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UKRAINE: DEVELOPMENTS IN THE AFTERMATH

OF THE ORANGE REVOLUTION

HEARING

BEFORE THE

SUBCOMMITTEE ON EUROPE AND 

EMERGING THREATS

OF THE

COMMITTEE ON 

INTERNATIONAL RELATIONS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

JULY 27, 2005

Serial No. 109–78

Printed for the use of the Committee on International Relations

(

Available via the World Wide Web: http://www.house.gov/international—relations 

(II)

COMMITTEE ON INTERNATIONAL RELATIONS 

HENRY J. HYDE, Illinois, Chairman 

JAMES A. LEACH, Iowa 

CHRISTOPHER H. SMITH, New Jersey, 

Vice Chairman 

DAN BURTON, Indiana 

ELTON GALLEGLY, California 

ILEANA ROS-LEHTINEN, Florida 

DANA ROHRABACHER, California 

EDWARD R. ROYCE, California 

PETER T. KING, New York 

STEVE CHABOT, Ohio 

THOMAS G. TANCREDO, Colorado 

RON PAUL, Texas 

DARRELL ISSA, California 

JEFF FLAKE, Arizona 

JO ANN DAVIS, Virginia 

MARK GREEN, Wisconsin 

JERRY WELLER, Illinois 

MIKE PENCE, Indiana 

THADDEUS G. MCCOTTER, Michigan 

KATHERINE HARRIS, Florida 

JOE WILSON, South Carolina 

JOHN BOOZMAN, Arkansas 

J. GRESHAM BARRETT, South Carolina 

CONNIE MACK, Florida 

JEFF FORTENBERRY, Nebraska 

MICHAEL MCCAUL, Texas 

TED POE, Texas 

TOM LANTOS, California 

HOWARD L. BERMAN, California 

GARY L. ACKERMAN, New York 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

DONALD M. PAYNE, New Jersey 

ROBERT MENENDEZ, New Jersey 

SHERROD BROWN, Ohio 

BRAD SHERMAN, California 

ROBERT WEXLER, Florida 

ELIOT L. ENGEL, New York 

WILLIAM D. DELAHUNT, Massachusetts 

GREGORY W. MEEKS, New York 

BARBARA LEE, California 

JOSEPH CROWLEY, New York 

EARL BLUMENAUER, Oregon 

SHELLEY BERKLEY, Nevada 

GRACE F. NAPOLITANO, California 

ADAM B. SCHIFF, California 

DIANE E. WATSON, California 

ADAM SMITH, Washington 

BETTY MCCOLLUM, Minnesota 

BEN CHANDLER, Kentucky 

DENNIS A. CARDOZA, California 

THOMAS E. MOONEY, SR., Staff Director/General Counsel 

ROBERT R. KING, Democratic Staff Director 

SUBCOMMITTEE ON EUROPE AND EMERGING THREATS

ELTON GALLEGLY, California, Chairman 

JO ANN DAVIS, Virginia 

PETER T. KING, New York, Vice Chairman 

THADDEUS G. McCOTTER, Michigan 

DARRELL ISSA, California 

TED POE, Texas 

J. GRESHAM BARRETT, South Carolina 

ROBERT WEXLER, Florida 

ELIOT L. ENGEL, New York 

SHELLEY BERKLEY, Nevada 

GRACE F. NAPOLITANO, California 

ADAM B. SCHIFF, California 

BEN CHANDLER, Kentucky 

RICHARD MEREU, Subcommittee Staff Director 

JONATHAN KATZ, Democratic Professional Staff Member 

PATRICK PRISCO, Professional Staff Member 

BEVERLY HALLOCK, Staff Associate 

(III)

C O N T E N T S 

Page

WITNESSES 

The Honorable Daniel Fried, Assistant Secretary, Bureau of European and 

Eurasian Affairs, United States Department of State ...................................... 5

The Honorable Nelson C. Ledsky, Senior Associate and Regional Director, 

Eurasia, National Democratic Institute ............................................................. 21

Mr. Stephen B. Nix, Regional Program Director, Eurasia, International Republican Institute ................................................................................................. 25

Taras Kuzio, Ph.D., Visiting Professor, Institute for European Russian and 

Euroasian Studies, George Washington University .......................................... 31

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

The Honorable Elton Gallegly, a Representative in Congress from the State 

of California, and Chairman, Subcommittee on Europe and Emerging 

Threats: Prepared statement .............................................................................. 2

The Honorable Robert Wexler, a Representative in Congress from the State 

of Florida: Prepared statement ........................................................................... 4

The Honorable Daniel Fried: Prepared statement ................................................ 7

The Honorable Nelson C. Ledsky: Prepared statement ....................................... 22

Mr. Stephen B. Nix: Prepared statement .............................................................. 26

Taras Kuzio, Ph.D.: Prepared statement ............................................................... 32

APPENDIX 

The Honorable Dan Burton, a Representative in Congress from the State 

of Indiana: Prepared statement .......................................................................... 41

(1)

UKRAINE: DEVELOPMENTS IN THE 

AFTERMATH OF THE ORANGE REVOLUTION 

WEDNESDAY, JULY 27, 2005

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON EUROPE AND EMERGING THREATS, 

COMMITTEE ON INTERNATIONAL RELATIONS, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 1 o’clock p.m. in 

room 2255, Rayburn House Office Building, Hon. Elton Gallegly, 

(Chairman of the Subcommittee) presiding. 

Mr. GALLEGLY. Good afternoon. Today, the Subcommittee on Europe and Emerging Threats is holding a hearing on the developments in the Ukraine in the aftermath of the Orange Revolution. 

Ukraine has reached a pivotal crossroads in its development as 

an independent nation. With the fall of the Soviet Union, Ukraine 

embarked slowly on the path of democracy with many of the same 

leaders that had led the country during the Soviet times. As the 

Presidential elections in 2004 approached, Ukraine appeared likely 

to continue to be governed by the same elites who were viewed by 

many Ukrainians as corrupt and out of touch. 

All of that changed with the rise of the Orange Revolution and 

the leadership of Victor Yushchenko. With his victory, the 2004 

Presidential elections, Yushchenko breathed new life into the country’s democracy. President Yushchenko visited the United States 

from April 4–7, 2005, to meet with President Bush and Secretary 

of State Rice. Following those meetings, the Administration 

pledged to work with Ukraine to complete bilateral negotiations for 

Ukraine’s accession to the WTO (World Trade Organization) and to 

support Ukraine’s efforts to join NATO by providing assistance 

with reforms. 

But now the honeymoon is over, and the hard work of implementing political and economic reforms is just beginning. By most 

accounts, the first few months of the new regime were rocky as the 

new government found its footing and spent a considerable amount 

of time negotiating with the Ukraine’s multiple political parties. 

Since May, the government has tried to focus on its core goals of 

political and economic reform. 

There are a couple of main issues we would like to focus on 

today. The first is economic reform in Ukraine. Economic reform in 

the Ukraine has two main components. The first is removing many 

of the Soviet-era laws governing the economy and reprivatizing a 

number of the companies that were the result of corrupt 

privatizations by the former Kuchma regime. 

2

This issue ties closely in with the second issue, the potential accession of Ukraine into the WTO. In its most recent session, the 

Ukrainian Parliament passed a number of laws required by the 

international community to join the WTO, including a strong intellectual property statute, but much remains to be done. 

Third, the application of the Jackson-Vanik amendment and the 

hurdles to granting permanent Normal Trade Relations status remains an issue on which there has been very little movement. The 

Administration has publicly stated its support for such a move, but 

the decision is in the hands of the Congress. 

Finally, I hope the Administration and other witnesses will discuss the likelihood and timetable for Ukraine joining NATO, an exceptionally sensitive issue in light of Ukraine’s relation with Russia 

and the presence of the Russian fleet in Ukrainian ports on the 

Black Sea. 

At this point I would yield to my good friend from Florida, the 

Ranking Member, Mr. Wexler. 

[The prepared statement of Mr. Gallegly follows:]

PREPARED STATEMENT OF THE HONORABLE ELTON GALLEGLY, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF CALIFORNIA, AND CHAIRMAN, SUBCOMMITTEE ON

EUROPE AND EMERGING THREATS

Today, the Subcommittee on Europe and Emerging Threats is holding a hearing 

on the developments in the Ukraine in the aftermath of the Orange Revolution. 

Ukraine has reached a pivotal crossroads in its development as an independent 

nation. With the fall of the Soviet Union, Ukraine embarked slowly on the path to 

democracy with many of the same leaders that had led the country during the Soviet times. As the Presidential elections of 2004 approached, Ukraine appeared likely to continue to be governed by the same elites who were viewed by many Ukrainians as corrupt and out of touch. 

All of that changed with the rise of the Orange Revolution and the leadership of 

Victor Yushchenko. With his victory in the 2004 presidential elections, Yushchenko 

breathed new life into the country’s democracy. President Yushchenko visited the 

United States from April 4 to 7, 2005 to meet with President Bush and Secretary 

of State Rice. Following those meetings, the Administration pledged to work with 

Ukraine to complete bilateral negotiations for Ukraine’s accession to the WTO and 

to support Ukraine’s efforts to join NATO by providing assistance with reforms. 

But now the honeymoon is over and the hard work of implementing political and 

economic reforms is just beginning. By most accounts, the first few months of the 

new regime were rocky as the new government found its footing and spent considerable amount of time negotiating with Ukraine’s multiple political parties. Since 

May, the government has tried to focus on its core goals of political and economic 

reform. 

There are a couple of main issues we would like to focus on today. The first is 

economic reform in Ukraine. Economic reform in the Ukraine has two main components. The first is removing many of the Soviet era laws governing the economy and 

re-privatizing a number of the companies that were the result of corrupt 

privatizations by the former Kuchma regime. 

This issue ties closely in with the second issue, the potential accession of Ukraine 

into the WTO. In its most recent session, the Ukrainian parliament passed a number of laws required by the international community to join the WTO, including a 

strong intellectual property protection statute, but much remains to be done. 

Third, the application of the Jackson-Vanick amendment and the hurdles to 

granting permanent Normal Trade Relations status remains an issue on which 

there has been very little movement. The Administration has publicly stated its support for such a move, but the decision is in the hands of the Congress. 

Finally, I hope the Administration and our other witnesses will discuss the likelihood and timetable for Ukraine joining NATO, an exceptionally sensitive issue in 

light of Ukraine’s relation with Russia and the presence of the Russian fleet in 

Ukrainian ports on the Black Sea. 

I will now turn to Mr. Wexler for any opening statement he may wish to make.

3

Mr. WEXLER. Thank you very much. I first want to thank Chairman Gallegly for holding today’s hearing. I especially want to welcome Assistant Secretary of State, Mr. Fried, who I had the privilege of first meeting when he was the Ambassador to Poland and 

very ably represented our Nation in that capacity. 

It has been 6 months since President Yushchenko was inaugurated and Ukrainians overwhelmingly opted for sweeping political, 

economic, and judicial reform at home and chose a clear path of integration with the Euro-Atlantic community and further membership in their future aspirations in the context of the EU, NATO 

and WTO. 

Although the Yushchenko Government has passed important legislation, including several WTO related bills—my understanding is 

possibly five—and a far-reaching intellectual property law on July 

6, enactment of key reforms has not gone as smoothly as many in 

Ukraine and the international community had hoped. 

While it would be unfair to solely blame the current impasse on 

the Yushchenko Government, which has had key aspects of its reform agenda blocked by factions in the Rada, it is essential that 

President Yushchenko play a more significant role in ending the 

political paralysis that has enveloped Kiev. 

The Yushchenko Administration and Rada must pass further reforms to the economy, trade laws, and judicial system, as well as 

set a clear economic course with benchmarks in order to stem 

Ukraine’s economic slide and loss of direct foreign investment. Additionally, the outstanding WTO bills must be passed by the Parliament when it reconvenes in September in order to ensure a December date for Ukraine’s membership in the WTO. 

The United States and Europe must continue to assist the 

Yushchenko Government as it pursues these difficult reforms. During his joint statement with President Yushchenko in April, President Bush stated, ‘‘As Ukraine undertakes far-reaching reform at 

home, it can count on the United States for support.’’ That support 

is needed now more than ever, and I urge the Administration to 

follow through on the ambitious agenda for a strategic partnership 

set forth in the statement. I join President Bush and the Chairman, as he stated earlier, in supporting Ukraine’s NATO aspirations, ending application of the Jackson-Vanik to Ukraine, and desire to work with President Yushchenko to achieve Ukraine’s accession to the WTO. 

Despite the serious constitutional challenges facing the EU, 

Brussels must move beyond the EU-Ukrainian Action Plan within 

the framework of the European Neighborhood Policy and open the 

possibility to Ukraine’s EU membership. Ukrainians overwhelmingly supported further European integration in last year’s Presidential election and EU membership remains the key catalyst for 

Kiev to pass needed reforms. Like all Americans, I was captivated 

last year by the peaceful scenes of protest in Kiev’s Independence 

Square where hundreds of thousands of Ukrainians declared overwhelmingly their desire for democratic change. It is now incumbent 

on the Yushchenko Government, as well as the United States and 

EU, to work together to fulfill this vision of hope and change ensuring that Ukraine succeeds as a stable, democratic, prosperous nation firmly rooted in the West. 

4

Mr. Chairman, I understand that Secretary Fried has just been 

to Ukraine, and he is going to offer us a very updated analysis. I 

am curious if, in the context of his discussion, we will hear about 

what the often mentioned WTO goals are, and whether, while on 

paper and in an academic setting, we might all agree with them. 

As it relates to Mr. Yushchenko on the ground in Kiev, are those 

WTO goals in fact good advice to a strong ally at this point? I 

would be curious if Ambassador Fried would address that if possible. 

Thank you. 

[The prepared statement of Mr. Wexler follows:]

PREPARED STATEMENT OF THE HONORABLE ROBERT WEXLER, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF FLORIDA

I want to thank Chairman Gallegly for holding today’s hearing on Ukraine and 

developments in the aftermath of the Orange Revolution. I want to thank Assistant 

Secretary of State Dan Fried, Dr. Kuzio, Ambassador Ledsky and Mr. Nix for testifying today. 

It has been six months since President Yuschenko was inaugurated and Ukrainians overwhelmingly opted for sweeping political, economic and judicial reform at 

home and chose a clear path of integration with the Euro-Atlantic community and 

future membership in the EU, NATO and WTO. 

In the aftermath of the first democratic transfer of power in Ukraine’s history, 

the Yuschenko Administration has had the difficult task of fulfilling the mandate 

and expectations of the Orange Revolution. 

Although the Yuschenko government has passed important legislation including 

several WTO related bills and a far-reaching intellectual property law on July 6, enactment of key reforms has not gone as smoothly as many in Ukraine and the international community had hoped. 

While it would be unfair to solely blame the current impasse on the Yuschenko 

government, which has had key aspects of its reform agenda blocked by factions in 

the Rada, it is essential that President Yuschenko take a greater role in ending the 

political paralysis that has enveloped Kiev. 

The Yuschenko Administration and Rada must pass further reforms to the economy, trade laws and judicial system as well as set a clear economic course with 

benchmarks in order to stem Ukraine’s economic slide and loss of direct foreign investment. Additionally, outstanding WTO bills must be passed by the parliament 

when its reconvenes in early September in order to ensure a December date for 

Ukraine’s membership in this organization. 

Mr. Chairman, the United States and Europe must assist the Yuschenko government as it implements difficult reforms. During his joint statement with President 

Yuschenko in April, President Bush stated ‘‘as Ukraine undertakes far-reaching reform at home, it can count on the United States for support.’’ That support is needed now more than ever, and I urge the Administration to follow through on the ambitious agenda for a strategic partnership set forth in the statement. I join President 

Bush in supporting Ukraine’s NATO’s aspirations, ending application of JacksonVanik to Ukraine and desire to work with President Yuschenko to achieve Ukraine’s 

accession to the WTO. 

Despite the seriousness constitutional challenges facing the EU, I urge Brussels 

to move beyond its EU-Ukrainian Action Plan within the framework of the European Neighborhood Policy and open the possibility to Ukraine’s EU membership. 

Ukrainians overwhelmingly supported further European integration in last year’s 

presidential election and EU membership remains the key catalyst for Kiev to pass 

needed reforms. 

Like all Americans, I was captivated last year by the peaceful scenes of protest 

in Kiev’s independence square where hundred of thousands of Ukrainian’s declared 

overwhelmingly their desire for democratic change. It is now incumbent on the 

Yuschenko government, as well as the United States and EU, to work together to 

fulfill this vision of hope and change ensuring that Ukraine succeeds as a stable 

democratic prosperous nation firmly rooted in the West.

Mr. GALLEGLY. Thank you very much, Rob. 

We have some good news and we have some bad news this afternoon. First of all, the good news is that we are fortunate to have 

5

some very, very qualified witnesses today before us, and I am overwhelmed at the response of people that are interested in the hearing. That is very positive. Unfortunately, someone just whispered 

in my ear that we are going to be scheduled for a series of votes 

in just about an hour, and those votes will probably take the better 

part of an hour, so we are going to have a condensed hearing obviously. I appreciate everyone’s understanding of that. I have no control over the bells. 

At this time it is my privilege and honor to introduce Daniel 

Fried, Assistant Secretary of the Bureau of European and Eurasian 

Affairs at the U.S. State Department. While Mr. Fried has only 

been in his current position for a few months, he is among the foremost experts on European and Eurasian affairs, having previously 

served as Senior Director of Europe and Eurasian Affairs at the 

National Security Council and as the U.S. Ambassador to Poland. 

