[Congressional Record Volume 141, Number 204 (Tuesday, December 19, 1995)]
[Extensions of Remarks]
[Pages E2397-E2398]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              THE IMPORTANCE OF ECONOMIC REFORM IN UKRAINE

                                 ______


                          HON. LEE H. HAMILTON

                               of indiana

                    in the house of representatives

                       Monday, December 18, 1995

  Mr. HAMILTON. Mr. Speaker, I commend the American-Ukrainian Advisory 
Committee and its distinguished chairman, Zbigniew Brzezinski, for 
their constructive contributions to building a strong and effective 
relationship between the United States and Ukraine. The committee, 
formed in 1993 by the Washington-based Center for Strategic and 
International Studies, recently held its third meeting in New York and 
issued a report.
  The recommendations of the report were designed to advance the 
process of economic reform in Ukraine, foster a climate to attract 
foreign investment, and integrate Ukraine into the global economy. In 
order to meet these goals, Ukraine's political leadership must adhere 
to the fundamental elements of the economic reform program proposed a 
year ago by President Leonid Kuchma.
  The American-Ukrainian Advisory Committee calls upon the Ukrainian 
Government to ``speed up and broaden privatization with aim of 
achieving the long-term objective of establishing a market economy'' 
and to ``follow through with real macroeconomic stabilization.'' The 
committee all urges the United States, the European Union, Japan, and 
the international financial institutions to provide adequate financial 
assistance to reinforce Ukraine's commitment to economic reform.
  The American-Ukrainian Advisory Committee's report follows:

                 American-Ukrainian Advisory Committee


                               communique

       The American-Ukrainian Advisory Committee met in New York 
     on November 17-18 and reiterated its strong conviction that a 
     resilient Ukraine is in the interest of European stability 
     and thus also American security. It welcomed the evident 
     improvement in the American-Ukrainian relationship, 
     especially the recognition by the U.S. government of 
     Ukraine's geopolitical significance. It also endorsed 
     strongly the reform efforts being pursued by the Ukrainian 
     government in order to transform Ukraine into a stable 
     democracy based on a free market economy.
       The American participants included: Hon Zbigniew Brzezinski 
     (CSIS Counselor), Hon. Richard Burt (Chairman International 
     Equity Partners), Hon. Frank Carlucci (Chairman, Carlyle 
     Group), Gen. John Galvin (Dean, Fletcher School of 
     International Law and Diplomacy), Mr. Michael Jordan 
     (Chairman & CEO, Westinghouse Electric Corporation), Hon 
     Henry Kissinger (Chairman, Kissinger Associates), and Mr. 
     George Soros (Chairman, Soros Foundations).
       The Ukrainian participants included: Dr. Bohdan Hawrylyshyn 
     (Chairman, Council of Advisors to Ukrainian Parliament), Ms. 
     Svitlana Oharkova (General Director, ``Tekno Ukrayina''), Mr. 
     Serhiy Oksanych (President, KINTO Investment Association), 
     Hon. Borys Sobolev (Deputy Minister of Finance), Hon. Dmytro 
     Tabachnyk (Chief of Staff, Presidential Administration), Hon. 
     Oleh Taranov (Chairman, Parliamentary Commission on Economic 
     Policy), Hon. Boris Tarasiuk (Ambassador to Belgium), and 
     Hon. Volodymyr Vasylenko (Ambassador-at-Large). In addition, 
     present at the meeting was Hon. Yuri Sheberbak, Ambassador of 
     Ukraine to the United States.
       More specifically, the AUAC endorses or recommends the 
     following:


