Union.
I believe that our efforts, combined with those of European leaders - and
particularly those of Presidents Kwasniewski and Adamkus, EU High
Representative Solana and OSCE Secretary General Kubis - contributed to
the peaceful and just outcome to the crisis. But we must remember who the
true heroes were: ordinary Ukrainians, who did extraordinary things.
A DIFFICULT ENVIRONMENT
The Ukrainian people's heroic choice of freedom was a giant leap forward in
Ukraine's journey toward democracy and prosperity. It has ushered in the
prospect of a profound change in Ukraine comparable to 1989 in Central
Europe. But now the poetry of the Orange Revolution needs to be translated
into the prose of programs to transform the Ukrainian polity, economy and
society and prepare Ukraine to become a full-fledged member of the
Euro-Atlantic community.
President Yushchenko and his government have set out a broad and
ambitious agenda for transforming Ukraine into a modern European state.
It is, I believe, the right direction. But Ukraine's new leaders are
undertaking reforms in a complex and difficult political environment:
First, the Orange Revolution lifted expectations extraordinarily
high, both at home and among Ukraine's friends abroad. Meeting these
expectations will require focus, hard work, consensus-building, and
sustained implementation of reforms.
Second, opposition to reforms remains strong. President Yushchenko's
anti-corruption campaign threatens powerful interests, and the presidential
election exacerbated regional tensions and, as a result of desperate
campaign tactics, spurred concerns about separatism. Some of these
concerns seem to have receded, however, as polls show substantially
greater confidence in President Yushchenko and his government emerging
in eastern and southern Ukraine. The mainstream opposition leaders also
deserve credit for putting the separatist card back in the deck.
Third, the new government is operating against the backdrop of the
upcoming parliamentary elections in March 2006. The President and
government recognize the importance of obtaining a working majority in the
parliament (Rada) to implement their vision for Ukraine. Nevertheless, the
government must be careful as it considers measures that may in the short
term gain favor with voters but in the longer term threaten Ukrainian
leaders' ability to reform and liberalize the economy and secure key
priorities such as joining the WTO, attracting foreign investment, and
achieving Market Economy Status.
Fourth, the government is a coalition with ministers and others drawn
from different parties with different philosophies and interests. There are
also competing personal agendas. Democracy is messy, and unity is not
the highest political value. But the new team must function as it faces hard
decisions. Discord between coalition members has sometimes spilled out
into the open, complicating decision-making.
Finally, Russia still looms large in Ukrainian calculations. Ukraine's
leaders know they must work hard to forge good relations with their eastern
neighbor, while seeking closer integration with the West. At the same time,
Russia needs to work hard to maintain a positive relationship with Kiev.
Good, strong Ukrainian-Russian relations, and a successful, democratic
and fully sovereign Ukraine able to make its own choices about its future,
are in everyone's interest.
IMPRESSIVE SUCCESSES
Despite this complex environment, President Yushchenko and his team
have achieved significant successes in their first six months in office. On
the domestic front, they have transformed the political scene. Respect for
the rights of citizens has improved dramatically. The opposition has
freedom of assembly, as witnessed by frequent and peaceful marches
and demonstrations.
The media operates more freely in contrast to the previous regime, when
intimidation, pro-government ownership, favoritism in granting broadcast
rights and frequencies, and government press guidance - the notorious
"temnyky" - were the order of the day.
However, self-censorship and concentrated ownership of the media are still a
concern. The courts appear to be more independent, following the example of
the Supreme Court's December 3 ruling that the second-round vote was flawed
and that the run-off should be repeated. And, while far from perfect, the
government does appear to be more transparent and open about its business.
The press regularly reports on vigorous intra-governmental policy debates.
In short, President Yushchenko and his government are forging a genuine
democracy.
President Yushchenko and his team have also moved to combat endemic
corruption by removing and sometimes prosecuting officials who abused their
positions to enrich themselves, and by closing loopholes in legislation that
allowed for graft. The anti-corruption campaign has already resulted in
increased revenues from the Customs and Tax Services. Nevertheless, it is
important that President Yushchenko ensures the honesty of his own
government, and that its members not succumb to the temptations of
corruption.
Prosecutions are vital in deterring officials from engaging in corruption,
but the authorities must avoid perceptions of political retribution and not
be overzealous nor pursue unjustified cases against those associated with
the previous government. The government should also continue to investigate
such cases as the 2000 murder of the journalist Heorhiy Gongadze. The
government has shown a new commitment to fighting trafficking in persons.
It created a new department in the Ministry of Interior dedicated to
fighting this scourge and has scored some victories on this front.
Delivering on its promise to increase the force of the market in the
Ukrainian economy, the Yushchenko government has ended years of tax
privileges for the powerful business oligarchies. After fierce debate, the
Rada passed significant legislation related to WTO accession, lowering
agricultural tariffs, reducing discriminatory trade measures, and
strengthening protection of intellectual property rights.
Some of the new administration's most impressive successes have been in
the foreign policy realm. President Yushchenko has dramatically transformed
Ukraine's international image and put relations with the U.S. and Europe on
a new track. In his foreign visits, he has exercised Ukraine's sovereignty,
orienting itself toward Europe, putting its own interests first and
foremost. He has committed Ukraine to supporting democracy and human
rights both in the region and further abroad, as witnessed by Ukraine's
votes for the UNCHR resolutions on Cuba and Belarus.
These votes were not easy - Belarus is a neighbor, and Cuba has provided
humanitarian assistance to child victims of the Chornobyl tragedy - and the
Ukrainian government deserves credit for doing the right thing and adhering
to its democratic principles. We are proud to have a new partner in the
advance of freedom in this region.
President Yushchenko's energetic engagement of European leaders has
already borne fruit, helping to produce an offer of Intensified Dialogue on
Ukraine's NATO Membership Aspirations in April. In February, President
Yushchenko also signed a three-year cooperation plan with the EU. This
agreement aims to build capacities for a wide range of reforms needed
to bring Ukraine closer to European standards.
Ukraine has also demonstrated real leadership in the region. President
Yushchenko has energized the GUAM (Georgia, Ukraine, Azerbaijan, and
Moldova) group, focusing it on promoting democracy, economic development,
and security in the region, while developing its links to countries in
Central and Eastern Europe that offer successful track records of reform. He
has injected new energy into confronting thorny regional problems, and has
initiated a proposal to find a solution to the frozen conflict in
Transnistria.
As I mentioned previously, Russia represents a particular challenge for the
new Ukrainian government, but also opportunities. The Kremlin openly
supported President Yushchenko's electoral rival, and has questions about
the implications of Ukraine's new Euro-Atlantic orientation. I believe that
President Yushchenko has done a good job of rebuilding ties and moving
forward. The new Ukrainian administration understands that Ukraine and
Russia are united by historical, cultural, language and economic bonds, and
that good relations are essential.