Welcome, Mr. Ambassador. We are anxious to hear your testimony. 

STATEMENT OF THE HONORABLE DANIEL FRIED, ASSISTANT 

SECRETARY, BUREAU OF EUROPEAN AND EURASIAN AFFAIRS, UNITED STATES DEPARTMENT OF STATE 

Mr. FRIED. Thank you, Mr. Chairman and Congressmen, and 

thank you for the opportunity to be able to report and discuss the 

developments in Ukraine and, in particular, how the United States 

can help the Ukrainian people realize their aspirations to live in 

freedom. 

Last winter, as you both said, the Ukrainian people chose freedom and democracy over corruption and intimidation. Their courage and conviction captured the imagination of the world and the 

support of the United States. The result of this brave stand was 

a new, legitimately-elected President, a new government and the 

promise of a new beginning for Ukraine. 

Well, after the poetry of the Orange Revolution comes the hard 

prose of transforming Ukraine’s aspirations into programs. President Yushchenko has set out a broad and ambitious agenda to turn 

the Ukraine into a modern European state, but this new government contends with many challenges; high expectations, resistance 

from entrenched interests and regional elites, a diverse and sometimes fractious coalition, upcoming parliamentary elections, and a 

complicated relationship with its very large neighbor to the east. 

Despite these challenges, President Yushchenko and his team 

have achieved significant successes to date. Respect for the rights 

of citizens has improved. The media operates more freely. Courts 

appear to be more independent. The authorities have moved to 

combat corruption. 

President Yushchenko has also dramatically transformed 

Ukraine’s international image. He has committed Ukraine to supporting democracy and human rights in the region and further 

abroad. He has put relations with the United States and Europe 

on a new and solid tract. On the economic front, the Rada recently 

passed significant legislation related to WTO accession, which I can 

describe a bit later. 

While we are encouraged by the new government’s successes, we 

are all concerned that some essential free market reforms have 

6

stalled. In addition, we have noticed interventionist and inflationary economic policies, as well as uncertainty with respect to reprivatization; all of which could threaten economic growth. These 

uncertainties could also damage key priorities, such as membership 

in the WTO, attracting foreign investment and obtaining market 

economy status. 

That said, I should report to you that I came away from my trip 

to Kiev convinced that Ukraine’s leaders recognize that they have 

had a rough initial period on economic policies and are convinced 

that they, themselves, are committed to getting reforms on track. 

There has been progress such as the Rada’s recent passage of the 

WTO related laws. 

With respect to United States-Ukrainian relations, we have a 

historical opportunity and, frankly, we have a lot at stake. It is in 

our interest that Ukraine succeed with its reforms and advance its 

integration into Europe and Euro-Atlantic structures. We are working to put to good effect the $60 million in supplemental funds approved by Congress, as well as the $79 million in our regular 

Ukraine budget. 

Our objective is to help the government pursue its highest priorities in a reform direction. We are directing the bulk of the supplemental funding, I should report, toward programs and activities designed to promote the rule of law, ensure free and fair elections, 

assist the government with economic reforms and support efforts to 

combat HIV/AIDS and tuberculosis. 

In April, Presidents Bush and Yushchenko agreed on a joint 

statement outlining the bilateral agenda for our strategic partnership with Ukraine. The document focuses on concrete areas for cooperation such as promoting democracy and freedom, fighting terrorism, assisting Ukraine with its reforms, supporting Ukraine’s 

NATO aspirations, combating weapons proliferation, crime, trafficking in persons, and the spread of HIV/AIDs and tuberculosis. 

This is a bold and ambitious agenda, Mr. Chairman, but we are 

in close touch with the Ukrainian Government to discuss these and 

many other issues. We have started a United States-Ukraine bilateral coordination group to advance these objectives, which I CoChair, and I am happy to report our current state of progress. 

On NATO, the United States led the Alliance to offer Ukraine intensified dialogue on NATO membership aspirations. The pace, intensity, and instate of Ukraine’s relationship with NATO now depends on Ukraine’s own wishes and its ability to forge a domestic 

consensus for NATO membership, as well as on its willingness to 

meet NATO’s performance-based standards. 

On Iraq and the global war on terrorism, let me underscore the 

deep appreciation that I expressed when I was in Kiev with respect 

to Ukraine’s substantial contribution in Iraq. Ukraine has consulted with us and coalition partners as it has conducted a phased 

withdrawal of its contingent and is committed to continue to help 

Iraq and the Iraqi people in training and reconstruction projects. 

We are grateful also for Ukraine’s support in Afghanistan and significant contributions to peacekeeping around the world. 

On nonproliferation, we have made good progress since the Orange Revolution. We applaud Kiev’s decision to expand our dialogue. 

7

On WTO progress, it has been slow, Mr. Chairman, but, as I 

have noted, earlier this month the Rada passed a number of key 

WTO-related bills that will strengthen intellectual property rights 

(IPR), reduce discriminatory trade measures and lower agricultural 

tariffs and other import duties. Yes, the government must push 

more legislation through the Rada in the fall and, yes, Ukraine 

must implement the legislation it has passed. But following President Yushchenko’s July 26 approval of the Rada’s amendments to 

Ukraine’s optical disk legislation, which will strengthen IPR protection, the Administration is now examining whether to terminate 

trade sanctions imposed earlier because of Ukraine’s weak legal 

framework and record on combating media piracy. A decision on 

this could be taken within the next few weeks. The Administration 

will also conduct a special 301 out-of-cycle review of Ukraine’s status as a priority foreign country and consider whether to restore 

Ukraine’s GSP benefits. 

On Jackson-Vanik, I agree that Ukraine has complied with the 

provisions of the Jackson-Vanik Amendment for over a decade. The 

Administration strongly supports Ukraine’s immediate graduation 

from Jackson-Vanik. 

In my meetings in Kiev, I conveyed a simple message to my 

Ukrainian interlocutors. The first is that Ukraine has a window of 

opportunity to consolidate its reforms to ensure a democratic prosperous future for Ukraine within a Europe whole, free and at 

peace. My second message is that it is up to Ukraine’s leaders and 

the Ukrainian people to make the necessary decision and take the 

necessary steps to realize this vision. We will help, but the heavy 

lifting is theirs. Ukraine’s transformation will not happen overnight. It is difficult. 

The obstacles are real, but they have one great advantage. They 

do know now that post-Communist transformation is possible. It 

has succeeded in other parts of Europe. If it has succeeded in Poland and is succeeding in Romania, then it can succeed also in 

Ukraine. With this vision, with leadership from President 

Yushchenko and his government, they can succeed. The United 

States stands ready to help. 

Thank you again, Mr. Chairman, for this opportunity, and I 

would be happy to answer any questions you might have. 

[The prepared statement of Mr. Fried follows:]

PREPARED STATEMENT OF THE HONORABLE DANIEL FRIED, ASSISTANT SECRETARY, BUREAU OF EUROPEAN AND EURASIAN AFFAIRS, UNITED STATES DEPARTMENT OF

STATE

Mr. Chairman, Members of the Committee, I am pleased to be here today to discuss with you current developments in Ukraine. 

As requested, I shall provide our assessment of the situation in Ukraine seven 

months after the historic Orange Revolution. I will also discuss our bilateral agenda 

with Ukraine, as laid out in the Joint Statement of Presidents Bush and 

Yushchenko in April of this year, and our views on the way ahead in U.S.-Ukrainian 

relations. I would also like to share some impressions from my recent visit to Kiev, 

my first to Ukraine as Assistant Secretary for European and Eurasian Affairs. 

The Orange Revolution and U.S. Policy 

At a pivotal moment in their nation’s history, the Ukrainian people rejected a stolen election and chose freedom, democracy, and the rule of law over corruption and 

intimidation. In the weeks following the fraudulent November 21 second-round presidential vote, hundreds of thousands of ordinary Ukrainians braved snow, frigid 

temperatures, and a real threat of violence in order to peacefully take back control 

8

of their country’s destiny and freely choose their leadership. Their courage and conviction captured the imagination of the world. We were, I submit, witnesses to a 

Ukrainian national identity taking shape through and thanks to a democratic transformation. 

The consolidation of such a democratic transformation in Ukraine would have a 

profound and beneficial impact on its region. A democratic, free, and prosperous 

Ukraine would encourage reformers in neighboring countries, and in nations to its 

east. Our stake in this effort is high. The United States does not seek any sort of 

geopolitical advantage in Ukraine. Nor do we need to. As we learned beginning in 

1989, the advance of American interests in what used to be known as the Soviet 

Union and Soviet Bloc is inextricably linked to the success of common values. 

I am therefore proud of the role the U.S. and our European allies played in support of the Ukrainian people at this historic moment. Well before the election, we 

made clear to then-President Kuchma that we took him at his word when he said 

he would not run for a third term. The U.S. government never favored a specific 

candidate, and pledged to work with whoever won a free and fair election. Our objective was to seek to bring about conditions so that Ukrainians had an opportunity 

to choose their next leader without coercion or manipulation. To that end, we helped 

train and field domestic and international observers; educated judges on Ukraine’s 

new election law; funded exit polls, media monitors, and parallel vote counts; and 

stressed that we viewed the conduct of the election as a test of Ukraine’s commitment to democracy. U.S. assistance was fully transparent and focused on improving 

the integrity of the election process so that Ukrainians could better determine their 

own future. I am proud of our efforts. 

We also warned that, should the election be judged less than free and fair by 

international standards, there would be consequences for our relationship, for 

Ukraine’s hopes for Euro-Atlantic integration, and for the individuals responsible for 

perpetrating violations. In fact, even before election day, several individuals clearly 

implicated in corrupt electoral manipulation did face consequences, for example, 

being told they would be unable to obtain a visa to travel to or conduct business 

in the United States. Such actions stained the reputations of key actors and served 

as a deterrent for others. 

After credible reports of widespread violations and fraud, we made it known that 

we did not recognize the legitimacy of the November 21 results. We stressed that 

we expected the will of the Ukrainian people to be upheld, and that the use of force 

against peaceful demonstrators was unacceptable. In this effort, we worked closely 

with Europe, especially the European Union. I believe that our efforts, combined 

with those of European leaders—and particularly those of Presidents Kwasniewski 

and Adamkus, EU High Representative Solana and OSCE Secretary General 

Kubis—contributed to the peaceful and just outcome to the crisis. But we must remember who the true heroes were: ordinary Ukrainians, who did extraordinary 

things. 

A Difficult Environment 

The Ukrainian people’s heroic choice of freedom was a giant leap forward in 

Ukraine’s journey toward democracy and prosperity. It has ushered in the prospect 

of a profound change in Ukraine comparable to 1989 in Central Europe. But now 

the poetry of the Orange Revolution needs to be translated into the prose of programs to transform the Ukrainian polity, economy and society and prepare Ukraine 

to become a full-fledged member of the Euro-Atlantic community. 

President Yushchenko and his government have set out a broad and ambitious 

agenda for transforming Ukraine into a modern European state. It is, I believe, the 

right direction. But Ukraine’s new leaders are undertaking reforms in a complex 

and difficult political environment:

• First, the Orange Revolution lifted expectations extraordinarily high, both at 

home and among Ukraine’s friends abroad. Meeting these expectations will 

require focus, hard work, consensus-building, and sustained implementation 

of reforms.

• Second, opposition to reforms remains strong. President Yushchenko’s anticorruption campaign threatens powerful interests, and the presidential election exacerbated regional tensions and, as a result of desperate campaign tactics, spurred concerns about separatism. Some of these concerns seem to have 

receded, however, as polls show substantially greater confidence in President 

Yushchenko and his government emerging in eastern and southern Ukraine. 

The mainstream opposition leaders also deserve credit for putting the separatist card back in the deck.

9

• Third, the new government is operating against the backdrop of the upcoming 

parliamentary elections in March 2006. The President and government recognize the importance of obtaining a working majority in the parliament (Rada) 

to implement their vision for Ukraine. Nevertheless, the government must be 

careful as it considers measures that may in the short term gain favor with 

voters but in the longer term threaten Ukrainian leaders’ ability to reform 

and liberalize the economy and secure key priorities such as joining the WTO, 

attracting foreign investment, and achieving Market Economy Status.

• Fourth, the government is a coalition with ministers and others drawn from 

different parties with different philosophies and interests. There are also competing personal agendas. Democracy is messy, and unity is not the highest 

political value. But the new team must function as it faces hard decisions. 

Discord between coalition members has sometimes spilled out into the open, 

complicating decision-making.

• Finally, Russia still looms large in Ukrainian calculations. Ukraine’s leaders 

know they must work hard to forge good relations with their eastern neighbor, while seeking closer integration with the West. At the same time, Russia 

needs to work hard to maintain a positive relationship with Kiev. Good, 

strong Ukrainian-Russian relations, and a successful, democratic and fully 

sovereign Ukraine able to make its own choices about its future, are in everyone’s interest. 

Impressive Successes 

Despite this complex environment, President Yushchenko and his team have 

achieved significant successes in their first six months in office. On the domestic 

front, they have transformed the political scene. Respect for the rights of citizens 

has improved dramatically. The opposition has freedom of assembly, as witnessed 

by frequent and peaceful marches and demonstrations. The media operates more 

freely in contrast to the previous regime, when intimidation, pro-government ownership, favoritism in granting broadcast rights and frequencies, and government press 

guidance—the notorious ‘‘temnyky’’—were the order of the day. However, self-censorship and concentrated ownership of the media are still a concern. The courts appear to be more independent, following the example of the Supreme Court’s December 3 ruling that the second-round vote was flawed and that the run-off should be 

repeated. And, while far from perfect, the government does appear to be more transparent and open about its business. The press regularly reports on vigorous intragovernmental policy debates. In short, President Yushchenko and his government 

are forging a genuine democracy. 

President Yushchenko and his team have also moved to combat endemic corruption by removing and sometimes prosecuting officials who abused their positions to 

enrich themselves, and by closing loopholes in legislation that allowed for graft. The 

anti-corruption campaign has already resulted in increased revenues from the Customs and Tax Services. Nevertheless, it is important that President Yushchenko ensures the honesty of his own government, and that its members not succumb to the 

temptations of corruption. Prosecutions are vital in deterring officials from engaging 

in corruption, but the authorities must avoid perceptions of political retribution and 

not be overzealous nor pursue unjustified cases against those associated with the 

previous government. The government should also continue to investigate such 

cases as the 2000 murder of the journalist Heorhiy Gongadze. The government has 

shown a new commitment to fighting trafficking in persons. It created a new department in the Ministry of Interior dedicated to fighting this scourge and has scored 

some victories on this front. 

Delivering on its promise to increase the force of the market in the Ukrainian 

economy, the Yushchenko government has ended years of tax privileges for the powerful business oligarchies. After fierce debate, the Rada passed significant legislation related to WTO accession, lowering agricultural tariffs, reducing discriminatory 

trade measures, and strengthening protection of intellectual property rights. 

Some of the new administration’s most impressive successes have been in the foreign policy realm. President Yushchenko has dramatically transformed Ukraine’s 

international image and put relations with the U.S. and Europe on a new track. In 

his foreign visits, he has exercised Ukraine’s sovereignty, orienting itself toward Europe, putting its own interests first and foremost. He has committed Ukraine to supporting democracy and human rights both in the region and further abroad, as witnessed by Ukraine’s votes for the UNCHR resolutions on Cuba and Belarus. These 

votes were not easy—Belarus is a neighbor, and Cuba has provided humanitarian 

assistance to child victims of the Chornobyl tragedy—and the Ukrainian government deserves credit for doing the right thing and adhering to its democratic principles. We are proud to have a new partner in the advance of freedom in this region. 

10

President Yushchenko’s energetic engagement of European leaders has already 

borne fruit, helping to produce an offer of Intensified Dialogue on Ukraine’s NATO 

Membership Aspirations in April. In February, President Yushchenko also signed a 

three-year cooperation plan with the EU. This agreement aims to build capacities 

for a wide range of reforms needed to bring Ukraine closer to European standards. 

Ukraine has also demonstrated real leadership in the region. President 

Yushchenko has energized the GUAM (Georgia, Ukraine, Azerbaijan, and Moldova) 

group, focusing it on promoting democracy, economic development, and security in 

the region, while developing its links to countries in Central and Eastern Europe 

that offer successful track records of reform. He has injected new energy into confronting thorny regional problems, and has initiated a proposal to find a solution 

to the frozen conflict in Transnistria. 

As I mentioned previously, Russia represents a particular challenge for the new 

Ukrainian government, but also opportunities. The Kremlin openly supported President Yushchenko’s electoral rival, and has questions about the implications of 

Ukraine’s new Euro-Atlantic orientation. I believe that President Yushchenko has 

done a good job of rebuilding ties and moving forward. The new Ukrainian administration understands that Ukraine and Russia are united by historical, cultural, language and economic bonds, and that good relations are essential. Of course, establishing strong relations is a two-way street. President Yushchenko has declared 

Ukraine and Russia to be ‘‘eternal strategic partners,’’ and traveled to Moscow on 

his first foreign trip immediately after his inauguration. President Putin, in turn, 

visited Kiev in March, and the two presidents pledged to build stronger ties and 

maintain an open dialogue. 

Some Concerns 

We are greatly encouraged by the successes of the new government. But we are 

also concerned that, in the economic sphere, some essential free-market reforms 

have stalled. The new leadership may not have used the political capital it earned 

from the Orange Revolution as decisively as it could have to move Ukraine unequivocally toward a prosperous market economy integrated into the global economy. Specially, we are concerned by interventionist and inflationary policies that 

the Ukrainian government is pursuing, as well as by continued uncertainty over reprivatization. For example:

• Price controls on gasoline earlier in the year briefly produced shortages. 

