Pustovoitenko tells officials in Washington Ukraine is staying the course of reform (10/11/98)

Pustovoitenko tells officials in Washington Ukraine is staying the course of reform

by Yaro Bihun
Special to The Ukrainian Weekly

WASHINGTON - The prime minister of Ukraine, Valerii Pustovoitenko, and an economically oriented government delegation visited the nation's capital on October 4-8 for meetings with the international financial institutions headquartered here, as well as with U.S. officials and business leaders.

The visit coincided with the annual meeting here of the International Monetary Fund and World Bank, which over the past month have agreed to extend Ukraine long-term credits and loans of more than $3 billion.

The message Prime Minister Pustovoitenko and other key members of his delegation were announcing publicly and, presumably, privately during their meetings, is that President Leonid Kuchma's economic reform program is holding strong, that the situation in Ukraine is much better than in Russia, and that Ukraine will honor its financial obligations and commitments to foreign creditors and investors.

"I would like to stress again," Prime Minister Pustovoitenko said in his October 6 appearance at the Center for Strategic and International Studies, "that we are ready to honor all our obligations to creditors. And I would also stress again that Ukraine conducts its policy independently from Russia." He repeated that message in separate interviews and during a news conference on the eve of his departure.

Mr. Pustovoitenko and his delegation had an intensive schedule that included meetings with World Bank President James D. Wolfensohn, International Monetary Fund Managing Director Michel Camdessus and U.S. Energy Secretary Bill Richardson. Meetings with Vice-President Al Gore, Deputy Secretary of State Strobe Talbott and officials at the National Security Council were scheduled for the last day of the visit, October 8.

The delegation also had meetings on Capitol Hill, at the Overseas Private Investment Corporation, and with business and organizational representatives of the Ukrainian American community.

On the first day of his visit, Mr. Pustovoitenko, accompanied by some members of his delegation and Ukraine's Ambassador Yuri Shcherbak, laid a wreath of blue irises and yellow roses at the monument to Taras Shevchenko.

The key members of the Ukrainian delegation included National Bank of Ukraine Chairman Viktor Yuschenko, Finance Minister Ihor Mitiukov, Agriculture Minister Borys Supikhanov, Vice Minister for Foreign Affairs Anton Buteiko, Vice Minister for Foreign Trade Andrii Honcharuk, as well as other key officials from the Cabinet of Ministers and President's Office and a small group of Verkhovna Rada national deputies.

At the outset of his visit, Mr. Pustovoitenko said the goal of his meetings with senior officials of the IMF and World Bank was to establish a personal relationship with them and maintain credit resources with those institutions.

He also stressed that, in combating the current international financial crisis, Ukraine will not follow the Russian example, which "undermined its reputation with the international financial organizations."

The deteriorating economic situation in Russia affects Ukraine and is a matter of concern to its leadership, Mr. Pustovoitenko said. He noted that Russia remains Ukraine's largest trading partner, but that Russia's imports of Ukrainian goods have dropped over the past year. In his talks with U.S. officials he said he sought to expand U.S. market access for Ukrainian exports.

Aside from government-guaranteed investments, he said, Ukraine would also like to see more direct private investment in Ukraine's many developing private industries.

"Unfortunately, the current financial crisis encompasses the entire world, practically speaking, and it will not be easy to resolve the crisis," he said.

During his October 8 news conference, Prime Minister Pustovoitenko indicated that the current $2.2 billion in IMF Extended Fund Facility credits and $910 million in World Bank loans are sufficient to sustain Ukraine's reform programs and economic well-being.

Commenting on talks with the IMF and World Bank, Yuschenko said in an interview that "there were no serious problems" noted about Ukraine's adherence to the IMF's EFF agreement and that its performance with respect to World Bank conditions was well received.

He said that Ukraine today has the chance to maintain a sound and stable currency. The recent devaluation of the hryvnia "was an adequate reaction to developments in Russia," he said, adding that further adjustments "are unnecessary."

Mr. Yuschenko noted that, in general, Ukraine's friends and creditors recognize "a meaningful difference between the developments and problems in Russia" and in Ukraine.

"All in all," Mr. Yuschenko said, "Ukraine now has a unique opportunity to separate itself from Russian problems, from the old stereotypes of dominance and subservience or dependence on the situation in Russia and its economic policy."