Of course, establishing strong relations is a two-way street. President
Yushchenko has declared Ukraine and Russia to be "eternal strategic
partners," and traveled to Moscow on his first foreign trip immediately
after his inauguration. President Putin, in turn, visited Kiev in March, and
the two presidents pledged to build stronger ties and maintain an open
dialogue.
SOME CONCERNS
We are greatly encouraged by the successes of the new government. But we
are also concerned that, in the economic sphere, some essential free-market
reforms have stalled. The new leadership may not have used the political
capital it earned from the Orange Revolution as decisively as it could have
to move Ukraine unequivocally toward a prosperous market economy
integrated into the global economy. Specially, we are concerned by
interventionist and inflationary policies that the Ukrainian government is
pursuing, as well as by continued uncertainty over re-privatization. For
example:
Price controls on gasoline earlier in the year briefly produced shortages.
President Yushchenko rescinded the measures, but the issue raised questions
about the government's commitment to market principles. Continued protection
of the agriculture sector, while not unique to Ukraine, also runs contrary
to the steps Ukraine needs to undertake in order to join the WTO.
The Yushchenko government has expanded on the commitments the previous
government had made to increase pensions and public sector pay. Elimination
of tax privileges and the government's anti-corruption campaign have
dramatically increased state income, but the higher social spending, while
understandable, has fueled inflationary pressures. Most observers predict a
2005 budget deficit of over three percent of GDP.
We understand the arguments for re-privatization: under the previous regime,
insiders used non-transparent means to grab major state enterprises at
bargain-basement prices. But mixed signals about the extent of
re-privatization have dampened both domestic and foreign investment. We
welcome current Ukrainian efforts to establish clarity on the way ahead on
this issue.
While the tax and tariff privileges in the Special Economic Zones were
largely used fraudulently, their abrupt elimination has caused problems for
some foreign investors. We encourage predictability in economic policies
affecting businesses, and are pleased to hear that President Yushchenko
endorses this principle and is considering restoring some privileges to
law-abiding businesses. Improving the climate for legitimate domestic and
foreign investors is critical to Ukraine's economic future.
Ukraine aims to diversify its energy supplies, reduce its energy dependence
and bolster competition in the Eurasian energy sector. However, a vertically
integrated, state-owned system of oil production, distribution, and sales -
as some in the Ukrainian government advocate - will not improve the
functioning of the market or address Ukraine's energy problems. We believe
that Ukraine should instead focus on creating strong incentives and a stable
environment for the private sector. What Ukraine needs are competition,
transparency, and private investment in its energy sector.
Some of these interventionist policies may seem attractive to the Ukrainian
government as it seeks to strengthen its popular support in advance of the
2006 parliamentary elections. But we are urging the Ukrainian government to
consider the consequences of adopting measures that may be popular in the
short term but that, if continued and unaccompanied by strong pro-growth
policies, would fuel inflation, reduce macroeconomic stability, and
undermine sustainable growth.
Such a set of policies would jeopardize key Ukrainian objectives, such as
joining the WTO, attracting foreign investment, and obtaining Market Economy
Status. In the long term, the tested free market reforms, including the
proper regulatory functions of a modern state in a free market that we have
witnessed elsewhere, are what will boost the Ukrainian people's prosperity,
not short-term populist policies.
I detect from my recent visit to Kiev that senior Ukrainian officials
recognize that they have had a rough initial period on economic policy, and
are committed to getting reforms on track. In fact, in many of the areas I
have cited, we have seen questionable decisions followed by a course
correction. As the Ukrainian government gains its footing, we hope it will
move forward decisively to implement the economic reforms so vital to
achieving their vision of Ukraine.
In fact, the approach of key markers, such as WTO Hong Kong Ministerial in
December does seem to be focusing minds. The Ukrainian government had
been slow in making progress to pass important WTO-related legislation. The
absence of amendments strengthening the law against media piracy, as well
as continued high tariffs and arbitrary sanitary regulations on poultry and
agriculture products had been an impediment in our own bilateral accession
negotiations.
I am therefore pleased to report that the parliament's recent passage of the
Optical Disk amendments, as well as other WTO-related laws, constitutes a
major step forward. It encourages us to hope that the parliament will adopt
and the government will implement the remaining WTO legislation, including
revised sanitary and phytosanitary (SPS) rules, technical standards, bank
branching authority, and revisions to the foreign economic activity law. It
is important that all WTO-related bills be submitted for review by the WTO
members considering Ukraine's accession, to ensure consistency with WTO
standards. We look forward to Ukraine doing so in the case of most of the
recent laws.
U.S.-UKRAINE RELATIONS: A NEW CENTURY AGENDA
Since 1991, successive U.S. administrations have pursued steady objectives
in relations with Ukraine: we seek to help Ukraine develop as a secure,
independent, democratic, prosperous country with an economy based on
free-market principles, one that respects and promotes human rights and
abides by the rule of law, and draws closer to European and Euro-Atlantic
institutions.
During the latter half of the 1990s and the first years of the new century,
however, U.S.-Ukrainian relations were in a holding pattern. The United
States never forgot the strategic importance of Ukraine or lost faith in the
Ukrainian people. But the scandals and corruption that came to characterize
the previous regime presented serious obstacles to developing the kind of
relationship we desired.
I am happy to say that the Orange Revolution has put us on a new trajectory,
one characterized by open dialogue and closer cooperation. The interaction
among senior U.S. and Ukrainian officials in 2005 has already intensified
dramatically compared to 2003 and 2004.
We now have an historic opportunity to help Ukraine succeed with its reforms
and advance its integration into Europe and Euro-Atlantic structures. Last
November, President Bush said that we stood by the Ukrainian people in their
hour of need. We did then, and we do today. Congress adopted the full $60
million in supplemental assistance for Ukraine that the Administration
requested. This amount is in addition to the $79 million in assistance that
we have already budgeted for Ukraine for fiscal year 2005 from FREEDOM
Support Act funds.
We are working to ensure that the supplemental funds approved by Congress
will help the new government pursue its highest and most immediate
priorities. One focus will be on assistance to eastern and southern regions
in Ukraine, where suspicion of reforms is strongest. We are directing the
bulk of the funding toward programs and activities designed to:
Combat corruption and promote judicial independence and the rule
of law;
Strengthen election administration and NGO capacities, and train
independent observers in order to ensure free and fair parliamentary
and local elections in March 2006;
Support media openness through partnership programs and grants;
Increase exchange programs and intensify outreach to eastern and
southern Ukraine;
Assist the Ukrainian government with WTO accession and with fiscal
management issues, as well as with municipal government and agricultural
sector reforms;
Help Ukraine reduce its energy dependence, including through
completion of the multi-year Nuclear Fuel Qualification Project;
Support Ukraine's efforts to confront serious health issues such as
the spread of HIV/AIDS and tuberculosis;
Support coal mine safety in eastern Ukraine to generate small
business development; and
Facilitate the donation of millions of dollars of goods and supplies
to needy Ukrainians.