                            security issues

       1. Encourage the U.S. to clearly articulate its vision of 
     European security architecture, and in that context urge it 
     to develop a consistent, long-term policy toward Ukraine 
     which views that country as a Central European state. That 
     policy needs to strongly and actively demonstrate American 
     support for an independent, democratic, and economically 
     successful Ukraine as a key factor of security and stability 
     in Europe as a whole.
       2. Recommend the establishment of a ministerial-level U.S.-
     Ukrainian Joint Commission. While applauding the existence of 
     joint, bilateral working groups, we urge the creation of 
     additional groups--by the Department of State and the 
     Ministry of Foreign Affairs as well as the Department of 
     Defense and the Ministry of Defense--to deal with a range of 
     issues, including energy supplies and security; environmental 
     issues; and combating organized crime.
       3. In order to develop a special relationship between NATO 
     and Ukraine, extend eligibility to Ukraine under the NATO 
     Participation Act of 1994. At the same time, encourage and 
     support Ukraine's active participation in the Partnership for 
     Peace program.
       4. Encourage strong support for the closest possible 
     Ukrainian participation and integration in European 
     multilateral institutions, such as the Central European 
     Initiative and CEFTA, cooperation partner status in the WEU, 
     and the inclusion of Ukraine with Moldova, Bulgaria, and 
     Romania in the Clinton Administration's Regional Airspace 
     Initiative.
       5. Support collective efforts to achieve reductions in and 
     confidence-building measures for military forces in the Black 
     Sea basin. When appropriate, a U.S. role as mediator in Black 
     Sea issues could prove useful.
       6. Encourage the U.S. Administration to continue rendering 
     support for Ukraine's territorial integrity and inviolability 
     of its state borders, and to urge Ukraine's neighbors to 
     refrain from raising territorial claims.
       7. Initiate the holding of U.S.-Ukrainian seminars and 
     roundtables on security-related matters.
       8. Encourage Western investment and technical and economic 
     assistance for the exploration and development of Ukraine's 
     natural gas and oil deposits, as well as diversification of 
     external energy supplies to Ukraine. Encourage also the U.S. 
     to play a leading role in helping Ukraine work out a 
     comprehensive plan for reforming the energy sector.


                            economic Issues

       1. Urge the Ukrainian government to speed up and broaden 
     privatization with the aim of achieving the long-term 
     objective of establishing a market economy. One important 
     step is to open opportunities to sell blocks of equity to 
     strategic investors, while urging U.S. AID to enhance the 
     efficacy of its support of Ukrainian privatization.
       2. Given the critical stage of Ukraine's economic reforms, 
     encourage the Ukrainian government to follow through with 
     real macroeconomic stabilization, while urging the IMF, the 
     World Bank, the European Union, Japan, and the U.S. 
     government to provide timely and adequate financial 
     assistance.
       3. Support the introduction of the Ukrainian national 
     currency, which should be a stable currency inspiring 
     confidence, and urge the IMF to provide the appropriate 
     stabilization fund.
       4. Encourage the U.S. government and the EU to identify and 
     overcome trade barriers so as to facilitate Ukraine's 
     integration into the global trading system.
       5. Assist with Ukraine's efforts to join the World Trade 
     Organization, and encourage the U.S. Administration to extend 
     Ukraine's participation in the U.S. General System of 
     Preferences.
       6. Express appreciation of the public education in market 
     economics financed by the U.S. government, and advocate 
     financing of education in business management and public 
     administration. Such efforts should lead to the Ukrainian 
     government's enhanced capacity to attract and retain 
     competent persons at all levels of administration.
     
[[Page E2398]]

       7. Support Ukraine's participation in the global space 
     program.
       8. Urge the U.S. Congress to follow Ukraine's lead and 
     ratify both agreements dealing with double taxation and 
     investment promotion and protection.


                       Business Investment Issues

       1. Encourage Ukraine to establish clear property and 
     contract rights, in harmony with international norms, so that 
     both foreign and domestic investors' rights can be protected 
     and enforced.
       2. Under the joint sponsorship of the Ukrainian Union of 
     Entrepreneurs and the U.S. Chamber of Commerce, establish a 
     Business Forum composed of CEOs and senior management to meet 
     once a year to discuss business opportunities and obstacles 
     in Ukraine and the United States.
       3. Encourage Ukraine to establish an equitable and rational 
     tax code which abjures retroactivity, double indemnity, 
     discrimination, and punitive taxation levels.
       4. Express clearly to the U.S. Congress and executive 
     branch the AUAC's strong support for rule of law programs 
     which could improve significantly Ukraine's business 
     investment climate (e.g. development of commercial code, 
     enforcement of decisions of Arbitration Courts), and 
     identifies this area as a priority.
       5. Encourage the Kyiv Political-Economic Working Group to 
     provide the Western NIS Enterprise Fund (Ukraine) with 
     specific investment/joint venture guidance and suggestions on 
     small business projects.
       6. Work through the Center for International Private 
     Enterprise, an affiliate of the Chamber of Commerce of the 
     United States, to conduct seminars on investment 
     opportunities in different sectors of the Ukrainian economy.

                          ____________________