President Yushchenko rescinded the measures, but the issue raised questions 

about the government’s commitment to market principles. Continued protection of the agriculture sector, while not unique to Ukraine, also runs contrary 

to the steps Ukraine needs to undertake in order to join the WTO.

• The Yushchenko government has expanded on the commitments the previous 

government had made to increase pensions and public sector pay. Elimination 

of tax privileges and the government’s anti-corruption campaign have dramatically increased state income, but the higher social spending, while understandable, has fueled inflationary pressures. Most observers predict a 2005 

budget deficit of over three percent of GDP.

• We understand the arguments for re-privatization: under the previous regime, insiders used non-transparent means to grab major state enterprises at 

bargain-basement prices. But mixed signals about the extent of re-privatization have dampened both domestic and foreign investment. We welcome current Ukrainian efforts to establish clarity on the way ahead on this issue.

• While the tax and tariff privileges in the Special Economic Zones were largely 

used fraudulently, their abrupt elimination has caused problems for some foreign investors. We encourage predictability in economic policies affecting businesses, and are pleased to hear that President Yushchenko endorses this 

principle and is considering restoring some privileges to law-abiding businesses. Improving the climate for legitimate domestic and foreign investors is 

critical to Ukraine’s economic future.

• Ukraine aims to diversify its energy supplies, reduce its energy dependence 

and bolster competition in the Eurasian energy sector. However, a vertically 

integrated, state-owned system of oil production, distribution, and sales—as 

some in the Ukrainian government advocate—will not improve the functioning of the market or address Ukraine’s energy problems. We believe that 

Ukraine should instead focus on creating strong incentives and a stable environment for the private sector. What Ukraine needs are competition, transparency, and private investment in its energy sector.

11

Some of these interventionist policies may seem attractive to the Ukrainian government as it seeks to strengthen its popular support in advance of the 2006 parliamentary elections. But we are urging the Ukrainian government to consider the 

consequences of adopting measures that may be popular in the short term but that, 

if continued and unaccompanied by strong pro-growth policies, would fuel inflation, 

reduce macroeconomic stability, and undermine sustainable growth. Such a set of 

policies would jeopardize key Ukrainian objectives, such as joining the WTO, attracting foreign investment, and obtaining Market Economy Status. In the long 

term, the tested free market reforms, including the proper regulatory functions of 

a modern state in a free market that we have witnessed elsewhere, are what will 

boost the Ukrainian people’s prosperity, not short-term populist policies. 

I detect from my recent visit to Kiev that senior Ukrainian officials recognize that 

they have had a rough initial period on economic policy, and are committed to getting reforms on track. In fact, in many of the areas I have cited, we have seen questionable decisions followed by a course correction. As the Ukrainian government 

gains its footing, we hope it will move forward decisively to implement the economic 

reforms so vital to achieving their vision of Ukraine. 

In fact, the approach of key markers, such as WTO Hong Kong Ministerial in December does seem to be focusing minds. The Ukrainian government had been slow 

in making progress to pass important WTO-related legislation. The absence of 

amendments strengthening the law against media piracy, as well as continued high 

tariffs and arbitrary sanitary regulations on poultry and agriculture products had 

been an impediment in our own bilateral accession negotiations. 

I am therefore pleased to report that the parliament’s recent passage of the Optical Disk amendments, as well as other WTO-related laws, constitutes a major step 

forward. It encourages us to hope that the parliament will adopt and the government will implement the remaining WTO legislation, including revised sanitary and 

phytosanitary (SPS) rules, technical standards, bank branching authority, and revisions to the foreign economic activity law. It is important that all WTO-related bills 

be submitted for review by the WTO members considering Ukraine’s accession, to 

ensure consistency with WTO standards. We look forward to Ukraine doing so in 

the case of most of the recent laws. 

U.S.-Ukraine Relations: A New Century Agenda 

Since 1991, successive U.S. administrations have pursued steady objectives in relations with Ukraine: we seek to help Ukraine develop as a secure, independent, 

democratic, prosperous country with an economy based on free-market principles, 

one that respects and promotes human rights and abides by the rule of law, and 

draws closer to European and Euro-Atlantic institutions. During the latter half of 

the 1990s and the first years of the new century, however, U.S.-Ukrainian relations 

were in a holding pattern. The United States never forgot the strategic importance 

of Ukraine or lost faith in the Ukrainian people. But the scandals and corruption 

that came to characterize the previous regime presented serious obstacles to developing the kind of relationship we desired. 

I am happy to say that the Orange Revolution has put us on a new trajectory, 

one characterized by open dialogue and closer cooperation. The interaction among 

senior U.S. and Ukrainian officials in 2005 has already intensified dramatically 

compared to 2003 and 2004. 

We now have an historic opportunity to help Ukraine succeed with its reforms 

and advance its integration into Europe and Euro-Atlantic structures. Last November, President Bush said that we stood by the Ukrainian people in their hour of 

need. We did then, and we do today. Congress adopted the full $60 million in supplemental assistance for Ukraine that the Administration requested. This amount 

is in addition to the $79 million in assistance that we have already budgeted for 

Ukraine for fiscal year 2005 from FREEDOM Support Act funds. 

We are working to ensure that the supplemental funds approved by Congress will 

help the new government pursue its highest and most immediate priorities. One 

focus will be on assistance to eastern and southern regions in Ukraine, where suspicion of reforms is strongest. We are directing the bulk of the funding toward programs and activities designed to:

• Combat corruption and promote judicial independence and the rule of law;

• Strengthen election administration and NGO capacities, and train independent observers in order to ensure free and fair parliamentary and local 

elections in March 2006;

• Support media openness through partnership programs and grants;

• Increase exchange programs and intensify outreach to eastern and southern 

Ukraine;

12

• Assist the Ukrainian government with WTO accession and with fiscal management issues, as well as with municipal government and agricultural sector 

reforms;

• Help Ukraine reduce its energy dependence, including through completion of 

the multi-year Nuclear Fuel Qualification Project;

• Support Ukraine’s efforts to confront serious health issues such as the spread 

of HIV/AIDS and tuberculosis;

• Support coal mine safety in eastern Ukraine to generate small business development; and

• Facilitate the donation of millions of dollars of goods and supplies to needy 

Ukrainians.

President Yushchenko’s visit to the U.S. in April represented a dramatic and positive shift in the relationship, and exemplified the new opportunities created by the 

Orange Revolution. In Washington, Yushchenko met with President Bush, Secretary 

Rice, Secretary Rumsfeld and other Cabinet officials, as well as with members of 

Congress and the Ukrainian-American community. I will not soon forget President 

Yushchenko’s powerful and effective speech, and your warm welcome, at the historic 

joint session of Congress. 

Presidents Bush and Yushchenko also agreed on a joint statement in Washington 

outlining the New Century Agenda for the American-Ukrainian Strategic Partnership. The document, which I encourage you to read as a significant blueprint for 

our new relationship, focuses on concrete areas for our cooperation. Let me mention 

a few.

— The United States and Ukraine pledge to work together to strengthen democratic institutions in Ukraine and to advance freedom in Europe, its neighborhood and beyond. We will work to defeat terrorism wherever it occurs 

and to advance economic development, democratic reforms and peaceful settlement of regional disputes. We will also work together to back reform, democracy, tolerance and respect for all communities, and peaceful resolution 

of conflicts in Georgia and Moldova, and to support the advance of freedom 

in countries such as Belarus and Cuba.

— In the area of economic policy, the United States and Ukraine will continue 

close cooperation on the issues that are vital to Ukraine’s growth and prosperity. The Ukrainian government will seek U.S. recognition as a market 

economy. We are committed to working together to achieve Ukraine’s accession to the World Trade Organization (WTO) and to moving as rapidly as 

possible to lift the provisions of the Jackson-Vanik amendment. We have initiated an energy dialogue to advance Ukraine’s plans to restructure and reform its energy sector to encourage investment, diversify and deepen its energy supplies, bolster commercial competition, and promote nuclear safety.

— In terms of international relations, the United States pledges to support 

Ukraine’s NATO aspirations and to help Ukraine achieve its goals by providing assistance with challenging reforms. Our support, however, cannot 

substitute for the important work that the Ukrainian government itself must 

undertake.

— The fight against the proliferation of weapons of mass destruction and their 

means of delivery is one of the most important issues facing the international community today. The United States and Ukraine will deepen our 

cooperation on nonproliferation, export controls, border security and law enforcement. We hope to deter, detect, interdict, investigate and prosecute illicit trafficking of these weapons and related materials. We also hope to enhance the security of nuclear and radiological sources and responsibly dispose of spent nuclear fuel.

— The security and stability of nations increasingly depends on the health, 

well-being and prosperity of their citizens. The United States and Ukraine 

therefore have committed to cooperate on a broad agenda of social and humanitarian issues, including halting the spread of HIV/AIDS and TB; fighting the scourge of organized crime, trafficking in persons and child pornography; and completing the Chornobyl Shelter Implementation Plan. We also 

support a bold expansion of contact between our societies. To this end, the 

United States and Ukraine will work to lower the barriers that separate our 

societies and to enhance citizen exchanges, educational training opportunities and cooperation between business communities of both countries. 

13

A New Century Agenda: Progress To Date 

This is a bold and ambitious agenda for the United States and Ukraine. Some of 

the tasks it lays out are longer-term; others can be completed fairly quickly. We are 

in close touch with the Ukrainian government to discuss these and many other 

issues. Ambassador Herbst meets with high-level Ukrainian officials almost daily. 

Secretary Rice and other high-level officials from the State Department and other 

U.S. agencies consult with their Ukrainian counterparts frequently. Members of 

Congress travel to Ukraine on a regular basis. At any particular time we are in the 

process of making preparations for two or three delegations. 

Among the most significant mechanisms for maintaining close contact is a new 

U.S.-Ukraine Bilateral Coordination Group. This group, which I co-chair, is composed of senior U.S. and Ukrainian officials from a number of different agencies and 

complements the work being done through our embassies and high-level visits. The 

group is responsible for overseeing progress on implementation of the New Century 

Agenda. 

Our first session was just a few weeks ago in Kiev, and I am happy to report on 

progress to date on some of the priorities identified by Presidents Bush and 

Yushchenko. Our operational principle is simple: as Ukraine moves ahead in its reforms so will our relations and our response. This process is now underway:

— NATO: The U.S. supports Ukraine’s desire to draw closer to NATO. The 

pace, intensity, and end state of Ukraine’s relationship with NATO will depend on Ukraine’s own wishes, and on its willingness and ability to meet 

NATO performance-based standards through progress on reforms. For our 

part, we are committed to ensure that NATO’s door remains open. We 

proudly led Allies to offer Ukraine an Intensified Dialogue on NATO Membership Aspirations at the April meeting of NATO foreign ministers in 

Vilnius, Lithuania. Intensified Dialogue provides a platform for Ukraine to 

work closely with NATO to prepare for the Membership Action Plan (MAP) 

program, the formal path to NATO membership. There is still much work 

to be done. The key is now for the Ukrainian government to complete the 

political, economic, defense, and security reforms required for membership 

consideration, and to build domestic support in Ukraine. A free and fair parliamentary election conforming to international standards in March 2006 

will be an important marker. We look forward to working with Ukraine and 

our Allies as we take the NATO-Ukraine relationship to a new and more collaborative level.

— NATO PfP Trust Fund: Also at NATO, the U.S. announced that it would 

lead the first stage of a Partnership for Peace Trust Fund project to destroy 

obsolete and excess munitions, weapons, and MANPADS in Ukraine. 

Ukraine has enormous weapons stockpiles and ammunition dumps on its 

territory that present public safety, environmental and proliferation risks. 

There have already been explosions and fires at a number of these facilities 

as the result of accidents and unstable munitions. Given the size of the problem, the NATO PfP destruction program is fittingly the largest project of its 

kind ever undertaken anywhere. It will take about a dozen years to complete. As lead nation in the program, the U.S. is responsible for soliciting 

donations to the trust fund from other Allies. To date, the U.S. leads all donors with an initial contribution of $2.14 million. Destruction activities 

should begin in the next few weeks.

— Iraq and the Global War on Terrorism: The U.S. deeply appreciates 

Ukraine’s substantial military contribution toward building a peaceful, secure, and democratic Iraq. In keeping with his campaign promise to the 

Ukrainian people, President Yushchenko is conducting a phased withdrawal 

of the Ukrainian contingent in MNF–I throughout 2005, which will see the 

remaining troops return to Ukraine by the end of the year. Ukraine has consulted closely with us and with other coalition partners at every step. 

Ukraine, however, has made it clear that it will remain committed to helping Iraq. Ukraine will retain trainers and some staff officers in Iraq after 

the primary contingent departs, and has indicated its willingness to participate in reconstruction projects in a number of different economic sectors. 

Ukraine has also expressed interest in contributing to NATO’s Training Mission in Iraq, and we are encouraging their participation in that effort.

— We also are very grateful for Ukraine’s support for Operation Enduring 

Freedom in Afghanistan. Ukraine has provided thousands of over-flight 

clearances, as well as military supplies to the Afghan National Army. 

Ukraine also has continued to play an active and constructive role in peaceVerDate Mar 21 2002 10:47 Nov 04, 2005 Jkt 000000 PO 00000 Frm 00017 Fmt 6633 Sfmt 6621 F:\WORK\EET\072705\22653.000 HINTREL1 PsN: SHIRL
14

keeping operations around the world, such as its 320-person contingent in 

Kosovo. Ukraine has also contributed troops and considerable resources to 

peacekeeping operations in Lebanon, Sierra Leone, Liberia, the Golan 

Heights, and Burundi. In short, Ukraine has been a key partner and contributor to common security and the global fight against terrorism. In recognition of this cooperation, we are including Ukraine in the Coalition Solidarity 

Fund and will continue to provide monies to assist with peace-keeping operations and other activities, such as for military inter-operability with NATO 

and for equipment and training.

— Non-Proliferation: We have made good progress with Ukraine on our nonproliferation agenda since the Orange Revolution building on a new political 

will from the Ukrainian leadership. We applaud Kiev’s decision to expand 

our dialogue on these issues, and we are pleased to note a new openness in 

our discussions. Since March, Ukraine has signed the Second Line of Defense agreement to install radiological portal monitors at border locations; 

signed an Implementing Agreement to improve the security of radiological 

sources at the RADON sites in Ukraine; added certain chemical precursors 

to its control lists and consequently was admitted into the Australia Group; 

and agreed to destroy its last five strategic bombers and associated missiles 

under an existing DOD CTR project. We are working closely with the 

Ukrainians on these issues as well as on concluding a Biological Threat Reduction Implementation Agreement (BTRIA) and on the disposal of highly 

enriched uranium from sites in Ukraine. Ukraine is becoming a key partner 

in preventing illegal arms exports.

— WTO: The Ukrainian government has identified accession to the WTO this 

year as a major priority, and we strongly support Ukraine’s bid. We have 

provided technical advice to the government and are consulting regularly in 

the informal working party meetings in Geneva. The Ukrainian government 

has struggled to push needed WTO-compatible legislation through parliament, but as I mentioned earlier—after a concerted effort by President 

Yushchenko, Prime Minister Tymoshenko, and Rada Speaker Lytvyn—on 

July 6–7 the Rada passed a number of important WTO-related bills. These 

included a set of amendments to Ukraine’s Optical Disk legislation, which 

will strengthen Ukraine’s protection of intellectual property rights, and bills 

on agricultural tariffs, insurance branching, auditing, automobiles, and oilseed export duties. But much remains to be done. If the government hopes 

to achieve its objective of joining the WTO this year, it must launch an all 

out effort to consolidate support and pass more legislation in the Rada this 

fall, and bring to closure the outstanding bilateral negotiations. But 

Ukraine’s WTO prospects do appear to be brighter today than a month ago.

— With regard to the U.S.-Ukrainian agenda, passage of the Optical Disk 

amendments was particularly significant. The Administration expects to see 

quick and effective implementation of these amendments and strengthening 

of the enforcement of all IPR laws. Now that President Yushchenko has 

signed the amendments, without changes, into law, the Administration is examining whether to terminate $75 million worth of trade sanctions currently 

imposed on Ukraine. This decision could be made within the next few weeks. 

In addition, the Administration will conduct a Special 301 out-of-cycle review 

of Ukraine, which is currently identified as a Priority Foreign Country because of a record of media piracy and weak enforcement of IPR legislation. 

We will also consider whether Ukraine’s Generalized System of Preferences 

(GSP) benefits should be restored. We will continue to work with Ukraine 

on IPR issues in the context of the out-of-cycle review and our bilateral negotiations regarding Ukraine’s WTO accession. With regard to the latter, 

Ukraine must address additional tariff, non-tariff, and services issues in its 

bilateral negotiations with us.

— Market Economy Status: In April, the Department of Commerce initiated a 

review of the Ukrainian government’s petition for designation of Market 

Economy Status (MES). The review is a quasi-judicial process and must be 

completed by mid-January 2006. Department of Commerce officials have met 

several times with Ukrainian officials to discuss Ukraine’s petition, and 

Commerce teams visited Kiev in March and again this month to go over the 

review process. For example, we have urged the government of Ukraine to 

reach out to foreign investors and address some of the concerns of the business community. We need to see the Ukrainian government taking decisions 

this fall which demonstrate its increasing commitment to free-market principles.

