German chancellor and Kuchma disagree on construction of new reactors (07/18/99)

German chancellor and Kuchma disagree on construction of new reactors

by Roman Woronowycz
Kyiv Press Bureau

KYIV - A proposal by German Federal Chancellor Gerhard Schroeder's proposal that Ukraine stop insisting on Western funding to complete construction of two nuclear reactors to replace Chornobyl and move towards substitute energy sources was quickly shot down by the Ukrainian leadership.

President Leonid Kuchma told Mr. Schroeder during his July 8-9 visit to Kyiv that, while he understands the pressure the German chancellor was facing from the Green Party in his government coalition to not support nuclear energy development, Ukraine is committed to the two uncompleted nuclear facilities.

"Had the situation in Ukraine's economy been different, we would have taken a different position in 1995 and would not have objected to the construction of thermal, gas or steam stations," said Mr. Kuchma.

While underscoring in his talks with Mr. Schroeder that Ukraine is ready and able to immediately shut down the Chornobyl plant, the Ukrainian president emphasized that the G-7 industrialized nations had repeatedly stated their support for the completion of the two reactor complexes, and that now it is simply too late to make other plans.

President Kuchma also said that alternative energy sources, "both in terms of time and spending, are far more expensive than solving the problem by the completing of the construction of the reactors at Khmelnytski and Rivne."

Ukraine has waited in vain for several years now to receive funding for the completion of the last of four nuclear reactors near the central Ukrainian city of Khmelnytskyi and the second of two near Rivne, located in the northwest corner of the country. Kyiv says the new reactors are needed to replace the energy generated by the infamous Chornobyl nuclear power plant.

In 1986 an explosion at the fourth reactor of the Chornobyl nuclear facility sent a cloud of radiation around the world, poisoning much of northern part of the country, as well as a good portion of Belarus, and leaving Ukraine with a chronic energy shortage.

Ukraine has promised the West that it will close the only nuclear reactor that continues to operate at Chornobyl if the West will help fund substitute other energy sources. The G-7, which includes Germany, has repeatedly stated that it would do just that - an intent that was reaffirmed in Cologne in the spring of this year at the last G-7 summit. In a statement released by the G-7, the leaders affirmed their intention to provide funding to complete both the Rivne and the Khmelnytskyi complexes.

The European Bank for Reconstruction and Development has been tasked with determining the level of funding needed and is finally due to render a decision in September. However, the EBRD has been involved in the issue of funding for the two complexes for some time and has repeatedly hemmed and hawed in disbursing the money, while demanding that Ukraine reform its energy sector. The international bank has also questioned the profitability, and even the need, for additional reactors for Ukraine.

In addition the EBRD has questioned the accuracy of the $1.5 billion estimate that Ukraine says is needed to complete the two nuclear complexes.

Germany, which had supported the completion of the Rivne and Khmelnytsky reactors, has done a turnabout of sorts since Mr. Schroeder's new center-left coalition government, with its heavy smattering of anti-nuke Green Party members, assumed power. It is believed that Mr. Schroeder, a Social Democrat, came to Ukraine with only a half-hearted proposal, but one that would keep the Greens in his coalition satisfied.

Mr. Schroeder, whose only comment on Ukraine's rebuke was that Germany would make its final decision on whether to support Ukraine's request in September when the next G-7 summit is to be held, chose instead to accent the developing relations between the two countries and their joint intention to develop investment in Ukraine.

After arriving in Kyiv on July 8 he made it plain that the success of his visit would not depend on Ukraine acceding to demands put on it by Germany's Green Party.

"The main objective of my visit is to develop political and economic relations between Germany and Ukraine," said Mr. Schroeder at Boryspil Airport.

Germany has invested merely $231.8 million into the Ukrainian economy since 1991, even though it has held itself out to be a major European partner for Ukraine. Mr. Schroeder said in Kyiv that he is looking for ways to spur German investment here.

True to his word, most of the eight agreements that were signed were commerce-related, including an agreement with Siemens AG to develop high-technology freight and passenger rail trunk lines and a joint German-Ukrainian project for the development of an agricultural machinery manufacturing plant.

President Kuchma admitted that Ukraine is at fault for the low level of German investment and said he would work to rectify the matter. "This has happened because of an insufficiently attractive investment climate," said Mr. Kuchma.

Yet, during a German-Ukrainian business forum, the Ukrainian side said it could not give German investors government guarantees for investment in the country which they have sought to safeguard German businesses against the instability of the Ukrainian marketplace.

As regards political affairs, Mr. Schroeder said that Germany would support Ukraine's integration into European institutions, but that the process of Ukraine joining the European Union would take place incrementally.

"It will proceed stage by stage. First an agreement on free trade must be agreed upon, then Ukraine should attain associate membership," said Mr. Schroeder.

Although the two sides could not reach agreement on some of the most important economic and political issues they sought to resolve, both Chancellor Schroeder and President Kuchma expressed their satisfaction with the two-day visit.

At the closing press conference at Mariinsky Palace, Mr. Schroeder, who called the Ukrainian president "a good friend," even let down his diplomatic guard a bit and made a quip about the upcoming Ukrainian presidential elections. "While respecting the independent choice of the Ukrainian electorate, who will judge on their own the policies that have been pursued, let me just say: Kuchma is for an independent state, which does not wish to depend on anybody," said the German chancellor.

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