2000: THE YEAR IN REVIEW

U.S.-Ukraine relations: continuing to move ahead

The beginning of 2000 in U.S.-Ukrainian relations saw the conclusion of a diplomatic drama that had begun in the last days of 1999: the abrupt replacement of Ukraine's ambassador in Washington. The year also was marked by a few important visits, Ukraine's continuing quest for credits from international lending institutions and U.S. assistance and support.

Ukraine's Ambassador Anton Buteiko, whose assignment in Washington was cut surprisingly short in December of 1999, left for home on January 2. Also recalled then was New York Consul General Yuriy Bohaievsky, as well as ambassadors and consular officers serving in several countries, among them Italy, Canada, Turkmenistan, Kazakstan and Kyrgyzstan.

No specific reason was given for the abrupt curtailment of Ambassador Buteiko's U.S. assignment which lasted exactly one year. His predecessor, Dr. Yuri Shcherbak, had served for four years.

On the eve of his departure, during a farewell dinner in his honor organized by Ukrainian American activists, Ambassador Buteiko highlighted some of the accomplishments in U.S.-Ukrainian relations during his tenure and said that those efforts would not have been as successful were it not for the "spirit of unity" and active support of the Ukrainian American community.

One month later, on February 1, Ambassador Buteiko's successor, Kostyantyn Gryshchenko, arrived and was placed on the fast track for recognition. The following day, he presented his credentials at the State Department, and a day later at the White House to President Bill Clinton.

The new ambassador did not wait long to meet with leaders of Ukrainian American organizations. He found time on February 2, between the State Department and White House presentations. Some of the leaders participating in the introductory meeting said it was characterized by "candor" and "openness," and the new envoy was described as a "highly qualified diplomat" and a "no-nonsense guy."

Ambassador Gryshchenko came to Washington from Brussels, where he was Ukraine's ambassador to the Benelux countries (Belgium, the Netherlands and Luxembourg) and headed Ukraine's mission to NATO. Earlier in his career he was vice minister of foreign affairs, served at the United Nations and had specialized in security, denuclearization and arms control issues.

The United States, too, would replace its ambassador in Kyiv in 2000, but the process was much slower.

President Clinton announced his intention to nominate Carlos Pascual to be U.S. ambassador to Ukraine on March 1, but the nominee would not leave for Kyiv for more than seven months.

The delay was due to a tug of war between some members of the Senate and the White House over certain nominations and issues that had nothing to do with Mr. Pascual, who was then special assistant to the president and senior director for Russian, Ukrainian and Eurasian affairs at the National Security Council.

He had his confirmation hearing before the European Affairs Subcommittee of the Senate Foreign Relations Committee almost four months later, on June 21, was confirmed by the Senate two and a half months after that, on September 8, was sworn in on October 6, and presented his credentials to President Leonid Kuchma in Kyiv on October 20.

Following his credentials presentation ceremony, Ambassador Pascual, whose parents fled Cuba in 1961, told journalists that he comes to Ukraine with three mandates: to support Ukraine's efforts to define itself as a European state; to support concrete actions to make the effort a reality; and to support efforts to create a stronger civil society so that people can take greater control of their lives.

Ambassador Pascual's predecessor, Steven Pifer, left Kyiv in early October, but his departure was clouded by a diplomatic row with the Ukrainian government over a letter that he and the ambassador from Canada and representatives from two international financial organizations had sent to the Ukrainian president, in which they expressed their doubts about the government's intention to bring about budget reform.

On September 29, the Ukrainian government called in the letter-writers to point out the inaccuracy of the information on which they based their assertion and to chastise them for interfering in Ukraine's internal affairs.

The controversy reflected the Ukrainian government's frustration in its attempt to fulfill the International Monetary Fund's requirements for the resumption of a credit program suspended in 1999. Ukraine had struggled to make its budget ends meet as it awaited IMF credit approval, without which international public and private lenders would not extend Ukraine any lines of credit.

Getting the IMF to renew its $2.6 billion Extended Fund Facility (EFF) credit program for Ukraine was the object of numerous high- and working-level visits and negotiations both in Washington and Kyiv during the year, including the first working visit here by Ukraine's new reformist prime minister, Victor Yuschenko, in early May.

The visit was originally scheduled for mid-March, but was postponed - officially because of a major mine disaster in Ukraine, which required Mr. Yuschenko's attention; unofficially, the press also pointed to the release of an embarrassing IMF report on the eve of the planned visit. The report accused the National Bank of Ukraine (NBU), which Mr. Yuschenko had headed, of exaggerating by more than $700 million its currency reserve reports to the IMF, which allowed it to obtain $200 million in IMF credits it otherwise would not have received.

Following his meetings May 8-9 in Washington with President Clinton and other senior members of his administration and the heads of the IMF and World Bank, the Ukrainian prime minister was optimistic about getting the credits flowing again, even though not in the very near future.

Indeed, it took two independent audits of NBU transactions and several more working sessions and reviews before the IMF Executive Board announced on December 19 that Ukraine will be able to draw up to $246 million. The monies however, will not be handed over to the NBU, but held in Ukraine's IMF account.