15

— Jackson-Vanik: Ukraine has complied with the provisions of the JacksonVanik Amendment to the Trade Act of 1974 for over a decade. This Administration strongly supports Ukraine’s immediate ‘‘graduation’’ from JacksonVanik and the extension of Permanent Normal Trade Relations to Ukraine. 

Some have resisted acting on Jackson-Vanik until Ukraine better addresses 

commercial issues, such as IPR. We view our WTO bilateral negotiations as 

the appropriate forum in which to press Ukraine on our commercial and 

trade concerns rather than using Jackson-Vanik. Nonetheless Ukraine’s recent approval of Optical Disk amendments and other WTO-related legislation should merit reconsideration of the delay on graduation. As the Ukrainian people look for tangible signs of our new relationship, they are perplexed 

that Ukraine remains tainted by the legacy of Jackson-Vanik. We urge Congressional action on this matter.

— Energy: During his May visit to Kiev, Secretary Bodman initiated a consultative mechanism to help advance Ukraine’s plans to restructure and reform 

its energy sector, diversify its energy supplies, and encourage investment. 

We have urged the Ukrainians to address the commercial viability of any 

energy strategy. U.S. firms are eager to invest in Ukraine, and it is vital 

that the government of Ukraine work with the private sector and create a 

transparent and supportive framework for investment.

— Chornobyl: The Chornobyl Shelter Implementation Plan (SIP) is a key element of the successful G7 effort that led to the permanent closure of the last 

operating nuclear reactor at Chornobyl in 2000. Together, the international 

donor community and Ukraine have pledged over $1 billion to complete the 

SIP. The U.S. is the largest single donor. Our May 2005 pledge of $45 million brings our cumulative total to $203 million.

— Visas: We warmly welcome President Yushchenko’s July 1 decree eliminating visa requirements for U.S. citizens traveling to Ukraine for business 

and personal trips of 90 days or less within a six-month period. President 

Yushchenko’s far-sighted move, which complements an earlier similar decision to eliminate short-term visa requirements for citizens of EU countries 

and Switzerland, should boost tourism and investment, and facilitate peopleto-people contacts. In response, we have eliminated non-immigrant visa 

issuance fees for Ukrainians, leaving only the ($100) non-waivable application fee that is charged worldwide to all applicants for short-term U.S. visas.

— Health: HIV/AIDS is spreading in Ukraine at an alarming pace. As I mentioned previously, we intend to use some of the supplemental funding granted to us by Congress to expand the reach of ongoing anti-HIV/AIDS projects. 

We intend to help the Ukrainian authorities strengthen national institutions 

dealing with HIV/AIDS and its victims, expand care and support service for 

HIV-affected children from two to five of the eight most affected regions in 

Ukraine, and support legislation and policies for a national anti-retroviral 

treatment program and national prevention programs among key risk 

groups. Ukraine’s current system for TB control is costly and ineffective. We 

plan to use some of the supplemental funding for prevention and care for 

HIV/TB co-infection, and to replicate a successful pilot project that dramatically decreases the cost and improves the effectiveness of TB treatment. 

Conclusion 

Earlier this month I led an inter-agency team to Kiev to meet with President 

Yushchenko, Prime Minister Tymoshenko, State Secretary Zinchenko, National Security and Defense Council director Poroshenko, Speaker Lytvyn, Foreign Ministry 

representatives, and others. I conveyed a simple message to all of my Ukrainian 

interlocutors. Ukraine has an historic window of opportunity—created by the heroism and determination of the hundreds of thousands of ordinary citizens who came 

together in the Maidan in Kiev and in the central squares of cities throughout 

Ukraine—to consolidate and make permanent reforms that will ensure a democratic, prosperous future within a Europe whole, free and at peace. The U.S. supports Ukraine’s reform efforts and European and Euro-Atlantic aspirations and will 

respond meaningfully to key initiatives. But, like other reforming nations such as 

Poland before it, Ukraine and its leaders must make the necessary decisions and 

take the necessary steps. Ukraine’s future is in its hands. 

As I said at the outset, there are enormous expectations of the new government, 

and, given the complex and difficult environment and the enormity of the task at 

hand, Ukraine’s transformation will not happen overnight. But it is vital that 

Ukraine’s new leaders persevere and succeed. The stakes are clear for Ukraine, and 

the success of the Orange Revolution will have impacts beyond Ukraine’s borders. 

16

It inspires hope in the hearts of the oppressed and signals that democratic freedom 

is on the ascendance. 

To succeed, Ukraine’s leaders must invest their substantial political capital in further reforms, particularly in the economic sphere where progress has been slow. 

There is never an easy time for difficult, but necessary reform: there is always an 

election on the horizon, a bureaucracy that resists, a constituency that opposes. But 

if the will is there, reform can be achieved. The Central European states have come 

a long way since 1989, and I personally witnessed the success of Poland’s reforms 

in the 1990s. From my meetings in Kiev, I am confident that President Yushchenko 

and his team have the vision and commitment necessary to do what needs to be 

done, and to lead Ukraine into the new century. The U.S. will pitch in to help. 

Thank you very much for allowing me to appear before your Committee today. I 

would be happy to answer any questions you may have.

Mr. GALLEGLY. Thank you very much, Ambassador. What can we 

do in the United States to encourage Russia to deal fairly and 

even-handedly with Ukraine’s new government? 

Mr. FRIED. We can, and we are, in close contact with the Russians. We have explained to them repeatedly what our intentions 

are with respect to Ukraine. We have explained that to them, and 

I am speaking not only for myself, but others including at the highest levels. We have expressed the view that it is certainly, it seems 

to us, a good thing for everyone, including Russia, if Ukraine is a 

secure, prospering democracy. 

We have told the Russians that we do not see Ukraine’s future 

in zero sum terms. Ukraine, which is integrating with Europe, is 

not a Ukraine which is going to have bad relations with Russia. 

Any successful Ukraine will want to have close relations with Russia, but these relations should be based on respect for Ukraine’s 

sovereignty, on market economic principles and hopefully based on 

a Russia which is itself moving into closer integration with the 

world. 

We have made very clear our intention to consult with Russia as 

we proceed, but we have also made clear that our relations with 

Ukraine are not a function of our relations with Russia. We have 

our own relations with Ukraine and will continue to. 

Mr. GALLEGLY. What is the official United States policy position 

regarding Ukraine’s potential membership in NATO? 

Mr. FRIED. I have been a champion of NATO membership for 15 

years, Mr. Chairman. NATO’s doors remain open in general. They 

remain open to Ukraine in particular. It is up to Ukraine first to 

decide as a nation whether it wants to join the Alliance, and at the 

moment it is not clear to me that there is a national consensus yet. 

Secondly, it is up to Ukraine to meet NATO’s standards. The 

NATO enlargement has been a success, and we look forward to 

working with Ukraine as it deepens its relationship with NATO. 

Mr. GALLEGLY. What does Ukraine have to do to improve its 

chances other than make the ultimate decision of having a consensus? 

Mr. FRIED. Well, what we look for, quite honestly, is first whether they really want this as a nation; whether there is a consensus 

throughout society. Apart from that, we look for Ukrainian democracy to be consolidated and Ukraine’s market economic reforms to 

deepen. We look for Ukraine to continue as it is doing to NATO’s 

purposes and be able to work with NATO. We look to Ukraine’s 

military reforms. You noticed I mentioned military reforms last because we look to NATO as more than an alliance of militaries. It 

17

is ultimately an alliance of values. It is a performance-based alliance. We are looking for Ukraine to deepen its reforms, and as it 

does, its chances of membership in NATO will grow. 

Mr. GALLEGLY. I have to just say what a historic day that would 

be to see that come to pass. 

I had the opportunity when President Yushchenko was here to 

visit with him personally. I was excited and encouraged and look 

forward to the future. That is just my own personal observation. 

Rob? 

Mr. WEXLER. Thanks. With respect to Jackson-Vanik, I think you 

said it in the most unequivocal of terms that the Administration 

supports the lifting of Jackson-Vanik as it applies to Ukraine. 

Mr. FRIED. Yes, sir. 

Mr. WEXLER. I do not want to mischaracterize anybody’s words, 

but I believe Chairman Gallegly said he supported lifting JacksonVanik. I believe Chairman Hyde supports lifting Jackson-Vanik. 

Mr. GALLEGLY. No equivocating on my part. 

Mr. WEXLER. No. I applaud that. What do you think is impeding, 

if you have any view, of why we actually have not done it? 

Mr. FRIED. The Administration also has not equivocated. 

Mr. WEXLER. I am not suggesting that they did. 

Mr. FRIED. I know. 

Mr. WEXLER. Right. 

Mr. FRIED. Let me see. You are asking me to comment on the 

Legislative process and the Committee process. 

Mr. WEXLER. You are an expert on everything. 

Mr. FRIED. You are giving me, Congressman, multiple opportunities to make very serious mistakes. 

We think that the time has come to move on this. We believe, 

especially now that Ukraine has shown the willingness to address 

IPR issues, that this is a good moment to proceed. I think it would 

be a very good signal to show to the Ukrainian people, if we were 

to show them, that as they move forward we are moving forward 

in our bilateral relations. So I certainly share your views that the 

time has come, and I stand ready to work with Congress and any 

of its Committees to advance this objective. 

Mr. WEXLER. Is there any concern, if I may, about the timing of 

passing such a thing as it relates to Ukraine, relative to passing 

or not passing the lifting of Jackson-Vanik with respect to Russia? 

Mr. FRIED. The Administration supports graduating Russia from 

Jackson-Vanik. That has been our position since November 2001. 

The two are not linked. We will support movement of Ukraine on 

its own. 

Mr. WEXLER. If I may just change subjects a bit regarding the 

WTO; and I am not familiar with all of the, I think it is, 15 possibly or more than a dozen requirements or stated objectives that 

Ukraine is supposed to satisfy. I sometimes wonder whether, in the 

process of laying out a process for an ally, we lay out a process that 

if in fact the ally fulfilled everything we have asked them to do, 

they would be jeopardizing their own political position and in effect 

the implementation of the WTO or that American suggestions 

would ultimately be counterproductive. 

18

I am curious if there is any aspect of that with respect to what 

we and the WTO are hoping and expecting that Ukraine adopt in 

the next coming months. 

Mr. FRIED. I am not aware of any of the provisions in the WTO 

which we expect Ukraine to meet which would have this impact, 

but your question is an important one because it goes to the heart 

of economic transformation. Almost no post-Communist Government which launched economic reforms since 1989 has been reelected. The governments that started the reforms are thanked for 

it much later, posthumously in a political sense. 

I can forgive Ukraine’s current government for not wanting to 

lose the next elections in March, but we also note that there is not 

any alternative ultimately to free market reforms. There is no third 

way. Governments that have tried that in our 15 years or 16 years 

of post-Communist history have never seen it work out. There is 

really no way but free market reforms. 

Now, that said, there is a way to advance free market reforms 

better or worse with more sensitivity to social concerns or less sensitivity. The Ukrainian Government is trying to find its way. They 

admit that they may have made some missteps in the early stages, 

but I have some sympathy for the predicament they are in. 

With respect to the WTO, I am not aware of any provisions that 

would put them in this kind of jeopardy, nor would the Ukrainians 

come to me and suggest that there are. When I discussed intellectual property rights protection with my Ukrainian interlocutors, 

and I did, I said that they should want to be a nation which produces intellectual property instead of a nation that steals intellectual property, and that those who were betting against IPR protection were betting against their own nation. They were not serving 

their nation’s long-term interests. 

Mr. GALLEGLY. Thanks, Rob. 

Before we go on to the next panel I would like to follow up just 

a little bit on the IP issue. 

Mr. FRIED. Yes, sir. 

Mr. GALLEGLY. It has been an issue that I have worked on in the 

Congress here for 19 years. When I was a tall guy with dark hair 

I started on that issue. 

Could you give me your evaluation of the Administration’s view 

on the recent legislation passed by the Parliament specifically as 

it relates to IP or intellectual property? 

Mr. FRIED. We thought that legislation was good. My understanding is, and I should not speak for them, but my understanding is that view was shared by some of the interested United 

States private groups. 

We need to see it implemented, but we were very encouraged by 

President Yushchenko’s signing of that legislation without changes. 

This was a good win for the government and the Parliament. It is 

good for our bilateral relations, and it is good for Ukraine’s WTO 

process. That is a positive assessment. 

Mr. GALLEGLY. Did you have a followup before we go to the next 

panel? 

Mr. WEXLER. Just quickly. The point you raised is really a fascinating one, that no post-Communist Government that implemented economic reform was re-elected. 

19

Mr. FRIED. That started. 

Mr. WEXLER. That started. 

Mr. FRIED. That started it. 

Mr. WEXLER. That started it. 

Mr. FRIED. Yes. 

Mr. WEXLER. Following my unfairness of the first question to 

you, if you were a political advisor to the Ukrainian Government, 

in terms of advice, how would one in Ukraine implement economic 

reform and at the same time advance relatively positively the political aspect of it? Is it mutually exclusive in Ukraine? 

Mr. FRIED. In the biggest sense, reform is always difficult, but 

there are certain kinds of measures which can help the politics. 

A good business climate to encourage foreign investors and domestic investors is a good thing. What I think the government 

should try to do is immediately launch programs to turn those 

demonstrators in the Maidan and other Ukrainian cities, where 

there are hundreds of thousands of young, intelligent people. Give 

them the opportunity to become entrepreneurs. Let them link up 

with foreign investors. The people they hire and their families will 

start voting for the parties and the politicians who create those opportunities. They should grow their electorate, the progressive, 

modern entrepreneurial electorate. 

Now, that is easy to say, and it is hard to do. Foreign investment 

and good business conditions for domestic investment are ultimately good politics. 

Mr. WEXLER. Thanks. 

Mr. GALLEGLY. We are joined by the distinguished lady from Nevada, Ms. Berkeley. 

As I had mentioned earlier, because the votes are going to start 

at 2 o’clock, to my understanding, and will go for about an hour, 

we are going to have a very short session. I understand you would 

like to ask the witness a quick question before we go to the next 

panel. 

Ms. BERKELEY. If you do not mind. 

Mr. GALLEGLY. Okay. If you would make it as brief as possible 

so we do not usurp the next panel? 

Ms. BERKELEY. All right. Thank you for being here, and I apologize for being late. I had some things in my office that required my 

attention. 

I hope this has not been asked before, but I did want to talk to 

you about some issues that have come up in the Jewish community. Representatives of the American Jewish community have expressed concerns about what they consider to be an extraordinarily 

slow pace at which Jewish community property seized or Jewish 

property seized during the Holocaust in the Soviet period are being 

returned to their rightful owners. 

In June, this group met with the new Ukrainian President, and 

he assured them that this issue would be a priority for him and 

that it would move more rapidly. Can you give me an update on 

what is happening? 

Mr. FRIED. We support the return of religious community property to the religious organizations, including Jewish community 

property. This is important for reasons of justice. I am happy to say 

20

that property has been returned. Some property has been returned, 

including some historic synagogues, but more needs to be done. 

The problem the Ukrainian Government faces is that establishing title can be complicated because title was wiped out between Communism, Nazism, the Holocaust and war destruction, 

and often buildings are occupied by current tenants so moving 

them out is difficult. That said, we encourage the Ukrainian Government to move as rapidly as it can on community property restitution, and we work closely with the Jewish community. 

I have to say as I was leaving the office of the Ukrainian Prime 

Minister, a group from the American Jewish Committee was coming in. I have worked with many of these people for years. They 

are old friends who continue to work together. 

Ms. BERKELEY. Is there anything more that we can be doing in 

Congress to help these efforts or speed them along? 

Mr. FRIED. I think letting the Ukrainian Government know of 

your concern and also letting them know, as you are letting them 

know, that you are friends to Ukraine and supportive of their aspirations to join Europe. These things go together. 

Ms. BERKELEY. Thank you very much. 

Mr. FRIED. Thank you, Madam. 

Mr. GALLEGLY. Thank you very much, Ambassador Fried. I 

apologize for having to cut our testimony short. You are a great resource for us, and I am very grateful you were able to make it 

today. I hope that we will be able to continue to work together. 

This is an incredible issue and a very exciting time for all of us. 

Mr. FRIED. Thank you for the opportunity, Mr. Chairman, and I 

stand ready to help any way I can. 

Mr. GALLEGLY. Thanks, Mr. Ambassador. 

We can call our second panel up. For our second panel this afternoon we are pleased to have three distinguished and knowledgeable witnesses that we expect to provide us with insight into the 

current state of affairs in Ukraine. 

Our first witness is Taras Kuzio. Dr. Kuzio is a Professor at the 

Elliott School of International Affairs at George Washington University. Dr. Kuzio has been published in a wide range of media and 

economic journals on post-Soviet and Ukrainian politics, international relations, and nationalism. In addition, Dr. Kuzio served 

as Head of the NATO Information Office in Kiev and was a longterm Observer for the OSCE (Organization for Security and Co-operation in Europe) during the 1998 to 2002 parliamentary elections 

in Ukraine. 

We are also pleased to have with us Stephen Nix, Regional Program Director for Eurasia at the International Republican Institute 

(IRI). Mr. Nix joined IRI in October 2000, after serving 2 years as 

Senior Democracy Specialist at the United States Agency for International Development. Mr. Nix is a specialist in political party development and judicial and legal reform in the former Soviet 

Union. Previously, he served for 3 years as the outside legal counsel for the Committee on Legal Reform in the Ukrainian Parliament. 

