CRITERIA FOR U.S. ASSISTANCE UNDER SECTION 498A(a) OF THE FOREIGN ASSISTANCE ACT OF 1961

UKRAINE

Section 201 of the FREEDOM Support Act amended Section 498A of the Foreign Assistance Act of 1961 to require that the President "take into account not only relative need but also the extent to which that independent state is acting to":

Section 498A(a)(1): "make significant progress toward, and is committed to the comprehensive implementation of, a democratic system based on principles of the rule of law, individual freedoms, and representative government determined by free and fair elections."

Ukraine has progressed unevenly in building a democratic society since gaining independence in 1991. The 1994 election of Leonid Kuchma to the Presidency against incumbent Leonid Kravchuk constituted the first peaceful, democratic, contested transfer of executive power in the former Soviet Union. Kuchma was reelected in November 1999, in Ukraine's third presidential election. Kuchma won with over 56 percent of the vote, compared to 38 percent for his communist rival. The election failed to meet a significant number of OSCE standards, due to government manipulation, harassment of the media, and the systematic involvement of government officials in the campaign. Despite problems in the election, some observers saw the result as a rejection of the communists and an endorsement by the Ukrainian people of continued political and economic reform and a pro-Western orientation, to which Kuchma had committed himself during the campaign.

The April 2000 referendum on changes to the Constitution that would have increased Kuchma's power at Parliament's expense also gave rise to charges of irregularities. According to the Organization for Security and Cooperation in Europe (OSCE), the March 2002 parliamentary elections were an improvement over the 1998 parliamentary elections in some respects, but important flaws persisted. A general atmosphere of distrust pervaded the pre-electoral environment due to factors that included flawed implementation of the legal framework, interference by the authorities in the electoral process, and abuse of administrative resources, including allegations of pressure against public employees to vote for certain candidates. Observers found state media coverage to be biased, and opposition candidates did not have access to the media. On the day of voting, however, results of the exit polls tracked closely with subsequently announced official results.

In the 2004 presidential election, the OSCE observer mission noted serious flaws in the campaign and the first round of voting, including a strong media bias, problems with the voters’ lists which excluded up to ten percent of voters, and administrative pressure on students and government and state enterprise employees. In the second round voting, between the two front runners, observers noted massive and systematic fraud through the abuse of mobile ballot boxes, absentee ballots which were cast in exceeding high numbers, and ballot stuffing, as well as previously cited problems. In an historic decision, the Supreme Court of Ukraine invalidated the results and ordered a revote set for December 26. In order to reduce the scope for fraud, the parliament and President cooperated to adopt legislation on procedures for the presidential election, which included the appointment of new electoral commission officials and limits on absentee voting,

The Constitution mandates an independent judiciary, headed by a Constitutional Court that determines the constitutionality of laws and acts by all branches of government. In practice, however, the courts remain subject to considerable political interference and are a weak check on the power of the executive branch. The deliberations of the Supreme Court on the 2004 presidential elections, which were broadcast nationwide, and the eventual decision decreeing a revote and calling for the investigation of those who committed electoral fraud set a new standard for transparency and independence of the judiciary. Prior to the presidential election, the legislative branch, the Rada, had been a relatively more effective check than the judiciary, though its practical ability to influence Kuchma's authority had been limited. Constitutional reforms, approved in December 2004 as part of a package with the legislation on the presidential election, will however, strengthen the role of the Rada vis-à-vis the executive.

Civil society is increasingly important in Ukrainian political life. Non-governmental organizations played a significant role in the March 2002 Rada and the 2004 presidential elections. Ukraine has an active NGO community; for example, the local NGO Committee of Voters provided thousands of domestic monitors during the last three elections. Several NGOs have come into conflict with the Government and have faced pressure from authorities. The 2004 presidential elections have proven to be a catalyst and a turning point for many NGO’s. In preparation for the presidential elections, a number of NGO’s formed a consortium and coordinated their work.

Section 498A(a)(2): "make significant progress in, and is committed to the comprehensive implementation of, economic reform based on market principles, private ownership, and integration into the world economy, including implementation of the legal and policy frameworks necessary for such reform (including protection of intellectual property and respect for contracts)."

