If U. S. Ambassador to Ukraine Marie L. Yovanovitch is as nervous about the upcoming summit between the American and Russian presidents as many people are in Ukraine, she doesn’t show it.
Instead, during a July 2 interview at the ambassador’s residence, Yovanovitch expressed concern about whether her rain-soaked back lawn would dry out in time for the next day’s traditional backyard barbeque to celebrate America’s Independence Day.
Her message seemed clear: Whatever U. S. President Donald J. Trump might say on any given day, U.S. policy is another matter.
“I think we, the United States, have made very clear that we are going to hold Russia to account for its behavior,” Yovanovitch said. “Our policy has not changed and I think it’s actually a pretty strong policy.”
And that policy means no recognition of Russia’s illegal annexation of Crimea, continued opposition to the Kremlin-backed war in the eastern Ukrainian Donbas, vigilance when confronted with electoral interference and fake news, among other stances that include more than four years of Western economic sanctions against Russia.
Yovanovitch doesn’t see the need to follow in the footsteps of her “well-respected” former counterpart in Estonia, James D. Melville, who recently resigned because of his disagreement with Trump’s criticism of the European Union, NATO and the president’s flirtation with reconstituting the G8 with Russia as a member again.
Instead, she said, Trump sees meeting with Russian President Vladimir Putin on July 16 in Helsinki as in the national security interests of the American people and their allies “to see and understand where President Putin is coming from, but also, as national security adviser John Bolton said, I think he also wants to make clear where we are coming from and what our concerns are. It’s important to have that conversation. Other leaders, including many European leaders, have also made that decision to meet with President Putin.”
US supports IMF
As of July 5, Ukraine’s parliament and government still had not met the three conditions to restart lending from the International Monetary Fund: legislation to create an anti-corruption court with jurisdiction over major ongoing corruption cases and appeals; raising household gas prices to market levels; and reduction of the deficit of the $40 billion state budget to 2.5 percent of the nation’s gross domestic product.
The IMF froze lending more than a year ago at $8.4 billion out of a possible $17.5 billion because of Ukraine’s backsliding on its commitments.
“There was an agreement that the government of Ukraine made with the IMF,” Yovanovitch noted. “These agreements are not demands. We believe the IMF is right on these issues, so we support that, just as we support the people of Ukraine that it’s necessary for the government to take the steps necessary to move economy forward.”
Time is running out. Parliament has scheduled only two voting days next week before adjourning until September.
The IMF program ends in March, the same month Ukraine is scheduled to hold a presidential election.
Corruption fight
Yovanovitch is not alone in being unable to name a single person convicted of corruption in Ukraine since President Petro Poroshenko came to power on June 7, 2014, replacing Viktor Yanukovych, who fled the 100-day EuroMaidan Revolution on Feb. 22, 2014.
Almost no one can, including officials in the Presidential Administration.
Prosecutor General Yuriy Lutsenko said on July 3 that courts have sentenced 2,260 people found guilty of corruption, but these appear to be mostly if not exclusively low-level suspects. The government has never furnished these names, despite repeated requests from the Kyiv Post.
Certainly billionaire oligarchs such as Ihor Kolomoisky are not among the charged or convicted, even though the National Bank of Ukraine said taxpayers lost $6 billion in bank fraud when he owned PrivatBank. The state took over the bank, the nation’s largest by assets, in December 2016. Instead of filing charges, Lutsenko had a friendly meeting with Kolomoisky in Amsterdam and, according to ex-Finance Minister Oleksandr Danyliuk, has obstructed the state’s efforts to recover the money.
“The bottom line: Are the Ukrainian people seeing the kind of results they want to see in the anti-corruption fight. Not yet,” Yovanovitch said. “That’s why it’s important to keep at it.”
She chooses to look at the progress and she cautions patience, saying that the world is witnessing changes that could take generations before taking hold in Ukraine.
“If somebody were to tell you, back in 2014, that there would be four independent anti-corruption institutions established by law, even if all of them don’t work perfectly yet, I think you would be surprised,” she said. “This is not an answer that is pleasing to many people, but it takes time to pass laws, develop institutions and get them up and running to be effective.”
The National Anti-Corruption Bureau of Ukraine, she said, is “working well,” but she acknowledged that Lutsenko’s office and that of Special Anti-Corruption Prosecutor Nazar Kholodnytsky are not working as well.
