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Ukraine: Minister of Economy Promises To Improve Investment Climate

Washington, 6 February 1998 (RFE/RL) --Ukrainian officials say they have launched into a focused and concentrated effort to quickly improve the country's business and investment climate.

Minister of Economy Viktor Suslov says there is good reason -- Ukraine has the potential of attracting as much as $40 billion in foreign investment over the next three years if it can create the right economic and financial environment.

So far, Kyiv hasn't done very well, he acknowledges. The United States leads all other western countries in investment into Ukraine, and the American investment totals only $325 million.

Speaking to international financial journalists in Washington Thursday, Suslov said the government is stepping up the large industry privatization program, including putting profitable enterprises -- such as telecommunications and energy -- at the top of the list. He said privatization, especially when done with the participation of western firms and investors, could help improve the general investment climate while bringing an infusion of much needed cash to help the country deal with its broader financial problems.

At the same time, said Suslov, Ukraine has formed a special committee of Ukrainian and American business people to help it address a long list of complaints from western investors.

Ukraine is under particularly pointed pressure from the U.S. to deal with the complaints. A law passed by the U.S. Congress last year requires a 50 percent cut in American assistance to Ukraine if the U.S. Secretary of State does not certify by April 30th that there has been "significant progress" toward resolving investors complaints.

Suslov says he believes the U.S. will be able to certify the progress because the Kyiv government is determined to see that every complaint is cleared up.

The Committee on Trade and Investment of the Ukraine-U.S. Binational Commission -- popularly known as the Gore-Kuchma commission -- isn't quite so sure. The committee discussed the issue two weeks ago in Kyiv, and in a joint statement issued Thursday, said there were differences between the two sides on progress made so far. It also said there are "differences in perception" over the Ukrainian government's authority to resolve the disputes.

Suslov says the situation will improve because Ukraine intends to continue to push ahead on a broad range of measures to improve the investment and business climate.

The Gore-Kuchma Trade and Investment Committee said the Kyiv government has taken some good preliminary steps, including a new law cutting the number of businesses licenses from 102 to 42, signaling what it says is Ukraine's intent to reduce further the regulatory burden on small business.

It also noted Ukraine's decision to reduce state agricultural procurements and not to interfere in the grain market, a key to the development of a market-driven agricultural sector. The committee also praised the progress made so far in privatizing state-owned or controlled agricultural enterprises.

Suslov says Ukraine will complete the privatization program quickly but fairly and transparently. He also reiterated that the vast majority of land in Ukraine is available for private ownership.

The committee in its joint statement said there still needs to be a "strong senior level commitment by the government of Ukraine to address conflicts of interest in public administration" and urged early adoption of a strong code of government ethics.

The committee said both the U.S. and Ukrainian sides understand the essential need to establish fair and reliable mechanisms for resolving commercial disputes as well as an effective means of enforcing judicial decisions free of outside interference.

Suslov is in Washington at the head of a six-member delegation of senior Ukrainian financial officials participating in a program sponsored by the private Center for Democracy. The six have been meeting with their counterparts in the U.S. government for discussions on understanding the government policy process on both sides.

In addition to Suslov, the Chairman of the State Export-Import Bank of Ukraine, Oleksandr Sorokin, and the First Deputy Minister of Finance Petro Hermanchuk, are in the group.