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East/West: U.S. Treasury Secretary Concludes Visit To Former Soviet Countries

U.S. Treasury Secretary Paul O'Neill has returned from a weeklong visit to Ukraine, Kyrgyzstan, Uzbekistan, and Georgia. The purpose of his trip was to prepare recommendations for U.S. President George W. Bush concerning possible economic aid. But RFE/RL reports that O'Neill used the opportunity to push his message that economic reform and private-sector development is the key to economic growth.

Prague, 19 July 2002 (RFE/RL) -- A delegation of the U.S. Treasury Department, led by Secretary Paul O'Neill, has ended a weeklong visit to four ex-Soviet states: Ukraine, Kyrgyzstan, Uzbekistan, and Georgia.

The purpose was to prepare recommendations for U.S. President George W. Bush for use in distributing as much as $5 billion in development aid. O'Neill said the recommendations would be submitted to the White House by the end of September.

O'Neill said the aid will go to countries meeting very specific criteria on the rule of law. "We will especially be looking to give assistance to those countries where the leadership is ensuring the rule of law, and is ensuring enforceable contracts; and where the government is dedicated to [fighting], and is fighting, corruption every day; and [where] the government is investing in essential needs of people, including education and health," O'Neill said.

He said these criteria are vital to attracting local and foreign investment, which in turn would raise the standard of living. "When investors are looking at places around the world to invest, they're being more and more insistent that the things I've mentioned earlier are present, namely the rule of law, enforceable contracts, no corruption, and the other things that give investors confidence that their money will do well when they go into a country," O'Neill said.

At the start of his trip in Ukraine, O'Neill said that country's progress had been slower than hoped for. Speaking in the capital Kyiv, he admitted that local authorities have made progress in reducing state ownership of land, adding that Ukraine's potential for reform is much greater.

Before leaving for Kyrgyzstan, O'Neill identified the difficult challenges Central Asia and the Caucasus region face. He pointed out, for example, that in Kyrgyzstan almost half the population lives on less than $2 per day. About a quarter of the population in Georgia and Uzbekistan live under the same conditions.

He said almost a third of Kyrgyzstan's rural population does not have access to clean drinking water, in spite of what he called the country's plentiful water resources.

O'Neill said the two regions need to think differently about water and energy use, explaining that reforms in these sectors will bring higher productivity and regional integration.

In Kyrgyzstan, O'Neill praised the direction of economic reforms. "When one looks at the 10 years that you have been on your own, it is really quite impressive that some important things have been done and some important commitments have been made," O'Neill said.

After talking with Kyrgyz President Askar Akaev, O'Neill said the U.S. was interested in participating in hydropower and aluminum projects in the country. He pushed the idea of using Kyrgyzstan's water resources for more hydropower development and offered to help assemble a team of U.S. or other foreign experts to advise how it could be pursued.

In Uzbekistan, O'Neill told a press conference that he is convinced President Islam Karimov will carry out promised economic reforms, including making the currency, the som, freely convertible. "I came away assured that the president [Islam Karimov] and [his] people are moving with deliberate speed, with no doubt about policy and objectives. And I don't mean by that [that] they're moving slowly, but it's O.K. I mean I do think that they are moving as quickly as they know how to move," O'Neill said.

In return, Karimov said that Uzbekistan will embrace International Monetary Fund standards requiring free convertibility of the som by the end of the year.

The IMF withdrew its representative from Uzbekistan last year because of frustration over the lack of economic reforms. But Uzbekistan's relations with the West have improved since Tashkent offered a military base to U.S. troops for operations in Afghanistan.

In his last stop in Georgia, O'Neill met with President Eduard Shevardnadze and Minister of State Avtandil Dzhorbenadze for discussions on cooperation in fighting money laundering, corruption, and sources of funding for terrorism.

En route home from his trip, O'Neill told Reuters that part of the reason for trips around the world like this is "to go find out what life is really like and not get your information from the Encyclopedia Britannica." He visited Africa earlier this year with Irish rock star Bono.

(RFE/RL's Kyrgyz and Uzbek services contributed to this report.)