Editor's Note: The following are remarks by U.S. Commerce Secretary Penny Pritzker at a joint press availability with Ukrainian Prime Minister Arseniy Yatsenyuk on Oct. 26 at the Cabinet of Ministers in Kyiv.
SECRETARY PRITZKER: Thank you very much, Mr. Prime Minister, for welcoming our delegation here to Ukraine. I am honored to be here with you. As you said, I’m joined by six executives from American businesses – premiere companies like Cargill, Citibank, Dupont, Honeywell, NCH Capital, and Westinghouse.
These business leaders took time from their very busy schedules to travel to Kyiv because they believe, as I do, that Ukraine’s people and government are making progress toward economic stability and growth; that Ukraine’s market possesses untapped potential for U.S. investment; and that real, lasting reform in Ukraine will support the development of a vibrant, dynamic private sector and meaningful economic opportunity for the people of Ukraine.
Since my last visit here 13 months ago, your government and your citizens have stood firm in the face of enormous challenges. Your work to restructure Ukraine’s debt, to stand up a National Anti-Corruption Bureau, and to begin difficult but necessary reforms in your energy sector has required political courage and a long-term vision.
As part of the United States’ commitment to working with international partners to ensure Ukraine has the support it needs to continue making progress on reforms, today I am pleased to announce that President Obama, working with our Congress, intends to move forward with a third, $1 billion loan guarantee for Ukraine in the coming months.
This fulfills a U.S. commitment to consider providing a third $1 billion loan guarantee in late 2015 if conditions warrant.
Today, I have had the opportunity to discuss with President Poroshenko and Prime Minister Yatsenyuk how the United States and Ukraine can use the third $1 billion U.S. loan guarantee to support continued progress in advancing reforms, including reforms that will be important to unlock international investment in Ukraine and lay the groundwork for return to growth.
The U.S. loan guarantee will be conditioned on Ukraine’s progress on implementing its economic reform program, including of course adherence to the IMF’s program and concrete forward momentum in the ongoing fight against corruption.
To that end, earlier today, the Prime Minister hosted a roundtable with our U.S. executives to discuss specific measures to further improve Ukraine’s business climate.
The President and the Prime Minister asked for them to join me on this trip because the Government of Ukraine knows, as we do, that sustained economic growth will be led by the private sector. This necessitates the government listening to issues and challenges facing private sector investors that are committed to helping build a brighter future for this wonderful country.
Our dialogue focused on measures Ukraine can take to more effectively fight corruption; to make its infrastructure more efficient and attractive for investors; to reduce excessive regulations; to raise the professionalism of its judiciary; to better protect intellectual property; and to improve its tax administration. Importantly, we are hearing details from American firms about the economic benefits that this government’s difficult reforms have yielded.
For example, Cargill, a leading U.S. company and a long-time investor in Ukraine, expressed how important progress in the form of an electronic VAT system has been for their business in Ukraine. While there is certainly more work to be done with respect to paying arrears, we are hearing clearly from Cargill and other companies — other American firms — that they are pleased with the progress under the electronic VAT system. We certainly encourage continued commitment to this electronic approach to addressing VAT challenges.
We also discussed how Ukraine can make it easier to do business in crucial sectors, including agriculture, energy and pharmaceuticals.
And our message will remain clear: Ukraine faces a long road ahead to reach its full economic potential. But the Ukrainian people have the firm and unwavering partnership of President Obama, my Department, our entire Administration, and the American private sector.
Mr. Prime Minister: the magnitude of the changes you are trying to implement is unprecedented in Ukraine’s history. In America’s government and business community, we fully appreciate the difficulty of this task, and we applaud your efforts.
As you stated at the first-ever U.S.-Ukraine Business Forum in Washington in July, your work is far from finished.
Reaching your goals of economic growth and prosperity will require continued strong cooperation and collaboration between you, President Poroshenko, the Rada, and the Ukrainian business community. I believe you are all up to the challenge, and I will reiterate: the United States stands ready to support you every step of the way – because we know reform is essential to Ukraine’s economic success and long-term prosperity.
