By Natalie Gawdiak, Journalist
Action Ukraine Coalition (AUC)
Washington, D.C., Tuesday, March 23, 2004

The luncheon was to have featured Congressman Curt Weldon (R-PA), co-chair of the Ukrainian Congressional Caucus, member of the House Armed Service Committee, and chairman of its Tactical Air and Land Forces Subcommittee. Although a crucial committee session in the House at the time prevented Mr. Weldon from attending the AUC luncheon, the participants engaged in a dynamic, fruitful wide-ranging analysis and debate of Ukrainian issues.

The close to fifty attendees represented U.S. government agencies, including State and USAID contractor organizations, Treasury, Commerce, the Office of Personnel Management, and the Library of Congress. Representatives from international organizations, development banks, think tanks, media, and the Ukrainian Embassy also participated. The Citizens Network for Foreign Affairs (CNFA) provided a conference room at its Washington headquarters.

Ihor Gawdiak opened the session by asking what can be done, if anything, by the U.S. government to ensure a truly fair and democratic election campaign preceding Ukraine's fall presidential election and to influence a more democratic and judicious approach to the controversial "reforms" being contemplated in Ukraine.

Vera Andrushkiw, Director of the US-Ukraine Foundation's Community Partnership Project (CPP), pointed out that it is important in understanding the current situation to take into account the effect upon Ukraine of the accession of the country's neighbors to the European Union.

Dr. Bill Gleason, chair, Advanced Ukrainian Studies and coordinator of the Eurasian Studies of the Foreign Service Institute )FSI) at State, noted that at a conference co-sponsored a week earlier by FSI "great concern was expressed by several members of the conference that the OSCE (Organization for Security and Cooperation in Europe) is not moving aggressively enough and that it is focused too much on the final election result and not enough on the events leading down to the election."

"UKRAINE FATIGUE?"

The Ukraine Desk Political Officer at the U.S. Department of State, Dr. Paul Carter, emphasized that the U.S. also views the coming election in Ukraine "as a critical event in Ukraine's history. It will set the stage for Ukraine's relationship not only with the U.S. but internationally for years to come." He pointed out that, "if the election does not go well, this could set Ukraine's membership in NATO back for quite some time."

Furthermore, he said, "there are certain psychological factors at work here. It's not just a question of the formal things, like memberships in certain organizations or not that's important here. If this election goes poorly, Ukraine will be lumped in with other countries--I don't want to pick out any particular country to the East--that have not done well on the democracy front, and 'Ukraine fatigue' so to speak will set in-people will just not be interested. There is an awful lot hanging on this for Ukraine."

It is a matter of timing, he said. "If the election goes well, and we have made this point quite often, the US will be much more inclined to support an early decision regarding membership in NATO for Ukraine. Fifty years from now, we may think of it only as another bad election in that part of the world--as an election that went nowhere and Ukraine went nowhere."

Carter went on to note that, "One of the participants on the Ukraine side at the Foreign Policy Committee meeting said, 'There is too much focus on this election in the international community. Who remembers what happened to the election in Poland in 1939?' Our response to that was that we certainly don't think that is a good way to look at it. But if this election does go poorly, maybe we won't remember it. Fifty years from now, we may think of it only as another bad election in that part of the world. That this election went nowhere and Ukraine went nowhere."

Responding to a query, Dr. Carter avowed that the Bush administration has certain sanctions in the planning stage should the upcoming presidential election indeed prove to have been fraudulently carried out. He declined to offer any details.

As for the coming presidential elections, Scherba stated, the fact that Ukrainian leaders Viktor Pinchuk and Akhmatov are in communication with Viktor Yushchenko shows that the potential victory of Yushchenko [in the presidential race] is not viewed in Ukraine as some remote possibility. The United States, therefore, should not be telling Ukraine how to behave and threaten it with some sort of sanctions, but instead it should treat Ukraine as an important partner and accept the results of the coming elections as a legitimate expression of the Ukrainian electorate.

