John HERBST: “My objective is to help Ukraine to make progress”

Could you please evaluate the current level of the bilateral relationship? How effective was the “slow steps” strategy implemented last year? Did it reach its goal? What might the next stage look like?

I think there is no question that Ukrainian-American relations have got much better in the past five months. And I think this happened not only because of that slow steps strategy, though it was valuable.

I think the relationship became much better because both countries recognize the importance of that relationship. Both countries understand that the problems that characterized the relationship did not serve their interest. So there was a mutual interest in improving relations substantially. There were steps taken in order to achieve it.

The brave decision by President Kuchma and Verkhovna Rada to send Ukraine’s representatives to Kuwait and then peacekeepers to Iraq was also important. Washington has taken efforts to settle certain problems and renew contacts on all levels. There were visits by Speaker Lytvyn, Prime Minister Yanukovych, and of course our presidents had a brief talk during their meeting in New York. So I think establishing contacts on all levels is an important element. And we are working now to improve the relationship in all areas.

Can we now expect that meetings between our presidents, prime ministers, and ministers will become more frequent and they will work consistently on concrete problems?

I think you can say that we already have that, because it’s not that common for a country to have that many high-level contacts with the United States as we had just in six weeks. It is important for observers in Ukraine and many other countries to understand how busy Americans are.

Considering the number of challenges that the American leadership faces, these frequent contacts in the past six weeks are a sign of the importance the United States attaches to Ukraine. I wouldn’t make any predictions about the future, because I understand how much work our leaders have to do, but I know there will be contacts on the high level with Ukraine.

Another question deals with the situation with Ukrainian- Russian relations. Many in Ukraine expected a clearer reaction from the countries, which signed the Budapest Memorandum guaranteeing Ukraine’s safety. Now in Ukraine voices advocating renewing this country’s nuclear arsenal as a guarantee for its security have become more distinct. What is the United States’ stand toward this issue?

Before I came here, I heard in the United States voices from Ukraine that wanted to reestablish its nuclear capability. I can’t say that in the past few weeks I heard much criticism of the United States’ on the part of the Ukrainians for the position it has taken regarding Tuzla. It seems to me, given these two facts, that those people who for some time have wanted to reestablish the nuclear capability of Ukraine are using the incident in the Kerch Straits to make their case. It is in no sense clear that having the weapons would help Ukraine in these current circumstances. And, as you know, the problems surrounding this issue have diminished over the past couple of weeks, and that’s all the US wants. I could tell you that the United States remains today, as it was ten, twelve, and forty years ago, opposed to nuclear proliferation.

I’ve already spoken many times on the situation around Tuzla. I don’t think I need to repeat the position of the United States.

You have been asked before on whether Ukraine can count on starting a NATO Membership Action Plan at the alliance’s Istanbul summit. However, there are countries in whose stabilization Ukraine has been involved before, that are already participating in the plan. Why do you think such a situation could arise? And to what extent can Ukraine really count on becoming a full alliance member in due time?

First of all, it’s my understanding this is the objective for the Ukrainian government, and we support very strongly this position. We think that Ukraine’s integration into the Euro-Atlantic entity — and NATO is perhaps the core of that entity — would contribute to Ukraine’s security and prosperity, as well as to stability in Europe.

Speaking about the MAP and Istanbul summit, let me just add that Ukraine has a very ambitious action plan of its own and it has made some progress implementing this plan. I think that NATO is looking carefully into this, and this will play important role as to what happens with Ukraine in Istanbul.

It’s important, now that we are talking about this, to understand what NATO is. NATO, of course, is the world’s most successful defensive alliance, but the reason for this is that it is an alliance of members of the same sorts of societies, the same values. In other words, let’s say, it’s an alliance of nations committed to democracy, freedom in democratic sphere, and of course human rights. So progress in the area of development and, for that matter, economic reform is very important as Ukraine moves in the direction it wants to move. If you understand that, you can see why NATO membership is in fact in the interests of the average Ukrainians: because NATO membership would provide them security and also mean that Ukraine will be in a place where citizens can express their political views freely, where their votes determine who their leaders are, and where their own hard work will lead to prosperity.

In this context we cannot ignore the fact that next year both our countries will have presidential elections. In your view, for how long will the relationship between our countries depend on their results?

