U.S. Ambassador to Ukraine Carlos Pascual address at the Center for Strategic and International Studies
program in Washington, D.C.
|
Western Members of the IPCTF Steering Committee
International Private Capital Task Force (IPCTF)
Report: 2001: A Ukrainian Odyssey...Boom or Bust?
| 1. |
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SigmaBleyzer
—
Michael Bleyzer, President
Edilberto Segura, Kyiv Director |
| 2. |
|
AGCO
Corp. —
Gordon Graham, General Manager |
| 3. |
|
AMCHAM
—
Jorge Zukoski, Executive Director |
| 4. |
|
CityBank
—
Witold Zielinski, General Manager |
| 5. |
|
Coca
Cola —
Garry Wilson, General Manager |
| 6. |
|
Commerzbank,
AG —
Olaf Letzel, Head |
| 7. |
|
Credit
Lyonnais —
Jacques Mounier, President |
| 8. |
|
DuPont
de Nemour —
Peter Gill, General Manager |
| 9. |
|
Financial
Markets International —
Hugh Patton, Director |
| 10. |
|
Leo
Burnet —
Francois Demers, Managing Director |
| 11. |
|
PricewaterhouseCoopers
—
Gerry Parfitt, Senior Partner
Jorge E. Intrigo, Partner |
| B. |
|
Multilateral and Bilateral Agencies |
| 1. |
|
EBRD
—
Andrew Seton, Country Director |
| 2. |
|
European
Commission —
Andre Van Haeverbeke, Ambassador |
| 3. |
|
Harvard
Institute for Int. Dev. —
Janusz Szyrmer, Director |
| 4. |
|
IFC
—
Alyona Voloshina, Resident Representative |
| 5. |
|
IMF
—
Henry Ghesquiere, St. Resident Repr.
David Orsmond, Resident Representative |
| 6. |
|
International
Center for Policy Studies —
Vera Nanivska, Director |
| 7. |
|
USAID-Ukraine
—
Christopher Crowley, Director |
| 8. |
|
US
Embassy —
Kenneth Fairfax, Economic Counselor |
| 9. |
|
World
Bank —
Gregory Jedrzejczak, Mission Chief |
Michael Bleyzer, President of SigmaBleyzer (seated);
Keith Bush of CSIS (standing)
|
|
Washington, D.C., March 29, 2001 — Carlos Pascual, U.S.Ambassador to
Ukraine, and Michael Bleyzer, President and CEO of SigmaBleyzer, an American/Ukrainian
Investment Banking Group, and Chairman of the International Private Capital Task Force
(IPCTF) for Ukraine, gave a major briefing about Ukraine in Washington, D.C. on Thursday,
March 29. More than 100 people attended the briefing, which was sponsored by the Center
For Strategic and International Studies (CSIS).
Ambassador Pascual began his remarks by outlining the current
political, economic, and social scene in Ukraine. He urged those who are watching Ukraine
not to lose sight of the longer term objectives to develop a strong, independent, market
economy in Ukraine. Instead, he encouraged people to focus on the many accomplishments
made in Ukraine this past year, especially on the economic scene, and in spite of the
current political crisis.
The Ambassador shared his perspective that it is very important for
Ukraine to continue on the path of becoming a European-style nation with a desire to be
integrated into the European and world economy. Pascual outlined three crisis areas that
Ukraine must immediately deal with and solve if Ukraine is to continue on a path of
democracy-building and economic reform:
| 1. |
|
Political
crisis surrounding the murder of a leading journalist; |
| 2. |
|
Building
a new meaningful majority in the Parliament; |
| 3. |
|
Problems
arising in international relations with Russia, the European countries, and the United
States as a result of the political and economic problems faced by Ukraine today. |
Ambassador Pascual also said that some working committees with Ukraine
in the areas of trade and investment, foreign policy and security will continue their
work in the Bush Administration. The Ambassador stated, in a reply to a question from the
audience about the growing Russian presence in Ukraine, that of course Ukraine needs to
have a strong, friendly elationship with Russia but that the relationship needs to be
transparent, and the parameters of engagement carefully defined.
Michael Bleyzer presenting his report entitled, "2001: A Ukrainian Odyssey....Boom or Bust?
|
Following his remarks, Ambassador Pascual introduced Michael Bleyzer,
a leading U.S. businessman who is President of SigmaBleyzer, an investment banking group
that manages the Ukraine Growth Fund (UGF). SigmaBleyzer now has nearly $100 million in
equity investments in Ukraine. The Ambassador asked Mr. Bleyzer to report on a major
economic study completed recently by the International Private Capital Task Force
(IPCTF), which is chaired by Bleyzer. The IPCTF was organized over a year ago by
SigmaBleyzer, and the members of the task force came from large foreign private companies
in Ukraine, international banking institutions, government officials, and leading private
economic non-governmental organizations.
Bleyzer stated that the Task Force (IPCTF) has concluded that a
significant increase in the rate of economic development must be achieved by Ukraine if
it is to become a major democratic state, develop political stability, become a strong
independent nation, and achieve the level of economic prosperity needed for integration
into the European and world economy.
Mr. Bleyzer emphasized that Ukraine is at a major crossroads regarding
its economic development, stating that, "Ukraine must have a major increase in foreign
direct investment if it is to move forward rapidly in it's economic development." Mr.
