Senate focuses on foreign aid to NIS, Ukraine (05/18/97)

Senate focuses on foreign aid to NIS, Ukraine

by Michael Sawkiw Jr.
Ukrainian National Information Service

WASHINGTON - Following several hearings in the House of Representatives regarding U.S. foreign assistance to Central Europe and the new independent states (NIS), including Ukraine, two Senate subcommittees heard testimony from U.S. government witnesses.

The first hearing, offered by the Foreign Operations Subcommittee of the Appropriations Committee, was held on May 6 and included testimony from Ambassador Richard L. Morningstar, special advisor to the president and secretary of state on assistance to the NIS, and Thomas Dine, assistant administrator of the U.S. Agency for International Development (USAID) for Europe and the NIS.

Subcommittee Chairman Sen. Mitch McConnell (R-Ky.) provided the witnesses a forum to present their views about U.S. assistance programs and the need to fund the Fiscal Year 1998 budget at the proposed level of $900 million (as requested by President Bill Clinton).

The witness provided a general overview of assistance programs and focused many of their remarks on Ukraine. Ambassador Morningstar acknowledged a "downturn in the [foreign] investment climate in Ukraine." While the development of Ukraine into a stable market economy is in the strategic interests of the U.S., "the U.S. should consider scaling back its assistance" if concerns are not addressed, said Ambassador Morningstar. He went on to cite President Leonid Kuchma's April 10 anti-corruption decree as a positive step in the establishment of rule of law in Ukrainian society.

Mr. Morningstar noted that Ukraine "is going to develop and thrive as a market economy."

Sen. Ben Nighthorse-Campbell (R-Colo.) stated that there ought to "be some link between business disputes and assistance to Ukraine." The senator elaborated on the case of a constituent who has experienced business problems in Ukraine.

Mr. Dine pointed to the dominance of monopolies, the slow pace of agricultural reform, allegations of high- and low-level corruption, and the resignation of Viktor Pynzenyk as negative developments in Ukraine, but he added that, nonetheless, Ukraine has been progressing in its reform efforts. Sen. McConnell mentioned the positive aspects of Ukraine's orientation towards the West, as evidenced by its recent refusal to sell turbines to Russia for use in a nuclear reactor to be eventually sold to Iran.

Responding to allegations about corrupt government officials and a poor business environment in Ukraine, Sen. Patrick Leahy (D-Vt.) questioned whether Prime Minister Pavlo Lazarenko is part of the corruption problem. Ambassador Morningstar did not provide specifics about individual personalities in Ukraine, but he insisted that cutting assistance to Ukraine as "pure punishment" is not in the interest of the U.S.

Concluding his remarks, Ambassador Morningstar elaborated on the programs instituted under the Partnership for Freedom (PFF) initiative, which supports legal reform in Ukraine; increase transparency (i.e., open tender processes); continues Chornobyl-related assistance; increases local and community level exchanges (i.e., development of grass-roots involvement in Ukraine); and speeds reform efforts in the energy and agricultural sectors.

A second hearing on May 7 before the Foreign Relations Committee's Subcommittee on European Affairs also focused on consideration of the administration's 1998 budget request for assistance to Central and Eastern Europe and the former Soviet Union. Testifying were: Ambassador Morningstar, Mr. Dine, and James H. Holmes, coordinator, Office of Eastern European Assistance at the Department of State. The hearing was chaired by Sen. Gordon Smith (R-Ore.) and was attended by Sens. Joe Biden (D-Del.) and Richard Lugar (R-Ind.).

Witnesses provided testimony supporting President Clinton's proposed budget for Central and Eastern Europe and the NIS, and related the importance of continued assistance to countries such as Ukraine and Russia even though certain issues, such as corruption, have threatened aid to the region.

Ambassador Morningstar stressed that it would be counter-productive to cut assistance to these countries during the second stage of funding, which includes the Partnership for Freedom (PFF) program that is designed to cement the reforms that have already taken place. The ambassador emphasized the significance of the upcoming meeting between President Leonid Kuchma and the U.S. administration and Congress, and warned that Ukraine's economic future is at stake.

Mr. Dine began his testimony by asking for a fully funded budget request (as offered by President Clinton) and explaining how the programs will operate. He mentioned that Ukraine is experiencing "serious economic problems and is slipping backwards," and that "Ukraine faces excruciating problems, including political stalemate, budget problems, failed investments, among other problems, but we must work with our friends."

Ask whether reforms would continue if U.S. foreign assistance was terminated, Mr. Dine acknowledged that in some countries it would proceed, yet in others, especially those in the southern tier (including Ukraine), it would not. Sen. Lugar stated that there is a lack of accountability in some of these countries and the U.S. should be given the option to cut programs that are not working or are undermining the reform process. The issue of corruption was also mentioned briefly by Sen. Smith, to which Ambassador Morningstar responded that corruption is endemic to Ukraine and Russia and is deep seated.

President Kuchma has initiated many reforms and begun several programs to improve the business climate and combat corruption. It is important that he and other reformers are not hampered in their efforts to correct Ukraine's problems. With programs such as PFF, positive changes can be made, concluded Ambassador Morningstar.

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