U.S. State Department Geographic Bureaus: Europe and Canada Bureau

U.S. Department of State
96/03/13 Fact Sheet: U.S. Assistance to Ukraine
Bureau of Public Affairs

March 13, 1996
U.S. Assistance to Ukraine

The dissolution of the Soviet Union in December 1991 brought an end to the Cold War and created the opportunity to build bilateral relations with the New Independent States (NIS) as they began a political and economic transformation. On December 25, 1991, the United States officially recognized the independence of Ukraine. It upgraded its consulate in the capital, Kiev, to embassy status on January 21, 1992. The U.S. ambassador to Ukraine is William Miller, sworn in on October 13, 1993.

The United States attaches great importance to the success of Ukraine's transition to a democratic state with a flourishing market economy. Following a period of economic decline characterized by high inflation and a continued reliance on state controls, the Ukrainian Government under the leadership of newly elected President Leonid Kuchma began taking steps in the fall of 1994 to reinvigorate economic reform and achieve macro- economic stabilization. The Ukrainian Government's new determination to implement comprehensive economic reform is a welcome development, and the U.S. is committed to strengthening its support for Ukraine as it embarks on this difficult path.

In January 1992, the U.S. initiated the Coordinating Conference on Assistance to the New Independent States in response to the humanitarian emergencies facing these states. The resulting Operation Provide Hope supplied desperately needed food, fuel, medicine, and shelter.

A cornerstone for the continuing U.S. partnership with Ukraine and the other NIS has been the Freedom for Russia and Emerging Eurasian Democracies and Open Markets (FREEDOM) Support Act, enacted in October 1992. In September 1993, a new $2.45-billion assistance package for the NIS, funded with a combination of fiscal year (FY) 1993 and 1994 supplemental appropriations, was passed by Congress and signed into law by President Clinton. The legislation continues to address political and economic transformation and humanitarian needs.

The U.S. has steadfastly supported Ukraine's transition to a free, democratic society with a prosperous market economy. Since 1993, the U.S. has obligated more than $1.3 billion in bilateral assistance and financing to help Ukraine advance democratic and market reforms and reduce the threat from weapons of mass destruction. Ukraine is now the fourth-largest recipient of U.S. assistance in the world.

In response to President Kuchma's commitment to implement rigorous economic reform under an IMF stand-by arrangement, the U.S. pledged $250 million at the March 1995 World Bank Consultative Group Meeting for Ukraine. Most of this contribution will be provided through an innovative trade credit insurance facility, funded by USAID and administered by the U.S. Export-Import Bank, to supply critical inputs to Ukraine's agricultural sector. The U.S. contribution was instrumental in leveraging an additional $3.1 billion in financial assistance and debt rescheduling from other bilateral donors and in facilitating final IMF approval of the stand-by program. In FY 1996, the U.S. projects making available at least $330 million in grant assistance and approximately $860 million in financing to Ukraine through a variety of government programs.

Assistance To Support the Transition to a Market Economy. U.S. technical assistance to support transition to a market economy has focused primarily on economic restructuring, development of the private sector, and energy sector reform. Specifically, USAID is assisting Ukraine in privatization of enterprises, land, and housing; creation of capital markets; reform of financial and fiscal systems; development of sound commercial law; restructuring the energy sector; fostering new business development and investment; reinvigorating agriculture; and promoting environmentally sustainable growth. The Western NIS Enterprise Fund was announced by President Clinton in January 1994 to promote private sector business development in Ukraine, Moldova, and Belarus. The fund has committed $12 million in investment capital to projects in the region.

U.S. exchanges and training programs have enabled Ukrainians to participate in a broad range of programs in the U.S. These include coal mine safety, nuclear reactor safety, private land ownership and real estate markets, local government finance, banking, tax accounting, labor statistics, telecommunications, labor- management relations, promotion of agricultural development, security and defense conversion, international trade and investment, entrepreneurship and small business development, and public health and hospital management and finance. Three medical partnerships have been established between U.S. and Ukrainian medical institutions. Peace Corps volunteers are working in Ukraine with a focus on small business development and English teaching.

Funding has also been provided for studies in air traffic control and airport construction, establishment of an agricultural center to provide training on U.S. agricultural equipment, and the conversion of a coal- power plant to gas. The U.S. has provided grain storage facilities.

Assistance To Support the Transition to Democracy. The U.S. is promoting Ukraine's democratic transition by supporting programs on participatory political systems, independent media, rule of law, local governance, and civil society, as well as a wide range of exchanges and training.

USAID has provided Ukraine with technical assistance related to elections, the development of political parties and grass-roots civic organizations, and the development of independent media. A USAID-funded rule-of-law consortium has been working with Ukrainian officials and non-profit organizations to create a legal system supportive of a democratic government and a market-based economy. The rule-of-law project has been further expanded to promote cooperation between U.S. law enforcement agencies and their Ukrainian counterparts to reform the criminal justice system.

Since 1992, the U.S. Information Agency (USIA) has brought over 1,200 Ukrainians to the U.S. on academic exchanges. Over 200 Ukrainian business people, journalists, local government officials, and other professionals have participated in other exchanges. USIA visitor program participants included then-presidential candidate Leonid Kuchma in April 1994. USIA visitor programs have highlighted such subjects as economic and education reform, rule of law, and public administration.