Finally, we have the Honorable Nelson C. Ledsky, Senior Associate and Regional Director for Eurasia at the National Democratic 

Institute. Ambassador Ledsky has managed NDI’s democratic deVerDate Mar 21 2002 10:47 Nov 04, 2005 Jkt 000000 PO 00000 Frm 00024 Fmt 6633 Sfmt 6601 F:\WORK\EET\072705\22653.000 HINTREL1 PsN: SHIRL
21

velopment programs in the former Soviet Union since 1992. Ambassador Ledsky retired from the U.S. Foreign Service in 1992, having 

served as United States Negotiator in Germany and United States 

Special Coordinator for Cyprus from 1989 to 1992, both with a 

rank of Ambassador. Ambassador Ledsky also served in the White 

House from 1987 to 1989 as a Special Assistant to the President 

for National Security Affairs and Senior Director of European and 

Soviet Affairs. 

I welcome you all here today, and we will start with Ambassador 

Ledsky. 

Mr. LEDSKY. Thank you. 

Mr. GALLEGLY. Pardon me. I know that you gentlemen are aware 

of the time situation we have, and one of the most embarrassing 

tasks of being the Chair is to try to make sure we maximize our 

time, so if you could all condense your opening statements, and 

without objection your entire statement will be made a part of the 

record of the hearing. 

Ambassador Ledsky? 

STATEMENT OF THE HONORABLE NELSON C. LEDSKY, SENIOR 

ASSOCIATE AND REGIONAL DIRECTOR, EURASIA, NATIONAL 

DEMOCRATIC INSTITUTE 

Mr. LEDSKY. Thank you very much, Mr. Chairman. I am delighted to be here to add my voice to that of Dan Fried, who is an 

old colleague, an old friend. We worked together in European Affairs for about 10 years in the 1980s and 1990s. 

I would like to add to his remarks by pointing out two or three 

things that I am particularly aware of that are going on in Ukraine 

and that do not necessarily come to the immediate attention of the 

State Department. 

First of all, the National Democratic Institute, along with our colleagues at the International Republican Institute, has been working in Ukraine for the past 13 years. We have had an office in Kiev 

since 1992, and we have been working with political parties since 

that time. Especially for NDI, we have also focused on the civic 

world of Ukraine, and we have helped create a series of organizations that worked during the 1990s and around the 2004 election, 

monitoring the vote, getting out the vote, and stimulating civil society throughout the country. 

I am pleased to say that one of the most important conclusions 

that I have come to is that civil society in Ukraine is alive and 

well, that it is active, that it has continued to follow the developments of 2004 and now into 2005, that it is organized all over the 

country in support of the Yushchenko Administration. What has to 

happen now is that such support needs to be encouraged and focused along the lines that Mr. Fried outlined. In other words, to 

support democratic change, civil society must be encouraged and 

supported and effectively developed. In my testimony I go into 

some detail about who these groups are, what they are doing and 

what they can do if they are actively supported. 

Let me say too that developments in 2005 are leading to a very 

important parliamentary election in 2006. There is every sign that 

these elections will be better than elections previously held in 

Ukraine. There is every indication that the Government of PresiVerDate Mar 21 2002 10:47 Nov 04, 2005 Jkt 000000 PO 00000 Frm 00025 Fmt 6633 Sfmt 6601 F:\WORK\EET\072705\22653.000 HINTREL1 PsN: SHIRL
22

dent Yushchenko understands the need for free and fair election, 

that he has so structured a Central Election Commission, that it 

will carry out free and fair elections. He has authorized for the first 

time domestic monitoring groups to be present in the polling stations, to instruct workers about how they should carry out their duties. We are very confident that what follows in March will be an 

important milestone. 

Let me say that the National Democratic Institute is also working across the former Soviet Union. We have an important program 

in Georgia. We have just left Kyrgyzstan where we had an important, I think, triumph in a democratic direction. Everybody is looking to Ukraine and to the policies of Ukraine for encouragement 

and support. What happens in Ukraine in the rest of 2005, 2006, 

and 2007 will be a guide for what happens in Moldova, Belarus, 

Azerbaijan, Armenia, and in Central Asia. It is in that sense that 

what you do and what we do and what the Ukrainians do is terribly important for the long-term development of democracy across 

the two continents of Europe and Asia. 

In that sense, the aid that we have tendered and the aid which 

you have tendered to other democracy-building organizations is 

very important. I would like to applaud you and the Committee for 

the support you have provided to Ukraine both in the past and 

what looks like will be increased support for 2006 and 2007. It is 

terribly important. 

I would like also to highlight the support which Congress is giving to the Democracy Assistance Commission. We have just been 

privileged to assist the Commission in going out to Georgia and 

looking at that Parliament with a view to what assistance you can 

provide in 2006. I would ask you to put Ukraine on that same list, 

to extend support from Congress directly to the Ukrainian Parliament in the year ahead. 

I would like to close here by simply saying that we are working 

extremely hard. It would be very easy to draw negative conclusions 

from events over the last 2 or 3 months. We do not do so. We think 

the events of the last 2 or 3 months need to be encouraged, supported, and underwritten. 

[The prepared statement of Mr. Ledsky follows:]

PREPARED STATEMENT OF THE HONORABLE NELSON C. LEDSKY, SENIOR ASSOCIATE

AND REGIONAL DIRECTOR, EURASIA, NATIONAL DEMOCRATIC INSTITUTE

Mr. Chairman and members of the Committee, on behalf of the National Democratic Institute (NDI), I am pleased to have the opportunity to speak about recent 

developments in Ukraine. American non-governmental organizations, including 

NDI, the International Republican Institute and the National Endowment for Democracy, have been involved in Ukraine since the early 1990s. Together and with 

support from Congress, these groups have worked cooperatively and productively to 

support democratic development in Ukraine. Since 1992, NDI has conducted programs in Ukraine aimed at strengthening democratic political parties, parliamentary groups, and civic organizations. I appreciate the chance to highlight these 

achievements and the opportunities facing Ukraine today. 

I. INTRODUCTION

The events surrounding the 2004 presidential election have fundamentally 

changed Ukraine’s political and social landscape. Following the Orange Revolution 

and its momentous consequences, Ukraine now faces the daunting task of establishing stability and normalcy across the country, developing a new perspective on 

governance, and instituting political and economic reforms. 

23

Viktor Yushchenko was sworn into office in January 2005 after democratic party 

leaders chose to forsake their individual political ambitions and coalesce together 

behind a common candidate and a united call for free and fair elections. Many of 

these leaders are now members of the government. Today, almost eight months 

later, there have been important successes. The Yushchenko administration has 

made tackling corruption a main feature of its reform agenda and to meet this goal 

has taken promising steps, such as dismissal of the notoriously corrupt traffic police 

and imposing new restrictions on customs and VAT duties. Ukraine has taken a 

leading role in the regional coalition GUAM (formed of Georgia, Ukraine, Azerbaijan, and Moldova) and is speaking out for a peaceful resolution of the 

Transdnistria conflict and for freedom in Belarus. The government has ultimately 

made a decision on the intended re-privatization of ill-gotten businesses. 

Parliamentary elections scheduled for March 2006 will be an important test of 

this government’s ability to sustain the support of the Ukrainian people. NDI expects to see elections that are well organized and conducted by an impartial Central 

Election Commission under conditions of transparency. NDI is encouraged to see 

that the government has decided to recognize and amend electoral legislation to 

allow domestic nonpartisan election observers, as prescribed by Ukraine’s decision 

to sign the 1993 Copenhagen agreement of the OSCE. There remain challenges to 

the election process, including a first-ever fully proportional election for the parliament and the task of replacing corrupt central, territorial, and precinct election 

offices with new officials. 

The success of the Ukraine experiment depends, in the final analysis, on the ability of the Yushchenko government to actively engage and inform citizens at every 

stage of the reform process. Citizens of Ukraine currently have high expectations. 

They will need to understand that the sacrifices they will be asked to make will ultimately result in more political and economic opportunities and a more democratic 

society. The Yushchenko government will need to engage in a dialogue with citizens 

so that the needed reform process has a constituency amongst the citizens of 

Ukraine. The success of the 2006 parliamentary elections will determine the government’s ability to mold support for reforms, implement these reforms, and continue 

on the path of creating a democratic Ukraine. 

II. CIVIL SOCIETY MUST BE ENGAGED

One of the most positive developments in Ukraine’s democratic transformation 

has been the growth of civil society. From the Soviet-era human rights activists who 

gained new momentum in the early 1990s through the young people who called for 

President Kuchma’s ouster last year, civil society has been a consistent bright spot 

on the Ukrainian political landscape. 

Most civic groups that engaged in political activism in the Kuchma era were harassed. This mainly took the form of selective government enforcement of tax and 

other policies and attempts to intimidate individual leaders. Following the events 

of 2004, NDI has found that Ukrainian civil society has emerged intact and newly 

energized by opportunities for reform. The following hallmarks of the civil sector 

offer particular promise for continued progress: 

Participation of Young People 

Pora (Enough) the civic group that last year brought thousands out into the 

streets is a youth-based movement. But, youth activism has a longer history in 

Ukraine. Since 1994, NDI helped a network of mainly young people all over the 

country form the Committee of Voters of Ukraine (CVU) the country’s largest nonpartisan politically active NGO. With more than 100 branches throughout the country, CVU has attracted tens of thousands of young people into Ukrainian political 

life through the experience of monitoring elections, promoting linkages between citizens and government bodies, and citizen education programs. Between elections, the 

young activists leading CVU’s grassroots chapters have created sophisticated, regional and national programs to monitor government responsiveness to citizens and 

involve Ukrainians in political life in their communities. 

CVU, Pora, and others groups like them are adjusting to new roles as government 

‘‘watchdogs’’ in Ukraine’s political environment. Particularly at the local level, they 

are finding that changes come slowly. Government officials often maintain longstanding attitudes of the Soviet era. The current government has yet to attempt extensive administrative reforms and citizen ‘‘watchdog’’ groups are, of course, appropriate even in the most developed democracies. 

Focus on Stemming Corruption 

Anger at official corruption and abuse of government authority has found outlets 

in hundreds of small community movements. These NGOs are driven by farmers 

24

outraged by corruption in the land privatization process, by small business people 

fed up at selective tax and other government inspections, by motorists weary of 

being shaken down by police. NDI has provided assistance to dozens of such groups 

throughout Ukraine. In many cases they have successfully lobbied for changes to 

laws and regulations have called for the removal of corrupt officials. These NGOs 

are generally isolated from the international community, and poorly funded but intensely determined, fired by a group of individuals who believe they are searching 

for justice. The success of these groups testifies to the breadth and depth of indigenous civic activism in Ukraine. 

Ukraine now boasts a full range of civic groups that represent many constituencies, including women, children, the elderly, the disabled, environmentalists, and 

others. While some of these groups are still in the process of defining their agendas, 

the very range of their activity is positive. It speaks to the ability of the Ukrainian 

political system to provide a vehicle for involvement for political activists of every 

stripe and citizens with every form of grievance. 

III. CHANGES MUST BE MADE AT ALL LEVELS OF GOVERNMENT

Since January, President Yushchenko sent a new group of leaders to the top of 

Ukraine’s power structure, but left intact a sprawling government bureaucracy. 

Today, despite appointing new ministers, the Yushchenko administration has had 

to rely on existing mid-level and local level bureaucrats. This is the case especially 

in the regions. In further instances, the Yushchenko has faced additional problems 

with newly appointed Oblast governors not adopting or implementing reforms. 

The bureaucracy has been characterized by a Soviet-era governing philosophy, 

nepotism, and entrance barriers for talented young people. The development of a 

professional civil service is also hindered by holdover policies from the Kuchma administration. Until there are visible changes in the government or reforms at the 

lowest levels, it will be difficult to convince citizens that the Yushchenko government represents a change from the previous regime. 

To this end, NDI is launching an internship and new staff development program 

geared toward bringing young professionals into government institutions and developing the skills of new hires. Participants will take part in an exchange program 

in Poland, Latvia, Estonia and other eastern European countries where they will 

work alongside civil servants to gain practical skills and develop deeper insights 

into the principles and practical execution of democratic governance. The participants will then return to Ukraine to begin or resume work in government ministries. This program will identify and train promising Ukrainian youth, including 

those recruited by the government, in an effort to create a talent pool of qualified 

professionals capable of carrying out the countless reforms proposed by the new regime. 

IV. CONCLUSION

Ukraine and its democratic future are important to the region and to the world. 

Democrats in Eastern Europe and elsewhere in the former Soviet Union are looking 

to Kyiv for inspiration. If Ukraine can successfully move toward Western Europe 

and the Atlantic community, so too can Moldova and Belarus, Azerbaijan and Armenia, and even the states of Central Asia. Russia, too, will be influenced by what happens in Ukraine—in a positive direction if things go well, in a negative direction 

if things go poorly. The developments in Ukraine, Georgia, and now Kyrgyzstan are 

all examples for the rest of the world. The success of these developing democracies 

will make more untenable the remaining authoritarian regimes across Eurasia. 

The international community has learned that dramatic democratic transitions do 

not guarantee a democratic state. Developing a democratic Ukraine will require sustained international assistance to the government of Ukraine to complete its necessary political and economic reforms. 

Ukraine has a long and difficult road ahead. The hopeful beginnings of 2005 need 

to be encouraged, supported, and strengthened. Congress has in its power to assist 

by focusing on professional exchanges, supporting the international community 

working in Ukraine, partnering with Ukraine on anti-corruption measures, and assisting the government with restructuring and improving the rule of law. In addition, congressional support for assistance to the parliament of Ukraine in 2006 

under the Democracy Assistance Commission would be useful and deeply appreciated. 

Ukraine is on the right trajectory, but the future is not assured. We must seize 

the opportunity to help create a democratic, socially responsible society. The US 

must invest sufficient resources into Ukraine to ensure its success.

25

Mr. GALLEGLY. Thank you very much, Mr. Ambassador, for your 

testimony and for making a real effort to abbreviate your extended 

testimony, that we will all want to read and review. 

Mr. Nix? 

STATEMENT OF MR. STEPHEN B. NIX, REGIONAL PROGRAM DIRECTOR, EURASIA, INTERNATIONAL REPUBLICAN INSTITUTE 

Mr. NIX. Yes. Thank you, Mr. Chairman. In the interest of time, 

I have a very lengthy and detailed statement to make, but will submit it for the record. 

Mr. GALLEGLY. Without objection. As I stated before, all of your 

testimonies will be put into the record in their entirety. 

Mr. NIX. Thank you, Mr. Chairman. 

Just briefly, I would like to outline a couple of points Ambassador Fried covered very eloquently on the issues of NATO enlargement, WTO membership, Jackson-Vanik, and EU membership. 

Very well done. We agree with the points that were made. I would 

like to focus on two political points and then sum up for you. 

First I would like to acknowledge the successes that the 

Yushchenko Government has had in the first 6 months in terms of 

religious pluralism, freedom of the press, and a number of important economic reforms. I would like to get to the two political questions. The first is the specter of constitutional reform in Ukraine. 

There is a possibility that if Ukraine does not adopt a law on local 

self-government by September 1 that by January 2006, powers that 

are currently vested in the President of Ukraine will devolve to 

Parliament and the Prime Minister. It is expected that Mr. 

Yushchenko will challenge these provisions in the Constitutional 

Court of Ukraine, but this separation of powers issue needs to be 

clarified, and our hope is it will be clarified soon by the Ukrainians. 

That will dictate whether or not there will be a strong President 

who will have the power to undertake and implement reforms as 

President Yushchenko has tried to do. 

Secondly, as Mr. Nelson Ledsky has mentioned, the parliamentary elections are of extreme importance to this government. Mr. 

Yushchenko has formed a new political party around his administration. Unfortunately, only 3 of the 10 parties that were part of 

his ‘‘Our Ukraine’’ bloc have joined this party, so it remains to be 

seen what will happen. It is vital that this government elect the 

required number of deputies in its faction to implement reforms 

this administration deems important. So those elections will be extremely important. We expect, as Nelson mentioned, that the elections will be much better administered. They will be more free. 

They will be more fair. Again, the outcome is in question. 

Thirdly, I would just like to say again that the support that this 

Committee has provided to our efforts in Ukraine to work with political parties and civil society, and to promote democracy and freedom, are greatly appreciated. I think it is important to note that 

Ukraine is still early in the game and additional support is necessary. There is one specific area where I think that financial support is vital and that is to assist Ukraine in reforming its Courts 

of General Jurisdiction. 

26

There has been a lot of discussion about the lack of foreign investment, which quite frankly centers on big ticket items like 

WTO, Jackson-Vanik and others. The fact remains that businesses 

are reluctant to invest in Ukraine because they are not sure that 

the courts will enforce contracts. Until that doubt is removed by a 

dramatic reform of the court system, investors will continue to be 

shy in some areas from investing in Ukraine. 

I close by saying that we are very optimistic in terms of the future. We think that the Yushchenko Government has handled itself 

well in the first 6 months, and we think that the administration 

will perform very, very well and hopefully continue in the reform 

process 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Nix follows:]

PREPARED STATEMENT OF MR. STEPHEN B. NIX, REGIONAL PROGRAM DIRECTOR, 

EURASIA, INTERNATIONAL REPUBLICAN INSTITUTE

Mr. Chairman, I wish to thank you for the opportunity to testify before this Subcommittee today. I would like to request that my statement be submitted to the 

record. This hearing in itself is testimony to the strategic importance of Ukraine’s 

democratic and economic development as it relates to the interests of the United 

States. 