Ukraine continues to make progress towards creating an economy based on market principles, private ownership, and integration into the world economy, but much work remains to complete the transition. The Kuchma administration's chief challenge in economic has been to institutionalize structural reforms to permit sustainable economic growth. Ukraine recorded its fifth year of positive economic growth in 2004; the year-end estimate for overall GDP growth is approximately 12.5%, up from 9.4 percent in 2002. Inflation was up in 2004 and ended the year around 12%. Ukrainian foreign currency reserves increased to over $10 billion by November 2004 but were drawn down to about $9 billion in the weeks of political uncertainty after the second round of the presidential elections. Consistent annual growth above five percent will depend on boosting investment and ensuring that investments flow to their most productive uses. This will require sound macroeconomic policies, a much stronger banking sector, and structural reforms to strengthen governance. Governance and rule-of-law issues remain a serious concern and limit FDI and domestic investment. The Government continues to try to reform the Value Added Tax (VAT) system and reduce VAT refund arrears, which remain a key concern of the International Monetary Fund (IMF). In March 2004, the IMF approved a precautionary stand-by arrangement for Ukraine but suspended it in the fall of 2004 due to fiscal policy slippages. It will probably be resumed when the new government takes office. The World Bank has moved forward on a range of sectoral loans but has not disbursed further tranches of the Programmatic Adjustment Loan (PAL).

The Government privatization program continued in 2004. Privatization revenues exceeded the budgetary target but privatization was marred by several large insider privatizations, notably of the Krivyorizhstal steel works, which was sold to connected insiders for a bid well below that of international bidders. Energy sector reform has stalled and remains largely incomplete. The privatization of regional energy distribution companies (oblenergos) has been put on hold pending legislation to restructure the companies’ debt. A Land Code passed In October 2001 allows farmers to trade land and use it as collateral, and progress in land titling will eventually permit full use of this asset.

Serious problems persist in the investment climate, with widespread corruption, arbitrary government actions, lack of respect for contracts, and lack of enforcement of property laws and court decisions. Although the constitution guarantees the legal equality of all forms of ownership and the inviolability of private property, the Rada has not passed legislation to implement these constitutional guarantees. In early 2003, President Kuchma signed into law a modern Civil Code but also signed a retrograde Commercial Code that conflicts with the Civil Code. Several long-standing disputes involving U. S. firms remain unresolved.

With a few significant exceptions, imports and exports are largely unrestricted, but an array of taxes and duties and a cumbersome regulatory framework remain major obstacles to trade and investment. Ukraine made progress during the year towards its goal of joining the World Trade Organization (WTO). It negotiated bilateral market access agreements with a number of countries, and participated in two WTO meetings toward completion of its Working Party Report. Much work remains before Ukraine can accede to the WTO, including the passage of WTO-compliant legislation in a number of areas. Ukraine has a bilateral trade agreement with the U.S. providing for reciprocal Normal Trade Relations, and has been determined to be compliant with the freedom of emigration provisions of the Jackson-Vanik Amendment (subject to a semi-annual reporting requirement on its continued compliance with these provisions). The U.S.-Ukraine bilateral investment treaty (BIT) entered into force in November 1996 and Ukraine has an OPIC agreement, which was concluded in 1992.

In January 2002, the U.S. Government imposed trade sanctions on Ukraine under Section 301 of the Trade Act of 1974 as amended in 1988. The U.S. had previously suspended Ukraine’s benefits under the Generalized System of Preferences (GSP) program. Sanctions were imposed due to Ukraine's failure to fulfill its commitment to the U.S. to stem rampant copyright piracy, which is causing substantial losses to U.S. industry. An optical media licensing law enacted in 2002 contains serious deficiencies and needs to be amended. Ukraine is a major transshipment point and storage location for illegal optical media produced in Russia and elsewhere. While Ukraine has taken some steps to address this problem, border enforcement efforts remain weak, and small criminal penalties for unauthorized production and export of optical media do not act as an effective deterrent. Trademark counterfeiting is also a serious problem, and is exacerbated by lack of cooperation from law enforcement officials.

Section 498A(a)(3): "respect internationally recognized human rights, including the rights of minorities and the rights to freedom of religion and emigration."

