Motorola Comes Back

A few years ago this plant and America's Federal System Group Co. set up a joint venture to make cellular telephones. The Nunn-Lugar Foundation (a project of two US Senators to support conversion of military production in the former USSR) allocated $2 million. The American partners began to deliver equipment but then suddenly discontinued cooperation.

The well-known Kharkiv Initiative has revived the project, strengthening the reassurance of another US firm, Motorola, which had once burnt its fingers in Ukraine and abandoned our market, slamming the door.

The newly-established enterprise is manufacture 12,000 units in its first year of work and then bring annual output up to 80,000. The potential users of these products are security agencies, police, the National Guard, and firefighters.

The future joint venture is expected to have $5 million in authorized capital. Out of this, two million must be contributed by the US Defense Department as compensation for losses Komunar incurred as a result of failed contracts in the past.

However, nothing is ever completely certain. During a working meeting of Kharkiv Initiative project directors, Kharkiv Governor Oleh Diomin and coordinator of US aid to the newly independent states William Taylor, the latter said the issue of financial and technical aid would soon be on the agenda of the US Congress and the solution would depend on positive conclusions by US Secretary of State Madeleine Albright. She in turn ties her conclusion to the progress of economic reforms in Ukraine and the performance of US companies here. Motorola seems to be sure the US government will not this time leave it to face Ukrainian bureaucrats alone.

Many of our industrialists and entrepreneurs hoping to get US aid will probably be disappointed. No great hopes should be pinned on American money, although Mr. Taylor controls billions. The partners will, at best, supply equipment to what are known as Kharkiv pilot enterprises. Meanwhile, judging from foreign press reports, many US Congressmen believe that a sizable part of American aid to underdeveloped countries settles down in the pockets of Beltway bandits, high-priced Washington-area consultants, and the funds appropriated are usually used to pay for their services. The US Agency for International Development has already announced a competition among US consulting firms to service the Kharkiv Initiative. A consortium of experts and consultants is also being formed: the positive side here is that it will also include Ukrainian specialists.

In fact, the very first documents signed by Mr. Taylor and Mr. Diomin said that the aim of the Kharkiv Initiative is to create a favorable investment climate in Eastern Ukraine and to smooth the initial stages for big and medium business. So everything is in earnest and according to the well-known proverb: eat slowly, and you'll get more.