Mr. Chairman, the world watched with admiration as the citizens of Ukraine took 

to the streets last winter to demand that their right to vote be respected. The Orange Revolution not only brought about a peaceful and legitimate transfer of power, 

it also ushered in a new era of hope for the people of Ukraine and their desire for 

integration into the Euro-Atlantic Alliance. 

In the wake of the Orange Revolution, Viktor Yushchenko and his team face an 

equally daunting challenge: to achieve full political and economic transformation 

and integration into Euro-Atlantic structures. In order to achieve those goals, President Yushchenko and his government must implement numerous reforms and face 

many challenges. It should be the policy of the United States to continue to assist 

in the democratic and economic development and integration of Ukraine, because of 

its vitally important geopolitical location, and for its commitment to freedom and 

democracy as evidenced by the Orange Revolution. 

The Yushchenko government has made significant achievements in its first six 

months. First, it has improved the state of civil liberties in Ukraine. Religious pluralism is flourishing in Ukraine, unlike in Russia. Second, press freedoms have significantly improved since the Orange Revolution. Prior to it, the Ukrainian government, and specifically the presidential administration, routinely practiced censorship through sending ‘‘temniki’’—or theme lists—to the press, indicating what topics 

should be covered and how these topics should be covered. Following the change of 

power in Ukraine, print and electronic media are finally reporting events without 

censorship; journalists are able to practice their profession freely; and the media are 

independent. 

Third, commitment to democracy has been evident not only in the internal policies 

of the Yushchenko government but has also become a new focus of Ukrainian foreign policy, as has been declared by Ukraine’s Foreign Minister Borys Tarasiuk. 

President Yushchenko made a commitment to supporting democracy worldwide during his working visit to the United States in early April. In a statement issued jointly with President Bush, Yushchenko pledged that Ukraine will work together with 

the United States ‘‘to back reform, democracy, tolerance and respect for all communities, and peaceful resolution of conflicts in Georgia and Moldova, and to support 

the advance of freedom in countries such as Belarus and Cuba.’’ Later in April, 

Ukraine’s representative to the United Nations supported the U.N. Resolution on 

Human Rights in Cuba. 

The Ukrainian government has intensified its involvement in the Transdnistria 

region of Moldova, assisting the Moldovan government in negotiations with the parties concerned towards reaching a political resolution. The conflict in Transdnistria 

is an all-European, rather than regional issue, since this militarized zone serves as 

a smuggling corridor to Europe for arms, drugs and trafficking of women. Therefore, 

Ukraine’s contribution towards the resolution of this conflict should be noted and 

commended. 

27

After the Orange Revolution, Ukraine took on a leadership role in reviving the 

Georgia-Ukraine-Azerbaijan-Moldova organization (GUAM) with the goal of it becoming a full-value regional organization for democracy and economic development. 

All these countries occupy favorable geographic positions as potential transporters 

of Caspian oil and participate in this organization with the goal of achieving European Union (EU) and North Atlantic Treaty Organization (NATO) membership. 

GUAM has allowed Ukraine to become a regional leader in the sphere of promoting 

democracy and human rights. The Ukrainian government hopes that future cooperation within GUAM will include a free trade area among its members. 

Despite early and significant progress in these important areas, the Yushchenko 

government faces major constitutional, political, legal, and economic issues. And 

part of my message here today is to affirm to you that the International Republican 

Institute remains committed to supporting the growth of reforms and democratic 

initiatives in Ukraine, just as we have since 1994. 

In the midst of the Orange Revolution, the Ukrainian parliament adopted a package of legislation, consisting of an amendment to the existing election law to prevent 

fraud in the repeat run-off of the vote and a bill on constitutional reform. The constitutional reform reduces some of the powers that are currently enjoyed by the 

president of Ukraine and awards them to the parliament and the prime minister. 

The most important of these powers is the right to appoint and to discharge the 

prime minister as well as several key ministers, such as defense and foreign ministers. The prime minister is awarded the right to create reform and eliminate ministries. 

The constitutional reform was scheduled to take effect on September 1, 2005, provided that the parliament would adopt a law on the improvement of local self-governance. Since this law has not yet been passed and it is unlikely that it will be 

by the September 1st deadline, the constitutional reform will come into effect on 

January 1, 2006. Therefore, starting next year, the authority of the president of 

Ukraine will be decreased, and the parliament and the prime minister will enjoy 

expanded powers. 

Critics of the constitutional reform argue that these changes are not timely because a strong office of the president would ensure that the much-needed radical 

reforms are implemented, and awarding key powers to the parliament through 

weakening the executive decreases the potential for change. Several members of the 

Yushchenko team, such as the Secretary of the National Security Council Petro 

Poroshenko and Head of Presidential Administration Oleksandr Zinchenko, as well 

as Prime Minister Yulia Tymoshenko and Deputy Prime Minister Anatoli Kinakh, 

publicly criticized the reform and have promised to challenge it by putting it up for 

national referendum. The law is also subject to challenge in the Constitutional 

Court, since procedural violations allegedly took place in the voting process, specifically adopting a change to the Constitution together with another piece of legislation. In short, President Yushchenko must either challenge the constitutional 

amendments in court, or must be willing to surrender certain powers to the parliament and the prime minister. In any event, this separation of power issue must 

ultimately be clarified. 

Parliamentary elections in Ukraine are scheduled for March 2006. They also pose 

a significant test to the Yushchenko team. This will be the first election since the 

Orange Revolution and, therefore, will present a test to the new Ukrainian leadership to demonstrate the consolidation of democracy in Ukraine by conducting a free 

and fair election. The United States should therefore monitor the election process 

closely by delegating election observers to Ukraine. 

This will also be an opportunity for the Ukrainian citizens to send a signal to 

their new leadership evaluating its progress. IRI recently conducted focus group research, which revealed that the Ukrainian people are becoming increasingly frustrated with the fact that while many reforms have been happening at the highest 

levels of government, their everyday lives have not changed. While reforms take 

time to be implemented, much more could be done in terms of economic, political, 

and bureaucratic reforms. If not, the people in the IRI focus groups have indicated 

that they, while they are patient, are willing to consider voting for other forces in 

the parliamentary election. IRI will continue to conduct polling during the campaign 

to help candidates focus on relevant issues and potential reforms just as we did in 

the run-up to the 2004 presidential election. IRI will also offer training to all parties 

which will compete in the election. 

Currently, Viktor Yushchenko’s party still enjoys the highest rating amongst political parties in Ukraine. President Yushchenko established his ‘‘People’s Union 

Our Ukraine’’ political party in March 2005. It represents an ongoing attempt to 

consolidate center-right political forces and unite them in a single party. However, 

individual party leaders that supported Yushchenko in the past were reluctant to 

28

dissolve their individual parties and to merge into a new one. Only 3 of the 10 parties that formed Yushchenko’s Our Ukraine bloc in 2002 agreed to join the new 

party. Currently, People’s Union Our Ukraine is proposing to consolidate its efforts 

with the Bloc of Yulia Tymoshenko, Ukraine’s Prime Minister as well as People’s 

Party of Ukraine, represented by Volodymyr Lytvyn, the Speaker of Ukrainian parliament, and uniting into a coalition for the parliamentary ballot. In addition, for 

the first time, all of Ukraine’s 450 parliamentary seats will be elected via proportional—or party list—system. This should prove to be a vast improvement for 

Ukraine, as a number of businessmen currently hold single-mandate seats, which 

provide them with immunity from criminal prosecution. 

Judicial reform is also a critical challenge to the Ukrainian government. Ukraine’s 

Supreme Court should be congratulated for its contribution toward the triumph of 

democracy in Ukraine. On December 3, 2004, based upon evidence of massive fraud 

and violations of the election law, it nullified the official results and ordered the 

Central Election Commission to conduct a repeat of the second round of the election. 

In this ruling, the Supreme Court signaled judicial concern for election fraud, and 

underlined the Court’s constitutional role as an independent, co-equal branch of government. 

It is now necessary to build upon the solid foundation laid by the Supreme Court 

and further strengthen democracy through reforming the judicial system of Ukraine. 

For this purpose, Secretary of the National Security Council Petro Poroshenko is 

heading a working group to advise President Yushchenko on judicial reform. The 

United States should provide support for this effort and should encourage the working group to be open and transparent in its undertakings. 

Currently, Ukrainian courts lack administrative and financial independence from 

the executive branch, proper organization and adequate mechanisms to enforce their 

decisions. This is compounded by a non-existent bar association to internally regulate lawyers and judges. These structural problems combine to make the rule of law 

difficult to understand, apply and enforce. Beyond the structural reforms necessary 

to create a functioning legal framework for Ukraine, procedural reforms are necessary to enhance transparency, independence and confidence in the rule of law. 

Clear guidelines must be established to standardize issues of jurisdiction and venue 

in electoral disputes, make court decisions promptly available to the public, and to 

end ex parte communications in an effort to avoid appearance of impropriety. The 

Civil and Commercial Codes also need to be harmonized. These reforms are a critical piece of democratization, since it would be difficult for Ukraine to cement recent 

democratic gains without these structural and procedural changes. The United 

States should aid Ukraine’s judicial reform by providing expert assistance and consultation on these necessary structural and procedural changes. IRI is prepared to 

assist the Yushchenko government in the area of legal and judicial reform and we 

encourage the United States Agency for International Development to fund such efforts. 

The Yushchenko government has declared membership in NATO as an important 

strategic priority. Ukraine has been cooperating with NATO since 2002 in the 

framework of the action plan. Under the government of Leonid Kuchma, who was 

alleged to have approved of the sale of radar systems to Saddam Hussein’s government, as well as numerous violations of democratic principles domestically, the best 

NATO could offer was the NATO-Ukraine Action Plan and annual target plans. Despite this, Ukraine has an excellent record of cooperation with NATO. Ukraine participates in the Partnership for Peace Planning and Review Process (PARP), which 

supports implementation of Ukraine’s State Plan for Reform of the Armed Forces. 

Ukraine contributed peacekeeping forces in the Balkans and other international 

peacekeeping efforts under the PARP. 

In April of 2005, at the NATO summit in Vilnius, Lithuania, Ukraine and NATO 

started an Intensified Dialogue (ID), a step toward the Membership Action Plan 

(MAP). Ukraine and NATO expect to move to a MAP following a free and fair parliamentary election in March 2006, which would demonstrate the progress of democracy in the country. The Ukrainian government will need to implement the reforms 

outlined by the MAP in order to achieve NATO membership. 

Unlike NATO, the European Union (EU) has not opened its door to Ukraine’s 

membership, even though the events of the Orange Revolution clearly demonstrate 

that Ukraine is a truly European nation. The Yushchenko government has repeatedly declared EU membership as the top priority of its government. Though Ukraine 

should be considered for membership solely on the basis of merit and the success 

of its government’s implementation of the necessary reforms, the EU should declare 

its commitment to accepting Ukrainian membership if Ukraine meets the qualifications. The United States should use its influence with its European allies to press 

29

for such a commitment—this is the most effective way to encourage democratic, 

structural, and legislative progress within Ukraine. 

The Yushchenko government also declared Ukraine’s accession to the World Trade 

Organization among its top priorities. Indeed, joining the WTO would lead to an additional annual growth of GDP, additional exports, and the opening up of new markets to Ukrainian goods. It is also a key component of Ukraine’s Euro-Atlantic integration plan. The United States should actively support Ukraine’s membership. 

Ukraine has made important steps towards reforming its trade laws and legal system by recently adopting six out of 14 legislative acts needed for WTO membership. 

Passage of these laws should allow Ukraine to be considered for membership at the 

WTO biannual conference in December of this year. 

On July 6, the Ukrainian parliament also passed bill #7032 ‘‘On Incorporating 

Amendments into Some Laws of Ukraine Concerning the Harmonization of National 

Legislation with Requirements of Multilateral WTO Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS).’’ This bill is commonly known as the 

law on laser disks and is significant, since Ukraine has long been a major player 

in the worldwide market of pirated CDs. Adoption of this law was not required for 

WTO membership, but was seen as critical by the United States. 

Considering Ukraine’s cooperation on the adoption of laws protecting intellectual 

property rights, it is crucial that the U.S. remove outdated trade barriers with 

Ukraine. The Congress should lift the Jackson-Vanik amendment. It has been in 

force since 1974 to punish the Soviet Union for limiting the immigration of its religious minorities. This no longer pertains to Ukraine. Consequently, this provision 

that bans normal trade relations between Ukraine and the United States should be 

lifted, which will allow Ukraine to gain most favored nation status and will stimulate its economy by increasing trade with the United States. This would bring economic benefits to the people of Ukraine and give them more confidence in the current government. 

With its focus on Euro-Atlantic integration and gaining access to world markets, 

the new Ukrainian government has at the same time repeatedly stated that a fullydeveloped, close and friendly relationship with Russia is its top foreign policy priority. Ukraine has traditionally had very close ties to Russia, a nation with which 

it shares much history and culture. In the 2004 presidential race, President Putin 

openly backed Viktor Yushchenko’s opponent—then-Prime Minister Viktor 

Yanukovych—and traveled to Ukraine several times in the course of the election 

campaign to rally support for the government’s candidate. Despite this, Yushchenko 

made a commitment to the development of Ukraine-Russia relations and traveled 

to Moscow on his first foreign trip as president of Ukraine, just a few days after 

his inauguration. 

However, mending the relationship with Russia has been challenging for Ukrainian authorities. Russia has become a safe haven for former government officials currently under investigation in Ukraine. The former head of the management of the 

presidential administration of Ukraine Igor Bakai is wanted in Ukraine on charges 

of abuse of office and causing material loss to the state. Those offenses are punishable by a prison term of seven to ten years in Ukraine. To avoid prosecution, Mr. 

Bakai, sought internationally, fled to Russia, where he was arrested, but then released for unknown reasons. Former Interior Minister Mykola Bilokon is also wanted for questioning in Ukraine on suspicion of abuse of office. He fled to Moscow, 

where he has frequent contacts with Mr. Bakai. Ruslan Bodelan, who was ousted 

as Odessa mayor in April 2005, is also wanted in Ukraine on charges of abuse of 

power. Bodelan underwent a heart operation at the Russian Defense Ministry’s 

Vishnevskiy hospital outside Moscow, where he is residing now with no plans to return to Ukraine. Russian authorities have provided no assistance in detaining and 

extraditing these individuals. 

In September 2004, during the presidential election campaign period in Ukraine, 

Russian authorities filed criminal charges against Yulia Tymoshenko, then an opposition leader and a member of the Ukrainian parliament, accusing her of bribing 

military officials while she headed a gas trading company in the mid-1990s. These 

charges are denied by Ms. Tymoshenko. Russian authorities refused to close the 

case after Tymoshenko’s appointment to the post of prime minister. 

Ukraine hosts the Russian Federation’s Black Sea Fleet on its territory. Russia 

leases hundreds of acres of land in Crimea under the terms of an agreement that 

is set to expire in 2017. At that time, in line with the Ukrainian Constitution, no 

foreign troops are allowed on its territory. Russia is interested in extending this 

agreement, but the Ukrainian side is not expected to comply in light of its goals 

of NATO membership and considering that the Russian fleet has violated the lease 

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30

cial purposes, and establishing military prosecution offices on the territory of 

Ukraine. 

Another outstanding issue with Russia is border demarcation between Ukraine 

and the Russian Federation in the Black and Azov Seas, specifically the jurisdiction 

over the Kerch Strait, a key shipping gateway between the two seas, and the island 

of Tuzla. Ukraine is intent on keeping the boarders that were marked during the 

soviet times as administrative boundaries between the Russian and Ukrainian Soviet Republics. Russia, on the other hand, is arguing that there were no marine 

boundaries among the republics. If this issue is not resolved between the two parties, it may have to be decided by the international court. 

Overall, despite the efforts of the Ukrainian government to mend the relationship 

with Russia after the Orange Revolution, it remains strained. Russian leadership 

is threatened by the democratic developments in Ukraine and its western orientation following the change of power. It is also displeased by the Ukrainian government’s attempt to diversify its sources for energy following a sharp rise in oil prices 

on the Ukrainian market by the Russian traders. 

The Russian pro-Putin party Yedinaya Rosiya recently openly endorsed the Party 

of Regions of the former Prime Minister Yanukovych, Viktor Yushchenko’s opponent 

in the contested presidential race, and wished the party victory in the coming parliamentary vote. The Russian leadership is clearly hoping a more favorable leader 

will come to power in Ukraine soon. 

Despite strained relations between the two countries, Viktor Yushchenko has 

reached out to the Russian business community to attract investment. In fact, the 

new leadership has been working hard to demonstrate the investment 

attractiveness of Ukraine to foreign entrepreneurs. President Yushchenko and 

Prime Minister Tymoshenko have been meeting with the business community leaders from Europe and the United States, and in mid-June Ukraine hosted a miniDavos, an offshoot of the famous Davos World Economic Forum, which attracted 

nearly 250 prominent guests and decision-makers. 

However, investors have been slow to move into Ukraine due to an uncertain 

business environment. Viktor Yushchenko made a promise during his campaign to 

take back large enterprises that have been sold by the previous leadership for considerably less than its market value and to auction them off under fairer circumstances. The most prominent reprivatization case is that of the largest steel 

maker in Ukraine, Kryvorizhstal, which courts have now declared was illegally sold 

for 3.59 billion hryvni (approximately $720 million) under the Kuchma government 

to a company controlled by his son-in-law and Renat Akhmetov, an oligarch from 

the eastern region of Donetsk and Ukraine’s richest man. Recently a court ordered 

the shares of Kryvorizhstal to be returned. The government expects that its re-sale 

would bring up to 10 to 12 billion hryvni ($2–2.4 billion). However, lack of clarity 

with respect to re-privatization and what other enterprise sales will be re-visited 

has had the most negative impact on foreign investors. The United States should 

assist Ukraine in its efforts to stabilize the business environment and attracting investment by establishing a dialogue between U.S. and Ukrainian business, economic 

and finance leaders. Helping Ukraine prosper would serve to ensure its population 

that the path of freedom, democracy, and market economy that they chose is the 

right one. 