The Ukrainian Constitution provides a legal framework for protecting civil and political rights, though some constitutional provisions still await the passage of enabling legislation. Actual human rights practices often do not conform to constitutional requirements. The Government’s human rights record remained poor; although there were some improvements in a few areas, serious problems remains. Ukraine has a large and active independent press, but criticism of the president has often not been tolerated by the Government. This issue took a sinister turn with the death of internet journalist Heorhiy Gongadze in fall 2000. Amid allegations of presidential involvement in his death, absence of a prompt and transparent investigation into his killing remains of great concern to observers. The United States Government continues to call for a full, credible, and transparent investigation. Beginning in 2002, the Presidential Administration began on a regular basis to instruct the press on how to cover news events through so-called "temnyky," or "guidance" sent to influential media outlets. The Government of Ukraine has also used tax audits, license revocations, and libel suits to harass and stifle independent media. Despite tightening government pressure on journalists, opposition media have remained vocal. During the 2004 presidential election campaign, the Government continued to try to suppress and intimidate independent media. Radio Liberty programming was suspended by its commercial carrier. When another commercial operator tried to pick up Radio Liberty broadcasts, its equipment was seized and its owner compelled to flee the country. Radio Liberty continues to be denied access to mainstream FM markets. One opposition-owned TV station, Kanal 5, has been subjected to unrelenting harassment, with its signal often unavailable in major cities in eastern Ukraine. An American-owned cable operator saw several of its executives jailed on spurious charges of disseminating pornography. During the tense period beginning with the October 31 first-round vote, an increasing number of journalists at state-owned and oligarch-owned media enterprises began to insist on delivering accurate and objective reporting, and the quality of reporting visibly changed for the better.

Abuses continue in the unreformed legal and penal systems, particularly in pre-trial detention facilities where police and prison officials regularly beat detainees and prisoners, and in the military where incidents of violent hazing of conscripts have led to fatalities. In a positive development, the Rada enacted a progressive criminal code, which entered into force on September 1, 2001, and which includes penalties for torture. Lengthy pretrial detention is common. Violence and discrimination against women and ethnic minorities persist. Harassment of ethnic minorities, including by the police, is a problem. There were some limits on freedom of movement; however, in 2001, the Constitutional Court held that the Soviet-era internal passport system was unconstitutional. In January 2004, President Kuchma signed a law passed by the Rada in December 2003 that guarantees all citizens of Ukraine, foreign citizens, and individuals without citizenship the right of unrestricted travel and residence, provided it does not contradict the laws of Ukraine. The new law replaces the old "propiska" system with a simpler registration procedure.

Ukraine is an important source country for girls and women trafficked for sexual exploitation. The Government has taken steps to address this problem. The new criminal code passed in 2001 criminalizes trafficking in persons, and anti-trafficking police units have been established at the national and local levels. A number of criminal cases have been initiated. Other sections of the criminal code, including fraud and illegal business activities, are also being used to help combat trafficking.

The national Government generally does not interfere with the registration or practice of religions and has allowed seminaries and Jewish and Muslim religious schools to open. There are some restrictions by local authorities on the activities of some minority religions. But the national Government's overall record is good on interethnic and inter-communal matters. This is particularly so in the case of Ukraine’s Jewish community, whose size varies in estimates from 300,000 by some foreign observers to 103,600 by the 2001 census, which could be even smaller in 2003 largely because of increasing emigration to Israel and the West. Some minority religions complain of unequal treatment in matters of property restitution, leasing and use. Foreign religious workers and some Islamic groups have had difficulties in some regions, and it is unclear how effective federal authorities have been when local authorities infringe on religious liberties.

With OSCE assistance, the Governments of Ukraine and Uzbekistan agreed in 1998 to simplify procedures for more than 65,000 Crimean Tatars to relinquish their Uzbek citizenship and to abolish the fee charged by Uzbekistan. Ukrainians who wish to travel abroad can do so freely. Exit visas are not required. The Government can deny passports to individuals with access to state secrets, but this is rarely done and can be appealed. Since 1997, Ukraine has been found to be in compliance with the emigration requirements of Jackson-Vanik amendment.

Section 498A(a)(4): "respect international law and obligations and adhere to the Helsinki Final Act of the Conference on Security and Cooperation in Europe and the Charter of Paris, including the obligations to refrain from the threat or use of force and to settle disputes peacefully."

