Advances a nd Debts

A Ukrainian governmental delegation, led by Minister of Economy and European Integration Valery Khoroshkovsky, flew to the United States Monday, January 27 (originally, the official visit was to be headed by First Vice Premier and Minister of Finance Mykola Azarov, but he had taken ill). The timing of this visit is no accident as American Ambassador to Ukraine, Carlos Pascual, has stressed the utmost importance of holding meetings in Washington for further constructive development of Ukrainian-American relations.

Circles close to the Ukrainian government tend to think that Ukraine’s main goal during this visit is overcoming the deadlock in relations with the US. Vitaly Lukyanenko, aide to Minister Azarov, told The Day this without mincing words. Developing relations at the level of ministers is one of the ways to overcome the crisis of confidence Washington proposed earlier.

It appears that the Ukrainian delegation has agreed to the tactic of rapprochement one step at a time. In all probability, one such step will be removing Ukraine (as well as Russia) from the blacklist of countries affected by the Jackson-Venik amendment. According to Ambassador Pascual, US President George W. Bush is ready to uphold such a decision. Thus far, no progress has been made on other issues, unless one considers a major advancement the fact that the American side has presented its draft agenda of the session of the American-Ukrainian committee on economic cooperation, which is to be held as part of this visit. The draft agenda of the Ukrainian side (it is unlikely that it will differ much from the one proposed) is still in the works. There is also some doubt as to the composition of the delegation.

Understandably, the Ukrainian delegation faces the difficult task of restoring Ukraine’s credibility during talks in the US Department of State, National Security Council, Treasury Department, IMF, and World Bank. The issues to be addressed include the economic policy of the Ukrainian government, bilateral trade relations, and bilateral commercial projects. The other day in Kyiv, Mr. Azarov stressed that, as of late, Ukraine has made considerable progress in solving the problems that stood in the way of the development of economic cooperation with the USA. “The dwindling commodity turnover between our countries is a major concern to us and thus we are prepared for a constructive discussion of these issues,” the First Vice Premier said.

Judging from Azarov’s words, a main goal of Ukraine is clearing the way for the export of metal to the US. These exports have been slashed as a result of antidumping investigations as well as sanctions against Ukraine resulting from its inefficiency in protecting intellectual property rights. When addressing this issue in Kyiv, Mr. Azarov underscored that a legislative basis for the protection of intellectual property has been created in Ukraine, and the executive power is monitoring this sphere on a regular basis. The First Vice Premier notes that this year, privileges for the mining and metallurgical enterprises were revoked. It will be recalled that these privileges were one of the reasons behind the antidumping investigations. According to Minister Azarov, the Ukrainian government will influence pricing on the metals market. “The metals market can be transparent with open and competitive market procedures,” Mr. Azarov opined.

Thus, he pointed out to the American Ambassador that very important laws have been passed in Ukraine. For one thing, amendments to the Criminal Code have been adopted in keeping with the requirements of the FATF. Also, amendments to the Law On Banks and Banking were adopted in the first reading, which makes it possible to perform effective financial monitoring in the fight against money-laundering. “By all accounts, there is every precondition for the adoption of laws which would tally with FATF methods before February 11. This way there will be no need for sanctions against Ukraine,” Premier Azarov stressed.

Naturally, an important part of the visit to Washington will be talks with international financial organizations. Despite the difficulties with the budget, Ukraine can take a firm stand during the talks. Evidence of this is the recent statement by Mr. Azarov to the effect that Ukraine will pick and choose when taking foreign loans and will not take high- interest loans. It is up to Azarov to convince American ranking officials that Ukraine has a government capable of keeping in check the country’s situation and of being a predictable partner. The US, however, has not once voiced any misgivings about the government of Yanukovych. This could also be due to Azarov. He is credited with devising a plan that made budget adoption possible (through working out a compromise with the opposition represented by Yushchenko and Our Ukraine). In this context, the phrase ‘the first months of work of the new government saw encouraging evidence of cooperation with the parliament’ said by Azarov during a meeting with the American ambassador takes on new meaning. Nonetheless, this phrase alone will not be enough during the Washington talks. It would be good if the government action plan is also presented. It is not ruled out that the Americans will be the first to read it.

INCIDENTALLY

On the heels of the USA, Germany, and Canada, Great Britain and Turkey announced they were introducing measures against Ukraine aimed at counteracting money-laundering. The British Treasury agrees with the FATF in that the law adopted in Ukraine does not fully eliminate the risk of money-laundering. According to its representatives, “there is a high risk that money-laundering schemes may be behind any transaction with this country.” Denmark also envisages imposing strict controls on financial operations performed by Ukrainian individuals and entities, the Ukrainian Foreign Ministry said on January 21. According to the Foreign Ministry, Japan, which has not announced any decisions yet, will also take into account the recommendations of the FATF. On February 12, in Paris, the FATF is to determine whether Ukraine has eliminated the shortcomings in its legislation on fighting money-laundering and decide whether it should revoke sanctions imposed late last year.