President Yushchenko's visit to the U.S. in April represented a dramatic and
positive shift in the relationship, and exemplified the new opportunities
created by the Orange Revolution. In Washington, Yushchenko met with
President Bush, Secretary Rice, Secretary Rumsfeld and other Cabinet
officials, as well as with members of Congress and the Ukrainian-American
community. I will not soon forget President Yushchenko's powerful and
effective speech, and your warm welcome, at the historic joint session of
Congress.
Presidents Bush and Yushchenko also agreed on a joint statement in
Washington outlining the New Century Agenda for the American-Ukrainian
Strategic Partnership. The document, which I encourage you to read as a
significant blueprint for our new relationship, focuses on concrete areas
for our cooperation. Let me mention a few.
The United States and Ukraine pledge to work together to strengthen
democratic institutions in Ukraine and to advance freedom in Europe, its
neighborhood and beyond. We will work to defeat terrorism wherever it occurs
and to advance economic development, democratic reforms and peaceful
settlement of regional disputes. We will also work together to back reform,
democracy, tolerance and respect for all communities, and peaceful
resolution of conflicts in Georgia and Moldova, and to support the advance
of freedom in countries such as Belarus and Cuba.
In the area of economic policy, the United States and Ukraine will continue
close cooperation on the issues that are vital to Ukraine's growth and
prosperity. The Ukrainian government will seek U.S. recognition as a market
economy. We are committed to working together to achieve Ukraine's
accession to the World Trade Organization (WTO) and to moving as rapidly as
possible to lift the provisions of the Jackson-Vanik amendment. We have
initiated an energy dialogue to advance Ukraine's plans to restructure and
reform its energy sector to encourage investment, diversify and deepen its
energy supplies, bolster commercial competition, and promote nuclear
safety.
In terms of international relations, the United States pledges to support
Ukraine's NATO aspirations and to help Ukraine achieve its goals by
providing assistance with challenging reforms. Our support, however,
cannot substitute for the important work that the Ukrainian government
itself must undertake.
The fight against the proliferation of weapons of mass destruction and their
means of delivery is one of the most important issues facing the
international community today. The United States and Ukraine will deepen
our cooperation on nonproliferation, export controls, border security and
law enforcement. We hope to deter, detect, interdict, investigate and
prosecute illicit trafficking of these weapons and related materials. We
also hope to enhance the security of nuclear and radiological sources
and responsibly dispose of spent nuclear fuel.
The security and stability of nations increasingly depends on the health,
well-being and prosperity of their citizens. The United States and Ukraine
therefore have committed to cooperate on a broad agenda of social and
humanitarian issues, including halting the spread of HIV/AIDS and TB;
fighting the scourge of organized crime, trafficking in persons and child
pornography; and completing the Chornobyl Shelter Implementation Plan.
We also support a bold expansion of contact between our societies. To
this end, the United States and Ukraine will work to lower the barriers that
separate our societies and to enhance citizen exchanges, educational
training opportunities and cooperation between business communities of
both countries.
A NEW CENTURY AGENDA: PROGRESS TO DATE
This is a bold and ambitious agenda for the United States and Ukraine.
Some of the tasks it lays out are longer-term; others can be completed
fairly quickly. We are in close touch with the Ukrainian government to
discuss these and many other issues. Ambassador Herbst meets with
high-level Ukrainian officials almost daily.
Secretary Rice and other high-level officials from the State Department and
other U.S. agencies consult with their Ukrainian counterparts frequently.
Members of Congress travel to Ukraine on a regular basis. At any particular
time we are in the process of making preparations for two or three
delegations.
Among the most significant mechanisms for maintaining close contact is a
new U.S.-Ukraine Bilateral Coordination Group. This group, which I co-chair,
is composed of senior U.S. and Ukrainian officials from a number of
different agencies and complements the work being done through our
embassies and high-level visits. The group is responsible for overseeing
progress on implementation of the New Century Agenda.
Our first session was just a few weeks ago in Kiev, and I am happy to report
on progress to date on some of the priorities identified by Presidents Bush
and Yushchenko. Our operational principle is simple: as Ukraine moves
ahead in its reforms so will our relations and our response. This process is
now underway:
NATO: The U.S. supports Ukraine's desire to draw closer to NATO. The
pace, intensity, and end state of Ukraine's relationship with NATO will
depend on Ukraine's own wishes, and on its willingness and ability to meet
NATO performance-based standards through progress on reforms.
For our part, we are committed to ensure that NATO's door remains open.
We proudly led Allies to offer Ukraine an Intensified Dialogue on NATO
Membership Aspirations at the April meeting of NATO foreign ministers in
Vilnius, Lithuania. Intensified Dialogue provides a platform for Ukraine to
work closely with NATO to prepare for the Membership Action Plan (MAP)
program, the formal path to NATO membership. There is still much work to
be done.
The key is now for the Ukrainian government to complete the political,
economic, defense, and security reforms required for membership
consideration, and to build domestic support in Ukraine. A free and fair
parliamentary election conforming to international standards in March 2006
will be an important marker. We look forward to working with Ukraine and
our Allies as we take the NATO-Ukraine relationship to a new and more
collaborative level.
NATO PfP Trust Fund: Also at NATO, the U.S. announced that it would
lead the first stage of a Partnership for Peace Trust Fund project to
destroy obsolete and excess munitions, weapons, and MANPADS in Ukraine.
Ukraine has enormous weapons stockpiles and ammunition dumps on its
territory that present public safety, environmental and proliferation risks.
There have already been explosions and fires at a number of these facilities
as the result of accidents and unstable munitions.
Given the size of the problem, the NATO PfP destruction program is fittingly
the largest project of its kind ever undertaken anywhere. It will take about
a dozen years to complete. As lead nation in the program, the U.S. is
responsible for soliciting donations to the trust fund from other Allies. To
date, the U.S. leads all donors with an initial contribution of $2.14
million. Destruction activities should begin in the next few weeks.
Iraq and the Global War on Terrorism: The U.S. deeply appreciates
Ukraine's substantial military contribution toward building a peaceful,
secure, and democratic Iraq. In keeping with his campaign promise to the
Ukrainian people, President Yushchenko is conducting a phased withdrawal
of the Ukrainian contingent in MNF-I throughout 2005, which will see the
remaining troops return to Ukraine by the end of the year.
Ukraine has consulted closely with us and with other coalition partners at
every step. Ukraine, however, has made it clear that it will remain
committed to helping Iraq. Ukraine will retain trainers and some staff
officers in Iraq after the primary contingent departs, and has indicated its
willingness to participate in reconstruction projects in a number of
different economic sectors. Ukraine has also expressed interest in
contributing to NATO's Training Mission in Iraq, and we are encouraging
their participation in that effort.
