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Did Yanukovych guys come back empty-handed from US? (Updated)

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Sept. 27, 2012, 12:57 p.m. | Op-ed — by Olena Tregub

A high-level Ukrainian delegation went to Washington, D.C., this week, but Olena Tregub reports that they didn't make great impressions on their hosts.
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Olena Tregub

Olena Tregub is a journalist, educator and civic entrepreneur. She is leading the Reform Watch project at the Kyiv Post, which analyses Ukraine's post-Maidan transformation progress. In the United States, Tregub co-founded the Global Education Leadership consultancy. She also worked as an adjunct professor of political science at Adelphi University and as a media liaison at the United Nations in New York. For several years, she served as a Washington, D.C.-based foreign correspondent for the Ukrainian News Agency and a columnist at the Kyiv Post, as well as a researcher on Ukraine for The New York Times. Tregub is a World Economic Forum Global Shaper and a Young Atlanticist of the Atlantic Council. She is a graduate of the Fletcher School of Law and Diplomacy at Tufts University. She can be reached by email at olenatregub@gmail.com, on Facebook at www.facebook.com/olenatregub, by Twitter @otregub and on Skype at olenatregub.

 WASHINGTON, D.C. -- The largest Ukrainian government delegation to Washington in recent history visited the U.S. capital last week to bring a pro-business message to American investors and encourage American capital to come to Ukraine.  

The delegation headed by the governor of the National Bank of Ukraine Sergiy Arbuzov included: Ihor Kaletnik, head of the State Customs Service; Oleksandr Klymenko, head of the State Tax Service; Yuriy Kolobov, minister of finance; Mykola Prysyazhnyuk, minister of Agrarian Policy and Food; and Eduard Stavytskyi, minister of ecology and natural resources.

The delegation had meetings with the International Monetary Fund representatives, but it remains unclear if the new financing will become available for Ukraine after the parliamentary election this fall.

Since the Ukrainian economy is in decline and trade imbalance is only growing Ukraine desperately needs IMF loan. And the Ukrainian government seems to be ready to meet the IMF demand of increasing prices of gas for domestic consumption- if only that increase comes after rather than before the elections.  Arbuzov told journalists he believes Ukraine will manage to unblock IMF frozen loans by the end of 2012  and that government is considering rising gas prices.

However, the thrust of trip was not just IMF, but American business in general. However, it seems like the Ukrainian delegation is coming home empty-handed.

On Sept. 20, the US-Ukrainian Business Council hosted a dinner with Ukrainian officials and American business people at the upscale Guarisco Gallery at the Ritz-Carlton, sponsored by ExxonMobil, SigmaBleyzer and Cargill.

The number of businesses present was modest compared to a similar event hosted by U.S. Ukraine-Business Council in 2010, when President Viktor Yanukovych visited the US for the first time after his successful bid for the presidency. At the most recent meeting, representatives of close to 20 businesses, most of which already operate in Ukraine, e.g. Citi, Dupont, Philip Morris, VISA, Intel, Coca-Cola, Monsanto, Cargill, Chevron, ExxonMobil mixed with experts on Ukraine as well as IMF and U.S. government staffers.  

The mood of the meeting was also very different. The businesses were not as curious and cheerful as they were when they came to meet the newly elected president. This time, those who were in the room seemed to have known what to expect from Ukraine.

Many guests stressed the need for Ukraine to change from inside rather than officials making empty promises. Eric Trachtenberg, director of the food & agriculture sector at McLarty Associates, said: “The key to success will lie in the government's willingness to create conditions that bring positive results for both business and ordinary Ukrainians.”

 Former U.S. Ambassador to Ukraine Steven Pifer, currently director of the Brookings Arms Control Initiative, pointed out: "The Ukrainian delegation described a country that is open and eager for foreign business. But reports from foreign businessmen about problems such as growing corruption and complex tax and regulatory rules, plus the country's low ranking in ratings like the World Bank's 'Ease of Doing Business' survey, suggest that Ukraine still has much to do to build a business climate that truly welcomes foreign investment.”

Matthew Rojansky,deputy director of the Russia and Eurasia program at the Carnegie Endowment, said:  “Now it's time to prove seriousness about reform not only to Americans but to Ukrainians themselves.”

Former Ambassador to Ukraine John Herbst, currently director of the Center for Complex Operations at the National Defense University, added: "What is important is what the government does in Ukraine, not speeches in DC. Without, for instance, solving VAT [value-added tax] problem for investors domestically, good speeches in the USA will not help them.”

The short presentations given by each of the Ukrainian delegates were not impressive and memorable. All but the head of customs, Kaletnik, spoke Russian. Despite the fact that the average age of the members of the Ukrainian delegation was relatively young – surprisingly enough these were people in their 30s and 40s, but nobody spoke English.

They were talking a lot about Ukraine as an emerging economy with great perspectives for business development. However, their conversation style was cumbersome. In was not a talk of a globally well-rounded technocrats, but rather of neo-Soviet bureaucrats.  Bringing in suitcases made of crocodile leather and frequent references to Yanukovych and his omnipresent leadership- as if nothing could happen without his blessing or as if everything good in the Ukrainian economy happened because of him could not have been helpful either. This is especially so, given increasing mistrust to his undemocratic style of leadership in Washington and all the recent calls for sanctions against Ukrainian officials.

There was a textbook talk about reforms, about transparent tenders, fighting corruption, but no breakthrough promises were made or pathbreaking initiatives suggested. Stability and predictability are two main characteristics of today’s Ukraine, said Klymenko in his presentation. 

However, when the recent State Department report warns US businesses against investing in Ukraine because of a high level of corruption, one needs anything but business as usual. One needs bold initiatives and positive surprises in showing the steps undertaken to reduce bureaucratic burden on foreign investments in Ukraine.  Instead, what the Ukrainian Custom Services brought with them was a poor quality and badly written leaflet – e.g. press release about the volume of trade between US and Ukraine. The information neither impressed nor caught anyone’s attention.

After the official part, a line of business people working in Ukraine formed around some of the delegates to discuss specific matters. Here, Klymenko, whose early speech had been already the spotlight of the evening, was again the most popular person.

One of the Ukrainian speakers said: “We are responsible not only to Viktor Yanukovych, our president and a guarantor of the Constitution, but also to the Ukrainian people.” 

And, from all appearances, it seems the largest Ukrainian delegation to the U.S. in recent history is coming back to those people with little to show from their trip either to their president or more importantly to the people of Ukraine.

This trip may be just one more opportunity missed and the Ukrainian taxpayers’ money wasted.

Olena Tregub is a freelance journalist living in Washington, D.C.

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