I think you need to understand something about the United States if you look at those questions. We can have correct and even positive relations with many countries, but we can’t become allies or even extremely good friends with countries that trample on principles Americans consider very important. And, for that matter, a country that aspires to become truly part of the Euro-Atlantic community cannot do that; it has to accept the principles this community holds very dear. That’s why democracy, freedom of the press, and human rights are very important, and also for the development of bilateral relations with the United States. It is not the United States’ business to say who should run any given country and who should be its leadership. We want the Ukrainian people to determine their leadership. We don’t think it would be fair to the Ukrainian people and consistent with the principles that are very important to the United States if some very wealthy people or some people in power are able to manipulate the elections. When we say this, we believe that we are expressing opinion of many Ukrainians.

Do you anticipate that the change of the White House administration will influence the role of the Iraq issue in the Ukraine-US relations and also in the relations between the US and the coalition allies?

It’s highly speculative to talk about policy changes based upon changes in White House. It seems to me that a large majority of political leaders in the United States, both Republicans and Democrats, unde rstand the importance of Iraq issue. For Iraq to become a stable peaceful country, for Iraq to practice all these principles we were just talking about — democracy, human rights, freedom of the press, freedom of religion — it’s very important for the coalition to continue to play an active role. If you look at what has been happening in Iraq over the past several weeks, you’ll understand just how dangerous the opposition there is. It seems to consist of former Baath officials and terrorists from many places in the world. They don’t have much support from the Iraqi people. So what you have there is that these extremists are blowing up the UN, the International Red Cross, and peaceful Iraqis, and because they know that the Iraqi people don’t like these activities, they don’t even identify themselves. So, a coalition victory in Iraq means that terrorism and extremism is defeated. This would be very good for the people of Iraq in the first instance, and it will send a message to terrorists around the world that their future has no advantative for them, that they are defeated. As you know, despite all of these problems, polls have shown that 70% Iraqis believe that they are better off today than they were under Saddam Hussein, and they expect to be in a much better situation in five years.

Speaking about Iraq, is it realistic to expect that Ukrainian companies get contracts on rebuilding Iraq and also access to its oil?

I certainly anticipate Ukrainian companies will participate in the reconstruction of Iraq. I know that the process is not going as quickly as some would like. It’s also true that Washington highly appreciates the role of Ukraine in Iraq. It’s important that Ukrainian companies look into this process and find their way to make competitive bids, because the bids will be given on the basis of their economic value.

It is known that Ukrainian government has invited an American company to analyze the expediency of using the Odesa-Brody pipeline in the direct, “European,” or reverse way. It is also known that American government supported the European option. Why, then, didn’t this support develop into contracts with leading American companies on oil transport and refining?

I notice you were very careful with wording this question. Because your question was designed in order to ignore the fact that American companies were negotiating with the Ukrainian government and Ukrainian entities about possible storage of oil in Odesa-Brody. Such a contract would provide some profit for this enterprise, had it kept open the pipeline for shipping oil from the Caspian Basin. So there is an insight on a commercially viable deal that very quickly can be done, as I understand, for using this asset. I think there are some very good reasons for doing this. The construction of Odesa-Brody was designed to transport oil from the Caspian to Europe, and this pipeline has clear substitute value for the energy independence of Ukraine and for its integration into Europe. One of the government’s policies is to make itself less energy dependent. Virtually all Ukraine’s oil and gas come out of one source today. Conveying gas and oil from the Caspian Basin would provide other sources of energy for Ukraine. Using the pipeline to bring oil from the Caspian to Europe would enhance Ukraine’s economic integration with Europe. So, keeping an eye on the strategic interests, it seems to me that it’s Ukraine’s advantage to preclude this deal, which is currently being negotiated with the American company.

This is especially true because if you send oil from Brody to Odesa, if you reverse the pipeline, you will be transporting oil of lower quality, which would raise some problems with maintenance, because the oil that comes from the Caspian is of higher quality, which requires less maintenance for the pipeline.

Moreover, the proposal to send oil from Brody to Odesa has another alternative. That oil could be sent from Belarus to Eastern Ukraine and from there to Odesa, using other pipelines. That will keep the Odesa-Brody open for this commercial deal currently under negotiation with the American company, and we’d also keep it open for use to transport oil from the Caspian to Western Europe, which is Ukraine’s great strategic objective.

