EDITORIAL: Two sides to every story (04/20/97)

EDITORIAL

Two sides to every story

A recent article in The New York Times ("Ukraine Staggers on Path to the Free Market") depicted Ukraine as a country overwhelmed by rampant official corruption with a bureaucrat begging for a bribe at the entrance to each government office.

Based on assertions by two American businessmen, and unnamed "diplomats," "officials" and "foreign executives," the reader is left with the impression that foreign investment is fleeing Ukraine faster than you can say "profit." If one is to believe the article, any American business, such as Cargill and Coca-Cola, that is still in Ukraine is getting hit upside the head something awful because of corruption. And the primary reason the government issued an emergency decree last August to "confiscate" the grain harvest from state-owned collective farms (how can you confiscate something that belongs to you in the first place?) was so that "various public officials" in Ukraine could split a profit of $500 million.

Though it may turn out to be true that $500 million was stolen from the public coffers, this assertion from unnamed sources is not otherwise substantiated, and no comment or reaction is offered from the Ukrainian government. However, information that could be obtained from public documents or other sources - for example that Ukraine uses grain exports to Russia to offset its debt, or the fact that last year Ukraine had its worst harvest since 1958 and maybe the government didn't want the nation to starve through a cold winter - is never mentioned. Oh well. Avoid famine as public policy: not a good enough reason for The New York Times.

That this article has some serious weaknesses as a piece of journalism is not terribly interesting, except that it appeared in the international affairs section of The New York Times on the morning of a congressional subcommittee hearing on foreign aid to the NIS. As a result, the contents of the article, extremely negative about Ukraine, dictated the terms of discussion. Rep. Ron Packard (R-Calif.) recommended that funding to Ukraine be stopped altogether.

This article continues in the tradition of off-base, one-sided anti-Ukraine stories that appear in the media right before an event important to Ukraine - such as the first visit of President Leonid Kuchma to Washington that was preceded by the CBS "60 Minutes" broadcast of the "Ugly Face of Freedom," or the article in Forbes magazine prior to last year's round of congressional hearings.

There is bad news in Ukraine. There is widespread official corruption. The government of Ukraine admits as much. President Kuchma has been battling with corruption since his election. Tax reform has ground to a halt; the budget is nowhere in sight; the political standoff between Communists and reformers continues. Though the author of the Times article could find no substantial reasons other than official corruption to explain why some American businesses have a hard time, we can offer several alternate theories: protection of domestic industries, fluctuating legal codes, competition from European businesses that got there sooner, suspicion among the population of the West's profit motive and political pandering to this suspicion.

As the House Subcommittee on Foreign Operations begins another round of hearings this week, including testimony from Joseph Lemire, one of the businessmen described by the Times as "bitterly complaining," we can only hope that committee members will seek another side to the story. For example, on April 8, the day before The New York Times article, Reuters reported that Utel, a joint venture between AT&T, Deutsche Telekom, PTT Telecom (Netherlands) and Ukrtelecom reported a net profit of $27 million for 1996 in Ukraine; in March, McDonalds announced plans to invest $120 million in Ukraine in the next three years and openits first restaurant this May. Several articles in our issue indicate positive changes in the investment climate.

We encourage committee members to keep things in perspective. It's only been a little more than five years since the economic and political system of one of history's largest, and most brutal, empires fell apart. The next time Congressman Packard of California feels it necessary to vehemently urge that all funding to Ukraine be stopped, we can only encourage him to look at his own state's history. The lawlessness of the Gold Rush era is mind-boggling to this day. It took 150 years to get from that to Silicon Valley.

| Home Page |