Indeed, reform requires the very qualities that spurred you to take to the Maidan in the first place: optimism about the future; the courage of your convictions; and a whole-hearted belief in Ukraine’s ability to build a democratic nation with a flourishing, open, market-based economy. Thank you.
QUESTION: [Inaudible] Could you please clarify what specific measures does Ukrainian government need to do to qualify for that $1 billion loan guarantee you have announced recently? Thank you very much.
PRITZKER: The U.S. loan guarantee will be conditioned upon Ukraine’s progress in implementing its economic reform program, including of course adherence to the IMF’s program and concrete progress in fighting against corruption. The details will be discussed and finalized between the Government of Ukraine and our government over the coming weeks. But the conditions for this loan are not dissimilar from the conditions for several other billion dollars worth of loans that the Ukrainian government is trying to secure from other sources.
QUESTION: (In Ukrainian.) …
PRITZKER: Let me give you some context. The entire purpose of our trip was to come — not just myself — but also to travel here with our business leaders and talk with your President and Prime Minister about the progress that’s been made, as well as the obstacles that are being faced by businesses as they do business here in Ukraine. The progress has been something that deserves being recognized, and that’s the reason that President Obama has made the decision that he endorses the third loan guarantee, as we discussed.
What is some of that progress?
It’s not only around anti-corruption or other areas, but it’s also the fact you’ve built your foreign reserves from $5 billion to around $12 billion, that your industrial production has stabilized, that your agricultural exports are increasing, your currency has stabilized.
But that’s possible because of the legal reforms that your Rada has undertaken in conjunction with the Prime Minister and the President.
What are the issues?
Our conversations today were also not just about all of the progress that has been made, but the challenges that businesses face and where they would like to see the Ukrainian government focus going forward. They talked about things like the VAT arrears being cleared up, or gas extraction royalty rates being addressed; deregulation; the need for greater strength in intellectual property; the need to address corruption and rule of law; implementing the government e-procurement system; and joining the WTO GPA agreement; agricultural reform; civil administration reforms; privatization.
There’s a lot of work to be done.
There’s a lot that’s been accomplished. It’s going to take, as the Prime Minister said, strong political will — not just by the President and Prime Minister, but frankly by the Rada — in order to complete the hard work that you’ve begun.
Ukraine is on a path, and the United States is there standing to be a partner with Ukraine in addressing these issues, and our companies want to be further supporters of Ukraine as it moves through this process of reformation. I think we have to keep in mind something: these businesses can be your best ambassadors. They can go out — if they come and have a positive experience, and a successful one — and encourage other investment, which is frankly the positive cycle that your government is trying to put in place. And this is the work that we’re trying to do between the United States and Ukraine — to create that kind of virtuous cycle that leads to greater opportunity for the Ukrainian people. Thank you.
QUESTION: Madam Secretary, you’ve addressed the issue of corruption several times here today, and I’m sure that it came up in the discussions upstairs with the investors. What are you hearing from the investors about how serious the corruption issue is in this country and how it’s limiting the amount of investment that the country so desperately needs. Do you sense the political will is there to handle and tackle this issue right now? And if I could throw that question also to Prime Minister Yatsenyuk, what will be done in the near term to address the issues that you heard upstairs from the investors — from some of the biggest investors that are already in Ukraine?
PRITZKER: Our investors are, first of all, they’re already active here in Ukraine. What they’re doing — their feedback is on a broad set of issues. And it’s specific on a number of issues. I listed them before, ranging from deregulation, intellectual property protection.
Your e-procurement system is something that’s being applauded by businesses for addressing some of these challenges that you raised, and allows a fair and transparent ability for companies to compete.
You heard the stories from some of these companies about their competing in different procurements, and by virtue of the transparency, I think having a win-win outcome for both the businesses and the Ukrainian government. The point is there’s been progress made.
The United States government is supporting that and applauding that. But you need the political will to continue to address the list of things we’ve collectively agreed would be necessary, and that you’re hearing not just from U.S. businesses, but also at the German investor conference. You’re going to have a French investor conference.
That’s terrific because that’s showing the tremendous amount of interest. But ultimately the political will is needed to create the conditions for businesses to continue to and make greater investments.
