Stephen PIFER: "Our main task is help Ukraine pull itself up"

But perhaps at the current stage the relationship between the two countries is more like strategic dependence? How is Ukraine actually regarded overseas? This and other questions were posed US Ambassador to Ukraine Stephen Pifer invited to The Day's round table along with Embassy officials Mary Kruger, Ken Moskowitz, and Vadim Kovalyuk. Mr. Pifer believes that Ukraine has a good chance now to show the rest of the world how different it is from Russia which still has not determined its course. Among other things, he pointed out that the Ukrainian government is handling the financial crisis adequately, and that US-Ukrainian relationships can be referred to as partnership; Washington's and Kyiv's stand with regard to Kosovo is identical, except for minor technical distinctions.

Q: Your mission in Ukraine is at a time when we are actively trying to clarify the processes underway here. Of course, we are interested in your opinion; what are your impressions of the reforms in Ukraine?

A: Sometimes Americans tend to be impatient about reform, and what I try to do is to remind them to look at Ukraine and see not just the problems but to look at the progress that's been made over seven years. Our impression is that the National Bank and government of Ukraine are doing a pretty good job of coping with the crisis. And we think there's an opportunity here for Ukraine to take advantage of the crisis situation. I know many in the West sometimes seem to think of Ukraine and Russia as one, and now there's an opportunity for Ukraine to differentiate itself from Russia. The IMF and World Bank loan programs have given Ukraine some breathing space, a bit of time to work with, and it's important that Ukraine take maximum advantage of this to pursue deregulation, rationalize the tax system, and basically make it easier for businesses to operate here. And as this happens, I think we would have greater business activity on the part of Ukrainians, plus greater foreign investment, which I think would be a real engine for economic growth in the country. And a number of the pieces are already in place, for example, the decrees on deregulation, but the key question now is going to be the implementation.

Q: Is there a possibility that the President won't be able to come to terms with Parliament after its resolution on the poverty line, because it contradicts IMF parameters? Or is this decision yet another populist maneuver, reflecting how difficult it is to implement presidential decrees?

A: If that is a problem, and a number of the steps advocated by the IMF have to be extended a month or so, they are hard steps politically. But I think that one must argue that if you take those steps together, that would be a road map on how to move Ukraine more quickly to an economy that can be more closely integrated into the global economy. So I guess our whole business and the hope of a good portion of the international financial community is that the executive branch and Verkhovna Rada are going to find a way to work together and that they will be able to take steps which admittedly are going to be painful but six to eight months down the road are going to begin to show themselves in terms of a positive transformation in the economy in terms of creating new jobs and economic growth.

Q: You will probably agree that unpopular decisions should be made by popular leaders or a popular government. In Ukraine, rigid IMF requirements are set against the backdrop of spreading anti-Western sentiments. Could this discredit the very idea of reform?

A: I think there is a risk, but I hope that people bear in mind that the IMF programs were worked out in conjunction with the Ukrainian government after extensive negotiations. The IMF on the one hand is saying, "I think you should do these steps," and as Ukraine comes down that path the IMF and the West are prepared to support Ukraine in doing so. But if you look at countries like Poland, Hungary, and the Czech Republic, they went through that period of economic pain, and then built the basis for economic growth. What we see as our task as is to push Ukraine along so it can get through the bottom half of the curve to get on the upper part.

Q: What do you think made US Congress demand that IMF stop giving "friendly" aid (as was often the case with Russia)? Will the IMF reform serve to enhance Western pressure on the Ukrainian Cabinet? Until now it was generally believed that IMF was just controlling the budget deficit in this country.

A: I guess I would disagree that the suggestion that IMF decisions are made on a personal basis. The IMF gives not grants; they are loans and the IMF wants and needs some assurance that there's an economically sensible course that allows the IMF five or six years down the road to feel it will be repaid. I'm not going to tell you that this process is totally devoid of any political influence.

From the point of view of the United States the IMF still remains a very important tool for coping with the international financial problems and also for assisting economies in transition. The fact that we are going to replenish our contribution with $18 billion is a pretty good indicator that the IMF is a serious and necessary institution. Whatever changes there might be in the way the IMF does business in terms of how it decides to operate, I don't think they will have an impact on the programs that have been funded. It uses a series of economic indicators, not just the budget deficit, which are examined on a regular basis. But it also has a series of about 19 actions which Ukraine will be taking over the course of the program. It is our belief that by implementing that program two years from now the Ukrainian economy is going to be much more closely integrated into the global economy, and it's going to be a much stronger economy.

Q: Ukrainian Ambassador to the US Yuri Shcherbak says Ukrainian goods appeared on the US market, proving quite competitive, but a year and a half or two years ago those products disappeared from American markets. How would you explain this?

A: My sense over the last five years is that American exports to Ukraine and Ukrainian exports to the United States have both been going up although not as fast as either the United States or Ukraine would like. I would say that the American market is the most open in the world. I think what Ambassador Shcherbak may have been referring to is that there are maybe four or five anti-dumping actions against Ukrainian exporters to the United States, and these are the result of a quasi-legal process which considers evidence that, first, an American industry has been damaged by imports and also that the imports coming into the country are being produced at an unfair advantage. In both cases, when a decision has been reached that dumping has occurred there has been a negotiated process between the United States and Ukraine that normally suspends the action and allows a certain amount of exports of the good in question. And we've also provided to Ukraine through the Gore-Kuchma Commission information that if Ukraine wishes to challenge one of those decisions or if circumstances have changed, the process can currently go forward.