Dr. Carter admitted to this unequal treatment but countered by saying the U.S. administration is harsher on Ukraine than on Russia because of Ukraine's stated desire to become part of Europe and join European institutions. Thus the question of democratic progress in Ukraine is for the United States very important. He responded to a question on what was meant by "if the elections go well," by saying that it was what would lead up to the election that is important-what things have to stop, like pressure on journalists, harassment of opposition at rallies--as happened at Donetsk--and the like. If these things were to stop, that would be a very positive step.

Christopher Grewe, international economist and Ukraine Desk Officer at the U.S. Treasury Department, agreed with the two participants from the Embassy of Ukraine, that Ukraine has been doing well economically. He noted that the beneficial influence of the policies set in place in 2000 and 2001, under Victor Yuschenko's term as prime minister, are still being felt and that the first half of last year was also a good period for economic policies.

Ukraine's macro economic policy has been good, Mr. Grewe observed, and Ukraine has also been "very lucky." Ukraine has a good central bank that has been reasonable and has had a fairly good fiscal policy. "You have to have stability if you are going to have economic growth. Our concerns are for the future, while we applaud what has happened, we always point out that Ukraine is not there yet; some substantial distortions still exist." The time to address these distortions is now because some of these reforms will cause pain, so it is better to suffer that pain when the economy is doing well, he observed.

MISDIRECTED RESOURCES

For U.S. Treasury officials looking at Ukraine's situation, the energy sector is a major concern. "It is still one of the least transparent, most corrupt sectors in the economy" and provides subsidies to Soviet-era industries, even so far as to make them turn a profit. These resources are being misdirected," Mr. Grewe asserted.

The second major area to improve is the business climate. Mr. Grewe stated that there is a tremendous amount of potential in Ukraine for people to set up new businesses. They have great trade ties with the EU and former Soviet republics. The old Soviet system did not kill the entrepreneurial spirit. Instead of favoring some groups over others, however, there needs to be a transparent way for the government to obtain the funding that it needs.

On the political side, the Treasury Department's concern is that free and fair elections support free market economy. This is a well established correlation throughout the world. "You can get economic growth without a democracy, as we have seen many times, but a really well functioning market economy really requires a free society otherwise resources can't move within the economy because they are blocked by political concerns," Mr. Grewe noted.

Acknowledging the positive side, Mr. Grewe observed that Ukraine has had its fifth year of growth. It's a balanced growth with growth in consumption, in investments, and in exports. All these different parts of the economy growing are very encouraging signs, especially in view of the economic situation in Ukraine in the 1990s. "In looking at this growth and the good outcomes, one of the questions we have asked, is what is driving this? Where is the growth coming from?" Mr. Grewe asked. It is really coming from Russia. Russia is growing in a very stable manner. Ukraine has reduced its share of exports to Russia, but Russia is still its major trading partner, he concluded.

Arriving at the meeting representing Congressman Weldon, Xenia Horczakiwskyj, the Congressman's legislative director, relayed the Congressman's apologies and explained that some legislative priorities required him to stay on the Hill. Ms. Horczakiwskyj heard direct appeals about broadcasting concerns from participants who spoke on behalf of the Voice of America (VOA) and Radio Free Europe/Radio Liberty (RFE/RL).

Asta Banionis, special assistant to the President for Public Outreach at RFE/RL and Jaroslaw Martyniuk, regional research manager, InterMedia, which does audience research in Ukraine for Radio Liberty and Voice of America, both spoke about Ukraine's clampdown of media outlets in Ukraine for international broadcasts.

Mr. Martyniuk observed that the only means of getting the signal to Ukrainian currently is by shortwave, but that the shortwave signal to Ukraine for Ukrainian broadcasts is much weaker than the one for Russian-language broadcasts, as it has always been. Since 1996, broadcasters found a way around this through access to FM stations, but now that these are no longer available, the strength of the shortwave signal is a critical issue.

He urged that the US assign a stronger frequency to Radio Liberty at least to the Ukrainian shortwave, but warned that this would have to be done almost immediately in order for the U.S. to have an impact on elections six months ahead.

Ms. Horczakiwskyj promised to relay this appeal to Congressman Weldon and to work directly on the problem. She also announced that the Congressional Record for March 17, 2004, carried a floor statement by Mr. Weldon's regarding his views on the troubled media situation in Ukraine.