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18 August 1998
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On August 24 people of Ukraine will celebrate a great national holiday—the Day of Independence of Ukraine. Seven years have passed since the Verkhovna Rada of Ukraine declared Ukraine and independent nation. In the countrywide referendum, held on December 1, 1991, 90.3 per cent of the voters supported this decision. Ukraine became the only nation among Post-Soviet states that brought the issue of nation’s independence to the people. This was the beginning of the new period of "national development" in the history of Ukraine.

Today Ukraine is heading in the direction of radical reforms with the goal of resolving current crisis situation, curing the social problems, providing the basis for stable socioeconomic growth, and reducing the time needed for successful transition to the market economy.

Regardless of the obvious difficulties, the intentions of the President and the Cabinet of Ministers to continue the course of reforming Ukrainian economy have remained unchanged and steadfast, while at present respective, measures to accelerate reforms have being substantially enhanced. All this permitted Ukraine to achieve certain positive results. The signs of production recovery have become even more distinct in most sectors of national economy; tendencies of economic growth intensified. Starting from the second half of the last year for the first time over last ten years the industrial output is on the upturn. Stabilization of the gross domestic product, which is of crucial importance for the economic development, has been achieved.

All of the above allowed the achievement of positive results. Furthermore, there are vivid signs of economic growth and stabilization of production in majority of industries. In the third and fourth quarter of last year, for the first time in ten years, the positive growth of the industrial output was made possible. The stabilization of GDP was also achieved; this has great bearing on the economic development of the nation.

By the order of the President of Ukraine several urgent measures designed to speed up the reform and lift Ukraine’s economy from the crisis situation, were issued and are currently in effect. These measures will reform the tax system, develop the export potential, create positive environment for national and foreign investment, and solve the most pressing social issues.

With the goal to develop the National budget for 1998 on the new tax base, The Verkhovna Rada passed the packet of bills dealing with taxation. These bills should provide supplemental inflows to the national budget while reducing the margin paid by the manufacturers.

After passing the groundbreaking legislation that provided the regime of clear cut budgetary constrains and provision to ensure budget revenues, the level of its deficit is being planned in the amount of 2.5% of the GDP by the end of the current year with its further decrease up to 2% of the GDP and even less in 1999.

The development of the market sector holds an important place in the creation of the reliable mechanism of Ukrainian economy stabilization, where small and medium size businesses play a leading role. Currently there are over 100 thousand small enterprises that employ 1.2 million people, three thousand cooperatives, and nearly 900 thousand individual enterprises that are acting in the economy. Over the last year a number of important decisions on improving the legislative and normative basis, which regulates the entrepreneurship activities with the purpose of creating favorable conditions for its development, were adopted at the state level.

The present conditions of economic development call for the active investment policy. The legislative basis in the field of regulating the investment activity was created in Ukraine and equal conditions for domestic and foreign investors’ activity were created. Foreign investors are given state safeguards to provide security for their investments. International Agreements "On promotion and mutual protection of investments’ have already been signed with 45 countries of the world. A number of such draft agreements are at the stage of harmonization.

Total amount of direct foreign investments into Ukraine was more than USD 2200 million as of the first half of 1998. Most investments were made by non-residents from the USA, the Netherlands, Germany, Cyprus, the Russian Federation, and Great Britain. Meantime, the total need of the economy of Ukraine in foreign investments constitutes more than USD 40 billion. Actually all sectors of economy need investments. Thus, Ukraine is interested in entry into the European economic and legal space, development of mutually beneficial cooperation with other countries and international financial organizations and attraction of foreign investments. In this context one cannot but pay attention, also a successful holding this year in Kyiv of the annual meeting of the Board of Governors of the European Bank for Reconstruction and Development which will undoubtedly promote growth of investments to Ukraine, as was testified by the arrangements, reached during the meeting.

The experience of 7 years of independence confirms that the foreign-policy course, opted by Ukraine, was, has been and will be a reliable means for protection and promotion of national interests on the international arena.

Within this short period, in the historical sense, Ukraine established diplomatic relations with more than 150 countries of the world, opened 70 embassies and other foreign missions on all the continents, established friendly relations with all neighboring countries, resolved (on the whole) rather difficult issues, historically and technically, of territorial division and borders, concluded almost 1,900 bilateral and multilateral international treaties and agreements that constituted the politico-legal backbone of its foreign affairs.

Over these 7 years Ukraine became a member of such influential pan-European organizations as the OSCE and the Council of Europe, joined the Central-European Initiative. In March 1998 the Agreement on partnership and cooperation between Ukraine and the European Union entered into force. Bilateral political and economic relations with "G-7" countries, as well as with leading countries of Western and Central-Eastern Europe and other countries, are successfully developing.

International assessment of this activity of Ukraine indicates: the world regards Ukraine as a state, which is one of decisive factors of maintaining stability and security in Europe.

Located in the center of Europe, Ukraine geographically, historically and culturally is at the crossroads between the West and the East, justifying its multi-vector foreign policy.

Recently Ukraine has made substantial progress in relations with western countries. In the near perspective, the future economic face of Europe will be defined by the enlarged and reformed European Union (EU), and in the sphere of strengthening the security -- by the process of the NATO enlargement. Thus, Ukraine is aware: it is next to impossible to prosper without collaboration with European and transatlantic structures. That is why one of priority directions of Ukrainian foreign policy is development of multilateral cooperation with these countries and follow the course of integration into them. Last year Ukraine made significant steps on the way of integration into European and transatlantic structures, first of all, into the EU.