We also are very grateful for Ukraine's support for Operation Enduring
Freedom in Afghanistan. Ukraine has provided thousands of over-flight
clearances, as well as military supplies to the Afghan National Army.
Ukraine also has continued to play an active and constructive role in
peacekeeping operations around the world, such as its 320-person
contingent in Kosovo. Ukraine has also contributed troops and considerable
resources to peacekeeping operations in Lebanon, Sierra Leone, Liberia,
the Golan Heights, and Burundi.
In short, Ukraine has been a key partner and contributor to common security
and the global fight against terrorism. In recognition of this cooperation,
we are including Ukraine in the Coalition Solidarity Fund and will continue
to provide monies to assist with peace-keeping operations and other
activities, such as for military inter-operability with NATO and for
equipment and training.
Non-Proliferation: We have made good progress with Ukraine on our
non-proliferation agenda since the Orange Revolution building on a new
political will from the Ukrainian leadership. We applaud Kiev's decision to
expand our dialogue on these issues, and we are pleased to note a new
openness in our discussions.
Since March, Ukraine has signed the Second Line of Defense agreement
to install radiological portal monitors at border locations; signed an
Implementing Agreement to improve the security of radiological sources at
the RADON sites in Ukraine; added certain chemical precursors to its control
lists and consequently was admitted into the Australia Group; and agreed to
destroy its last five strategic bombers and associated missiles under an
existing DOD CTR project.
We are working closely with the Ukrainians on these issues as well as on
concluding a Biological Threat Reduction Implementation Agreement
(BTRIA) and on the disposal of highly enriched uranium from sites in
Ukraine. Ukraine is becoming a key partner in preventing illegal arms
exports.
WTO: The Ukrainian government has identified accession to the WTO
this year as a major priority, and we strongly support Ukraine's bid. We
have provided technical advice to the government and are consulting
regularly in the informal working party meetings in Geneva. The Ukrainian
government has struggled to push needed WTO-compatible legislation
through parliament, but as I mentioned earlier - after a concerted effort by
President Yushchenko, Prime Minister Tymoshenko, and Rada Speaker
Lytvyn - on July 6-7 the Rada passed a number of important WTO-related
bills. These included a set of amendments to Ukraine's Optical Disk
legislation, which will strengthen Ukraine's protection of intellectual
property rights, and bills on agricultural tariffs, insurance branching,
auditing, automobiles, and oilseed export duties.
But much remains to be done. If the government hopes to achieve its
objective of joining the WTO this year, it must launch an all out effort to
consolidate support and pass more legislation in the Rada this fall, and
bring to closure the outstanding bilateral negotiations. But Ukraine's WTO
prospects do appear to be brighter today than a month ago.
With regard to the U.S.-Ukrainian agenda, passage of the Optical Disk
amendments was particularly significant. The Administration expects to see
quick and effective implementation of these amendments and strengthening of
the enforcement of all IPR laws. Now that President Yushchenko has signed
the amendments, without changes, into law, the Administration is examining
whether to terminate $75 million worth of trade sanctions currently imposed
on Ukraine. This decision could be made within the next few weeks.
In addition, the Administration will conduct a Special 301 out-of-cycle
review of Ukraine, which is currently identified as a Priority Foreign
Country because of a record of media piracy and weak enforcement of IPR
legislation. We will also consider whether Ukraine's Generalized System of
Preferences (GSP) benefits should be restored. We will continue to work
with Ukraine on IPR issues in the context of the out-of-cycle review and our
bilateral negotiations regarding Ukraine's WTO accession. With regard to
the latter, Ukraine must address additional tariff, non-tariff, and services
issues in its bilateral negotiations with us.
Market Economy Status: In April, the Department of Commerce
initiated a review of the Ukrainian government's petition for designation of
Market Economy Status (MES). The review is a quasi-judicial process and
must be completed by mid-January 2006. Department of Commerce officials
have met several times with Ukrainian officials to discuss Ukraine's
petition, and Commerce teams visited Kiev in March and again this month
to go over the review process.
For example, we have urged the government of Ukraine to reach out to
foreign investors and address some of the concerns of the business
community. We need to see the Ukrainian government taking decisions
this fall which demonstrate its increasing commitment to free-market
principles.
Jackson-Vanik: Ukraine has complied with the provisions of the
Jackson-Vanik Amendment to the Trade Act of 1974 for over a decade.
This Administration strongly supports Ukraine's immediate "graduation" from
Jackson-Vanik and the extension of Permanent Normal Trade Relations to
Ukraine. Some have resisted acting on Jackson-Vanik until Ukraine better
addresses commercial issues, such as IPR.
We view our WTO bilateral negotiations as the appropriate forum in which to
press Ukraine on our commercial and trade concerns rather than using
Jackson-Vanik. Nonetheless Ukraine's recent approval of Optical Disk
amendments and other WTO-related legislation should merit reconsideration
of the delay on graduation. As the Ukrainian people look for tangible signs
of our new relationship, they are perplexed that Ukraine remains tainted by
the legacy of Jackson-Vanik. We urge Congressional action on this matter.
Energy: During his May visit to Kiev, Secretary Bodman initiated a
consultative mechanism to help advance Ukraine's plans to restructure and
reform its energy sector, diversify its energy supplies, and encourage
investment. We have urged the Ukrainians to address the commercial viability
of any energy strategy. U.S. firms are eager to invest in Ukraine, and it is
vital that the government of Ukraine work with the private sector and create
a transparent and supportive framework for investment.
Chornobyl: The Chornobyl Shelter Implementation Plan (SIP) is a key
element of the successful G7 effort that led to the permanent closure of the
last operating nuclear reactor at Chornobyl in 2000. Together, the
international donor community and Ukraine have pledged over $1 billion to
complete the SIP. The U.S. is the largest single donor. Our May 2005 pledge
of $45 million brings our cumulative total to $203 million.
Visas: We warmly welcome President Yushchenko's July 1 decree
eliminating visa requirements for U.S. citizens traveling to Ukraine for
business and personal trips of 90 days or less within a six-month period.
President Yushchenko's far-sighted move, which complements an earlier
similar decision to eliminate short-term visa requirements for citizens of
EU countries and Switzerland, should boost tourism and investment, and
facilitate people-to-people contacts. In response, we have eliminated
non-immigrant visa issuance fees for Ukrainians, leaving only the ($100)
non-waivable application fee that is charged worldwide to all applicants
for short-term U.S. visas.
Health: HIV/AIDS is spreading in Ukraine at an alarming pace. As I
mentioned previously, we intend to use some of the supplemental funding
granted to us by Congress to expand the reach of ongoing anti-HIV/AIDS
projects. We intend to help the Ukrainian authorities strengthen national
institutions dealing with HIV/AIDS and its victims, expand care and support
service for HIV-affected children from two to five of the eight most
affected regions in Ukraine, and support legislation and policies for a
national anti-retroviral treatment program and national prevention programs
among key risk groups.