Q: What do we actually have in terms of the Ukrainian-US relationship? Strategic partnership, as officially declared, or the strategic dependence of Ukraine on the United States?

A: I would use the term strategic partnership. What is in agreement is that the two countries have a number of common interests and that by working together we will both advance those interests. And you see the same thing in the discussions we have ongoing regarding how a more secure and stable Europe should be shaped. It's also in terms of how we feel about each other and how we work together on certain issues that I call post-Cold War questions, issues like counter-proliferation, efforts against international crime, and those sorts of transnational issues, where I think there is a common American-Ukrainian interest. Another more recent reflection of the partnership is the dialog that we've had ongoing between the United States and Ukraine on Kosovo. This is an issue of concern to Ukraine, and we ought to be talking so that Ukraine understands where United States policy is going on this issue.

Q: We would be interested in knowing what Ukraine's position was on Kosovo. Whose stand do you mean: the President's, Cabinet's, or Parliament's?

A: Let me explain what the Ukrainian government has communicated to me, which I think has actually been fairly clear. Let me step back for a second: it is not the American or NATO desire to drop bombs on Serbs. NATO's preparations for the use of force were designed to achieve a political end, which was to bring the Yugoslav military and security forces to halt the war that they were conducting and also to bring President Milosevic to comply fully with UN Security Council resolution 1199. And the United States and Ukraine share exactly the same view that what is required here is full compliance with Security Council resolution 1199. I think the difference that we had with the Ukrainian government was a technical question: the United States and NATO believed that the combination of resolution 1199 and noncompliance by President Milosevic would be sufficient to justify the use of force. What we heard from the Ukrainian government was that, while the Ukrainian government did not necessarily rule out the use of force, the Ukrainian government felt that what was needed was a new Security Council resolution that specifically authorized the use of force.

Q: Suppose an old friend of yours asked you to comment on what's going on in Russia, considering the geographical closeness of your present mission. What would you have to say?

A: A year and a half ago when I worked at the National Security Council I was responsible for Russia as well as Ukraine. I have to say one thing that I said to myself many times in the last four months, thank goodness my work only requires me to be involved in Ukraine. I think Russia is going through a very complicated situation. I think that Russia has not yet decided where its strategic course is going, and so you have a hesitation that in this period in effect amplifies what has ensued from the economic crisis. Certainly, I hope that the Russians can come to grips and begin to find a way out of this situation and begin to get on a path to a stronger economy.

Q: It is very difficult for the average Ukrainian to get a US visa. Why? Is it because the US authorities are afraid of the Russian Mafia (including Ukrainians in it) or because of the economic hardships in Ukraine, making some of residents seek refuge across the ocean? Will the visa situation change if our economic status improves in several years?

A: This is a very difficult issue, and if there were three problems with which I could somehow wave a magic wand and make it go away or be solved, this would be one of them. American visa law is essentially "un-American" in the sense that it counters one of our basic principles, that you are presumed innocent until proven guilty. Our visa law turns that around. Our consular officers are instructed by law to assume that an applicant for a temporary visa plans to stay in the United States and work illegally or plans to do things inconsistent with that temporary visa until he or she convinces them otherwise.
And, unfortunately, our experience is that we do have a significant number of Ukrainians who travel to the Unites States
on temporary visas and then try to adjust their status and apply to become residents. A very big factor in the decision by the consular officer is the economic circumstances of the applicant. But I think that as the economic circumstances in Ukraine improve four or five years down the road, that's going to make the decision easier, and then we can decide that there is not the motivation to go and work illegally in the Unites States that there was before. So, I think one of the big factors increasing visa issuance will be the growth of the economy in Ukraine. The legislation will remain, but it's a different decision when the economics change here.

Q: You said you prefer to regard Ukrainian-US relationships as one of partnership, but we all understand how very
different our countries are. Things like the freedom of expression and the press are different here and there. Don't you think that this freedom is in jeopardy in Ukraine, now that a year separates us from the next presidential campaign and that the recent eviction of the Kievskie Vedomosti is a graphic example?

A: No, I think that freedom of the press is a very important aspect of a stable and fully functioning democracy. And if you ask the question whether there is freedom of the press in Ukraine, then yes, you have it. And it's not a question that you can make a yes or no answer to. Certainly, as we read the press, we can see the full spectrum of viewpoints represented, and there is considerable criticism of the government, which I think is also one of the questions you look for in saying how freedom the press has. By the same token, there have been some actions here ongoing that, for example, could put a pall over the issue.

Q: Ukraine has its image and reputation. How do you personally regard this country in light of your experience here in Kyiv?

A: In my job I look at Ukraine through a particular prism which is how I can work with Ukraine in a way that ultimately advances American interests. And there are a lot of cases when things that we're doing to advance American interests, I think, correspond very nicely with Ukrainian interests, so we're advancing our common interests. I think Americans are becoming more aware of Ukraine in terms of the role it's playing. It's a learning process.