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UKRAINE
>> Regional Overview >> Ukraine Overview
Development Challenge FY2001 Program /
Activity & Budget InformationSummary Tables
Program Summary
Previous Years' Activities
2000, 1999, 1998, 199732
Introduction
Ukraine’s successful transition to a democratic society and market economy continues to be highly important to U.S. national interests. Secretary of State Madeleine Albright recently identified Ukraine as one of the top, four emerging – but fragile – democracies that are critically important for their region and for U.S. foreign policy. A strong, independent, prosperous, and democratic Ukraine could serve as an important strategic partner for the United States. Such a partnership would promote stability and security, expand commercial and economic relations, and address critical cross-border issues such as health and environment in the region. U.S. assistance seeks to enable Ukrainians to build an economically strong, independent, democratic country, and to support Ukrainian plans to associate closely with Europe and forge stronger ties with the West.
The Development Challenge
With the re-election of President Kuchma to a second term, appointment of one of the most reform-minded leaders in Ukraine as Prime Minister, and some prospect for a constructive majority coalition in Parliament, Ukraine’s reform program offers new signs of life after a two-year period of election-related deferral. This opportunity represents Ukraine’s best chance in years to demonstrate its commitment to advance decisively on fundamental macroeconomic and structural reform measures. Ukraine has a compelling reason to do so. Once again, a financial crisis threatens the country, this time in the form of major debt coming due in early 2000. Ukraine will have to satisfy international financial institution conditions to obtain the financing required for solvency. It remains to be seen whether the political will to implement difficult reforms will wane if Ukraine manages to avert the crisis.
Despite the lack of consistent commitment to comprehensive reform over the past several years, there has been reform progress. USAID’s economic reform programs have achieved considerable successes. In the agricultural sector, over 600 farms have been restructured or privatized, and over 4,000 agro-industrial enterprises were privatized. Non-agricultural private enterprise development activities also performed well, with over 90% of all small enterprises in Ukraine now privately owned, providing employment to more than 660,000 people. In addition, more than 9,500 of the approximately 11,000 medium and large enterprises in the country have been privatized. In the area of financial sector reform, USAID supported the formation of the broker-dealer association (PFTSA), which in turn established a nation-wide electronic trading system. In 1999, PFTSA grew to 240 members in 21 cities, and the total volume of trades by the membership amounted to $196 million. In the energy sector, the USAID-supported National Electricity Regulatory Commission firmly committed itself to a competitive, market-based energy sector that issues utility licenses, regulates prices, and sets terms and conditions on producer-consumer relationships.
Finally, in environmental management, the transfer of U.S. Environmental Protection Agency, computerized water system modeling technology, U.S. engineering technologies, and financial management expertise, increased local capacity to provide water services from zero to three hours per day to 24 hours per day in the assisted area. In the industrial sector, USAID projects helped generate $3.4 million in annual savings in ten Donetsk and Dnipropetrovsk enterprises and improved energy efficiency in 24 enterprises.
USAID democracy and governance activities had mixed results. USAID-supported activities helped to train and deploy over 55,000 election monitors for the 1999 presidential elections and to provide technical assistance for electoral administration. Nevertheless, the Organization for Security and Cooperation in Europe has raised concerns about the conduct of the presidential elections of 1999. USAID efforts to support non-State media suffered setbacks, as 25 of the 64 member stations of the Ukrainian Radio Broadcasters Association reported that they had received anonymous threats or were harassed by tax authorities during the election campaign. The Government of Ukraine exerted pressure on the media to keep the communist opposition off the air.
In the area of rule of law, USAID technical assistance and training achieved the following results. A Constitutional Court was formed. A judicial training center was created. Court administration was computerized. Legal information was widely disseminated, and mechanisms for alternative dispute resolution introduced. Improvements were made in education of legal professionals and citizens’ access to legal representation increased. Finally, USAID local governance assistance enabled 40% of cities with populations between 50,000 and 1,000,000 to begin using financial analysis models. Twelve of these cities achieved measurable improvements in municipal services (transportation and water). Seventeen percent of the total began using strategic development planning tools. Fifteen of the cities established citizen task forces and advisory boards. Twenty-two cities held public hearings and "town hall" meetings on a consistent basis, and 11 cities used competitive procurement procedures regularly.
In the social sector, USAID assistance contributed to improved cost recovery for housing and communal services, saving the state budget an estimated $1 billion per year. The USAID-supported, housing subsidy program provided targeted assistance to some four million poor families, using automated caseload management and financial reporting systems. In addition, USAID technical assistance helped create systems for monitoring the social protection needs of the population and for reporting wages and contributions to the State Pension Fund. These new systems improved tax collection, linked pensions to employment history, and could potentially eliminate workbooks. USAID-supported health activities sparked the start of administrative reform within the Ministry of Health and health care reform in the country. Working closely with counterparts at the Ministry of Health and a number of oblasts. USAID catalyzed the Ukrainian government’s support for more aggressive health sector restructuring and helped design and implement programs in the sector.
Given the Government of Ukraine’s ambivalence about comprehensive reform, the United States has changed its approach to assistance, emphasizing local-level activities that empower people and grassroots organizations to effect change. USAID provides minimal support to central government structures, and then only in areas where the potential for reform is significant. Recognizing that people have to understand and believe in the concepts of reform in order to implement lasting change, a portion of FREEDOM Support Act (FSA) assistance is being redirected towards the next generation of Ukrainian leaders. Should Ukraine follow through on initial encouraging post-election actions, the U.S. will quickly identify the most promising opportunities to support reform and provide assistance in coordination with the International Monetary Fund (IMF), World Bank and the European Union, among others. Given limited resources, USAID will allocate its assistance selectively and in a manner that leverages resources and complements the work of other donors.
USAID will continue to emphasize assistance programs that foster a strong civil society, and private enterprise-led opportunities for employment and economic growth. This approach includes supporting small business development; working with private farmers in selected regions; strengthening citizens’ groups, think tanks and other non-governmental organizations; and increasing the capacity of local government to implement reforms and promote economic growth. Greater reliance on partnerships with U.S. organizations will help leverage U.S. assistance dollars further and promote strong ties between groups in the United States and Ukraine. In addition, USAID emphasizes the sharing and the application of lessons learned by other former Eastern Bloc countries further along in their transition, such as Poland. Support for anti-corruption measures will play a more prominent role in U.S. assistance programs, particularly in reducing the potential for corruption by encouraging transparent measures, reducing regulation, and putting in place incentives to reduce corruption.
Other Donors
The United States is one of the largest bilateral donors to Ukraine, having provided $199 million in FY 1999. Major donors include the World Bank, European Union, United Kingdom, Germany, Canada and the European Bank for Reconstruction and Development. USAID works closely with these donors to ensure that U.S. assistance programs are complementary and mutually reinforcing. Donors meet regularly to exchange views and information on joint activities and key developments. Ukraine’s performance under an IMF Extended Fund Facility totaling $2.6 billion undergoes regular review to gauge progress on a range of macroeconomic and structural reform conditions, with implications for the full range of donor programs.
Country Background Information Resources CIA Factbook
Library of CongressNational Geographic Country Maps
State Dept. Country Information
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Last Updated on: December 12, 2000 |