This meaningful choice of Ukraine, enshrined in fundamental documents that regulate foreign policy of our nation was once again confirmed by the President’s Decree "On endorsing the strategy of Ukraine’s integration into the European Union" (1998). The Decree defines the main aims of the integration process (adaptation of Ukraine’s legislation to the EU legislation, safe-guarding human rights, an economic integration and development of trade relations between Ukraine and the EU, integration of Ukraine into the EU in the context of the common European security, political consolidation and the strengthening of democracy, adaptation of the social policy of Ukraine to the EU standards, cultural, educational, scientific and technical integration, regional integration of Ukraine, sectoral cooperation, cooperation in an environment protection field) and internal backing for the integration process. 

According to the provisions of the Agreement on partnership and cooperation, which came into force on March 1 this year, the first meeting of the Cooperation Council Ukraine-EU was held and it was stated that Ukraine’s strategic aim was to enter the EU and ways of its implementation were defined. The political dialogue between Ukraine and the EU has been conducted at the highest level and the preparation to the second Ukraine-EU summit is an evidence of it. The European Union adopted the Action Plan for Ukraine, worked out a draft document for the integration of Ukraine into the EU, the issues on concluding the European Agreement as the next integration stage.

A string of successful steps in strengthening and expanding cooperation between Ukraine and NATO were made: meetings of Joint Commissions was held at the level of the ministers of foreign affairs and defense, the work of Ukraine’s Mission in NATO began as an independent diplomatic institution and soon the Alliance liaison officer will be established. During the visit of NATO Secretary General J.Solana to Ukraine in June this year cooperation between the Alliance and Ukraine was commended and the idea on expanding the interaction was supported. The State Programme of Cooperation with NATO for 1998-1999 was elaborated and approved. The Programme, in particular, provided for organization of a cooperation between a number of ministries and government departments of Ukraine with relevant Alliance structures dealing with various sectors of economy. There are reasons to hope that the Ukrainian military and industrial complex will take a proper place in this cooperation.

Ukraine actively develops a cooperation with its neighbors -- countries of Central and Eastern Europe: Poland, Hungary, Slovakia, Rumania. Over last years the high level of political and economic cooperation with them was achieved. Last year Ukraine signed a memorandum on stage-by-stage liberalization of a mutual trade with these countries that is an important stage in reaching European integration.

Ukraine has a number of indisputable successes in building on relations with Russia. The programme of economic cooperation between Ukraine and the Russian Federation for 1998-2007 was signed and is being implemented in life.

Owing to Ukraine’s perseverance we agreed on rescinding VAT on a mutual basis. New prospects in expanding the production co-operation have been created. One of the most important projects here is to secure joint mass production, deliveries and operation of aircraft AN-70. Progress has been achieved in the negotiation process concerning as to a delimitation of the state border with the Russian Federation.

Recently the south-eastern vector has acquired a particular importance in Ukraine’s foreign relations, namely, the Southern-Caucasus and Central-Asian vector. The total volume of trade with countries of these regions in Ukraine’s trade turnover is characterized by a stable tendency for increase. With active participation of our nation the GUAM consultative forum including Ukraine, Azerbaijan, Georgia and Moldova was established. The GUAM’s guidelines of activities are fields in which Ukraine is extremely interested, in particular, creation of a common transport corridor, cooperation in the field of extraction and transportation of oil, etc.

An active dialogue is developing with the states of the Mediterranean and the Near East, the Black Sea basin. On the initiative of Ukraine, in June this year at the summit in Yalta a new international Organization of the Black Sea Economic Cooperation was developed.

At present, the Commonwealth of Independent States lives through an important stage of reforming. Ukraine’s experience of participation in it showed that at present the CIS mechanism is not effective. In Ukraine’s opinion, after reforming, the Commonwealth should, first of all, be an instrument of multilateral negotiations and consultations that supplement the process of shaping qualitatively new relations between the states on the basis of international law. The CIS should be transformed into the sound tool of economic cooperation that will contribute to integration of the participating states into the world and European economic space. The economic cooperation among the CIS participating countries should be based on the principle of the consistent steps; first of which is the creation a free-trade zone based on the regulation and principles of GATT/WTO.

The arrangements and agreements on strategic partnership of Ukraine and the USA have been filled with new and significant concrete contents. The USA renders assistance in implementing the course of reforms declared by Ukraine, integration into the European and trans-Atlantic structures, considers Ukraine one of the key elements of the European security. This fact indicates that there is a permanent political dialogue at the highest level, the subject of which is both the issues of bilateral cooperation in ever growing number of fields and the most crucial issues of international life which are of mutual interest, which was reflected, in particular, in the successful holding of the second plenary meeting of the Ukraine - US Binational Commission Kuchma-Gore. The visit of the US Vice-President A.Gore to the Chornobyl NPP, his expressed understanding of the situation and aspiration to assist Ukraine was an important result in view of the role which the USA plays in mobilization of finances to realize the "Shelter" project and ChNPP decommissioning in the nearest future. Among the most important examples of the Ukrainian-US cooperation may also be interaction as to Ukraine’s accession to full-fledged membership in the Missile Technology Control Regime, the stage of practical realization of the international program "Sea Launch."

An important place in the strategy of Ukraine’s foreign political activity is given to the use of the progress achieved during seven years of independence to improve internal economic situation, for the benefit of every concrete citizen, materialization of achievements at the international arena, translation of cooperation with partners into a practical plane. At present, enhancement of the economic component both of the internal and foreign policy of Ukraine is in line with urgent necessities of the time.

Ukraine has to solve many problems in all spheres. However, democratic option of the state is unchanged. Ukraine having embarked on a massive program of reforms and building a democratic European state, will carry on, solving all issues in a civilized manner, and honoring all its commitments before partners. Independence is the most important guarantee of it.

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