Money Only In Exchange for Reforms

There have already been reminders this year that Ukraine must immediately get down to serious structural changes, pursue a transparent privatization policy in the energy sector (this above all concerns natural gas), put an end to bureaucratic permissiveness, and adopt a radically new tax code. Special US Secretary of State advisor Stephen Sestanowich and chairman of the trade and investment sub-commission at the Kuchma-Gore commission Jan Kalicki stressed this, as well as the need for a strict control over credit use, administrative reform and transparency in handling off-budget funds, during their visits to Kyiv in January. "We want to see real deeds rather than hear words," said then William Taylor, coordinator of US aid to the newly independent states.

But even this was not enough for Ukraine to obtain the $195 million US aid package: now, as the Americans explain, the Ukrainian side has not yet resolved nine controversial issues with US investors. These must be finally resolved in favor of the US before February 18, when Ms. Albright will testify in Congress on Ukraine. Both she and Congress require irrefutable evidence that things in Ukraine have really changed for the better. Obviously, only after this will it become possible to say anything about the Kharkiv initiative and other potential US investments.

The American demands to Ukraine coincide almost completely with those of the IMF and World Bank with whose representatives the Ukrainian delegation was bargaining in Washington. Ukraine is unlikely to get new loans unless it meets the IMF memorandum requirements and ratifies agreements with the World Bank - and this will not happen, judging by statements made by Verkhovna Rada Speaker Oleksandr Tkachenko. Accordingly, the budget will not be fulfilled without resorting to monetary emission and rampant inflation, which is unlikely to be interpreted overseas as a good sign. Ukraine may not manage to prove in practice before February 19 that her reforms are making headway and American investors are held in esteem here, especially knowing that up to now no kind of investors were in esteem.

Obviously, the IMF will be guided primarily by Washington in deciding whether or not to continue the EFF program for Ukraine. But, in any case, they will not be lending us much.