Commenting on the decision, IMF First Deputy Managing Director Stanley Fischer commended Ukraine for the "recent improvements in economic policy implementation and progress on their reform agenda."

Economic and other reforms, corruption, press freedom and human rights were among the issues discussed in U.S.-Ukrainian bilateral talks during the year 2000 as in previous years.

The State Department's annual Human Rights Report on Ukraine, released on February 25, saw "limited progress" in some areas and "serious problems" in others. The most notable of the problem areas dealt with the last presidential election, in which the report cited government interference in the election process and increased pressure on the media - especially the national broadcast media - through tax inspections and other measures. While there were "some irregularities" during the election campaign and balloting, the report noted that "almost all observers agreed that the election results reflected the will of the electorate," as did the previous national elections in 1998 and 1994.

The curtailment of press freedoms also was the subject of several hearings and statements of the U.S. Commission on Security and Cooperation in Europe (the Helsinki Commission).

Ukraine's former Prime Minister Pavlo Lazarenko, who was arrested at New York's Kennedy Airport in February of 1999, today remains were he was at the beginning of the year - in a federal detention facility in California. His status was changed on June 1, however, when government prosecutors indicted him on one count of conspiracy to commit money laundering, seven counts of money laundering and 23 counts of transportation of stolen property.

According to the charges, between 1994 and 1999 Mr. Lazarenko transferred approximately $114 million that he had corruptly and fraudulently received into bank and brokerage accounts in the United States and laundered more than $20 million through U.S. banks.

A U.S. trial date has yet to be set for Mr. Lazarenko.

In the meantime, Switzerland on July 20 withdrew its extradition request after Mr. Lazarenko pleaded guilty in absentia to laundering $9 million in Swiss banks. The Swiss court sentenced the former official to an 18-month suspended prison term and confiscated $6.6 million in his Swiss bank accounts.

Ukraine has indicated that it would like to have Mr. Lazarenko returned to Ukraine to stand trial on various charges. Unlike Switzerland, however, Ukraine does not have an extradition treaty with the United States.

On the very day Mr. Lazarenko's indictment was announced, Ambassador Gryshchenko accepted a check for $1 million from the U.S. government for restitution and damages caused by the U.S.-based McCormick Distilling Company Inc., which pleaded guilty in Newark, N.J., to falsifying liquor export documents.

The McCormick Distilling Co. had unknowingly done business with organized crime members who smuggled alcohol for sale on the black market after improperly labeling it as industrial cleaning products. McCormick, which, according to prosecutors, fully cooperated with U.S. law enforcement officials, said it never knowingly did business with organized crime. The company was charged with a misdemeanor record-keeping violation and was requested to compensate the government of Ukraine for $1 million.

On October 28 President Clinton signed into law H.R. 3244, the "Victims of Trafficking and Violence Prevention Act of 2000," which, among other things, strengthens U.S. efforts to combat the international trafficking of women.

President Clinton called this bipartisan bill's anti-trafficking provisions "a major step forward" in the effort to eradicate "modern-day slavery."

"Over the past several years, we have taken every opportunity to shine a bright light on this dark corner of the criminal underworld, in part by continually raising with leaders around the world the need to work together to combat this intolerable and reprehensible practice," he said.

This international crime is of concern to Ukraine since unknown thousands of Ukrainian women each year become its victims, as they accept offers of work abroad only to find themselves entrapped in the sex trade.

Oksana Horbunova, vice-president of La Strada in Ukraine, an organization that is in the forefront of the battle against trafficking, told The Ukrainian Weekly that at the root of the problem is the catastrophic state of Ukraine's economy, in which women comprise more than 70 percent of those unemployed. "And that's why our women eagerly accept these offers of work abroad," she said. "Not knowing what's involved, they jump at the chance and end up being sold for large sums of money."

Statistics about how many Ukrainian women have fallen victim to this crime are hard to come by, she said, because the victims, even when freed, are both ashamed to admit what they experienced and afraid of reprisals from the mafia if they talk.

In the face of growing criticism of the draconian requirements for those seeking a U.S. visa, the consular section of the U.S. Embassy in Kyiv instituted major changes in 1999, and further improved the system this year.

In July 1999, the Embassy instituted a "drop box" procedure, whereby those who previously had been granted a three-year multiple-entry visa or two single-entry visas, or those who were renewing student, exchange, visitor or temporary work visas, could simply drop off their applications and fees at the consular offices and in most cases pick up their visas the next day.

This year, that privilege was extended to all applicants 60 years of age or older and to those who have been granted even a single U.S. visa during the previous year.

These improvements notwithstanding, the Embassy found itself in a highly embarrassing situation when on October 11 it rejected a visa application from a Ukrainian Catholic priest who wanted to visit the United States for a few weeks. The reason: he had failed to document that he was not intending to immigrate. This priest, however, happened to be the Rev. Myroslav Medvid, who as a young seaman 15 years ago twice jumped from a Soviet ship in New Orleans in a vain attempt to get political asylum in the United States; both times U.S. authorities returned him to the ship.

