Prime Minister Kinakh of Ukraine on first visit to the United States (11/04/01)

Prime Minister Kinakh of Ukraine on first visit to the United States

by Yaro Bihun
Special to The Ukrainian Weekly

WASHINGTON - Anatolii Kinakh made his first visit here as Ukraine's prime minister, seeking improvements in the trade relationship with the United States, more private investment and continued credits from the international financial institutions headquartered in the U.S. capital.

During his two-day stay here on October 30-31, he had talks with Vice-President Richard Cheney, Secretary of State Colin Powell and other Cabinet members and senior officials responsible for U.S. economic and trade relations with Ukraine.

He also met with the leaders of the World Bank, the International Monetary Fund and the U.S. Export-Import Bank.

While Prime Minister Kinakh met with Secretary Powell and other officials in person, his "meeting" with the vice-president was conducted by way of a video-conference. Following the Justice Department's warning on October 29 about the possibility of another terrorist attack, Mr. Cheney had been moved to an undisclosed secure location.

Mr. Kinakh told reporters following his first full day of talks that he had conveyed Ukraine's "deep and sincere condolences" for the tragedy America suffered on September 11. Before coming to Washington, he had spent a day in New York City, where he visited the ruins of the World Trade Center, attended a memorial service at St. George Ukrainian Catholic Church and met with Mayor Rudolph Giuliani and United Nations Secretary General Kofi Anan.

"Ukraine views this as a crime against mankind and human civilization," he said, adding that Ukraine is cooperating closely with the United States and the international coalition in combating international terrorism by sharing intelligence and allowing overflights by U.S. military transport planes. Mr. Kinakh said that he and Vice-President Cheney agreed to broaden this cooperation to include investigations of illegal money-laundering activities.

While the discussion of international terrorism was on the agenda of his meetings with U.S. officials, as with similar previous visits by his predecessors Viktor Yuschenko and Valeriy Pustovoitenko, economics predominated.

One Ukrainian energy project in which the United States has shown an interest in the past - a pipeline that would carry Caspian oil through Ukraine to Europe - now is being described in strategic terms following the events of September 11.

"Ukraine and the United States now see the Odesa-Brody-Gdansk oil pipeline as a crucial element in the energy security of Europe and the World," Mr. Kinakh said.

U.S. Ambassador Carlos Pascual, who participated in the Washington talks, told The Ukrainian Weekly that the United States has always considered the Odesa-Brody pipeline an important project and has cooperated with the Ukrainian government on getting it built.

Increasingly, he said, the Ukrainian government has understood the importance of inviting international oil companies to participate in the project. "And now the Ukrainian government is taking a much stronger market-oriented approach to making the pipeline a commercial reality," Ambassador Pascual said.

"It's one thing to build the pipeline. In some ways it's the easy part," he said. "The tough part is to put in place the kinds of contractual agreements that ensure that the pipeline is full and provides a consistent supply of oil that can be used in Ukraine and in refineries in Central Europe. And that's the key step that we're taking right now," the U.S. envoy said.

To that end, the U.S. Trade and Development Agency awarded a $125,000 grant to Ukrainian oil transportation company UkrTransNafta for a study of the commercialization of the Odesa-Brody pipeline. The grant agreement was signed October 30, during the prime minister's visit.

Among frequently cited impediments to increased foreign private investment in Ukraine's economy are the absence of laws guaranteeing a viable economic environment and the inability or unwillingness on the part of government entities to enforce existing laws.

The most recent and most flagrant example of this - the mass pirating, reproduction and export of CDs, CD-ROMs and DVDs in Ukraine - could result in the imposition of hundreds of millions of dollars of U.S. trade sanctions against Ukraine in November. After two years of unsuccessful pressure on Ukraine to curb the unauthorized production of pirated optical media, the U.S. Trade Representative (USTR) decided in August to suspend the special duty-free status for Ukrainian products unless Ukraine takes the remedial action it has promised to take but never followed through.

According to the USTR, Ukraine has become Europe's largest producer and exporter of pirated music, films and computer programs, costing the legitimate creators of those products some $200 million annually.

Prime Minister Kinakh said that the government of Ukraine has done everything possible to create a transparent and competitive market for intellectual property and that the Verkhovna Rada will have a second reading of the intellectual property legislation in mid-November. In preparation for the second reading, he said, the government is receiving assistance from U.S. intellectual property rights experts.

Mr. Kinakh said that a Ukrainian government study estimates that U.S. trade sanctions would cost Ukraine a minimum of $400 million annually and that the Parliament has been made aware of these consequences. He said the government expects the bill to pass.

"We will do our utmost to find the best possible solution which would not harm the trade and economic relationship between Ukraine and the United States," he said.

According to the latest available USTR figures, the United States had a trade deficit of $687 million with Ukraine in 2000, an increase of $373 million over the previous year. U.S. exports to Ukraine were $186 million, an 8.8 percent decrease from 1999, while its imports from Ukraine were $873 million, an increase of $355 million (68.6 percent) from 1999.

Despite these lopsided figures, Ukraine is dissatisfied with the trade relationship as it is today.

Mr. Kinakh said that Ukraine would like to see the relationship become normal, to include the elimination of the Jackson-Vanik Amendment restrictions originally imposed on the Soviet Union and the recognition that Ukraine is a country with a market economy and not a developing country.

In response to reporters' questions, Prime Minister Kinakh also made the following points during his news conference:

President Kuchma will sign the land privatization bill recently passed by the Verkhovna Rada. "And this will be the guarantee of the irreversibility of the market and democratic reforms in Ukraine."
Ukraine welcomes the enlargement of the European Union and NATO and the development of closer ties between these groupings and Russia. Both will help guarantee peace and security in Europe. "What is important here is that increased cooperation between Russia and NATO, and between Ukraine and NATO and the European Union, not be made at the expense of worsening relations and cooperation with other countries."
The deciding factor in the appointment of the next defense minister should not be whether the person is military or civilian, but the quality of the person.

In addition to meetings with U.S., IMF and World Bank officials, Ukraine's prime minister had a working breakfast meeting with the Ukraine-U.S. Business Council, a luncheon meeting with members of the Congressional Ukrainian Caucus and a meeting with Sen. Mitch McConnell (R-Ky.), who, when the Republicans controlled the Senate, chaired the appropriations subcommittee that earmarked many of the aid programs for Ukraine.

He also met with representatives of Ukrainian American organizations and addressed a conference on Ukraine organized by the Organization for the Defense of Four Freedoms for Ukraine and the Ukrainian Congress Committee of America.

Prime Minister Kinakh's delegation included the Ukrainian government's finance and economic ministers and the director of the National Bank of Ukraine.

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