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Ukraine: President's U.S. Visit Focuses On IMF/World Bank

  • Andrew Tully

Ukraine's agricultural and industrial production are down, and corruption is said to be widespread. And both the International Monetary Fund and its sister organization, the World Bank, are holding back on loans to the government of President Leonid Kuchma, saying it is moving too slow on open-market reforms. RFE/RL's Andrew F. Tully reports that Kuchma will be in Washington this week to meet with the two lending groups. But the outlook is grim.

Washington, 7 December 1999 (RFE/RL) -- Ukrainian President Leonid Kuchma will be in Washington this week for meetings with U.S. President Bill Clinton and Vice President Al Gore, but the focus of his visit will be the World Bank and the International Monetary Fund (IMF).

It is unclear, however, whether his trip will generate any financial help for his nation, which is beset by a hobbled economy and reportedly rampant corruption.

Kuchma and Gore are co-chairmen of the U.S.-Ukraine Binational Commission. They meet every year to receive status reports from committees on foreign policy, security, trade and investment.

This year's meeting was to have been in July, but was postponed until Wednesday (Dec. 8) because of the campaign for the presidential election last month in which Kuchma won a second term as president. Clinton also is set to meet briefly on Wednesday with the Ukrainian leader.

Kuchma's real interest during his Washington visit will be meetings on the same day with Michel Camdessus, managing director of the IMF, and James Wolfensohn, president of the World Bank.

Last Saturday, John Odling-Smee, the head of an IMF delegation to Kyiv, said the IMF is uncertain whether to resume lending to Ukraine because of shaky progress in the transition from communism to a free market. The IMF has repeatedly delayed its loans to Ukraine for this reason.

Last year, the IMF began a three-year program under which it would lend some $2.2 billion to Ukraine if Kuchma's government instituted free-market and budgetary reforms. These are the loans that are now on hold.

And last Thursday, Lily Chu, who led a World Bank delegation to Kyiv, said, Ukraine was among the most hostile places for foreign investors in the former Soviet Union. She, too, cited slow economic reforms.

The World Bank said it would loan the Kyiv government $800 million next year if Ukraine adheres to promises of reforms. But so far, the delegation said, there were few signs of the promised reforms. The World Bank plans another meeting in Kyiv next month.

Kuchma's response to both the World Bank and the IMF was quick. During the weekend, he signed a decree ending Soviet-era collective farms by privatizing all agricultural land by April 2000. Farmers will be able to buy up to 100 hectares of land from their collective farms. Until now private land ownership was forbidden.

Agriculture officials hope the measure will revitalize Ukrainian farms. The nation is known for its fertile soil, but farm production has been cut in half since Ukraine gained independence in 1991.

The Ukrainian government has invited Camdessus, the IMF chief, to Kyiv for further talks about IMF aid. An IMF spokeswoman tells RFE/RL that Camdessus will not decide whether to visit Ukraine until after he meets Wednesday with Kuchma in Washington.

Analysts said it is unlikely that Kuchma can accomplish anything, particularly with the IMF, during his Washington visit -- even if he can persuade Camdessus to visit Kyiv.

Roger Kubarych is a senior fellow in international economics at the Council on Foreign Relations, a New York think tank. He says Kuchma's visit to Washington is intended more to help Kuchma than Ukraine.

"Kuchma needs it [the visit] for -- to sort of establish his credentials at home, that he's a player -- he's just won an election -- and [to] try to get some momentum, favorable momentum, get people to think there's a sense of hope."

Helmut Sonnenfeldt, a guest scholar in foreign policy studies at the Brookings Institution, a Washington think tank, agreed. He said the Ukrainian leader's appearance in the U.S. is largely symbolic.

"The galaxy of the American, the American leadership is a boost for him psychologically and politically. I don't know that there's anything very specific that's likely to come out of it."

The Ukrainian officials accompanying Kuchma to Washington are expected to include Foreign Minister Borys Tarasiuk, Deputy Prime Minister for economic reform Serhiy Tyhypko and Chairman of National Security Council Yevhen Marchuk.