Ukraine's current system for TB control is costly and ineffective. We plan
to use some of the supplemental funding for prevention and care for HIV/TB
co-infection, and to replicate a successful pilot project that dramatically
decreases the cost and improves the effectiveness of TB treatment.
CONCLUSION
Earlier this month I led an inter-agency team to Kiev to meet with President
Yushchenko, Prime Minister Tymoshenko, State Secretary Zinchenko, National
Security and Defense Council director Poroshenko, Speaker Lytvyn, Foreign
Ministry representatives, and others. I conveyed a simple message to all of
my Ukrainian interlocutors. Ukraine has an historic window of opportunity -
created by the heroism and determination of the hundreds of thousands of
ordinary citizens who came together in the Maidan in Kiev and in the central
squares of cities throughout Ukraine - to consolidate and make permanent
reforms that will ensure a democratic, prosperous future within a Europe
whole, free and at peace.
The U.S. supports Ukraine's reform efforts and European and Euro-Atlantic
aspirations and will respond meaningfully to key initiatives. But, like
other reforming nations such as Poland before it, Ukraine and its leaders
must make the necessary decisions and take the necessary steps.
Ukraine's future is in its hands.
As I said at the outset, there are enormous expectations of the new
government, and, given the complex and difficult environment and the
enormity of the task at hand, Ukraine's transformation will not happen
overnight. But it is vital that Ukraine's new leaders persevere and succeed.
The stakes are clear for Ukraine, and the success of the Orange Revolution
will have impacts beyond Ukraine's borders. It inspires hope in the hearts
of the oppressed and signals that democratic freedom is on the ascendance.
To succeed, Ukraine's leaders must invest their substantial political
capital in further reforms, particularly in the economic sphere where
progress has been slow. There is never an easy time for difficult, but
necessary reform: there is always an election on the horizon, a bureaucracy
that resists, a constituency that opposes. But if the will is there, reform
can be achieved.
The Central European states have come a long way since 1989, and I
personally witnessed the success of Poland's reforms in the 1990s. From
my meetings in Kiev, I am confident that President Yushchenko and his
team have the vision and commitment necessary to do what needs to be
done, and to lead Ukraine into the new century. The U.S. will pitch in to
help.
Thank you very much for allowing me to appear before your Committee
today. I would be happy to answer any questions you may have. -30-
---------------------------------------------------------------------------------------------------------
By Ambassador Daniel Fried, Assistant Secretary for European and
Eurasian Affairs, United States Department of State
=============================================================
2. DEVELOPMENTS IN THE AFTERMATH OF THE ORANGE REVOLUTION
TESTIMONY: By Ambassador Nelson C. Ledsky
Regional Director, Eurasia
National Democratic Institute (NDI)
House International Relations Committee
Subcommittee on Europe and Emerging Threats
Washington, DC, Wednesday, July 27, 2005
The Action Ukraine Report (AUR), Number 533, Article Two
Washington, D.C., Friday, July 29, 2005
TESTIMONY:
Mr. Chairman and members of the Committee, on behalf of the National
Democratic Institute (NDI), I am pleased to have the opportunity to speak
about recent developments in Ukraine. American non-governmental
organizations, including NDI, the International Republican Institute and the
National Endowment for Democracy, have been involved in Ukraine since
the early 1990s.
Together and with support from Congress, these groups have worked
cooperatively and productively to support democratic development in
Ukraine. Since 1992, NDI has conducted programs in Ukraine aimed at
strengthening democratic political parties, parliamentary groups, and civic
organizations. I appreciate the chance to highlight these achievements
and the opportunities facing Ukraine today.
I. INTRODUCTION
The events surrounding the 2004 presidential election have fundamentally
changed Ukraine's political and social landscape. Following the Orange
Revolution and its momentous consequences, Ukraine now faces the
daunting task of establishing stability and normalcy across the country,
developing a new perspective on governance, and instituting political and
economic reforms.
Viktor Yushchenko was sworn into office in January 2005 after democratic
party leaders chose to forsake their individual political ambitions and
coalesce together behind a common candidate and a united call for free and
fair elections. Many of these leaders are now members of the government.
Today, almost eight months later, there have been important successes.
The Yushchenko administration has made tackling corruption a main feature
of its reform agenda and to meet this goal has taken promising steps, such
as dismissal of the notoriously corrupt traffic police and imposing new
restrictions on customs and VAT duties.
Ukraine has taken a leading role in the regional coalition GUAM (formed
of Georgia, Ukraine, Azerbaijan, and Moldova) and is speaking out for a
peaceful resolution of the Transdnistria conflict and for freedom in
Belarus. The government has ultimately made a decision on the intended
reprivatization of ill-gotten businesses.
Parliamentary elections scheduled for March 2006 will be an important test
of this government's ability to sustain the support of the Ukrainian people.
NDI expects to see elections that are well organized and conducted by an
impartial Central Election Commission under conditions of transparency.
NDI is encouraged to see that the government has decided to recognize
and amend electoral legislation to allow domestic nonpartisan election
observers, as prescribed by Ukraine's decision to sign the 1993
Copenhagen agreement of the OSCE. There remain challenges to the
election process, including a first-ever fully proportional election for the
parliament and the task of replacing corrupt central, territorial, and
precinct election offices with new officials.
The success of the Ukraine experiment depends, in the final analysis, on the
ability of the Yushchenko government to actively engage and inform citizens
at every stage of the reform process. Citizens of Ukraine currently have
high expectations. They will need to understand that the sacrifices they
will be asked to make will ultimately result in more political and economic
opportunities and a more democratic society.
The Yushchenko government will need to engage in a dialogue with citizens
so that the needed reform process has a constituency amongst the citizens of
Ukraine. The success of the 2006 parliamentary elections will determine the
government's ability to mold support for reforms, implement these reforms,
and continue on the path of creating a democratic Ukraine.
II. CIVIL SOCIETY MUST BE ENGAGED
One of the most positive developments in Ukraine's democratic
transformation has been the growth of civil society. From the Soviet- era
human rights activists who gained new momentum in the early 1990s
through the young people who called for President Kuchma's ouster last
year, civil society has been a consistent bright spot on the Ukrainian
political landscape.
Most civic groups that engaged in political activism in the Kuchma era
were harassed. This mainly took the form of selective government
enforcement of tax and other policies and attempts to intimidate individual
leaders. Following the events of 2004, NDI has found that Ukrainian civil
society has emerged intact and newly energized by opportunities for reform.
The following hallmarks of the civil sector offer particular promise for
continued progress:
Participation of Young People
Pora (Enough) the civic group that last year brought thousands out into the
streets is a youth-based movement. But, youth activism has a longer history
in Ukraine. Since 1994, NDI helped a network of mainly young people all over
the country form the Committee of Voters of Ukraine (CVU) the country's
largest non-partisan politically active NGO.