Ukraine adheres to commitments under the Helsinki Final Act and the Charter of Paris and respects international law. Ukraine has no territorial claims on other states. In 1997, it signed a treaty with Romania to assist in resolving border disputes. Remaining border issues persist with Romania and have been the subject of talks between the Governments, but have not been the source of serious tension. Ukraine also reached a border agreement with Belarus in 1997, which was signed by both presidents and later ratified by the Ukrainian Rada. The Belarusian Parliament has yet to ratify the agreement, but it is being observed by both sides. In addition, Ukraine sought the advice and counsel of the OSCE in resolving peacefully outstanding political differences regarding the Crimea. The OSCE mission in Ukraine, its mandate on Crimean issues largely fulfilled, was replaced in May 1999 with an OSCE project office. The project office administers a number of activities in such areas as legal reform, media freedom, military reform, assistance to the human rights Ombudsman, anti-trafficking in persons, and other areas. OSCE observers monitored the two rounds of the presidential election in October and November 1999, the March 2002 Parliamentary elections and all three rounds of the 2004 presidential elections. In November 1999, Ukraine joined the other OSCE states in signing the Charter for European Security, which reaffirms full adherence to all existing OSCE documents.

Section 498A(a)(5): "cooperate in seeking peaceful resolution of ethnic and regional conflicts."

Ukraine has played a constructive role in the search for a peaceful resolution of separatist disputes in its region. In Moldova, Ukraine works with the OSCE as a mediator in multilateral talks to resolve the conflict in the disputed region of Transnistria. While serving on the UN Security Council in 2000-2001, Ukraine participated in the informal Friends of Georgia group focused on resolving the conflict in the Abkhazian region of Georgia. In May 1997, Ukraine and Poland signed a Declaration of Historical Reconciliation to improve Polish-Ukrainian ties. In 2003, Polish and Ukrainian leaders jointly commemorated the sixtieth anniversary of the inter-ethnic conflicts in the Volyn region.

In 1997, the Governments of the Russian Federation and Ukraine signed several agreements towards resolving issues concerning Sevastopol and the former Soviet Black Sea Fleet and also signed a Treaty of Friendship and Cooperation, both of which have been ratified by the respective parliaments. In 2003 Ukraine actively engaged Russia in an attempt to defuse a dispute over Tuzla Island, the Kerch Strait, and the Sea of Azov. On December 24, 2003 the Ukrainian and Russian presidents signed an agreement to regulate maritime borders in the Azov from seabed to surface.

Ukraine is contributing more than 3000 peacekeepers to missions in Iraq, the Balkans, the Middle East, and Africa. Since November 1999, Ukrainian peacekeepers, with the support of the U.S. and other Allies, have been deployed in Kosovo as part of the UKRPOLBAT Ukrainian-Polish battalion, attached to the U.S. sector commander. Ukraine provides one of the largest contingents of soldiers in the Polish-led division of troops of the coalition forces in Iraq.

Within its own borders, Ukraine fostered peaceful resolution of political differences with Crimea by inviting and encouraging the active participation of the OSCE in evaluating the situation and making recommendations. The constitution grants a certain degree of autonomy to Crimea. Ukraine also has made clear efforts to guarantee rights of persons belonging to minorities and has been free of widespread ethnic conflict. Ukraine has offered to host an OSCE institution devoted to inter-ethnic relations.

Section 498A(a)(6): "implement responsible security policies, including--

(A) adhering to arms control obligations derived from agreements signed by the former Soviet Union;

(B) reducing military forces and expenditures to a level consistent with legitimate defense requirements;

(C) not proliferating nuclear, biological, or chemical weapons, their delivery systems, or related technologies; and

(D) restraining conventional weapons transfers."

For a number of years, the United States has engaged Ukraine in a dialogue on nonproliferation and arms control. Our efforts are designed to support an end to Ukrainian entities’ cooperation with programs of concern and improve cooperation to combat the gray arms trade by pursuing an effective and lasting implementation of Ukrainian export control laws and regulations. In 2002, U.S.-Ukrainian bilateral relations were strained by confirmation that President Kuchma had authorized the sale and transfer of a Kolchuga early-warning system to Iraq. Consequently, we intensified our non-proliferation dialogue with Kiev.

In June 2003, the U.S. sent a joint experts team with the United Kingdom and Poland to Kiev to review overall arms export processes and to offer recommendations for tightening controls. With the continued participation of the United Kingdom and Poland, the U.S. pursued this discussion with Ukraine in subsequent meetings during the year. Drawing on our previous successes with the NATO invitees, we will continue to cooperate with Ukraine to improve Ukrainian enforcement and enactment of structural reforms, but significant policy and technical changes are necessary to achieve effective oversight of defense industries, arms exports and the related services.

