Americans Blown Up By Ukrainian Ammo

It is now much in the interests of the official Kyiv, as said US Ambassador in Ukraine Steven Pifer, to have a civilized "divorce" between the project participants. Elayent Techsystems still retained a glimmer of hope the last two months. Over that period, the Ukrainian government has been frantic to settle its disputes with US investors, so that Ukraine might acquire a full $195 million package of US financial aid this year. But Elayent Techsystems was unlucky: it could not help being blown up by the dangerous Ukrainian ammunition.

The joint venture was supposed to salvage almost two-thirds of the total obsolete ammunition from Ministry of Defense arsenals. The American cofounder, Elayent Techsystems, which had cooperated with the US Department of Defense for fifty years, invested over $20 million in an ammunition-salvaging facility in Ichnia and a powder-grinding enterprise at Tsvetos, near Khmelnytsky.

It was expected that sales of components from salvaged ammunition on the domestic and foreign markets would bring in a total $100 million. The profit was to have been equally shared between the American and Ukrainian parties.

However, only 28,000 out of 220,000 tons of ammunition have been salvaged in five years, netting only $7 million. The Americans say this resulted from failure of the Ukrainian partners to deliver on time the ammunition to be salvaged. The Ukrainian military in turn stresses that the Americans went back on their promises to ensure comprehensive salvaging of the ammunition. Peacemaking attempts failed. Little wonder, for no influential posts at the Ministry of Defense are now being held by those generals who adamantly supported the project six years ago. Elayent Techsystems now wants to gainfully sell the joint venture equipment in order to recover its investment.

"I think the Ukrainian government would also do well to get involved so that Elayent Techsystems does not have to refer to OPIC," US Ambassador in Ukraine Mr. Pifer told The Day.

It will be recalled that the US Overseas Private Investment Corporation (OPIC) insured this demilitarization project in Ukraine, and in case of failure it must pay insurance to Elayent. However, under the US-Ukrainian agreement on reciprocal protection of investments, it is Ukraine that will have to later fully compensate OPIC for its losses. Thus, everything will have to be paid by penurious Ukrainian taxpayers.