FOR THE RECORD: Shcherbak on Ukraine's economic development (06/09/96)

FOR THE RECORD: Shcherbak on Ukraine's economic development

Following are excerpts of remarks by Yuri Shcherbak, ambassador of Ukraine, at the international conference "Ukrainian Economics: Problems, Policies and Prospects" held at Yale University on May 16-17.

You have gathered today at a crucial time for my country, when Ukraine is facing two major challenges: adopting a new constitution and real sustainable economic recovery on a market basis. That is why we expect that your discussions will be focused on the most urgent and topical issues of Ukraine's economic development. In the final analysis, we realized a very simple truth, that the national security of our country depends upon successful economic transformations.

At this point, let me address some issues of U.S.-Ukrainian relations both in the political and economic context. We in Ukraine highly value our ties and cooperation with the United States, considering them as having the potential to become a strategic partnership. From the very first days of our independent development, active cooperation with the United States was considered one of the most important directions of Ukraine's foreign policy.

While characterizing Ukraine's relations with the U.S., I want to stress that they were far from simple and have passed a few important stages in their development. Within the last four and a half years since regaining our independence, we have witnessed the tremendous progress in this sphere: from difficult recognition, through a controversial period of misunderstandings over nuclear weapons located in Ukraine, to the current level of democratic partnership between our nations and peoples.

The November 1994 state visit of Ukrainian President Leonid Kuchma to Washington marked a new stage in our bilateral relations. Today we have a good framework for our versatile ties: the Charter of Ukrainian-American Friendship, Partnership and Cooperation, which recognizes the strategic importance of Ukraine for the United States and European security. In this connection let me recall the words of Secretary of State Warren Christopher in his key speech about U.S. policy toward the new independent states of the former Soviet Union delivered in March 1995 at Indiana University:

"Some states of the former Soviet Union command particular attention because of their potential to influence the future of the region. Ukraine is critical. With its size and its position, juxtaposed between Russia and Central Europe, it is a linchpin of European security. An independent, non-nuclear and reforming Ukraine is also vital to the success of reform in the other new independent states."

I would also like to underline that President Bill Clinton's visit to Kyiv in May 1995 was a landmark in our bilateral relations, which very substantially strengthened our independence. It was the first state visit of a president of the United States to Ukraine since it became an independent country. This fact alone shows that the United States has come up with a new policy approach to Ukraine as a European partner that is called upon to play an important role in the future security system in Europe. Or, as President Clinton said in Kyiv, "it is a matter of United States national interest... to help build a Ukraine... that will provide an essential anchor of stability and freedom in a part of the world still reeling from rapid change, still finding its way toward the 21st century."

Over the last two years meetings between our leaders became a regular and important element of our relations. According to assessments given by high-level U.S. officials themselves, the pace and intensity of those relations are unprecedented in U.S. relations with any country of Central or Eastern Europe. After two successful summits in 1994 and 1995, President Kuchma came again to Washington in February and had very productive meetings with President Clinton, Vice-President Al Gore, Secretary Christopher, Secretary [of the Treasury Robert] Rubin, Secretary [of Defense William] Perry, IMF Managing Director Michel Camdessus, World Bank President [James] Wolfensohn, other high U.S. and international officials. At these meetings the issue of Ukraine's economic development, as well as bilateral economic assistance and cooperation, were the focus of our leaders attention. The United States has declared that encouraging Ukraine to continue economic reforms is one of its long-term and strategic goals in this part of the world.

An important role, which is even more crucial for some key sectors of our economy, is played by the assistance rendered to us by the United States government since the first years of our independence. According to official U.S. statistics, during fiscal years 1992-1995 the grant sums designated for various projects aimed at economic assistance to Ukraine totaled $983.64 million, of which $837.1 million were allocated and $490.4 million actually spent. During the same period, the expenses for U.S. assistance to the newly independent states amounted to $6.37 billion, of which $2.4 billion were given to Russia.

