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Press Release

President of Ukraine Leonid Kuchma Addresses the Scientific Conference "Ukraine on the Eve of the XXI Century: Lessons Drawn from Reform and Development Strategy"

Kyiv, November 16, 2000     # 33

In his speech entitled "Ukraine: The Results of Socio-economic Transformations and the Vision of the Future" President Leonid Kuchma explored Ukraineís development over the past ten years and prospects for the future.

The President said that during the first decade of its independent development Ukraine has established itself in the world as a sovereign state, a full-fledged member of the international community and an important factor of stability in the European continent. He noted that the results of the presidential elections in 1999, consolidation of state power and formation of the constructive majority in the parliament have created a new political situation in the country. The stabilization that is taking place in the national economy creates preconditions for sustainable economic growth.

However, in Presidentís view realistic approach calls for objective assessment of achievements and setbacks. He noted in particular that the economic potential of the country has more than halved while standards of living have fallen even further. Among the reasons that caused economic decline in the initial stage of independent development the President named excessive hopes on external aid and mistakes in determining the model of economic transformation. He pointed out that the deep systemic transformation on which Ukraine embarked after independence, was not limited to market transformations as it was widely and erroneously believed. As the President pointed out the formula of transformation adopted at the initial stage when social issues were sacrificed to economic reforms proved to be not only wrong but destructive. He said in this conection that social re-orientation of reforms should be considered not as tactical step but as the ultimate goal of all transformations in the country.

As it was pointed out Ukraineís experience and that of other states gives enough proofs that no country has ever been able to replicate the process of development of other states. Success of reforms depends on the ability of the leadership to work out an effective custom-made model of transformation without relying exclusively on foreign experts whose approach is not always objective and does not take into account the specific realities.

The President said that democracy is of vital importance for the success of reforms, however, he noted that Ukraine needs time to build a real democratic system of western type. Only a strong and viable state can ensure consolidation of democratic institutions and civil society in this transformation period. Mr.Kuchma emphasized the necessity to enhance economic freedom and create conditions that would protect property rights in the country.

Mr. Kuchma emphasized the need to thoroughly contemplate the strategy of Ukraineís integration into the European Union. He said that it should be a step-by-step process which means that the goals and mechanisms of each phase on the way to the EU could not be identical. Mr. Kuchma said that at the present moment when Ukraine is lagging considerably behind its neighbors in Eastern and Central Europe government's pivotal task is boosting GDP per capita in order to catch up with countries like the Czech Republic and Poland. Mr. Kuchma believes that to catch up with the countries that are first wave candidates for EU membership Ukraine would need at least 6-7% GDP growth and conditions for this should be created in 2001. In his view the 2001 state budget should form a potential for future economic growth. He emphasized on the need to work out a strategy that would stabilize the economy and generate further growth.

Mr. Kuchma stressed that Ukraine is interested in cooperation with the International Monetary Fund and acknowledged its vital importance for Ukraine. However, he added that such cooperation should be completely de-politicized and that it should be built on mutual trust and acknowledge Ukraineís ownership of the reform program. He spoke in favor of open and constructive dialogue with the IMF needed to discuss all existing problems.

The President noted that Ukraine will not seek cancellation of its debts to the International Monetary Fund, and will continue negotiations with the IMF on refinancing its debt. Mr. Kuchma expressed hope that success in negotiations will lead to Ukraineís economy recovery without new borrowings, thus the state could free itself from outside control on its policies. Unfortunately, we are becoming more convinced that the policies of the IMF are not always constructive, and they do not take into consideration the specific nature of each particular country, Mr. Kuchma said.

The President also said he would focus on fighting Ukraine's shadow economy that presently accounts for over 40% of Ukraineís gross domestic product. He added that the shadow economy drains the state budget revenues by10-12 billion hryvnias which creates serious problems, particularly in the social sphere, and leads to corruption. Mr. Kuchma told the conference that an important task of reform is to reduce the influence of the so called "oligarchic structures". As Mr. Kuchma said, the government would not be able to perform its mission if its policies are largely determined by corporate interests. He said that the state would increase its support to domestic investors and producers and called for a stronger banking system that would become an efficient instrument to support economic growth.

In conclusion the President noted that the irreversibility of the strategic political course on reforms in all spheres of life does not prelude the methods and means of achieving the goals from adjustment. In the present situation the statesmen and leaders who assumed the responsibility to rebuild the system that Ukraine inherited, no longer have a right for mistakes. The trial and error method must give way to a deep, comprehensive and sober analysis that would lead to a viable realization of the aims. He said that Ukraine has enough potential not only to improve the current situation but also to significantly accelerate the development of economy and social sphere.

For more information, please contact:
Taras Malyshevskyi, Press Secretary of the Embassy of Ukraine
310 Somerset Street West, Ottawa, ON K2P 0J9
Tel. (613) 230-2961, fax (613) 230-2400,