The United States should further assist Ukraine’s development by including 

Ukraine as an eligible country to compete for the Millennium Challenge Account 

(MCA) assistance. The MCA was established in 2002 as a vehicle for providing developmental assistance to nations that ‘‘govern justly, invest in their citizens, and 

encourage economic reform.’’ After the Orange Revolution, Ukraine is a precise example of a country that is qualified under these provisions. Ukraine also qualifies 

as a candidate based on the country’s per capita income level. With the assistance 

of the MCA funds, Ukraine could implement programs for fighting corruption, reforming its bureaucracy and developing its economy. 

In conclusion, Ukraine has had a long and brutal history. Having suffered under 

decades of communism, which oppressed Ukrainian national identity and basic 

human freedoms and murdered millions of Ukraine’s population by starvation in a 

synthetic famine, Ukraine was not able to fulfill the promise of independence after 

the fall of the Iron Curtain. Ukraine’s first decade of independence was marked by 

government corruption and infringements on human rights and media freedoms. It 

was not until the Ukrainian people stood up in the unprecedented mass peaceful 

protests against the government’s attempt to steal the 2004 presidential election 

that Ukraine became truly free. Ukraine’s path to democracy has been a long and 

challenging one and it will take time for its new leadership to implement the 

changes necessary to reforms Ukraine’s economic and political systems. Mr. ChairVerDate Mar 21 2002 10:47 Nov 04, 2005 Jkt 000000 PO 00000 Frm 00034 Fmt 6633 Sfmt 6621 F:\WORK\EET\072705\22653.000 HINTREL1 PsN: SHIRL
31

man, IRI stands ready to continue its role is assisting Ukraine in developing and 

implementing those critical reforms. 

The United States should take steps to fulfill President Bush’s promise, made 

during his second inauguration speech, to support ‘‘the expansion of freedom in all 

the world’’ and ‘‘the growth of democratic movements and institutions in every nation and culture,’’ and assist the Yushchenko administration in overcoming the significant challenges it faces. With such assistance, I am hopeful that President 

Yushchenko will succeed in implementing the reforms long awaited by the Ukrainian people that will lead this strategically important country toward a democratic 

and prosperous future.

Mr. GALLEGLY. Thank you very much, Mr. Nix. 

Dr. Kuzio? 

STATEMENT OF TARAS KUZIO, PH.D., VISITING PROFESSOR, 

INSTITUTE FOR EUROPEAN RUSSIAN AND EUROASIAN 

STUDIES, GEORGE WASHINGTON UNIVERSITY 

Mr. KUZIO. Thank you very much for inviting me today. I see 

that as the last speaker I am under intense pressure to try to be 

brief and especially to try to prove that not all academics like the 

sound of their own voice and speak too long. 

First, I would like to say that what we need to take into account—I have prepared a longer testimony that mentions this—is 

that we have, in effect, two transitions taking place. We have one 

which I would call a revolutionary transition at the moment, until 

next year’s parliamentary elections, and then a completely different 

situation from next year’s elections onward. 

The revolutionary coalition that has come to power in Ukraine 

inherited a Parliament in the Kuchma era. That Parliament has 

caused, and will probably continue to cause, problems for the 

Yushchenko Administration. From next year onwards, the current 

predictions and opinion polls, all the way from January until the 

present, suggest that the Yushchenko coalition will obtain a parliamentary majority of 50 to 60 percent. So, with control of the government and the executive, that should mean a very powerful 

triadic relationship in favor of reform and a push for Euro-Atlantic 

integration. 

I would also like to state that Ukraine enters this transition period in a far greater starting position than other democratic revolutions that have taken place recently; for example, in Serbia, Georgia, and Kyrgyzstan. Compared to those countries, Ukraine’s starting position is far greater because its economy is growing, its state 

is functioning, and we have a very demoralized opposition. We 

should also be more optimistic in comparison to the 1990s, when 

reform was tried to varying degrees in Ukraine and elsewhere in 

the CIS (Commonwealth of Independent States). Today the Communist Party is in terminal decline in Ukraine, which was one of 

the main blockages on reform in the 1990s. In next year’s Parliament, the Communist Party is predicted to have no more than 

35 or 30 seats, down from 120 in the 1998 Parliament. 

Shock therapy is over. That was undertaken in the 1990s. Economic growth is now taking place since the year 2000, so we have 

a far more favorable climate. Plus, very important, compared to the 

1990s the EU and NATO have moved up to Ukraine’s western borders. Geography does matter in these situations. 

The good progress has been in the battling of corruption, rule of 

law, democratization, media, and judicial review. The more weaker 

32

areas have been in Yushchenko’s leadership style, sometimes a bit 

like an absent-minded professor, unfortunately. He needs to take 

more control of the situation. 

The economic situation we have already heard about, but we 

should not focus too much on the bad side of the economic reform. 

There have been some very positive developments in economics. 

There is a far more positive relationship toward small and medium 

business in Ukraine compared to the Kuchma era. In post-Communist transitions in Central Europe, small and medium businesses were very important in propelling the transition. 

Also, I think a weak area has been in the resolution, finding and 

laying criminal charges against the organizers of the murder of opposition journalist Heorhiy Gongadze. Sadly, we have not seen that 

much progress in that field. We have to actually appreciate that if 

there had been no Kuchma-gate crisis in November 2000 there 

would have been no Orange Revolution, so the two events are very 

much closely interconnected. 

Another positive area, although of course we all understand the 

opposition is important for democracies, is that we have an extremely demoralized opposition in Ukraine. In effect, the opposition 

was highly involved in election fraud, corruption, abuse of office, 

and of course the murder of Gongadze and the poisoning of Viktor 

Yushchenko. So potentially we do not really, at the moment, have 

a very serious opposition to Viktor Yushchenko. That will certainly 

be the case even more after next year’s parliamentary elections, 

where the opposition is not expected to have more than a quarter 

of the seats. 

Just on foreign policy quickly, I think that timelines, which was 

asked about earlier, are very important. I believe that it would be 

very important for the United States to support the lifting of the 

Jackson-Vanik Amendment, WTO membership, and market economic status by next year’s parliamentary election. 

I believe that these three areas would be something that would 

be very important for Yushchenko to have under his belt. After the 

2006 election, it would be important for the United States to support Ukraine’s membership action plan as a step toward NATO 

membership. 

Thank you. 

[The prepared statement of Mr. Kuzio follows:]

PREPARED STATEMENT OF TARAS KUZIO, PH.D., VISITING PROFESSOR, INSTITUTE FOR

EUROPEAN RUSSIAN AND EUROASIAN STUDIES, GEORGE WASHINGTON UNIVERSITY

Viktor Yushchenko’s election as Ukraine’s third president was made possible by 

the Orange Revolution, the third democratic revolution that followed Serbia in 2000 

and Georgia in 2003. Ukraine’s democratic revolution has influenced successful revolutions in Kyrgyzstan and Lebanon. The Orange Revolution is continuing to give 

sustenance to democratic reformers in Armenia, Azerbaijan, Kazakhstan, Belarus 

and, most importantly, to Russia. 

In comparison to the Serbian and Georgian democratic revolutions, Ukraine has 

a stronger starting position to succeed in its reforms. Unlike Serbia and Georgia, 

Ukraine is not a failed state. Ukraine’s economy, unlike Serbia’s and Georgia’s, was 

also growing at a record 12% in 2004, the highest growth rate in Europe. Ukraine 

also differs from Serbia in that the old guard, who are now in opposition, are demoralized and cannot mobilize voters using extreme nationalism. 

Ukraine differs from Serbia and Georgia in that no portion of its territory is beyond central control. Kosovo remains beyond Serbian government control and Belgrade continues to have conflicts with Montenegro over the continued usefulness of 

33

1 After 2006, elections are not due until October 2009 (presidential) and March 2011 (parliamentary). 

any Union. Georgian President Mikhail Saakashvili inherited a country with three 

regions beyond central control: South Ossetia, Abkhazia, Ajaria, of which only the 

latter has been returned to Georgian sovereignty. 

Ukraine’s stronger starting base for reforms gives greater grounds for optimism 

in the success of the reform drive under Viktor Yushchenko. Yushchenko’s clean 

personal record as National Bank Chairman and Prime Minister, his relative youth 

and the limited Soviet influence upon his career path, gives little doubt that 

Yushchenko is personally committed to Ukraine’s democratic path. 

At the same time, we should not under-estimate the difficulties that lie ahead. 

Ukraine’s regional divisions gave Yushchenko only 52% of the vote after the Orange 

Revolution, far less than the 96% received by Saakashvili. 

These realities forced Yushchenko into undertaking three compromises. The first 

with the Socialists to include them in the Yushchenko alliance, the second with Parliamentary Speaker Volodymyr Lytvyn to keep parliament open and the third with 

President Leonid Kuchma in round-table negotiations to permit a re-run of round 

two of the election on December 26, 2004. Yushchenko also inherited a Kuchma-era 

parliament with which he has to deal until the March 2006 election. These compromises and inheritances impacted upon the policies and strategies undertaken by 

President Yushchenko his first year in office. 

Ukraine’s Orange Revolution inevitably led to over-inflated expectations, some of 

which will not be met. Through 2005 many of these expectations continue to be fulfilled by the Yushchenko administration, Yushchenko and Tymoshenko continue to 

have high popularity rates ranging between 55–65%. 

The Orange Revolution took place because many Ukrainians changed their view 

of Ukrainian politics from one of ‘‘A plague on all of your houses’’ where all politicians were viewed are corrupt. Yushchenko changed this widespread view by convincing a majority of Ukrainians that he and his political allies were different. 

The continued salience of this view that Yushchenko is different from politicians 

in the Kuchma camp is central to the success of the Orange Revolution. This continued salience will determine whether voters continue to believe Yushchenko is different. Or, they instead, become disillusioned and begin to see Yushchenko as little 

different to these politicians he replaced. 

After severe domestic and Western criticism of government economic policies during Yushchenko’s first 100 days important corrections were introduced in May-June 

2005. In contrast, the Yushchenko administration’s policies in democratization, 

media freedom, reducing the power of oligarchs and battling corruption have been 

positively received by the USA. 

Changes in economic policies, coupled with continued successes in democratization 

and battling corruption, will move Ukraine in a positive direction during the remainder of the transitional revolutionary administration until the 2006 parliamentary election. This overall positive trend, coupled with the victory of reformist forces 

in the 2006 election, will be important in preparing Ukraine for 4 years of reforms 

that will not be interrupted by elections.1

Ukraine’s reform path under Yushchenko will gather speed after the March 2006 

parliamentary election. With control over the executive, government and parliament, Ukraine will, for the first time, have a leader committed to reform that is 

also in control of Ukraine’s three key institutions. 

There is little debate that democratic progress will take place under Yushchenko. 

But, democratic progress will be at a medium pace. Ukraine’s democratic progress 

will be slower than that experienced in central Europe because of the negative legacy of Soviet totalitarian-imperial rule, and 12 years of misrule under post-Soviet 

leaders. Other factors include weak administrative capacity (i.e. the ability of the 

leadership to implement policies on the ground) and Yushchenko’s leadership style. 

The success—or failure—of Ukraine’s Euro-Atlantic drive and if Yushchenko is reelected for a second term in October 2009 will be not decided by the revolutionary 

transition of 2005–2006. Yushchenko’s and Ukraine’s successful democratic consolidation will take place in the period between elections in 2006–2009/11. The USA 

can, and should, play a strategically important role in ensuring the success of 

Ukraine’s democratic consolidation during this period. 

ELECTION COALITIONS

Ukraine’s politics are influenced by the broad coalition that came to power under 

Yushchenko and the need to build new coalitions to win a parliamentary majority 

in the 2006 parliamentary election. Our Ukraine is being transformed into a new 

34

ruling party, the People’s Union-Our Ukraine. Opinion polls suggest that the new 

party will obtain one-third of the vote in the 2006 elections, up 10% on Our 

Ukraine’s vote in 2002. 

The inability of People’s Union-‘‘Our Ukraine’’ to obtain more than 50% popularity 

single handedly, forces Yushchenko to compromise to ensure the creation of a propresidential parliamentary majority. A three party coalition is being prepared for 

the 2006 election that will consist of People’s Union-Our Ukraine, the Tymoshenko 

bloc and parliamentary Speaker Volodymyr Lytvyn’s People’s Party. The latter 

unites moderates from the Kuchma camp who did not readily support Viktor 

Yanukovych’s candidacy in the 2004 presidential elections. 

Other likely members of this election coalition include First Deputy Prime Minister Anatoliy Kinakh’s Party Industrialists and Entrepreneurs, Yuri Kostenko’s 

Ukrainian People’s Party, Finance Minister Viktor Pynzenyk’s Reforms and Order 

party and Foreign Minister Borys Tarasiuk’s Rukh party. This pro-Yushchenko alliance is slated to win 50–60% of the vote, giving it a sufficient number of deputies 

to form a parliamentary majority. 

WEAK OPPOSITION

Divisions within the governing coalition will not be capitalized upon by the former 

pro-Leonid Kuchma camp. As former ruling parties, centrist parties are finding it 

difficult to adjust to acting as a united and coherent opposition. Ukraine will only 

have a real political opposition after the 2006 election. 

The decline of the Kuchma camp can be seen in changes in parliamentary factions 

since the Orange Revolution. The former pro-Kuchma camp has shrunk in size from 

240 to 110 deputies. Key pro-Kuchma parliamentary factions have lost over half of 

their parliamentary deputies, some of whom have defected to Yushchenko and 

Tymoshenko. 

Centrist, former pro-Kuchma ‘opposition’ parties—Viktor Yanukovych’s Regions of 

Ukraine and Medvedchuk’s Social Democratic united Party—are devoid of any ideology that could form the basis of an ideological opposition to the Yushchenko coalition. During the Kuchma era his centrist allies were ideologically amorphous. 

Defeated candidate Yanukovych Regions of Ukraine Party is the most ideologically amorphous of Ukraine’s centrists. Its ratings, together with those of 

Yanukovych’s in the 2004 election, were high because Communist voters defected 

to them. This was seen in the low vote for Communist leader Petro Symonenko in 

round one of the 2004 election (4.5%) and in the continued low popular ratings for 

the Communist Party of 5–6% (compared to a 20% vote in the 2002 election). 

Yanukovych will be unable to mobilize the 44% of voters who backed him in the 

December 2004 election. The hard-line anti-Yushchenko opposition commands a 

maximum of 25% of the vote. Many of the remaining 20% who voted for Yanukovych 

will vote for Yushchenko’s 2006 election alliance. 

Ukraine’s centrists were created as ruling parties and therefore are finding it difficult to adjust to being in ‘opposition’. As ruling parties they survived only as political roofs for oligarch, regional, business and criminal interests. For example, in 

Trans-Carpathia the Social Democratic United Party extorted funds from businesses 

for a charity which it controlled. 90% of the charity’s funds then went to finance 

the local branch of the Social Democratic United Party. 

Regions of Ukraine and the Social Democratic United Party are both led by discredited leaders. Regions of Ukraine leader Viktor Yanukovych, Social Democratic 

United Party leader Viktor Medvedchuk and Communist Party leader Petro 

Symonenko all have -50% ratings. 

Many senior Regions of Ukraine leaders do not favor the Regions of Ukraine’s ‘opposition’ stance because it is bad for business. Many business supporters of former 

pro-Kuchma parties do not want confrontational relations with the authorities. 

Since the Orange Revolution the former Kuchma camp has divided into two 

groups: 

Moderates in the Ascendancy Willing to Work With Yushchenko 

• Kinakh’s Party of Industrialists and Entrepreneurs (defected in second round 

of the 2004 election); 

• Lytvyn’s People’s Party (sat on the fence in the 2004 election);

• Democratic Ukraine parliamentary faction;

• United Ukraine parliamentary faction;

• Remnants of the People’s Democratic Party;

• Labor Ukraine party (formerly the political representation of the 

Dnipropetrovsk clan); 

35

2Karen Buerkle, Lisa Kammerud and Rakesh Sharma, Public Opinion in Ukraine After the 

Orange Revolution (Washington DC: International Foundation Electoral Systems, April 2005). 

Hard-Line Opposition Hostile to Yushchenko 

• Social Democratic United Party;

• Regions of Ukraine.

These many factors that debilitate the ‘opposition’ camp are also hampered by 

their inability to mobilize the population. This is a consequence of how civil society 

is weaker in eastern-southern Ukraine than in areas that voted for Yushchenko in 

2004. 

The spontaneity of citizens joining the Orange Revolution from western-central 

Ukraine is very different from the ‘managed democracy’ model of civil society found 

in oligarch-controlled eastern-southern Ukraine. The difference can be found in the 

attitudes of Yushchenko voters, who tend to be younger and better educated, while 

Yanukovych voters tend to be over 55 and less educated. 

62% of Yushchenko voters believe that NGO’s are necessary while only 35% of 

Yanukovych voters do so. 30% of Yushchenko voters would take action to protect 

their rights compared to only 10% of Yanukovych voters2. 