Overall, Ukraine's commitment to reduction of nuclear weapons has been good. In 1992, President Kravchuk made a written commitment to the United States that Ukraine would have a "non-nuclear status." In 1994 Ukraine signed the Trilateral Statement with the United States and the Russian Federation, which among other things committed Ukraine to transfer all nuclear weapons on its territory to Russia for elimination. By mid-1996, all of the nuclear weapons on Ukrainian territory had been transferred to Russia. Also in 1994 Ukraine acceded to the Treaty on the Non-Proliferation of Nuclear Weapons (NPT) as a non-nuclear-weapon state. Ukraine’s safeguards agreement with the International Atomic Energy Agency entered into force on January 22, 1998. Ukraine also signed the Additional Protocol to the safeguards agreement in 2000. On July 30, 2004, the Government submitted for consideration by the Rada the draft Law of Ukraine on the Ratification of the Additional Protocol. Ukraine is a party to both the START and Intermediate and Shorter Range Nuclear Forces (INF) Treaties and participates in the Joint Compliance and Inspection Commission and Special Verification Commission to implement those Treaties. To our knowledge, the Government of Ukraine is not engaged in the proliferation of nuclear, biological, or chemical weapons, or related technology.

The Ukrainian Rada approved the Conventional Armed Forces in Europe (CFE) Treaty in July 1992. Ukraine ratified the 1996 CFE flank agreement in 1997, and participated actively in negotiations to adapt the CFE Treaty, which was signed by Ukraine and representatives of all 30 CFE States at the Istanbul Summit in 1999. Ukraine has substantially complied with the CFE Treaty and Ukrainian Government officials have reaffirmed their commitment to full implementation. We continue to engage Ukraine on a number of implementation and technical CFE concerns bilaterally and in the context of the CFE Joint Consultative Group (JCG), the Treaty’s implementation body. Ukraine actively participates in the JCG J. Ukraine has provided data on equipment as required by the Treaty and has also hosted on-site inspections as provided for in the Treaty.

Ukraine is also one of 55 participating states to the OSCE's Vienna Document on confidence and security building measures. Ukraine has submitted annual Confidence- and Security-Building Measures (CSBM) data declarations regularly since 1995 and has willingly accepted CSBM inspections and evaluation visits in accordance with the OSCE Vienna Document.

Ukraine is also a party to the Treaty on Open Skies, which establishes a regime of unarmed aerial observation flights over the territories of State Parties. Ukraine actively participates in the Open Skies Consultative Commission, which is the Treaty's implementation body. Prior to the Treaty’s entry into force on January 1, 2002, Ukraine cooperated with 26 other signatories in trial flights and other preparations for entry into force. Ukraine hosted one U.S.-Canadian over flight of its territory, and in 2003 successfully participated in supporting two U.S. over flights of Russia through leasing an AN-30 observation aircraft.

Ukraine has cooperated with efforts to limit proliferation of weapons and technologies of mass destruction. An original signatory to the 1993 Convention on the Prohibition of the Development, Production, Stockpiling, and Use of Chemical Weapons and their Destruction (CWC), Ukraine ratified the agreement in October 1998. Ukraine is a party to the 1972 Convention on the Prohibition of the Development, Production, and Stockpiling of Bacteriological (Biological) and Toxin Weapons and on their Destruction (BWC). Ukraine has actively supported U.S. and international efforts to promote nonproliferation in South Asia, including chairing the multilateral South Asia Task Force during 1999. Ukraine is a member of the Nuclear Suppliers Group (NSG) and as such has adopted current international export standards, including the NSG commitment to require full-scope safeguards as a condition of nuclear supply. Ukraine has cooperated constructively on individual cases of concern raised by the United States and has stated that it will not provide assistance to unsafeguarded nuclear programs. In March 1998, Ukraine took the positive, politically difficult step to terminate the participation of a Ukrainian firm in a project to provide key components for an Iranian nuclear power plant. Ukraine adhered to the Missile Technology Control Regime (MTCR) Guidelines in 1994, joined the MTCR in 1998 and became an original Subscribing State on November 25, 2002, to the Hague Code of Conduct Against Ballistic Missile Proliferation. (HCOC)

Since its inception in 1993, Ukraine has been a member of the Kiev-based Science and Technology Center in Ukraine (STCU), a multilateral nonproliferation program focused on preventing the proliferation of WMD expertise by redirecting former weapons of mass destruction scientists to peaceful activities. Efforts to engage former biological and chemical weapons scientists in Ukraine have expanded under the aegis of the State Department’s Bio-Chem Redirect Program, working with the STCU and emphasizing long-term sustainability for peaceful scientific endeavors.