It is noteworthy that, as of the beginning of FY 1996, Ukraine became the third largest recipient of U.S. foreign aid after Israel and Egypt, while the total foreign assistance, including aid rendered to the NIS as a whole, decreased quite dramatically. Ukrainian reformers got the right message from the U.S. Congress when Ukraine's share of foreign assistance to the NIS increased in FY 1996 compared to the previous year. We are very grateful to all persons and organizations who contributed to supporting Ukraine on Capitol Hill, and especially to the active members of Ukrainian American organizations, first of all, the Ukrainian Congress Committee of America, the Ukrainian National Association and others.

The latest figures on U.S. bilateral assistance to Ukraine, which were publicized during President Kuchma's working visit to Washington in February, are as follows. The total grant assistance for FY 1996 will amount to $330 million, of which $225 million are meant for economic and technical assistance allocated by Congress in accordance with the Overseas Interests Act of 1995; $67 million more will be spent for grant supplies of pharmaceuticals and foodstuffs (in FY 1995 the sums were about the same); and $38 million are meant for further implementation of the Nunn-Lugar program for nuclear disarmament (the total amount of pledged money for Nunn-Lugar programs is $350 million, of which $270 million have been allocated or spent already). Furthermore, last year U.S. Eximbank credit opportunities were reopened for Ukraine, and about $500 million could be provided to Ukraine by the Eximbank alone, and $175 million more together with the USAID. Thus, in FY 1996 U.S. credits and guarantees for Ukraine should amount to $860 million.

The president, the government and the people of Ukraine are very grateful to the U.S. Congress and the administration for this assistance. I hope that during the next two days you will be able to address ways to improve the efficiency, mechanisms and forms of providing such assistance, as well as the ways to achieve optimum economic development of my country, which would make use of the most positive experience of post-Communist and free-market economies.

The Ukrainian people appreciate the leading role of this country in producing the G-7 summit resolutions at Naples and Halifax encouraging Ukrainian reforms and promising assistance from the international community conditioned on the implementation of sound economic policies. The United States is taking a lead among Western donors and creditors. It is important also that the United States, as a major shareholder of and contributor to international financial institutions, is playing a key role in securing this assistance to countries in need. The political support and technical advise for Ukraine's integration into the international community through the World Trade Organization also was of great value.

I have been emphasizing all this in order to show this audience that the formula of a Charter for Ukrainian-American Partnership, Friendship and Cooperation signed by our presidents back in 1994 - "The existence of a free, independent and sovereign Ukraine, its security and prosperity, are matters of great importance to the United States of America" - is indeed not just polite diplomatic wording.

In this context, let me also say a few words about the generous support provided to us by international financial institutions. Since the beginning of these joint programs' implementation in 1994, Ukraine has received $1.503 billion from the International Monetary Fund and over $500 million from the World Bank. World Bank plans for Ukraine for FY 1996 include up to $600 million, and the IMF stand-by loan could comprise up to $900 million by the end of the year. As for the World Bank, over the next three years it is ready to extend up to $1 billion annually for various programs in Ukraine.

Also, Ukraine's debt rescheduling was an important form of assistance rendered by the West. With the help of international financial institutions, $3.254 million of Ukraine's debt to Turkmenistan and Russia for gas and oil deliveries was rescheduled.

Ukraine has set before itself a lofty foreign policy goal of becoming, in the 21st century, a truly independent, sovereign and equal member of the family of European nations, including a full-fledged member of the European Union, achieving a prosperous market economy and high living standards for its population. So far, our economy has been working in the regime of a fire-fighting department trying to solve the burning problems of everyday life.

The significance of conferences like the one we are opening today is to look for ways to deal with these issues on a regular, planned and effective basis, proceeding from the experience of developed market and post-Communist economies. So, let us discuss ways to bring those ambitious plans closer to reality.

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