Bureaucratic problems in the consular section took another several weeks to resolve the problem, and on November 15 the Rev. Medvid finally got his visa. Two days later he boarded a plane for New York, arriving in time to address the Great Famine commemoration at St. Patrick's Cathedral on November 18 and then setting out on a six-week tour of Ukrainian American communities.

President Clinton on November 6 signed the U.S. foreign aid bill for Fiscal Year 2001 that includes $170 million in assistance for Ukraine.

The bill, which passed by an overwhelming majority in the Congress on October 25, budgets $14.9 billion for assistance programs worldwide - an increase of $1.4 billion over the previous year's budget - and $810 million for the former Soviet states - a decrease of $29-million over the previous year.

During a visit to Kyiv on November 3, William Taylor, U.S. coordinator of assistance to the new independent states, indicated that the aid budget for Ukraine will fund an expanded cultural exchange program, which will allow an additional 2,400 Ukrainian government and non-government officials as well as students to visit the United States, as well as provide for the creation of 14 new Internet sites in libraries in Ukraine that the public can use for free.

In addition to the $170 million in developmental aid, Ambassador Taylor noted that Ukraine will receive $40 million to modernize its defense forces and strengthen its military technology export regime.

While in Ukraine he signed a bilateral agreement that gives Kharkiv $535,000 for a feasibility study to overhaul that city's heating system. The agreement is part of cooperative U.S. program called the "Kharkiv Initiative" launched in 1998 after, under pressure from Washington, Ukraine agreed to cancel its participation in a $850 million Russian nuclear power plant construction project in Iran. Kharkiv's Turboatom, which was contracted to build the turbines for the plant, lost the contract, reportedly worth $45 million, and potential future contracts with Russia.

In late September, an official delegation from the Kharkiv Oblast, led by its chairman, Oleh Dyomin, began a two-week visit to Washington and seven other U.S. cities in search of investors to help develop the oblast.

U.S. assistance to Ukraine was the subject of other official visits during 2000. In early February, Ambassador Stephen Sestanovich, special advisor to the U.S. secretary of state for the new independent states, discussed Ukraine's plans for economic reform "and how the United States can best support them" in meetings with President Kuchma and other Ukrainian officials. He also met with representatives of the IMF, the World Bank and the American business community in Kyiv.

A few days later, on February 6, U.S. Energy Secretary Bill Richardson while on a visit to Kyiv announced that the United States will give Ukraine $22.5 million for the development of a thermal power plant that will help replace some of the energy provided by the Chornobyl nuclear power plant, which was scheduled to be closed, and ultimately was closed, by the end of the year.

Another area in which U.S.-Ukrainian cooperation developed during the year was labor. While on a visit in Washington on July 26, Ukrainian Minister of Labor and Social Policy Ivan Sakhan joined U.S. Secretary of Labor Alexis M. Herman in signing a memorandum of understanding that allows Ukraine to participate in the Labor Department's technical assistance initiatives.

Budgeting $3.75 million for the first year of the two-year cooperative plan, the Labor Department will implement five projects in Ukraine, dealing with mine safety and health, dislocated worker services, child labor, industrial relations and gender equality.

In the field of culture, the Fulbright Office in Kyiv, which administers the Fulbright scholarship exchange program between Ukraine and the United States, announced the launch of an annual Fulbright-Margolin writing award for Ukrainian authors.

The $20,000 prize, which will alternate annually between the categories of fiction and non-fiction, is named after Sen. J. William Fulbright (1905-1995), in honor of his commitment to international mutual understanding, and Arnold D. Margolin (1877-1956), the Ukrainian lawyer and diplomat who represented the Ukrainian Central Rada government of 1917-1918 at the Paris Peace Conference. He later taught at the University of Pennsylvania, New York University and other U.S. institutions.

The U.S.-Ukraine Joint Cultural Heritage Commission held its third plenary meeting in Kyiv on May 17, discussing such issues as the need for legislation to protect cemeteries from development, progress in the restitution of religious communal properties, and efforts to document the condition of cemeteries, massacre sites and synagogues in Ukraine.

Commission members also discussed new laws dealing with preserving cultural heritage, including the repatriation of cultural assets taken from Ukraine, and the preservation of Ukrainian culture in cooperation with museums and universities in the United States.

The staff ship of the Ukrainian navy, the Slavutych, which came to New York harbor on July 4 to participate in the International Naval Review 2000, a prelude to Operation Sail 2000, returned home with close to two tons of humanitarian aid destined for the ship's home port of Sevastopol, Ukraine.

The cargo, valued at more than $85,000, was organized by the Children of Chornobyl Relief Fund. It included antibiotics, intravenous fluids and starter kits, surgical needles and syringes, gowns, analgesics and sterile gloves provided by the Catholic Medical Mission Board. Shipped to the naval hospital in Sevastopol, the medical supplies were to be used for emergency services and to meet the health care needs of the people of Sevastopol.

The Slavutych's U.S. voyage was part of ongoing cooperation programs between Ukraine's Ministry of Defense and the U.S. Department of Defense.

Copyright © The Ukrainian Weekly, January 7, 2001, No. 1, Vol. LXIX

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