Ukraine today understands things more clearly, he said, including its traditional trade dependence on Russia, with its related monetary dependence, which now "is undergoing serious revision." The "irrationality" of Ukraine's trade policy will be "greatly minimized" by the end of this year, he said.

Asked how Ukraine is reacting to the worldwide problems caused by the uncontrolled flow of short-term capital, Mr. Yuschenko said that it does create a budgetary problem. But, unlike Russia, which used these credits to prop up the rubel, he added, Ukraine used this short-term capital to maintain the National Bank's reserves, which then were used to service the outflow of this capital.

"This lessened by a factor of three the effect of capital flight on Ukraine as compared to Russia," he said.

Following his meeting with Energy Secretary Richardson, Mr. Pustovoitenko said Mr. Richardson expressed a desire to visit Ukraine, and Chornobyl, probably in mid-November.

Asked about the status of plans to close the Chornobyl nuclear station by the year 2000, he said that the G-7 countries, unfortunately, have not lived up to their promises about funding the closure of the crippled plant and the completion of two other nuclear power plants to compensate for the resulting energy loss at Chornobyl. Ukraine has asked the European Bank for Reconstruction and Development and Russia to help finish the two plants, he said.

Prime Minister Pustovoitenko's luncheon discussion with Ukrainian American business and community leaders focused Ukraine's economic development, its relationship with Russia and the United States, as well as on the efforts of those present in assisting Ukraine.

The luncheon was moderated by U.S. Claims Court Judge Bohdan Futey, who exchanged toasts with Mr. Pustovoitenko for a successful visit and for Ukraine's well-being. Mr. Pustovoitenko was accompanied to the luncheon by Agriculture Minister Supikhanov, Vice Minister Buteiko, Ambassador Shcherbak and a few members of the prime minister's staff.

The Ukrainian American contingent included George Chopivsky, who is involved in private agricultural development in the Poltava and other oblasts; Wolodymyr Bazarko, a Cleveland attorney with dealings in Ukraine; Nadia K. McConnell, president of the U.S.-Ukraine Foundation, which conducts various exchange and development projects with Ukraine; Ihor Kotlarchuk, a Justice Department attorney who has helped in the development of U.S.-Ukrainian relationships in that area; Orest Deychakiwsky, president of The Washington Group, an association of Ukrainian American professionals; Roman Goy, president-elect of the Ukrainian Medical Association of North America; Ihor Gawdiak, chairman of the National Council and Washington Office director of the Ukrainian American Coordinating Council; Michael Sawkiw Jr., director of the Ukrainian National Information Service; and Lydia Chopivsky Benson, vice-president of the Chopivsky Family Foundation, which, among other things, conducts educational exchanges with Ukraine; and Nadia Boianovska, the Chopivsky Family Foundation's exchange coordinator in Kyiv.

During the prime minister's visit, the U.S. Congress was in the process of passing a resolution marking the 65th anniversary of Stalin's man-made famine in Ukraine. The Senate resolution, sponsored by Carl Levin (D-Mich.), passed three days before Mr. Pustovoitenko's arrival, and it was working its way through the House committees during his stay. The House resolution was initiated by Rep. Sander Levin (D-Mich.) and his fellow co-chairs of the Congressional Ukrainian Caucus.

Mr. Pustovoitenko had three separate meetings on Capitol Hill: in the Senate with Arlen Specter (R-Pa.) and Mitch McConnell (R-Ky.), and in the House with seven members of the Congressional Ukrainian Caucus - Jon Fox (R-Pa.), Benjamin Gilman (R-N.Y.), Maurice Hinchey (D-N.Y.), Marcy Kaptur (D-Ohio), Michael McNulty (D-N.Y.), William J. Pascrell Jr., (D-N.J.), and Bob Schaffer (R-Colo.) - and representatives of Tom Lantos (D-Calif.) and Rep. Levin.

The Ukrainian prime minister's delegation also met with representatives of the European Bank for Reconstruction and Development and other major banks, and with high government officials from Ukraine's neighboring countries who also were visiting Washington, including representatives of Georgia, Azerbaijan and Moldova, which together with Ukraine form the "GUAM" group.

In a joint statement following their prime-ministerial-level meeting at the Ukrainian Embassy, the four GUAM countries stressed the need for a "multiple" system of pipelines to bring Caspian Sea oil to world markets. Ukraine has proposed one possible route that would take the oil to northern Europe through its territory, using the Odesa terminal and a pipeline through Brody.

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