While Ukraine has the potential to be a major arms supplier, it is a member of the Wassenaar Arrangement and supports its goals and objectives. Additional information relevant to conventional arms transfers has previously been provided to Congress on a classified basis. We occasionally receive reports of missile-related cooperation between Ukrainian entities and countries of proliferation concern and have sought cooperation from the Government of Ukraine to prevent such transactions. The Ukrainian authorities have been able to take action in some cases, and the U.S. has imposed sanctions against the offending entity in others. We continue to assist the Ukrainian Government’s efforts to curtail such activities by Ukrainian entities.

Section 498A(a)(7): "take constructive actions to protect the international environment, prevent significant transborder pollution, and promote sustainable use of natural resources."

Significant environmental problems remain in Ukraine, particularly from the after-effects of Chornobyl and widespread industrial pollution. The Government of Ukraine’s capacity to manage regulatory programs is insufficient to the task, as many environmental functions have been decentralized. Nevertheless, environmental consciousness is growing, led by an active green movement.

In 1995, Ukraine signed a Memorandum of Understanding (MOU) with the G-7 on a comprehensive program to close the Chornobyl nuclear power plant by the year 2000. The United States worked closely with Ukraine and our G-7 partners to implement the MOU. The program also sought to help Ukraine undertake energy sector reforms and power sector investments needed to ensure that Ukraine's power needs would continue to be met after the closure of Chornobyl. On December 15, 2000, the final Chornobyl reactor was shut down. In 2004, Ukraine commissioned two new nuclear reactors, Khmelnytskyy 2 and Rivne 4. The EBRD provided a loan of $110 million to finance safety upgrades for the new reactors.

The Government of Ukraine has taken steps to address environmental issues, mainly through the Ministry of Environmental Protection. Ukraine has met its commitments under the UN Framework Convention on Climate Change and is developing investment projects for the mitigation of greenhouse gas emissions. Given the Ukrainian economy's poor performance to date, however, full implementation of a pollution fee system taxing air and water emissions and solid waste disposal has lagged.

National environmental NGOs are slowly gaining access to the policy-making process on environmental issues. Ukrainian NGO’s took the lead in bringing a major environmental issue to international attention, when the GOU proposed to build a canal through the most sensitive part of the Danube Delta International Biosphere Reserve. Despite international urging, Ukraine failed to abide by it commitments on assessing the impact and consulting other parties before beginning construction of the canal, which has earned it international censure.

U.S. EPA has a successful capacity-building program in place that is assisting national and regional level environmental managers by providing them with risk assessment and financial management skills. This hands-on program is yielding results. Regional representatives of the Ministries of Health and Environment are working together to build risk assessment models and corresponding risk management plans. Industry stakeholders, oblast officials and communities are also getting involved. The EPA-funded Dnipro water quality assessment program has also been providing technicians in both Mikolayev and Kherson oblasts with skills to continue monitoring the water quality of the Dnipro. All measurements are now being done by local administrators and EPA is providing modeling expertise. The oblasts will use the information to determine pollution sources and perhaps use risk assessment and management tools to determine the best way to tackle the problems.

Section 498A(a)(8): "deny support for acts of international terrorism."

Since September 11, 2001, Ukraine has supported the global campaign against terrorism. It has given assistance in several areas, including sending a contingent of troops to Kuwait for Operation Iraqi Freedom and to Iraq as part of coalition stabilization forces, intelligence sharing, allowing over 10,000 over flights of Allied aircraft participating in operations in Afghanistan and the region, and enhancing the Afghan National Army by transferring small arms and equipment to the fledgling force. The Government of Ukraine does not grant sanctuary from prosecution to individuals or groups that have committed acts of international terrorism or otherwise support international terrorism. Ukraine has ratified all of the twelve international counterterrorism conventions and protocols.

