Ukrainian and Russian representatives meet at business summit in Kharkiv (12/23/01)

Ukrainian and Russian representatives meet at business summit in Kharkiv

by Roman Woronowycz
Kyiv Press Bureau

KYIV - Russia's chief economic envoy to Kyiv on December 19 rejected an assertion by the leader of his country's main businessmen's association that Kyiv and Moscow should emulate the European Union countries and join in a single currency.

Arkadii Volskyi, president of the Russian League of Industrialists and Entrepreneurs, added controversy to a rather mundane Russian-Ukrainian business forum held in Kharkiv on December 13-14 when he called on the two countries to adopt a single currency to simplify economic ties and trade between them.

He told fellow businessmen during a forum session that such a move would help avoid losses in trade that occur during currency exchanges and cited the European Union, which will introduce a single currency, the euro, in a few weeks, for having a realistic currency policy, according to Interfax-Ukraine.

Viktor Chernomyrdin, Russia's ambassador and chief economic envoy to Ukraine, rejected the possibility at least for the near term on December 19 when he told Kyiv journalists that he doubted the two countries are ready socially, economically or politically for such a move.

The comments by Mr. Volskyi were the most controversial in the first-ever officially sponsored summit of Russian and Ukrainian business-types. The presidents of both countries, Leonid Kuchma of Ukraine and Vladimir Putin of Russia, visited the proceedings on December 14 after touring several local manufacturing centers in the Kharkiv area.

Speaking before the business representatives, President Kuchma emphasized that Ukraine-Russia relations are as good as ever and that while Ukrainian businesspeople are burrowing into Russia, and particularly Moscow, with investments, Russian businesses have remained tentative and restrained with regard to the Ukrainian market. He noted that Ukrainians have invested $250 million in 31 joint ventures and other unilateral investments merely in Moscow. In Ukraine, on the other hand, he said there had been "no breakthrough" in Russian investment. As an example, he cited "a paltry $6 million in investments in the month of October."

Nonetheless, Ukrainian-Russian trade turnover, after severely contracting in 1998 as a result of the Russian financial collapse, has recently picked up. Trade has increased as both countries have witnessed dramatic economic growth this year, with Russia's GDP pegged to end the year with about 6 percent growth, while Ukraine should attain about 9 percent.

Both sides expect that by the first quarter of 2002 trade turnover in goods and services will hit an annual rate of $12 billion. The final 2001 figure is expected to be more than $9 billion.

In Kharkiv the businessmen talked of increasing ties in heavy industry and machine building, fuel and energy, the military-industrial sector, the agricultural sector and chemical production.

During his presentation Mr. Kuchma noted successful joint ventures in automobile production of the Russian GAZ sedan, which has resulted in 50,000 jobs for Ukrainian workers, and cooperation in the space industry, which has led to the release of six rockets into orbit and to the creation of 6,000 highly skilled jobs. He also pointed out successes in aircraft production, particularly the AN-74 and AN-140 joint projects.

Ukraine's president called on Russian businessmen to consider investment in Ukraine in airline production, the shipbuilding industry, radio and electronics, and the nuclear industry. He reminded them that both the Odesa-Brody oil line and the Odesa Oil Terminal are open for business, reported Interfax-Ukraine.

In private consultations with President Putin and the Russian governmental delegation, President Kuchma and the Ukrainian side agreed to borrow $100 million in 2002 from Moscow to help complete reactors at the Khmelnytskyi and Rivne nuclear power complexes.

Mr. Kuchma also expressed a desire to coordinate activity with Moscow in relations with international organizations such as the World Trade Organization, the EU, the World Bank and the International Monetary Fund, and to push forward with a common viewpoint on matters of common interest.

President Putin expressed his belief that the two countries had just about established a common market, but said that certain "political prejudices and stereotypes" prevent the two sides from maximizing the full potential of such a relationship.

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