Kholodnytsky is facing a reprimand, but not dismissal, over allegations that he sabotaged criminal cases by tipping off suspects, blocking investigations and concealing other wrongdoing. Ukrainian media, citing anonymous sources, reported that Kholodnytsky is blocked from entering the United States.
Yovanovitch, while noting longstanding U.S. policy against commenting on an individual’s visa status, noted that the audiotapes of Kholodnytsky’s alleged corruption contain “some disturbing allegations.”
Aside from prosecutors, the anti-corruption court is only one part of a comprehensive judicial overhaul required, she said, but a key one. “For a particular set of crimes, if somebody in government service is corrupt above a certain level, these are the crimes that will go to that (anti-corruption) court.”
A U.S. Marine Corps color guard shows the flag during an American Independence Day celebration on July 3. (Photo by Lesia Trachuk) (US Embassy to Ukraine)
Twin priorities
Besides “helping Ukraine’s democracy move forward” by setting up such institutions as an anti-corruption court, she said the United States is steadfastly committed to Ukraine’s security as a nation and has spent $1 billion on training and equipment of the nation’s armed forces to counter Russian aggression.
This policy is unlikely to change, she said, noting that “Congress on a bipartisan basis continues to support Ukrainian security assistance. Training is the most important part. I think you can see the results on the front line.”
She said that, in terms of deepening democracy, she’s encouraged by two recent trips, one to Ternopil Oblast and the second one to Chernihiv Oblast.
She said she witnessed in both places how municipalities are seizing the opportunities of decentralization — the devolution of money and power from Kyiv — to set community priorities and make public spending more accountable. Communities are also learning more about their potential resources and problems they didn’t pay close attention to before.
In Ternopil Oblast, one school she visited decided to build an observatory. In the small town of Kiptivska in Chernihiv Oblast, local authorities have gained a much better understanding of its resources through a pilot “land map” project.
“They now have all the information — who owns what parcel of land, what is the land zoned for, what taxes are paid,” she said. And they discovered “thosands of hectares they were unaware of” in forestry and agricultural sectors, land that previously was not accounted for. The discoveries are providing “immediate benefits to the community” and new economic possibilities, she said.
‘Bullish’ on Ukraine
Trade ($3.35 billion in 2017) and investment ($541 million cumulative as of 2017) are moving in the right direction in both nations, although America and Ukraine are far from each other’s major economic partners.
Still, Yovanivitch said, “I am bullish on Ukraine and I think American companies are as well.
“To look at the positive side first, it’s more anecdotal than the hard figures, but we’re hearing very positive things from American companies. They are here and they are making money. If you talk to the big agricultural companies, they need to be in Ukraine because this is such an important country, geostrategically, in the agricultural sector.
Some of that is what’s happening now and some of that is about potential.”
Familiar complaints are still being raised among prospective investors and businesses, including the large gray economy, making Ukraine’s creation of an anti-corruption court all the more important as “a symbol that Ukraine is serious about moving forward with rule of law and stamping out corruption on the government side,” Yovanovitch said.
Improvements in the regulatory environment and infrastructure are needed in the energy and agricultural sectors, among others.
In the energy sector, for instance, domestic oil and natural gas production have not been increasing or attracting as much investment as possible because of government resistance to production sharing agreements, transparent licensing procedures and making geological information free and public.
“Companies have choices,” Yovanovitch said. “If you don’t make it easy and attractive for companies to come to your country, they are going to go elsewhere.”
Infrastructure improvements in many areas, including railway transportation, will help attract more U.S. investment. “Getting your product to market is key anywhere in the world,” she said. “It’s a struggle here.”
General Electric’s $1 billion, 10-year commitment to supply 225 new locomotives and overhaul 75 others, with work to be carried out in both Ukraine and in America, will help. Other steps will also, including a more active role by the U. S. Overseas Private Investment Corporation, or OPIC, which insures investments in risky countries. As for now, however, Yovanovitch said there are no discussionsa about a wide-ranging free trade agreement between the U.S. and Ukraine.
Democracy needs work
The Fourth of July holiday is “a time to celebrate all that is best in America and that does include rule of law and that we are all created equal,” she said. “Democracy is always a process that one has to work at every day and all of us have to work at it.” n