With more than 100 branches throughout the country, CVU has attracted
tens of thousands of young people into Ukrainian political life through the
experience of monitoring elections, promoting linkages between citizens
and government bodies, and citizen education programs.
Between elections, the young activists leading CVU's grassroots chapters
have created sophisticated, regional and national programs to monitor
government responsiveness to citizens and involve Ukrainians in political
life in their communities.
CVU, Pora, and others groups like them are adjusting to new roles as
government "watchdogs" in Ukraine's political environment. Particularly
at the local level, they are finding that changes come slowly. Government
officials often maintain long-standing attitudes of the Soviet era. The
current government has yet to attempt extensive administrative reforms and
citizen "watchdog" groups are, of course, appropriate even in the most
developed democracies.
Focus on Stemming Corruption
Anger at official corruption and abuse of government authority has found
outlets in hundreds of small community movements. These NGOs are driven
by farmers outraged by corruption in the land privatization process, by
small business people fed up at selective tax and other government
inspections, by motorists weary of being shaken down by police.
NDI has provided assistance to dozens of such groups throughout Ukraine.
In many cases they have successfully lobbied for changes to laws and
regulations have called for the removal of corrupt officials. These NGOs are
generally isolated from the international community, and poorly funded but
intensely determined, fired by a group of individuals who believe they are
searching for justice. The success of these groups testifies to the breadth
and depth of indigenous civic activism in Ukraine.
Ukraine now boasts a full range of civic groups that represent many
constituencies, including women, children, the elderly, the disabled,
environmentalists, and others. While some of these groups are still in
the process of defining their agendas, the very range of their activity is
positive. It speaks to the ability of the Ukrainian political system to
provide a vehicle for involvement for political activists of every stripe
and citizens with every form of grievance.
III. CHANGES MUST BE MADE AT ALL LEVELS OF GOVERNMENT
Since January, President Yushchenko sent a new group of leaders to the
top of Ukraine's power structure, but left intact a sprawling government
bureaucracy.
Today, despite appointing new ministers, the Yushchenko administration
has had to rely on existing mid-level and local level bureaucrats. This is
the case especially in the regions. In further instances, the Yushchenko
has faced additional problems with newly appointed Oblast governors not
adopting or implementing reforms.
The bureaucracy has been characterized by a Soviet-era governing
philosophy, nepotism, and entrance barriers for talented young people.
The development of a professional civil service is also hindered by holdover
policies from the Kuchma administration. Until there are visible changes in
the government or reforms at the lowest levels, it will be difficult to
convince citizens that the Yushchenko government represents a change
from the previous regime.
To this end, NDI is launching an internship and new staff development
program geared toward bringing young professionals into government
institutions and developing the skills of new hires. Participants will take
part in an exchange program in Poland, Latvia, Estonia and other eastern
European countries where they will work alongside civil servants to gain
practical skills and develop deeper insights into the principles and
practical execution of democratic governance.
The participants will then return to Ukraine to begin or resume work in
government ministries. This program will identify and train promising
Ukrainian youth, including those recruited by the government, in an effort
to create a talent pool of qualified professionals capable of carrying out
the countless reforms proposed by the new regime.
IV. CONCLUSION
Ukraine and its democratic future are important to the region and to the
world. Democrats in Eastern Europe and elsewhere in the former Soviet
Union are looking to Kyiv for inspiration. If Ukraine can successfully move
toward Western Europe and the Atlantic community, so too can Moldova
and Belarus, Azerbaijan and Armenia, and even the states of Central Asia.
Russia, too, will be influenced by what happens in Ukraine - in a positive
direction if things go well, in a negative direction if things go poorly.
The developments in Ukraine, Georgia, and now Kyrgyzstan are all examples
for the rest of the world. The success of these developing democracies will
make more untenable the remaining authoritarian regimes across Eurasia.
The international community has learned that dramatic democratic transitions
do not guarantee a democratic state. Developing a democratic Ukraine will
require sustained international assistance to the government of Ukraine to
complete its necessary political and economic reforms.
Ukraine has a long and difficult road ahead. The hopeful beginnings of 2005
need to be encouraged, supported, and strengthened. Congress has in its
power to assist by focusing on professional exchanges, supporting the
international community working in Ukraine, partnering with Ukraine on
anti-corruption measures, and assisting the government with restructuring
and improving the rule of law.
In addition, congressional support for assistance to the parliament of
Ukraine in 2006 under the Democracy Assistance Commission would be
useful and deeply appreciated.
Ukraine is on the right trajectory, but the future is not assured. We must
seize the opportunity to help create a democratic, socially responsible
society. The US must invest sufficient resources into Ukraine to ensure its
success. -30-
------------------------------------------------------------------------------------------------------------
By Ambassador Nelson C. Ledsky, Regional Director, Eurasia
National Democratic Institute (NDI), Washington, D.C.
=============================================================
3. DEVELOPMENTS IN THE AFTERMATH OF THE ORANGE REVOLUTION
STATEMENT: Of Chairman Elton Gallegly
House International Relations Committee
Subcommittee on Europe and Emerging Threats
Washington, DC, Wednesday, July 27, 2005
The Action Ukraine Report (AUR), Number 533, Article Three
Washington, D.C., Friday, July 29, 2005
STATEMENT:
Today, the Subcommittee on Europe and Emerging Threats is holding a
hearing on the developments in the Ukraine in the aftermath of the Orange
Revolution.
Ukraine has reached a pivotal crossroads in its development as an
independent nation. With the fall of the Soviet Union, Ukraine embarked
slowly on the path to democracy with many of the same leaders that had led
the country during the Soviet times. As the Presidential elections of 2004
approached, Ukraine appeared likely to continue to be governed by the
same elites who were viewed by many Ukrainians as corrupt and out of
touch.
All of that changed with the rise of the Orange Revolution and the
leadership of Victor Yushchenko (YUSH-CHEN-KO). With his victory in the
2004 presidential elections, Yushchenko breathed new life into the country's
democracy. President Yushchenko visited the United States from April 4 to
7, 2005 to meet with President Bush and Secretary of State Rice.
Following those meetings, the Administration pledged to work with Ukraine
to complete bilateral negotiations for Ukraine's accession to the WTO and to
support Ukraine's efforts to join NATO by providing assistance with reforms.
But now the honeymoon is over and the hard work of implementing political
and economic reforms is just beginning. By most accounts, the first few
months of the new regime were rocky as the new government found its footing
and spent considerable amount of time negotiating with Ukraine's multiple
political parties. Since May, the government has tried to focus on its core
goals of political and economic reform.
There are a couple of main issues we would like to focus on today. The
first [1] is economic reform in Ukraine. Economic reform in the Ukraine has
two main components. The first is removing many of the Soviet era laws
governing the economy and re-privatizing a number of the companies that
were the result of corrupt privatizations by the former Kuchma regime.
