Washington and Kiev: Progress and Problems

July 11, 2011 3:15 PM

On July 7, three prominent Washington think tanks — the Atlantic Council, the Brookings Institution and the Peterson Institute for International Economics — organized a big conference on Challenges and Impact of Governance in Ukraine. It was held at the Peterson Institute in Washington. This conference attracted no fewer than 300 participants, including 50 representatives from the US government. This brought home the message that Washington remains very interested in Ukraine, but also that Ukraine is a source of both hope and concern.

Media reporting from the event has appropriately been dominated by the observation by David Kramer, the President of Freedom House, that the current criminal cases against former Prime Minister Yulia Tymoshenko were turning from a farce into a tragedy and may destroy Ukraine's prospects for real integration into the Euro-Atlantic community.

There is a tension in American and European perceptions of Ukraine. On the one hand, the West has nothing but praise for Ukraine's foreign policy, which it genuinely appreciates as friendly and constructive. On the other hand, the West is concerned about Ukraine's slippage from a free to a semi-free country, as Freedom House has recorded it.

Three sessions were primarily devoted to foreign policy, with Ukraine's deputy foreign minister, Pavlo Klimkin, and the former US national security advisor Zbigniew Brzezinski as keynote speakers. Damon Wilson, executive vice president of the Atlantic Council, summed up the US position in three points. First, the United States has not lost interest in Ukraine. In particular, it is very appreciative of Ukraine's decision in April 2010 to give up its highly enriched uranium. Second, democracy must be high on the agenda. Third, the United States must engage with Ukraine.

All agreed that Ukraine's current negotiation with the European Union on an association agreement, including a deep and comprehensive free trade agreement, is the most important element of Ukraine's present foreign policy. European integration will be a game-changer for Ukraine, and Brzezinski underlined that the EU cannot refuse Ukraine as a fully European country from membership if it complies with all the membership criteria.

At the same time, James Sherr of the Royal Institute for International Affairs in London doubted that the Ukrainian leaders understood what European integration was really about, and former US Ambassador to Ukraine Steven Pifer, now senior fellow at Brookings, concluded with the pointed question: "Can Ukraine join the European Union without full democracy?"

A notable development was that nobody questioned President Viktor Yanukovych's policy on Russia any longer. Brzezinski referred to his old statement from 1994 "that without Ukraine, Russia ceases to be an empire, but with Ukraine suborned and subordinated, Russia automatically becomes an empire." He emphasized that he was no longer afraid that Ukraine would be suborned by Russia. On the contrary, he harbored good hopes for Ukraine helping Russia to find its way to Europe and become fully European.

Still, concerns were uttered that Ukraine would once again become subject to undue pressure on energy supplies and trade. Andriy Fialko, foreign policy adviser to President Yanukovych, said that Ukraine's negotiations with the Customs Union of Russia, Kazakhstan and Belarus are simply aimed at resolving practical trade issues between the Customs Union and Ukraine. Ukraine would definitely not join the Customs Union.

The panel on governance in Ukraine was all the more critical. A broad consensus reigns that the country is pervasively corrupt, but that has long been the case. The current administration in Kiev is not accused of anything specific, although observers fail to notice any improvement. One journalist in the audience cited the specific case of how President Yanukovych had acquired his current residence and how large state funds had been invested in this now private property, asking whether this must not be described as personal corruption.

The key concern is the government's misuse of law enforcement and especially the judicial system, which seems to be in really bad shape. Former Deputy Prime Minister Oleh Rybachuk detailed the actual repression carried out by the Yanukovych administration, and David Kramer clarified this in the most direct and dire terms. Adrian Karatnycky, a former President of Freedom House, who otherwise tried to explain and belittle the current administration's mistakes, also emphasized that a sentencing of Tymoshenko could derail Ukraine's endeavors to integrate into the European Union.

The two first cases against Tymoshenko, which were constructed by the three Washington firms Akin Gump, Trout Cacheris, and Kroll, which have been hired by the government of Ukraine to investigate corruption.  These cases have been rebutted by a fourth Washington firm, Covington & Burling, hired by Tymoshenko's party. The third case, involving Ukraine's gas agreement with Russia in January 2009, appeared to many critics and analysts as completely political and seemed to fall apart in farce in the court room. Subsequently , the Security Service of the Ukraine government was returning to focus on Tymoshenko's old commercial gas case with Russia in 1996, creating the suspicion that the government had decided to sentence her to prison, but it did not quite know for what reason.

Similar views were presented about the legal case against the former minister of interior, Yuriy Lutsenko, and many other former officials of the Tymoshenko government who are now being prosecuted for what look suspiciously like political offenses. Karatnycky saw the case against former President Leonid Kuchma as an example of the new administration trying to be somewhat impartial, while others argued that it represented Yanukovych's revenge against Kuchma for his refusal to order special forces to crack down during the Orange Revolution in November 2004.

Viktoria Siumar, executive director of the Institute of Mass Information in Kyev, mentioned a large number of cases of repression of journalists, many of which were carried out by the Security Service or the personal security guards of Ukraine's top politicians. Andriy Kulykov, the talk show host of Svoboda Slova of the private television channel ICTV, tried to de-dramatize the situation, arguing that there is pressure on the media, but it comes from many sources. The duty of journalists was to stand up to these pressures in a sensible, responsible and courageous fashion, he said.

This conference devoted only slight attention to economic matters. Jorge Zukoski, president of the American chamber of Commerce in Ukraine, repeated the old adage: "Ukraine is a success story waiting to happen." He and Karatnycky enumerated the many economic reform measures that had been undertaken – the early adoption of a substantial reform program and an International Monetary Fund (IMF) program, the adoption of the tax code, health care reform, the promulgation of a cadastre law governing property taxes on the day of the conference, and a substantial reduction of regulations and the number of regulating staff. Yet, corruption remains endemic and the favoritism of a few big Ukrainian industrial groups is most disturbing.

Pifer summarized that the economic picture is mixed. While the Ukrainian officials emphasized their interest in foreign direct investment, the question was whether much investment could be realized under the current conditions, as corporate interests dominate over national interests.

C. Fred Bergsten, the director of the Peterson Institute, concluded the conference by emphasizing that his dominant impression was the contradiction between Ukraine's ambition to integrate with the European Union and queries whether Ukraine was really sufficiently democratic to be able to do so.

Anders Åslund is the author of How Ukraine Became a Market Economy and Democracy.

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Anders Åslund Former Research Staff

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