Yanukovych rallies during the 2004 election were organized by forcing or paying 

people to attend them. People were paid to travel to Kyiv to support Yanukovych 

in the Orange Revolution. The same is true of rallies against Yushchenko since he 

was elected. As ideologically amorphous parties, centrists do not have real members 

(as opposed to fictitious members on paper) who would defend their candidate or 

party in rallies, meetings, and protests. 

The Communist Party remains adamantly hostile to the Yushchenko presidency. 

Nevertheless, Ukraine (and Russia) has changed since the 1990s when Communists 

could command large followings and block reform. The Communist Party is in terminal decline from its 20% support in the 2002 parliamentary election to only 4.5% 

for the Communist Party leader in the 2004 presidential election. Its current ratings 

give the Communists only 5–6% support meaning that their presence in next year’s 

parliament will be reduced from its current 55 deputies to only 36. At its height, 

the Communists had 120 deputies in the 1998 parliament. 

The new opposition has been unable to convince Ukrainians or international organizations (EU, Council of Europe, OSCE) that law enforcement activities against 

them are tantamount to ‘political repression’. Only 30% of Ukrainians believe that 

the actions of the authorities amount to ‘political repression’. 

POLICY UNITY AND DIVISIONS

President Viktor Yushchenko’s election victory in 2004 came about as a consequence of a broad political alliance that includes left and right-wing populists—

the Socialist Party and Yulia Tymoshenko Bloc—alongside free-market liberals and 

centre-right national democrats—the Party of Industrialists and Entrepreneurs and 

Yushchenko’s Our Ukraine. 

There are few divisions in this alliance over political and institutional aims. Populists, liberals and national democrats all broadly agree on the need to:

• democratize political life;

• build respect for the rule of law;

• media freedom;

• reform the judiciary and court system;

• fight corruption and organized crime;

• remove the power of the oligarchs;

• bring to trial members of the former regime implicated in corruption and election fraud. 

Constitutional Reform 

The only policy in the policy domain that could seriously strain the coalition in 

the political/institutional field relates to the constitutional reforms agreed in December 2004 as part of a compromise package to break the deadlock and hold repeat 

elections. However, only the Socialist Party support constitutional reforms; the 

Tymoshenko bloc and the Party Industrialists and Entrepreneurs are opposed, while 

Our Ukraine is evenly divided, fearing both to weaken the presidency’s ability to 

push through reforms and advantage the Left. The reforms could be challenged in 

the Constitutional Court, over procedural irregularities in their initial passage. 

36

3Lytvyn was head of the Presidential Administration in 2000 when Gongadze was murderd. 

Personal Rivalries 

Other divisions in the coalition are personal—the product of competition for top 

jobs after the 2004 election. For example, the broad remit given to Petro 

Poroshenko, who had hoped to become prime minister, as head of the National Security Council creates the potential for ‘turf wars’ with Tymoshenko, and friction between the two is likely to persist. 

Tymoshenko will remain as prime minister at least until parliamentary elections 

in March 2006. Leaving the coalition at this stage would threaten her political future, and she is protected from votes of no confidence by a period of 18-months’ 

grace after becoming Prime Minister, which extends to the elections in 2006. Her 

more populist impulses will continue to jar with Yushchenko’s more reformist approach, but Yushchenko has reined her in over misguided economic policies. 

Corruption 

The Yushchenko administration inherited high levels of, and deeply entrenched, 

corruption. Some important steps have been undertaken to combat corruption, but 

much more needs to be undertaken. Criminal charges have only reached as far as 

the middle level of former Kuchma officials. 

Many former Kuchma officials have fled to Moscow where they have been asylum. 

Interior Minister Yuriy Lutsenko describes this group of former Kuchma officials as 

a ‘government-in-exile’. Russia has not only given asylum to criminals on the run; 

it has also lobbied in the Parliamentary Assembly of the OSCE for this organization 

to denounce alleged ‘political repression’ in Ukraine. Russia’s ruling Unified Russia 

party has signed an agreement of cooperation with defeated candidate Yanukovych’s 

Regions of Ukraine, continuing Russia’s official support for Yanukovych in the 2004 

election. 

Gongadze Murder 

Little progress has been made in resolving the murder of opposition journalist 

Heorhiy Gongadze in fall 2000. 3 of the 4 policemen who murdered Gongadze have 

been arrested. But, the head of the murder group, General Oleksiy Pukach, has fled 

abroad, reportedly to Israel. Former Interior Minister Yuriy Krawchenko committed 

suicide or was murdered. 

The key suspects in the Gongadze case, former President Kuchma and Parliamentary Speaker Volodymyr Lytvyn3, have not been charged. There is strong suspicion 

that Kuchma was given immunity during round-table negotiations in December 

2004, after lobbying by EU Xavier Solana and Polish President Aleksandr 

Kwasniewski. 

Progress in the Gongadze case is also hampered by the exiled presidential guard 

Mykola Melnychenko. Melnychenko’s tapes made illicitly in Kuchma’s office recorded a voice resembling Kuchma’s ordering Interior Minister Krawchenko ‘to deal’ 

with Gongadze. Melnychenko has been unwilling to cooperate with the Ukrainian 

Prosecutor’s office or hand over the original tapes. 

Economic Reform 

On economic policies, the coalition is divided between state interventionists (Socialists and Tymoszhenko bloc) and free-market liberals (Party Industrialists and 

Entrepreneurs, Our Ukraine), who have clashed over key issues: 

Regulating food and fuel prices. The government’s decision to impose price caps 

after an oil price hike in April 2005, alongside Tymoshenko’s decision to confront 

directly the Russian oil companies that supply most of Ukraine’s oil, arguably only 

succeeded in creating a petrol shortage. Yushchenko and certain figures in the cabinet, notably First Deputy Prime Minister Anatoliy Kinakh, criticized the government’s handling of the crisis, in particular the departure from allowing market 

forces to determine pricing. Yushchenko suggested in a meeting with Russian oil executives that Tymoshenko should resign, although he later stepped back from this 

step. 

Re-privatization. Tymoshenko has voiced support for investigating 3,000 

privatizations undertaken since 1992, while Yushchenko and Kinakh supported a 

list of 29 companies. After the min-Davos World Economic Forum summit in Kyiv 

in June, it was decided to not draw up any lists of companies slated for re-privatization. 

Tymoshenko’s statist views are supported by the new head of the State Property 

Fund, Valentyna Semeniuk (Socialist Party). Left and right-wing populists support 

maintaining state control over large ‘strategic’ enterprises if they are re-privatized; 

Yushchenko supports their submission to new, transparent tenders or asking the 

37

current owners to pay the market price. Yushchenko’s more pro-market views will 

dominate government policy. 

One area of economic policy that the coalition has not disagreed on is a socially 

oriented budget. Pensions and state salaries were increased ahead of the 2004 elections by then Prime Minister and presidential candidate Viktor Yanukovych. The 

new government had to continue these commitments, but has added new spending 

of its own. 

Higher pensions and state salaries risk higher inflation and slower growth. Nevertheless, they are supported by both strands in the coalition, partly to reduce the 

need for corruption by making state salaries sufficient to permit a reasonable standard of living for state officials, but also to increase support for the coalition in the 

2006 parliamentary election, especially in eastern and southern Ukraine. 

CONCLUSION

Ukraine’s progress towards reform under Yushchenko will progressively move forward and become faster after the 2006 parliamentary election. Yushchenko’s election coalition will win a parliamentary majority, giving it control over the government. 

The speed of reforms will be at a medium pace, compared to their rapid progress 

in central Europe and the Baltic states. The reasons for this are inherited legacies 

from Soviet rule and mismanagement and corruption since 1992. A faster reform 

pace is also constrained by two other factors. First, regional divisions, with support 

for reform lower in eastern Ukraine. Second, the need to build up administrative 

capacity to permit Yushchenko’s policies to be implemented at the local level. 

Yushchenko’s reform program is being undertaken in a more benign environment 

than that of the 1990s. First, the opposition is in decline (Communist Party) or lacks 

legitimacy (former pro-Kuchma centrists). Second, the worst aspects of reform,—

shock therapy—have already taken place. Third, since 2000 the economy is growing.

Mr. GALLEGLY. Thank you very much, Dr. Kuzio. 

I am going to try to condense my questions in an abbreviated 

form so Ms. Berkeley will have an opportunity before the bells go 

off. 

For you, Dr. Kuzio: What is your assessment of Russia’s policy 

toward Ukraine, and do you think that Russia may be trying to undermine the new pro-Western government? 

Mr. KUZIO. There is little question that Russia does not even legitimately accept the election of Viktor Yushchenko. Vladimir 

Putin’s political party, Unified Russia, only last month signed an 

agreement of cooperation with Viktor Yanukoviych’s party of regions, which therefore continues Putin’s intervention in Ukraine’s 

internal affairs. 

Could you imagine, for example, the United States Republican 

party signing an agreement with Victor Yushchenko’s People’s 

Union-Our Ukraine party? This would rightly be seen as direct 

intervention in Ukraine’s domestic affairs. Russia is continuing to 

do this. Worse still, Russia has become, in effect, a center for government officials in exile of Kuchma, who have fled to Moscow due 

to having been charged on various issues such as election fraud 

and corruption. 

A third way in which Russia is playing a very negative role is 

in attempting, as we saw in Uzbekistan, to block the spread of democracy in the former USSR. Vladimir Putin is in favor of actually 

launching counterrevolutions against democratic progress. So we 

already have a very direct competition there between Ukraine, 

which supports the Bush Administration’s promotion of democracy 

in the region, and Russia’s attempt to oppose the spread of democracy. 

38

Mr. GALLEGLY. Following up on that, Mr. Nix, do you believe 

that the current United States assistance to Ukraine is sufficient? 

If not, what do we need to do? 

Mr. NIX. The short answer is yes. Currently our assistance is sufficient, but I think we have to keep in mind that just like it takes 

time to build parties and build transitions of power, it takes time 

to build structures. My admonition is that the United States Agency for International Development and the State Department have 

to continue to provide assistance in a broad array to Ukraine in a 

number of areas. 

Number one is to continue to work in the area of political parties 

as they develop. Number two is development of civil society. Number three is rule of law. Again the reform of the Courts of General 

Jurisdiction is very important for a number of reasons to make 

Ukraine’s courts really separate and equal from the executive and 

legislative branches. 

My point to the Committee is that we have to stay at this for 

years to come. This is not something that we can say we had tremendous success during the Orange Revolution and then walk 

away from it. It is an investment of time and resources, and we 

have to make a commitment to it. 

Mr. GALLEGLY. Thank you, Mr. Nix. 

One final question for you, Ambassador Ledsky. From a more 

global view, how can the events in Ukraine help to spread democracy in former Soviet countries such as Belarus and elsewhere in 

the world? 

Mr. LEDSKY. Well, first through inspiration. I think what is going 

on in Ukraine is known in Belarus. It is known in Moldova. It is 

known in the Caucasus. It has come to inspire the political leadership of the opposition in all those countries. The Ukrainians have 

also taken a number of steps to promote democracy in Belarus, in 

Moldova, in Georgia, and Armenia. Finally, the Ukrainians have 

begun a process of trying to solve the Trans-Dniester problem together with the Moldovans in a way that is absolutely new and, I 

think, quite refreshing. 

Perhaps, finally, I should mention the Ukrainians have taken a 

lead in trying to put together this Guam relationship—a relationship which includes, if I am not mistaken, Moldova, Georgia, Azerbaijan, and Ukraine—in an effort to stimulate economic development among the four or five democracy-building societies and to assist in the political development of each of those states. The 

Ukrainians have done, I think, a remarkable job of reaching out to 

their neighbors over the course of the last 6 months, and I think 

it should be encouraged and developed further. 

Mr. GALLEGLY. Thank you very much, Ambassador. 

Ms. Berkeley? 

Ms. BERKELEY. Mr. Chairman, I do not have any additional questions. I appreciate the questions that you asked. They would have 

been the ones that I would have. 

I want to thank all of you for being here and helping to educate 

me so that I could do a better job in my position. I appreciate how 

optimistic you are with reservations, obviously, about the future of 

Ukraine and the surrounding area. I share your enthusiasm and 

look forward to working with the Ukrainians and providing them 

39

with the resources they need to continue doing what they are 

doing. 

Thank you all very much for being here. 

Mr. GALLEGLY. I would just like to quickly summarize by giving 

a very big thank you to the three of you and Ambassador Fried. 

It is remarkable we were able to cover such a lot of ground, and 

we did it with 34 seconds to spare. Obviously there are many, 

many more questions that I know my fellow Committee Members 

would like to ask and continue to use all of you as a resource. 

In my 19 years here in this great body, there have been few 

things that have given me anywhere near the level of pleasure as 

what I am seeing happening in this region of the world. It is extremely encouraging, yet it is still fragile. I see us going in a direction that many of us never thought we would see 10, 12, or 14 

years ago. 

Mr. LEDSKY. Mr. Nix predicted it. 

Mr. GALLEGLY. Yes. Well, let us hope that he has other great 

things to predict in the future because if it is like this I want to 

applaud you belatedly. 

Again, thank you all for being here, and again I apologize for the 

abbreviated hearing. With that, the Subcommittee stands adjourned. 

[Whereupon, at 2 o’clock p.m. the Subcommittee was adjourned.] 

(41)

A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

PREPARED STATEMENT OF THE HONORABLE DAN BURTON, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF INDIANA

Mr. Chairman, thank you for convening this important hearing to shed light on 

the progress of democracy in Ukraine after the Ukrainian’s people courageous struggle for political freedom and economic prosperity. Only a few short months ago, the 

Ukrainian people voted to cast off the burden of corruption, oligarchy and tyranny 

by electing opposition leader Viktor Yushchenko as President in what has been 

called the Orange Revolution. In the true spirit of freedom and equality, the brave 

and determined people of Ukraine achieved their victory through a truly bloodless 

revolution. 

Since the fall of the Iron Curtain much of Eastern Europe has struggled to loose 

the chains of corruption and oppression that linger as relics of Soviet socialism and 

communism. It is for this reason that the Orange Revolution came as a refreshing 

glimmer of hope to the United States and the international community as a whole. 

We cannot commend enough the courage and bravery of the Ukrainian people. Their 

vote was one for progress and one against a corrupt relationship between business 

and politics. Furthermore, such political progress epitomizes the America’s determined foreign policy goal of spreading democracy and freedom throughout the globe. 

The Orange Revolution occurred as a result of electoral fraud on the part of government officials; it was this fraud which ultimately incensed the Ukrainian people 

and catalyzed opposition leader Viktor Yushchenko’s victory. Mr. Yushchenko not 

only boasts international approval, but most importantly maintains a 60% approval 

rating in Ukraine as well. He maintains a policy of governmental transparency and 

economic progress. Such policies have combined, this year, to increase public spending, increase the average national wage, and increase Ukraine’s GDP by 12.1%. 

Thanks to Mr. Yushchenko’s government, we are seeing internal economic progress 

in a country once overwhelmed with corruption. 

In addition to the current economic progress we are witnessing in Ukraine, Mr. 

Yushchenko has gone to great lengths to dispel past animosities and has wholeheartedly sought favor with the international community. In his own words, his ultimate goal is to ‘‘place Ukraine among the prosperous democracies’’ of Western Europe. In order to do this, Mr. Yushchenko is adamantly lobbying for his country’s 

entrance into the European Union, North Atlantic Treaty Organization (NATO), and 

the World Trade Organization (WTO). Entrance into these organizations is an essential step toward cementing current reforms and providing an audience for further progress. I encourage all of my colleagues to endorse Ukraine’s entrance into 

the international community and in doing so I encourage us to offer our hand, not 

as former foe, but as welcoming friends. Such a gesture, I believe, will go a long 

way toward completely stabilizing and solidifying democracy and freedom in 

Ukraine. 

Mr. Chairman, despite my optimism and hope that the Orange Revolution and 

Mr. Yushchenko’s government have provided in their region, history has demonstrated that revolutions are a means, not an ends. They are the dynamic foundation of freedom and equality, both of which transcend people and time through constant progress and revival. Although it is regrettable that the phoenix must occasionally rise from ashes to resume its place of admiration, we must nevertheless 

view revolution as rebirth. For this reason, while I commend President Yushchenko 

and Prime Minister Yulia Tymoshenko and the Ukrainian people for the steps they 

have taken toward the ideal of democracy and free markets, I am compelled to state 

my concerns with the hope that this hearing will illuminate the country’s situation 

42

so as to give praise where praise is due and raise concerns where further reforms 

are needed. 

Although Ukraine has already made much progress since the Orange Revolution, 

I am concerned that government actions are not matching the words of the Orange 

Revolution speeches. The Yushchenko government promised open government and 

free markets—both of which are emerging in Ukraine but fall short of Western 

standards. Long delays in opening Ukraine’s financial records of government officials cast a shadow of doubt on the pledge of government transparency. And in addition to this, I am concerned about recent government-supported price ceilings imposed on the oil and meat markets in Ukraine. Such actions are not only hypocritical of free market rhetoric but cause alarm in this post-Soviet region. 

Make no mistake about it, these concerns cannot take away from the fact that 

Ukraine is on the right track. The Ukrainian people have spoken and they adamantly demand freedom and democracy. I believe that Mr. Yushchenko and his government are the answer to the Ukrainian cries. The United States’ participation in 

the international theater will provide ample audience for Ukraine’s continued reform. 

Once again Mr. Chairman, I thank you for holding this important and timely 

hearing. I look forward to hearing from the witnesses and hope—by the days end—

that we will have a better understanding of how best to support our friends in 

Ukraine and their quest for freedom and democracy.

Æ