Could you give us the name of the company negotiating with the government?

This is not my role.

Today it is often said that the US Congress is prepared to cancel the Jackson-Vanick amendment to the Trade Act, thus implementing normal trade regime between the two countries. What prevents the US from granting Ukraine a market economy country status? As you know, many in Ukraine consider this decision purely political.

On Jackson-Vanick, the US administration would like very much Ukraine to be exempted from this legislation. This has been the position of the Bush administration, as well as Clinton administration, for many years. But the power to do this rests with Congress. We are trying to work with the Congress to achieve this objective, but again it’s in the power of the Congress to do this. It’s important to understand, though, that Jackson-Vanick has had no negative impact whatsoever on economic relations between the United States and Ukraine, because every year since Ukraine has become independent, the administration has said that the sanctions of Jackson-Vanick do not apply to Ukraine.

Regarding free market status, this is a complex question. On the one hand, we recognize the great economic progress that Ukraine has made over the past several years. Everyone knows the excellent growths of the Ukrainian economy in the past two years and we admire the fiscal policies and the budget policies of the government. But we believe there are still some things that exist here, which are not consistent with the market economy, things related to the rule of law and the ability of the courts to enforce commercial legislation for all companies in the same way. Also while there has been substantial privatization of the economy, the government still plays a very large role and owns a big portion of the economy. There is also the question of government subsidies, which may make it easier for some Ukrainians farmers to compete abroad, for instance, especially in the energy sector. Now, having said all this, I believe this is something that we and the Ukrainian government should work at, and we are prepared to work hard to make progress as quickly as possible.

The United States often declare its support to Ukraine’s entering the WTO. In the past few months the problems preventing Washington from giving Ukraine full support on this way were repeatedly named: chicken imports and intellectual property rights. What is the current Washington’s stand toward this? Are these problems still urgent, considering achievements in other fields?

We want very much to see Ukraine in the WTO as soon as possible. We look at this question, you might say, with three points of view. One is strategic: it’s important for Ukraine’s integration into the world economy and developing as a society to become WTO member. But then there are two economic sides to this question as well. The first has to do with specific American interest in Ukraine, and that touches upon the two issues that you mentioned. We would like to see the results of the issues of chickens and intellectual property rights. I think significant progress was made on the chicken issue and I hope we will soon see some imports and convince that this issue is no longer a problem. On intellectual property rights a good step was taken with legislation early this year, but there were some questions remaining about the treatment of compact discs. There were attempts in Verkhovna Rada to address this problem within the last several months, but they weren’t successful. But I think there is a reasonable chance that this will be addressed in the future. I think it’s important that Verkhovna Rada members, especially those who say they support a free market, support the bill on intellectual property rights. I am rather optimistic toward this third group of issues relating to WTO membership. But the last group has to do with the American role, as you might say, as a country that has special responsibilities for maintaining the integrity of the international economic system. In that regard, there are certain requirements for all new members of the WTO. The basic objective of the WTO is to remove all barriers to trade, and if they cannot be entirely removed, then to remove the non- tariff barriers. So, legislative changes are necessary for all countries that want to become members of the WTO. That’s especially true for the countries that had a misfortune to have a Communist economic system. We had experts here working with your experts and your legislators, helping to show what sort of legislation is necessary to make Ukraine’s economy consistent with the world trade system. Let me just add that these issues are very high priorities for me and for the United States.

What other issues you would call priorities in your work?

I would just once again talk about improving the US-Ukrainian relationship in the last few weeks. Priorities come from that simple statement. In the economy area we talk about the WTO and market status, in the security area we talk about NATO membership in the long term and cooperation on issues like Iraq, increasing trade and foreign investment. But of course for these things to happen, there has to be substantial reform in the economy. It’s also true that for NATO and EU membership you need to see free and fair democratic election.

There is a connection between all these objectives. If they are achieved, the average Ukrainian will live in a wonderful society where the people will choose its own leaders, a society which will be economically much richer because people will profit from their own economic activities.

In other words, my objective is to help Ukraine to make progress.