Pifer leaves Kyiv amid controversy (10/08/00)

Pifer leaves Kyiv amid controversy

by Roman Woronowycz
Kyiv Press Bureau

KYIV - Days before his term as U.S ambassador to Ukraine was to end, Steven Pifer became embroiled in a political conflict with the Ukrainian government over a letter that he and his fellow ambassador from Canada and representatives from two international financial organizations sent to the Ukrainian president. The letter set out their misgivings on what have proved to be inaccurate assertions that Ukraine was ready to allow budget reform to die.

On September 29 the Ukrainian government called in Mr. Pifer and the other foreign diplomats to chastise them for interfering in the internal affairs of Ukraine, while pointing out that the diplomats had relied on inaccurate information as the basis for their complaint.

The same day Prime Minister Viktor Yuschenko told reporters the authors of the article "were a bit misinformed" about the current year's budget process. He said that references to the curtailment of budgetary reform were baseless, while adding that the government was continuing the reform process "in cooperation with the Parliament and under direct control of the president."

The controversy reflects the increasing frustration the Ukrainian government is feeling as it unsuccessfully continues to attempt to fulfill requirements of the International Monetary Fund for resumption of a financial program that was suspended a year ago. Ukraine has struggled to make its budget ends meet as it awaits IMF credit approval. Few international lenders, public or private, are ready to extend Ukraine lines of credit without IMF approval of its reform efforts.

The letter was an embarrassment to the U.S. and Canadian governments as well as the European Bank for Reconstruction and Development and the World Bank, whose chief Ukrainian representatives also signed the correspondence, because its criticism was based on glaringly inaccurate piece of information.

On September 29, slightly over a week before Ambassador Pifer's scheduled October 9 departure for the United States the letter appeared in the popular Russian-language Kyiv tabloid Fakty i Kommentari alongside a related article. In their letter the foreign diplomats expressed concern with the Kuchma administration for a decision they stated the president had made to withdraw items in the budget bill that referred to inter-budgetary relations reform. According to the newspaper, the letter expressed consternation that the decision by the president reflected a change in the official government position on economic reform in general and urged him to continue with reforms.

According to Fakty i Kommentari, the letter caused President Leonid Kuchma to quickly fire-off a memorandum to Prime Minister Yuschenko asking the head of government to take note of the fact the president had not yet received the 2001 budget bill; that he had made no decisions regarding the document; and that changes to the proposed budget and its final approval are the responsibility of the Verkhovna Rada, and not the presidential Administration.

Mr. Yuschenko responded by directing Minister of Foreign Affairs Borys Tarasyuk and Minister of Finance Ihor Mitiukov to demand a meeting with the four foreign diplomats "to explain to them the real state of matters" and to enunciate the position of the Ukrainian government, which Mr. Yuschenko made clear was "interference with our country's internal affairs."

Although Canadian Ambassador Derek Fraser, World Bank representative Gregory Jedrzejczak and EBRD mission head Andrew Seton complied, Mr. Pifer failed to show due to illness and sent his first assistant instead, according to Interfax-Ukraine.

While Mr. Tarasyuk explained in detail the current developments in reform of the budgetary process, Mr. Mitiukov called on the G-7 most developed countries to stop gathering information on Ukraine from secondary sources. He said that should any of the ambassadors need accurate information on the country's financial situation, the budget or reforms in general all they had to do was call his office.

Meanwhile, Presidential Press Secretary Oleksander Martynenko expressed some of the pent-up frustration Ukraine was feeling towards the West over what it believes are Western misperceptions about the state of reforms in Ukraine when he told reporters on October 3 that perhaps Western countries and organizations finally had learned a lesson about being quick with conclusions.

The following day, during his final public appearance in Ukraine, Ambassador Pifer did not sound repentant as he told a crowd of students at the National University of Kyiv-Mohyla Academy that, as long as Ukraine continues to receive international aid, it should expect the advice that goes hand in hand with it.

In a press release issued the day the newspaper article appeared, the U.S. Embassy had asserted that "sharing important questions with a host country's leadership is a responsibility that senior diplomats have throughout the world."

Mr. Pifer leaves Ukraine after serving in Kyiv since January 1998. He was the third U.S. ambassador to Ukraine, and will be followed by Carlos Pascual, who was recently confirmed by the U.S. Senate.

Mr. Pifer called his three-year stay in Kyiv "the most rewarding assignment of my career" and said that he would definitely like to return as a visitor.

He called his biggest achievement in Kyiv his involvement in raising the level of dialogue on political and security matters between the U.S and Ukraine. His deepest disappointment: the continued underdeveloped level of U.S. private investment in Ukraine.

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