Bleyzer shared that the study by the IPCTF outlined three scenarios regarding the
economic development of Ukraine. "Which of the scenarios actually happens in Ukraine will
depend on which course of action the Ukraine government takes in making significant
improvements in the major governmental policies that influence economic growth."
The IPCTF study laid out a strong, detailed action plan regarding
important changes in governmental policies that are needed in order to improve foreign
direct investment in Ukraine. The study outlines three possible scenarios for Ukraine,
all of which depend on the level of changes in economic policies the Ukraine government
is willing to implement:
| (1) |
|
Continue
present government policies, which will mean capital inflows will not increase from the
present level of less than US $1 billion per year. Under this scenario Ukraine's economy
will continue to grow very slowly and will not achieve economic stability anytime soon.
This scenario will leave Ukraine in a very weak economic and political position. |
| (2) |
|
Implement
50% of the necessary policy actions within the next 5 years, which would result in
Ukraine increasing its foreign direct investment to about $ 3.4 billion per year. This
level of investment would move Ukraine forward, allow it to achieve a respected level of
economic growth and stability, and help Ukraine strengthen its position in the world
economy. |
| (3) |
|
Implement
80% of the recommended policy actions within five years, which would demonstrate to the
world a strong commitment to economic growth. This action would increase the level of
foreign direct investments to US $6.4 billion per year and would move Ukraine forward,
bring it closer to the level which has been achieved by other eastern European countries
such as Poland and Hungary. The US $ 6.4 billion level of foreign direct investment is
absolutely necessary if Ukraine is to take a strong position in the European and world
economy. |
Mr. Bleyzer told the CSIS group that the IPCTF report lays out nine
key fiscal and monetary "policy actions" which have been taken by other countries, which
have achieved high levels of economic growth. The report stated that these same key
driver/policy actions are needed in Ukraine. The study identified the following nine
"policy actions, which stimulated foreign investments in other countries:
|
|
(1) |
|
Liberalize
and de-regulate business activities; |
|
|
(2) |
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Provide
a stable and predictable legal environment; |
|
|
(3) |
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Enhance
governance and reform public administration; |
|
|
(4) |
|
Remove
international capital and trade restrictions; |
|
|
(5) |
|
Facilitate
the financing of businesses; |
|
|
(6) |
|
Eliminate
corruption; |
|
|
(7) |
|
Reduce
political risks (non-economic country risks); |
|
|
(8) |
|
Expand
country promotion; and, |
|
|
(9) |
|
Rationalize
investment incentives. |
Mr. Bleyzer went on to explain that the IPCTF study takes each of the
nine key policy areas and provides detailed actions in each area, all of which need to be
implemented in Ukraine.
He also noted that the IPCTF study lays out a strong action plan for
Ukraine, but also raises questions for policy makers in the United States and other
western countries and recommends a new, strong action plan for the United States toward
Ukraine.
The important questions for US policy makers to consider, which are
raised by the IPCTF study include:
|
|
(1) |
|
Is
Ukraine a strategically important country for US national security interests? |
|
|
(2) |
|
Is
the US prepared to concede Ukraine to the newly emerging Russian superpower? |
|
|
(3) |
|
Can
the long-term independence of Ukraine be ensured without its developing into a viable
democratic state with a strong market-based economy? -and- |
|
|
(4) |
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Can
Ukraine be truly an independent nation without e energy independence? |
For the meeting at CSIS, Mr. Bleyzer outlined the action plan
recommended by the IPCTF study for U.S. policy makers:
|
|
(1) |
|
Develop
and clearly communicate the US policy toward Ukraine. |
|
|
(2) |
|
Build
a strong Western coalition of countries committed to assisting in the building of a truly
independent Ukraine by supporting programs to strengthen democratic institutions and the
reforms needed to create a strong, market-based economy in Ukraine. |
|
|
(3) |
|
Restructure,
refocus, and streamline all foreign aid/assistance to Ukraine. |
|
|
(4) |
|
Focus
on the development of private business, SME's (small and medium enterprises) from within
Ukraine, and programs to support investments by multinationals in strategic sectors like
energy, telecom, defense conversion and other sectors. |
|
|
(5) |
|
Require
tough, very specific, measurable, performance conditions on all assistance to Ukraine. |
|
|
(6) |
|
Provide
for hands-on implementation assistance. |
|
|
(7) |
|
Implement
a variety of real risk sharing, guarantee, and political risk insurance programs, which
will leverage badly needed foreign private investments. |
|
|
(8) |
|
Reduce
"blind pools of money" disbursements from international financial institutions and direct
government- to-government financial assistance to Ukraine. |
Mr. Bleyzer closed his remarks by emphasizing that the potential in
Ukraine is huge and stated that his company, its investors, and other major economic
organizations are still investing in Ukraine, and are very optimistic about the future.
He stated that the theme of SigmaBleyzer is, "Ukraine Is Bound To Succeed!" He urged
everyone to stay involved in Ukraine and to work and invest there.
Mr. Bleyzer issued a strong plea for the future. "It is critical for
Ukraine to implement the right policies now, for the West to recognize the true
importance of Ukraine and provide the vital support needed, and for international
investors to increase their investment in Ukraine. If everyone works together, Ukraine
can become a strong, prosperous, independent nation for the people of Ukraine, for the
region, and for the world."
|
