[Congressional Record Volume 149, Number 169 (Thursday, November 20, 2003)]
[Senate]
[Pages S15278-S15279]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      BUSINESS CLIMATE IN UKRAINE

  Mr. CAMPBELL. Mr. President, as Co-Chairman of the Commission on 
Security and Cooperation in Europe, I have closely followed 
developments in Ukraine including aspects of the human, security and 
economic dimensions. My desire is that Ukraine consolidate its 
independence by strengthening democratic institutions, including the 
judiciary, and undertaking reforms to improve the business climate 
essential to attracting much-needed foreign investment. Twelve years 
after independence, the people of Ukraine deserve to enjoy the fruits 
of freedom and prosperity, but obstacles remain. Bringing Ukraine more 
fully into Europe is both essential to the country's long-term economic 
success and important for European security. Accelerating Ukraine's 
movement toward Europe is timely and needed. While high-ranking 
Ukrainian officials pay lipservice to such integration, the jury is 
still out as to whether they are prepared to take the bold steps that 
will be required to advance such integration. An important barometer 
for the future will be the extent to which the country's moves to 
confront the corruption and crime that retard the process of 
democratization and economic liberalization and erode Ukraine's 
security and independence.
  While those at the top say the right things, there is justified 
skepticism as to their sincerity. This is certainly the case concerning 
Ukraine's current President, Leonid Kuchma. The controversies 
surrounding Kuchma undercut his credibility with respect to the issue 
of combating corruption. Nevertheless, this should not detract from

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the urgency of tackling corruption in the lead up to critical 
parliamentary elections slated for next year, and presidential 
elections to select Kuchma's successor in 2004.
  Meanwhile, those serious about rooting out corruption and corrupt 
officials should take a hard look at the handling--or more accurately, 
mishandling--of Ukrainian and foreign owned businesses. For example, 
United States-owned businesses have been victimized through 
expropriations, asset thefts, extortion and the like perpetrated or 
abetted by corrupt officials and courts in Ukraine. While new cases 
continue to occur, longstanding cases remain unresolved with investors 
unable to obtain the relief to which they are entitled under Ukrainian 
and international law.
  Although the State Department has made repeated representations about 
these cases at senior levels of the Kuchma administration, Kyiv 
rebuffed repeated requests to resolve them in accordance with the law. 
At the same time it refuses to punish the perpetrators of the criminal 
acts or take corrective measures to prevent similar cases from arising.
  If the victims are to ever achieve a measure of justice, it is 
essential that U.S. officials raise these cases at every appropriate 
opportunity.
  In one especially egregious and illustrative case, well-connected 
individuals in Ukraine were able to orchestrate the seizure of all the 
assets of a successful pharmaceutical joint venture which was half 
owned by United States investors. When, 6 years after the theft the 
Ukrainian appeals courts finally dismissed the spurious claims to the 
assets on grounds that they were based entirely on forged and falsely 
fabricated documents, senior Ukrainian officials launched into action. 
Within weeks of these judicial decisions, the Ukrainian President 
reportedly convened a meeting of senior officials, including the 
cognizant senior judges and his own senior law enforcement and national 
security cabinet level officers, at which he made clear that he did not 
want the stolen assets restored to their rightful American owners.
  The courts quickly complied, without explanation, and in disregard of 
the copious evidence before them, the judges reversed the decisions 
taken just two months earlier and held in favor of the claimants. 
Several months later longstanding criminal charges against the same 
individuals were dropped.
  The circumstances surrounding this case and others involving United 
States investors are indicative of the far reaching scope of corruption 
and the rule of law deficit in Ukraine today. While the matter was 
repeatedly raised by the State Department several years ago, I am 
concerned that the Ukrainian side might assume that the matter is a 
closed case. I urge officials at the Departments of State and Commerce 
to disabuse Ukrainian Government officials of such an impression.
  If the Kuchma administration is serious about rooting out corruption 
and advancing democracy and the rule of law, these cases provide a good 
starting point. Only time will tell if they are up to the challenge.

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