What the United States Should Do in Ukraine

Anders Aslund

No political event in Europe this year is more important than Ukraine’s presidential elections next October. They amount to two clear-cut choices between democracy and dictatorship, as well as between a Western and Eastern geopolitical orientation.

The United States is well liked and highly influential in Ukraine. The U.S. can do a great deal to influence that country’s choice. The main objective for U.S. policy on Ukraine should be to support democracy. If only democracy is secured, Ukraine is most likely to choose a Western geopolitical orientation.

Since 2000, Ukraine has been transformed from a moribund to a highly dynamic economy, which has enjoyed an average growth rate of over 7 percent a year for the last four years, and growth seems to be accelerating. Meanwhile, business had been transformed from rent-seeking to productive and profit-seeking. With such a strong competitive market economy, Ukraine needs to make very serious political mistakes to fail. Unfortunately, that cannot be excluded, because the political system remains pretty retrograde, being dominated by a few oligarchic groups.

Hardly anybody doubts that the presidential election on October 31 will take place and be a watershed in modern Ukrainian history. It is commonly recognized as the most important political event since Ukraine’s national independence in December 1991.

At present, two candidates appear likely to dominate. The democratic center-right candidate will be former Prime Minister Viktor Yushchenko, who is the Chairman of the center-Right bloc Our Ukraine. The oligarchic groups are putting forward Prime Minister Viktor Yanukovich, the leading politician from the Donetsk group. In a free and fair election, Yushchenko is likely to win, but the government is using all means to skew the election to the advantage of its candidate.

Beside Russia, the U.S. has persistently been the country that has taken the greatest interest in Ukraine. Every statement in Washington about Ukraine is carefully scrutinized in Kiev. Two aspects of Ukraine’s current developments are of fundamental importance to the United States.

·        Will Ukraine become a democracy or an authoritarian state?

·        Will Ukraine integrate with the West or not?

The U.S. can do a great deal in both regards. Ukraine is tied to democracy through a large number of international agreements, notably to the United Nations, the Organization of Security and Cooperation in Europe (OSCE) and the Council of Europe. Publicly, the Ukrainian government strongly professes the values of democracy, and it has repeatedly committed itself to such values in agreements with the U.S. The U.S. can and should insist on the Ukrainian government honoring all its international commitments with regard to democracy.

Sometimes, U.S. authorities protest when independent media are being closed down, but it could be done more firmly and at a higher official level.

The Ukrainian government uses the State Tax Inspection as its main agency of repression. Businessmen who support the opposition have been extensively investigated and harassed. The U.S. Ambassador to Kiev, John Herbst, has rightly protested, but again these abuses should be given more high-level attention.

Both the U.S. and the EU have protested sharply against the aggravated malpractices in regional and local elections, but more high-level attention would be useful.

In the presidential elections on October 31, international election observers are accepted. The U.S. can help to make the elections are free and fair.

The second aim for U.S. policy on Ukraine is its integration into the West. Ukraine is already a member of most international organizations, including the IMF, the World Bank, the OSCE and the Council of Europe. The three remaining organizations of relevance are the WTO, NATO and the European Union.

For the U.S., the first interest is to have Ukraine accede to the WTO as soon as possible. The main outstanding U.S. demand is that Ukraine adopt a new and more stringent law on intellectual property rights. With little doubt, Ukraine will promulgate such a law after the presidential elections regardless of their outcome. Second, the U.S. should recognize Ukraine as the market economy it is, which is of importance for how the U.S. treats Ukraine in anti-dumping disputes. Third, strangely, the Jackson-Vanik Amendment to the U.S. Trade Law of 1974 about the freedom of Jews to emigrate from the Soviet Union still applies to Ukraine, although it is not the Soviet Union and Jews have no complaints about any problems emigrating from Ukraine. This anachronism should be abolished.

Ukraine has a close cooperation with NATO, which is likely to proceed further.

In March 2003, the oligarchic majority in the Ukrainian parliament, with partial support from Our Ukraine, voted for sending some 1,600 Ukrainian troops to support the U.S. in Iraq. President Kuchma’s obvious purpose was to improve Ukraine’s poor relations with the U.S. The troop presence in Iraq is very unpopular in Ukraine, and several Ukrainian soldiers have died. Ukrainian troops participate in various peacekeeping efforts in former Yugoslavia, as well.

Since 1996, Ukraine has officially asked for membership in the European Union, but it has been cold-shouldered by the EU. Yet, the democratic opposition is much more committed to its “European Choice” than the government is. Recently, the President of the European Commission, Romano Prodi, repeated his statement that the EU has no plans for letting Ukraine become a member of the EU. Although Ukraine is now the neighbor of three EU countries (Poland, Slovakia and Hungary), it has a minimum of agreements with the EU. In particular, its trade access to the EU is very limited, as Ukraine primarily exports such sensitive goods as steel, foods, chemicals and textiles. Moreover, the possibilities for Ukrainian citizens to travel west have been sharply reduced with the enlargement of the EU to countries that previously did not require visas for Ukrainian citizens. It would be desirable that the EU open its markets to Ukraine through a free trade agreement, but a natural EU demand is that Ukraine first become a member of the WTO.

Regardless of other policies, the U.S. needs to help build up a cadre of well-educated Ukrainians who understand Western economies and politics. For this purpose, a larger number of scholarships need to be given for doctoral degrees at U.S. universities.

Oddly, the U.S. administration has devoted great attention to whether an unused small pipeline from Odessa in southern Ukraine to Brody in western Ukraine will be utilized in one direction or the other. Given that Ukraine has a sound competitive oil market, this does not appear to be a major U.S. interest.

The current dilemma in U.S. policy toward Ukraine may be sharpened as a choice, on the one hand, between the relative importance of Ukrainian troops in Iraq, and democracy in Ukraine, on the other. Recently, President George W. Bush wrote a letter to President Leonid D. Kuchma, thanking him profusely for sending Ukrainian troops to Iraq. Meanwhile, mid-level State Department officials are complaining about a variety of abuses of democracy in Ukraine. No observer can draw any conclusion but that troops in Iraq supersedes everything else. This balance in U.S. policy toward Ukraine needs to be redressed.

Anders Åslund is Director of the Russian and Eurasian Program at the Carnegie Endowment for International Peace. He served as an economic advisor to the Ukrainian government, 1994-97. He also wrote on Ukraine for the Fall 2003 issue of The National Interest.