This issue ties closely in with the second [2] issue, the potential
accession of Ukraine into the WTO. In its most recent session, the
Ukrainian parliament passed a number of laws required by the international
community to join the WTO, including a strong intellectual property
protection statute, but much remains to be done.
Third [3], the application of the Jackson-Vanick amendment and the hurdles
to granting permanent Normal Trade Relations status remains an issue on
which there has been very little movement. The Administration has publicly
stated its support for such a move, but the decision is in the hands of the
Congress.
Finally [4], I hope the Administration and our other witnesses will discuss
the likelihood and timetable for Ukraine joining NATO, an exceptionally
sensitive issue in light of Ukraine's relation with Russia and the presence
of the Russian fleet in Ukrainian ports on the Black Sea.
I will now turn to Mr. Wexler for any opening statement he may wish to make.
=============================================================
4. PRIME MINISTER TYMOSHENKO REJECTS U.S. CONCERN
OVER UKRAINE'S ECONOMIC PERFORMANCE
By Natasha Lisova, Associated Press Writer
AP, Kiev, Ukraine, Thursday July 28, 2005
KIEV, Ukraine - Prime Minister Yulia Tymoshenko on Thursday insisted that
Ukraine's economy is developing dynamically, rejecting a U.S. official's
concern over the new government's economic performance. "I rely exclusively
on statistics .... (and) They show significant development in Ukraine's
economy," Tymoshenko told journalists.
She said the economy has registered 4 percent growth, family incomes have
increased 26 percent and inflation was down to 6.4 percent in the first half
of the year.
Last year, Ukraine's economy was the fastest growing in Europe, registering
GDP growth of 13.2 percent, and many government officials had expressed
hope that the worldwide attention focused on their country after last year's
Orange Revolution would lead to a flood of foreign investment. So far, that
hasn't happened.
The U.S. State Department expressed concern Wednesday that the six-
month old Ukrainian government is not fully pursuing "essential free market
reforms."
"Ukraine is building all necessary market components," countered
Tymoshenko, advising "all officials to study statistics before making any
statements."
Assistant Secretary of State Daniel Fried, testifying before a House
International Relations subcommittee on Wednesday, also criticized the
new Ukrainian government's "interventionist and inflationary" policies.
In his prepared remarks, Fried said price controls on gasoline earlier this
year briefly produced shortages and "raised questions about the govern-
ment's commitment to market principles."
The price limits had been endorsed by Tymoshenko, and were removed
only after President Viktor Yushchenko intervened, scolding his government
for violating free market policies.
Earlier this year, Ukraine's Central Bank strengthened the national currency
the hryvna against the U.S. dollar, which boosted inflation and took a fair
chunk from the savings of many Ukrainian who prefer to keep their financial
assets in foreign currency. A big increase in pensions has also added to
inflationary pressure.
Economists had earlier predicted a downturn in growth this year in Ukraine,
caused in part by falling world prices for metals and investor uncertainty
about the new government's plans, particularly its reviews of past
privatization deals. -30-
=============================================================
5. TYMOSHENKO PROMISES NO ECONOMIC CRISIS IN UKRAINE
Ukrainian News Agency, Kyiv, Ukraine, Thu, July 28, 2005
KYIV - Prime Minister Yulia Tymoshenko has vowed at a press conference
that there will be no crisis in economy. "I would like you to forget the
word "crisis" We will have peace," she said.
Tymoshenko flatly denied any predictions for a financial crisis in autumn
and compared current changes in the country with a body of a sick man
who begins to recovery when his temperature is high. "I would like us to
get over all recovery crisis," the Prime Minister said.
She refuted the allegation that her government uses administrative methods
to manage economy. "I deny presence of any manual methods," she said and
added that if such allegations are voiced, it means that the government work
is effective.
"No tendentious shrieks, no experts will prevent us from doing that," the
prime minister said. Tymoshenko said she knows that someone calls her
socialist, but she does not think it can insult a politician and she herself
has a good attitude towards socialists.
She further attributed the fact to active social policy aimed at better life
for people rather than populism. "All our actions are aimed at justice, not
at populism," she said.
As Ukrainian News earlier reported, parliamentary deputy, deputy chair-
woman of the People's Party Kateryna Vaschuk forecast a bread crisis in
Ukraine for 2005. When assessing the 100 days' government performance in
May, Tymoshenko mentioned among failures the critical situation on the
petroleum and meat markets.
Ukraine witnessed a crisis on the petroleum market in April and May during
which the price for petroleum products went high and the demand remained
unmet. -30- [The Action Ukraine Report Monitoring Service]
=============================================================
6. UKRAINIAN STATE RESERVE AND KHLIB UKRAINY PLAN TO BUY
GRAIN AT 10-15% HIGHER PRICES THAN PAID BY GRAIN
TRADERS ACCORDING TO PM TYMOSHENKO
PM supports major government intervention into private markets
Ukrainian News Service, Kyiv, Ukraine, Thu, July 28, 2005
KYIV - The State Committee for Material Reserve and the state joint stock
company Khlib Ukrainy plan to buy grain at commodity markets at prices
higher by 10-15% than those proposed by grain traders. Prime Minister
Yulia Tymoshenko informed journalists about this.
"We have an opportunity, starting from Friday, to enter all agricultural
commodity markets," she said. For instance Prime Minister emphasized
that procurement price of third grade. Such procurements, in the words of
the head of government, will be performed, for instance, to ensure
fulfillment of export contracts by Khlib Ukrainy, that the company has
concluded already for 2.5 million tons of grain.
Tymoshenko called on farmers to abstain from selling grain trade products
at reduced prices. "If you don't hurry, your grain will bring good money,"
she said.
As Ukrainian News earlier reported, Agricultural Policy Minister Oleksandr
Baranivskyi recommends that the agricultural producers keep from selling
grain during the period of its lowest cost in September-October 2005.
The Cabinet of Ministers announced its intention in June to buy grain from
farmers at world prices via the State Reserve and Khlib Ukrainy .
UGA Director General Volodymyr Klymenko said on June 14 that the price
of wheat at the seaport constitutes USD 100 per ton, including USD 16.6
of VAT.
Agricultural Policy Ministry has set the minimum prices of grain and
sunflower in the beginning of June. For instance, the prices of soft winter
and spring wheat were set at the following levels: UAH 930 per ton of the
1st grade. The Ministry of Agrarian Policy forecasts grain forecast in 2005
at the level of 35-37 million tons. -30-
=============================================================
FOOTNOTE: Once again the prime minister's support of the private
business sector and private markets seems to be through her words
and statements only, and not found in her deeds, actions and the
type of programs she sets up or endorses.