Although Ukraine set up a Regional Environmental Center (REC) in Kiev, irregularities in the management of the REC led U.S. EPA to withdraw its support from the REC. U.S. EPA intends to audit the REC, and is considering whether the conditions exist in Ukraine to support the re-creation of a revised REC.

Section 498A(a)(9): "accept responsibility for paying an equitable portion of the indebtedness to United States firms incurred by the former Soviet Union."

In October 1991, shortly before the Soviet Union dissolved, Russia and eleven other Soviet republics, [including Ukraine, signed a Memorandum of Understanding declaring themselves jointly and severally liable for the foreign debts of the former Soviet Union (FSU). In December 1991, Russia and seven other former republics, including Ukraine, signed an agreement that assigned to each of the Newly Independent States a share of all the external assets and foreign debt of the former FSU.

Beginning in 1992, Russia sought to replace the joint and several liability principles by seeking full liability for the debt of the FSU in return for all the external assets of the FSU. In December 1994, Ukraine signed a "double-zero option" agreement with Russia under which Russia agreed to assume Ukraine's share of the foreign debt of the FSU in return for Ukraine’s share of the FSU's external assets.

Please see section 498(a)(9) of the Russia assessment regarding indebtedness to the United States incurred by the former Soviet Union.

Section 498A(a)(10): "cooperate with the United States Government in uncovering all evidence regarding Americans listed as prisoners-of-war, or otherwise missing during American operations, who were detained in the former Soviet Union during the Cold War."

The U.S. effort to uncover evidence of American POWs and MIAs in the former Soviet Union is being conducted through the U.S.-Russian Joint Commission on POWs/MIAs, established in March 1992. The U.S. side of the Commission visited Ukraine in December 1992 and August 1993. They made two additional visits in 2003. Ukraine continues to cooperate in the search for evidence on American POWs/MIAs.

Section 498A(a)(11): "terminate support for the communist regime in Cuba, including removal of troops, closing of military and intelligence facilities, including the military and intelligence facilities at Lourdes and Cienfuegos, and ceasing trade subsidies and economic, nuclear, and other assistance."

We have no evidence from which to conclude that the Government of Ukraine is providing military intelligence, economic, nuclear, or other assistance to the Government of Cuba.

CHECKLIST FOR GROUNDS OF INELIGIBILITY UNDER SECTION 498A(b) OF THE FOREIGN ASSISTANCE ACT OF 1961

UKRAINE

Section 498A(b)(1): Has the President determined that the Government of Ukraine has "engaged in a consistent pattern of gross violations of internationally recognized human rights or of international law"?

No. The President has not made such a determination at this time. However, many problems exist in the observance of democratic practices. We remain committed to addressing these problems not only through diplomatic efforts but also through assistance programs.

Section 498A(b)(2): Has the President determined that the Government of Ukraine "has failed to take constructive actions to facilitate the effective implementation of applicable arms control obligations derived from agreements signed by the former Soviet Union"?

No. The President has not made such a determination at this time. Ukraine has taken numerous actions to facilitate the implementation of arms control agreements signed by the USSR.

Section 498A(b)(3): Has the President determined that, after October 24, 1992, the Government of Ukraine "knowingly transferred to another country --

(A) missiles or missile technology inconsistent with the guidelines and parameters of the Missile Technology Control Regime; or

(B) any material, equipment, or technology that would contribute significantly to the ability of such country to manufacture any weapon of mass destruction (including nuclear, chemical, and biological weapons) if the President determine[d] that the material, equipment, or technology was to be used by such country in the manufacture of such weapon"?

No. The President has made no such determination at this time.

Section 498A(b)(4): Is the Government of Ukraine "prohibited from receiving such assistance by section 101 or 102 of Arms Export Control Act or sections 306(a)(1) and 307 of the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991"?

No.

Section 498A(b)(5): Has the President determined and certified to the appropriate congressional committees that the Government of Ukraine "is providing assistance for, or engaging in non-market-based trade (as defined in section 498B(k)(3)) with the Cuban Government? If so, has the President taken action to withhold assistance from Ukraine under the Foreign Assistance Act within 30 days of such a determination, or has Congress enacted legislation disapproving the determination within that 30-day period?"

No. The President has not determined that the Government of the Ukraine is providing assistance for, or engaging in any non-market-based trade with, the Cuban Government.