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Ukraine: Foreign Investors Ignore Country, Officials Tell EBRD

  • Stefan Korshak

Kyiv, 11 May 1998 (RFE/RL) -- Top Ukrainian officials are promoting investment opportunities, arguing that a strategically located country of 50 million people, with an improving economy and massive resources, simply cannot be ignored. But, most foreign investors appear poised to do just that - largely ignore Ukraine.

The Ukrainian officials addressed the annual meeting of the European Bank for Reconstruction and Developments in Kyiv.

Ukraine's Deputy Prime Minister Serhiy Tyhypko over the weekend said, "We know that we need investment to develop. We believe that the conditions are now favorable."

Ukraine is not unaware of the problems involved. Kyiv knows that about 50 percent of Ukraine's Gross Domestic Product is part of the shadow economy - not formally regulated and contributing no tax revenues. The foreign debt is soaring, and privatization auctions of state property, critical for government receipts this year, need to be a lot more transparent, before outside money is invested.

As a proposed remedy, Tyhypko and Minster of Finance Ihor Mitiukov, National Bank of Ukraine Chairman Viktor Yushchenko, and State Property Fund Director Oleh Bondar agree, the country's economic infrastructure needs overhauling.

The new Parliament meets tomorrow, and will see its first bills for reform in tax, privatization, deregulation, and government fiscal policy as early as this month, Tyhypko stated.

Some Western businessmen attending the EBRD meeting have been persuaded. Couderq and Kubas Partner, Pierre Couderq, tells RFE/RL, "Ukraine is getting too much negative media coverage. People come to Ukraine not because of the press but because of the market. Fifty- million is a very big market, and all big companies cannot afford not to come here."

But, submitting carefully crafted draft laws is not the same thing as getting them passed by Ukraine's Parliament.

With the new Parliament even more leftist than the last one, government-sponsored legislation is expected to receive an even more hostile reception.

But, the Ukrainian officials say national interest will take priority over party affiliations, when it comes to voting on reform measures. Besides, the officials say, about 150 new parliamentary delegates are entrepreneurs likely to vote in favor of improving their country's business climate.

"We are all Ukrainians," Tyhypko said. "I am convinced that the days of confrontation with the Parliament (Verhonaya Rada) is a past occurrence."

Perhaps. But few share his optimism.

"They have been promising reforms and a better investment climate for as long as I can remember," an investment manager (anonymous) for a large Swiss bank told RFE/RL.

"I can't say that I am encouraged," said the director (anonymous) of a Czech securities trading branch office in Kyiv.

Few doubt the sincerity of Ukraine's presentation. But observers say other parts of the government, with direct effect on the implementation of reforms - whose results could be joblessness and more voter discontent - might simply refuse to participate.

Was the Ukrainian presentation successful. Well, it depends on outlook. As one Swiss banker (anonymous) told RFE/RL, "Well, the Ukrainians put together a smooth conference, and got $130 million from the EBRD. But, I don't send them money. Me, I wait."