Actions like those outlined in the news article above, in the past, have
cost the government of Ukraine millions of dollars from the state treasury
and have been connected to graft and corruption. The history of KHLIB
UKRAINY is one of major losses, manipulation of markets, payoffs, and
corruption of all kinds.
One major player in the private Ukrainian agricultural business scene
is quoted as saying today in Ukraine after hearing the news above:
"Is someone going to ask the braided one, why a free market
economy would use a state entity that typically defaults on contracts,
as a competing exporter of grain.
"One international grain company, for example last year, lost $1.0 mil
and then $600,000 on prepaying warehouse receipts from Khlib
Ukraina, but can not sue this state entity or place them in bankruptcy.
Khlib Ukraina also defaulted on a contract to supply 30,000 tons of
grain to an international grain company in Crimea last year.
I think the orange revolution was a media hype."
It is just astounding that the Yushchenko/Tymoshenko government
is putting Khlib Ukraina back in business using government money to
compete with the private sector and in the process, most likely, create
losses for the government of Ukraine. EDITOR
=============================================================
7. UKRAINE DISAPPOINTS THE WEST
European investors do not rush ahead with investment
programs for the Ukrainian economy
PRAVDA.RU, Moscow, Russia, Thursday, July 28, 2005
MOSCOW - The West was smitten overnight by the Ukrainian revolution last
year. It was a brief affair, though. The West became quickly disenchanted
after taking a better look at the product in the orange wrapper. The
European press were initially raving about "progressive," democratic"
reformer Viktor Yushchenko. The media changed its outlook for Ukraine's
glorious future eight months after the coup d'etat.
THE WEST WILL NOT HELP MR. YUSHCHENKO OUT
Below are some recent headlines printed by the world's leading periodicals:
"Ukrainians' euphoria faded away" (Financial Times Deutschland); " 'Orange'
impotence" (Die Tageszeitung, Germany); "Orange revolution loses its
splendor" (The Financial Times, Britain); "It is about time Ukraine revised
its economic policy" (The Heritage Foundation, USA); "Investors complain
about chaos in Ukraine" (Berliner Zeitung, Germany). The list can go on.
Unlike Mr. Kuchma's regime that had close cooperation with Russia only, the
"orange" opposition got support from the EU and America prior to the
presidential campaign. The revolution leaders promised that Ukraine would
integrate into the EU and cease to be Russia's younger sister.
However, cooperation between the U.S. and Ukraine boils down to financial
aid allocated at a regular basis by U.S. Congress to "support the democratic
processes" in Ukraine. Investors in Europe take their time too. They do not
rush ahead with investment programs for the Ukrainian economy. They prefer
to watch the developments from a distance.
Viktor Yushchenko probably has not fully perceived that neither his
personality nor the personality of Mrs. Tymoshenko had anything to do with
the credit of trust extended by the West to the new authorities after the
revolution. It was all about the concept of struggle against the
"authoritarian" and Russia-oriented Leonid Kuchma. Once the revolutionary
authorities started making one mistake after another, yesterday's well-
wishers turned into today's obstructionists.
PROFITS SPENT ON SELF-ADVERTISING
The popularity rating of a new regime mostly depends on the government's
social policy. The increase in pensions and wages is the only election
promise kept without fail by the "orange ones." According to regular
statements by Mr. Yushchenko, the new government has increased the
amount of average wage by 17% while the amount of average pension rose
by 16%.
Meanwhile, the government is pretty reluctant to make public other economic
indicators. For example, last week the Ministry of Economy changed this
year's forecast for economic growth rate from 8.2% to 6.5%. The figures are
significantly lower than last year's indicator.
The revolutionaries had great expectations with regard to some income
items. But their expectations fell flat. Privatization deals fetched only
$100 million in the first half of the year while the 2005 target figures for
privatization deals stand at $1.2 billion.
Implementing social programs is a duty of the government. The government
officials figured out the way to take advantage of the situation and give a
boost to their own popularity as the social programs got under way. Unlike
some colorful yet useless campaign leaflet, a few rubles in the voter's
pocket can really make a difference in terms of the election results. The
method is not of Ukrainian origin, though.
Having come to power after the coup d'etat, the Yushchenko-Tymoshenko
tandem is going to experience the effects of legal and traditional
parliamentary election in March 2006. A new administrative reform will
come into force after the election. The reform will vest parliament with the
power to nominate the prime minister who is currently nominated by the
president.
Therefore, Mr. Yushchenko is keen to keep his supporters as a majority in
parliament and use them as a stumbling block for any opposition candidate
who might try to enter the government. In the meantime, Mrs. Tymoshenko is
making every effort to retain her present position. On the one hand, both of
the above are pursuing the same goal i.e. minimize the number of seats of
the opposition in new parliament.
On the other hand, Mr. Yuschenko wants to make sure that the prime minister
is a trustworthy protege he personally handpicked for the job, the person's
name does not seem to matter to him. As regards Mrs. Tymoshenko, it is a
matter of principle for her to stay where she is now. To succeed, she is
ready to recruit not only vacillating semi-opposition groups but Mr.
Yushchenko's active supporters as well.
"ENVY ANB RIVALRY IN LIEU OF REFORMS"
Noisy public disputes between the members of the president's team have long
become something of a trademark of the new Ukrainian regime. One day we
hear President Yushchenko threaten to fire Prime Minister Tymoshenko for
instigating the fuel crisis on a nationwide level.
The next day we hear Prime Minister Tymoshenko publicly blame her deputies
for the lack of professionalism. Then the Speaker of Ukrainian parliament
Vladimir Litvin and the Prime Minister Tymoshenko engage in a war of words.
However, those involved in the controversies are adamant that everything is
fine in the house of the "orange ones." Once another incident comes to
light, the powers that be begin hugging one another while chanting the
mantra about "the one united team."
Meanwhile, assistants and advisors to Ukraine's top officials are more
outspoken in their comments on the situation.
"Mrs. Tymoshenko shares the most extreme leftist and populist views, she
is an advocate of economic paternalism, and she has great charisma,"
said Boris Nemtsov, an economic adviser to President Yushchenko.
Mr. Nemtsov believes that Mr. Yushchenko is a liberal, a democrat, a
politician with a clear orientation on the West. According to him, envy and
rivalry are the main ingredients of today's political situation in Ukraine.
The reforms have been put on hold, adds he.
"The Yushchenko-Tymoshenko team is going to face some serious
problems," said Grigory Nemirya, and adviser to the Ukrainian prime
minister. He believes there is a lack of coordination between the
authorities.
"If the last year's revolution was a controlled revolution, a controlled
counterrevolution may break out within the next eight months," said Mr.
Nemirya.
Experts estimate that a new crisis may kick off in Ukraine as early as this
autumn. The crisis may come to a close only in March next year after the
parliamentary election. The split in the "orange" team may make it easier
for the opposition to take command. (Translated by: Guerman Grachev)
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http://english.pravda.ru/world/20/92/370/15875_Ukraine.html
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