Vice Prime Minister Tyhypko in Washington for committee meeting of Binational Commission (04/12/98)

Vice Prime Minister Tyhypko in Washington
for committee meeting of Binational Commission

by Yaro Bihun
Special to The Ukrainian Weekly

WASHINGTON - The government of Ukraine intends to work more closely with the new Verkhovna Rada elected on March 29, according to Vice Prime Minister Serhii Tyhypko, who admitted that it had not always cooperated as well as it should have with the old Parliament.

In the past, he told Washington journalists at the Ukrainian Embassy on April 3, the government introduced reform measures but did not always follow up in the legislative process.

"Not all measures were accepted," he said, "and we understand well that we also were partially to blame. We did not work adequately with the Verkhovna Rada. We did not do as much as we should have to win them over."

He added that no matter the ultimate make-up of the new Verkhovna Rada, the government fully intends to continue its reform policies, "and we will try to cooperate with it."

Mr. Tyhypko was in Washington leading a large Ukrainian government delegation to the fourth meeting of the sustainable cooperation committee of the U.S.-Ukraine Binational Commission headed by President Leonid Kuchma and Vice-President Al Gore. The delegation, numbering some 20 Ukrainian officials, included Finance Minister Ihor Mityukov, Environmental Protection Minister Yuri Kostenko, Roman Shpek, who heads the National Agency for Development and European Integration, and Valerii Lytvytskyi, assistant to President Kuchma.

The Ukrainian delegation also met with members of the U.S. Congress and American business executives to discuss, among other things, Kyiv's economic reform program and its efforts to improve the investment climate in Ukraine.

There was also a two-hour meeting with the International Monetary Fund concerning a planned long-term, almost $3 billion Extended Fund Facility credit program for Ukraine that would replace the current $542 million stand-by credit arrangement. Mr. Tyhypko said that while there still are some problem areas in the negotiations, Ukraine expects a favorable IMF decision later this month. These IMF credits influence investor decisions and are necessary for Ukraine's economic well-being, he explained.

Mr. Tyhypko said that his delegation's talks with U.S. representatives also focused on the issue of whether Secretary of State Madeleine K. Albright will certify that Ukraine is making progress in resolving outstanding disputes with a number of American investors. According to a stipulation in the U.S. foreign aid bill, if she cannot certify this progress by the end of April, Ukraine stands to lose half the $225 million of its appropriated U.S. assistance funds.

Mr. Tyhypko said that much progress has been made over the past year in improving the investment climate in Ukraine and in resolving investor disputes. He added, however, that a number of problem investments remain to be worked out.

The vice prime minister said he was pleased with the tone and atmosphere of talks with U.S. officials and businessmen, and with how Ukraine now is viewed on Capitol Hill.

"While it is very hard to gauge the mood of Congress based on a meeting with three congressmen, I thought the meeting went very well and I noticed an improvement in the way it looks at Ukraine," he said.

Mr. Tyhypko pointed out some of the good economic indicators in Ukraine during the first two months of 1998:

industrial output grew by 1.9 percent;
inflation was 1.5 percent, compared to 4 percent last year;
while the hryvnia dropped by 6.5 percent, it rebounded in the last two weeks; and
for the first time in six years, Ukraine has a foreign trade surplus.

"But we understand and are not complacent about these indicators," he added, "because they do not yet show the economic growth that all of us are working toward."

He said the most troubling aspect of the economy today is budgetary - this year's estimated budget deficit of 650 million hrv ballooned to 1.35 billion. The remedy calls for tighter budgetary policy and structural reforms, he said. The latter - including deregulation of the economy, development of a stock market, privatization, agriculture and energy sector reforms - were the subject of the Ukrainian delegation's discussions with their government Kuchma-Gore Commission counterparts at the U.S. State Department, he said.

The only member of the delegation who is a declared member of a political party is Minister Kostenko; the rest have no party affiliation. Asked to give his, and his Rukh Party's, assessment of the Verkhovna Rada election results, Mr. Kostenko said the election was a major step in Ukraine's democratization process in that it will more clearly define responsibility for government policies and actions.

In the past, he said, the leftists could be, and in many cases were, in charge of carrying out government policies, while at the same time proclaiming themselves in opposition to the government and working against government reform programs.

Now, if a leftist majority in the Verkhovna Rada forms a government, he said, "the people will quickly realize who is in power and who is responsible for the economic situation in this country."