The Department of Commerce's Special American Business Internship Training (SABIT) program and the Department of Agriculture's (USDA) Cochran Fellowship Program have brought over 130 business executives, scientists, and agriculturalists to the U.S. for internships and training programs.

Support for the Social Sector. The U.S. is assisting Ukraine's efforts to maximize equity in reform and to sustain social welfare and stability during and beyond the transition. Toward this end, USAID is providing assistance to local governments in redefining the roles of the public and private sectors in providing social services to allow government to focus limited resources on key social sectors. Training and technical assistance is being provided to Ukrainian institutions and government agencies on reforms of health care financing and delivery of medical services. A number of medical partnerships between U.S. and Ukrainian health care institutions have been established to improve both patient care and institutional management. Also, USAID is providing training and technical assistance on ways to improve reproductive health, focusing on providing family planning services and reducing the use of abortion.

Humanitarian Assistance. Through the end of FY 1995, the U.S. has coordinated and funded the delivery of $60 million in food, medical supplies, and clothing to Ukraine. This includes a $16-million surplus Department of Defense hospital recently delivered to Dontsk. In the spring of 1995, the U.S. Government provided $25,000 in response to a disaster declaration in Kharkiv and coordinated the delivery of flood relief equipment and teams to the region. Previously, the U.S. provided $25,000 in response to the January 1994 flood disaster in Ukraine's Zakarpatska oblast. In October 1993, $25,000 was provided in international disaster funding for the drilling of water wells in the flood-stricken area of Rivne. The U.S. has provided funding for non- governmental organizations to deliver surplus Department of Defense food and medicines, in addition to providing transport for privately donated food, medicines, medical supplies, and clothing.

Through the end of FY 1995, Operation Provide Hope has delivered over $148 million in donated food, medicine, and clothing to Ukraine. A large portion of these supplies were designated for hospitals treating victims of the Chernobyl nuclear accident. Under the Medical Assistance Initiative, Project HOPE, a private voluntary organization, has shipped more than $30 million worth of pharmaceutical and medical supplies to Ukraine.

In response to an epidemic of diphtheria, the U.S. sent two assessment advisers from the Centers for Disease Control and vaccines, syringes, and needles with a value of $1.3 million under the Emergency Medicines Initiative. Under the Emergency Immunization Program, through Project HOPE, measles vaccine was provided, allowing for the vaccination of all Ukrainian children up to two years of age during 1993. In response to a 1994 request from the Ukrainian Government, the U.S. provided diphtheria vaccines for adults and children to help Ukraine eradicate this deadly disease. In FY 1994, USDA provided Ukraine with more than 70,000 metric tons of food aid, valued at about $24 million, and in FY 1995, provided $31.1 million in PL 480 assistance in the form of 122,000 metric tons of food aid.

Bilateral Trade Issues

The U.S.-Ukraine Trade Agreement, effective June 22, 1992, provides reciprocal most-favored-nation tariff treatment to the products of each country. Since January 1994, the Overseas Private Investment Corporation (OPIC) has approved investment insurance totaling more than $23 million for three projects in Ukraine. OPIC has also sponsored conferences and exchanges to encourage joint ventures between U.S. and Ukrainian companies. U.S. Export-Import Bank programs are currently closed in Ukraine, but the bank is continuing to reassess Ukraine's creditworthiness in light of recent government economic reforms with a view to reopening lending activities as soon as possible. In March 1994, President Clinton and Kravchuk signed treaties on bilateral investment and double taxation.

Security Issues

In Lisbon on May 23, 1992, the United States signed a protocol to the Strategic Arms Reduction Treaty (START) with Ukraine, Russia, Belarus, and Kazakstan (those states on whose territory strategic nuclear weapons of the former Soviet Union are located). The protocol makes each state a party to the START Treaty and commits all signatories to reductions in strategic nuclear weapons within the seven-year period provided for in the treaty. Ukraine, Belarus, and Kazakstan also agreed to join the nuclear Non-Proliferation Treaty (NPT) as non-nuclear weapons states. The treaty entered into force on December 5, 1994, the same day Ukraine acceded to the NPT.

The U.S. is providing nearly $350 million in assistance to Ukraine under the Cooperative Threat Reduction (CTR) or "Nunn-Lugar" program, including assistance in the dismantlement of strategic offensive arms ($215 million); elimination of nuclear infrastructure ($10 million); enhancement of export controls ($13.2 million); building defense conversion partnerships ($50 million); and nuclear material protection, control, and accountability ($22.5 million). CTR assistance funds also have helped establish a government-to-government communications link ($2.4 million), provided emergency response equipment and training ($5 million), and supported defense and military contacts ($5 million) and a multilateral nuclear safety initiative ($11 million). In addition, the U.S. has provided $15 million for the establishment and support of a Science and Technology Center in Ukraine designed to provide peaceful civilian employment opportunities to scientists and engineers formerly involved with weapons of mass destruction and their delivery systems.

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