OPIC announces new project in Ukraine, urges economic reforms (03/21/04)

OPIC announces new project in Ukraine, urges economic reforms

Embassy of the United States

KYIV - Dr. Peter Watson, president and CEO of the Overseas Private Investment Corporation (OPIC), on March 12 announced OPIC's first new project in Ukraine in five years, and said U.S. private sector investment in the country would increase once Ukraine had resolved outstanding investment disputes involving American companies.

At a signing ceremony witnessed by Ukrainian government officials, Dr. Watson announced that OPIC would provide $3.8 million in political risk insurance to a U.S. small business involved in a joint venture that will manufacture suspension systems for railroad freight cars in Ukraine. The project will provide substantial benefits to the Ukrainian economy, which relies on both its rail system and heavy industry.

"Today's signing sends a message to potential U.S. investors that Ukraine has resolved to be a good partner to American companies interested in doing business in this resource-rich nation. Both the Ukrainian people and American businesses stand to benefit from this development," said Dr. Watson.

"Continued OPIC activity in Ukraine is conditional upon prompt settlement of outstanding disputes with U.S. companies. By resolving these disputes and committing itself irrevocably to economic reforms, the Ukrainian government will only improve its international standing as an attractive destination for foreign investment. Once settlement is achieved, OPIC looks forward to working with Ukrainian businesses and the Ukrainian government, and expanding our activity in the country," he added.

Dr. Watson noted that OPIC and the government of Ukraine on December 8, 2003, signed a memorandum of understanding enabling OPIC to resume activity in the country, with a stipulation that the parties conclude by January 1, 2005, an agreement to settle an insurance claim on an OPIC-supported project in Ukraine. OPIC had stopped providing support for projects in Ukraine in 1999 because of the claim.

In the new project, OPIC will provide insurance to Hansen Inc., of Pittsburgh, for the manufacture of railroad freight car suspension systems, including friction wedges, side bearings and center bowl liners, to be sold primarily in Ukraine, and potentially in Russia. The OPIC insurance will also cover the lease of Hansen's manufacturing equipment and use of its patented technology.

"This project will help to diversify Ukraine's economy, which relies greatly on heavy industry, by supporting sectors such as agriculture," Dr. Watson said. "OPIC is pleased to work with a U.S. small business to bring these important developmental benefits to the people of Ukraine."

OPIC was established as an agency of the U.S. government in 1971. It helps U.S. businesses invest overseas, fosters economic development in new and emerging markets, complements the private sector in managing risks associated with foreign direct investment and supports U.S. foreign policy. Because OPIC charges market-based fees for its products, it operates on a self-sustaining basis at no net cost to taxpayers.

OPIC's political risk insurance and financing help U.S. businesses of all sizes invest in more than 150 emerging markets and developing nations worldwide. Over the agency's 32-year history, OPIC has supported $150 billion worth of investments that have helped developing countries to generate more than 690,000 host-country jobs. OPIC projects have also generated $66 billion in U.S. exports and created more than 257,000 American jobs.

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