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Ukraine: Official Not Disappointed By Washington Visit

Yuri Yekhanurov, Ukraine's first deputy prime minister, led a delegation to Washington last week for talks with officials of the U.S. government and of leading international financial institutions. The Ukrainians returned to Kyiv without a promise that a much-needed International Monetary Fund (IMF) loan program will resume. RFE/RL correspondent Andrew F. Tully reports.

Washington, 7 August 2000 (RFE/RL) -- The head of a senior delegation from Ukraine says he is not disappointed in the meetings he held last week in Washington with officials of the U.S. government, the World Bank and the International Monetary Fund (IMF).

The delegation was in the U.S. capital from Monday through Friday (July 31 through August 4). It was led by First Deputy Prime Minister Yuri Yekhanurov and included Finance Minister Ihor Mityukov and Volodymyr Stelmakh, chairman of the National Bank of Ukraine.

The Ukrainians met on Tuesday with Johannes Linn, the World Bank's vice president for Europe and Central Asia. A World Bank spokeswoman says the meeting focused on the Bank's country-assistance strategy for the fiscal years 2001 through 2003, aimed at promoting improved governance and reforms of Ukraine's financial institutions.

On Wednesday, the delegation met at the White House with Leon Fuerth, the national security adviser to Vice President Al Gore. They also met with Edwin Truman, the assistant secretary of the Treasury for International Affairs. The Ukrainians also met with Alan Larson, the deputy assistant secretary of state for international finance and development.

On Thursday, the delegation had its most important meeting -- with Horst Koehler, the managing director of the IMF. Ukraine badly needs foreign capital -- whether in the form of loans or business investment -- and is suffering from the suspension of a $2.2 billion IMF loan program.

The loan package was suspended last autumn after only about $580 million had been disbursed to Ukraine. The IMF said it had learned that the National Bank of Ukraine (NBU) had been using accounting practices that made its foreign-currency reserves appear to be greater than they actually were.

The fund said the irregularities induced it to make disbursements that it otherwise would have withheld. And the fund has made clear that the loan disbursements will not resume until it is satisfied with the pace of reform in Ukraine's banking and other industries, and in privatization of Soviet-era enterprises.

On Friday, Yekhanurov said he believed that he was able to demonstrate to Koehler that Ukraine is making significant progress in these reforms. He spoke at a news conference in the Ukrainian Embassy in Washington.

"During the negotiations with the IMF, we managed to settle our differences with the fund regarding the steps we are taking. And we believe that the discipline which we introduced in the government policy helped us to get good results."

Despite his optimistic demeanor, Yekhanurov stressed his country's need for foreign cash, particularly loans, if it is to meet its current obligations. And he offered an incentive to those nations -- and international lending institutions -- that might be able to offer assistance:

"If even a small amount of foreign financing were available for us, the rate of reform would increase."

Larson -- the State Department official who met with the Ukrainians on Wednesday -- points out that there is now little foreign investment in Ukraine. But he says Kyiv could attract the interest of more businesses by modernizing its legal code -- for instance, to ensure that business contracts are upheld.

"This is a big country, potentially rich, a country that I think, with the right policies, could hope to attract billions of dollars of foreign investment per year."

According to Larson, corruption is another impediment to foreign investment. He says that traditionally, it is consumers who decide the direction of their country's economy.

But the State Department official points out that Ukraine's economy is still controlled by government officials. This makes these officials susceptible to what he called "inappropriate forms of influence" -- a diplomatic term for bribery.

Still, Larson says, the administration of U.S. Bill Clinton has decided not to turn its back on Ukraine. He notes that Clinton and Vice President Gore, as well as Secretary of State Madeleine Albright, have all visited Kyiv this year. Therefore, Larson notes, the administration's approach to the Ukrainian government is positive, not negative.

"What we really are focusing on in the months ahead is encouraging them to get into a good relationship with those international economic institutions like the IMF and the World Bank that are in a position to provide both technical and material support for Ukraine's transformation and transition to a market economy."

But Larson stressed that Ukraine has much to do in order to ensure a bright future.

"There is a very important future [in U.S.-Ukraine relations] and they [Ukrainians] have a very important role to play in the world. But they're facing some very significant challenges, and I think, you know, I think we and they have a stake in seeing them address these challenges as squarely as possible and as quickly as possible."

Yekhanurov told reporters on Friday that Ukraine is doing just that. And he said he was not disappointed that he was returning to Kyiv without a promise from the IMF that the loan program would resume soon.

"I treat the results of this visit as not out of the ordinary. We understood that one visit would not produce decisions."

But he also returned to Kyiv without an expression of optimism from the U.S. government.

RFE/RL explicitly asked Larson if he was optimistic about Ukraine's future. The State Department official sidestepped the question and gave a reply that dealt only with what he called Ukraine's potential for prosperity.