Press Roundtable on U.S.-Ukraine Issues

Press Availability
Philip H. Gordon
Assistant Secretary, Bureau of European and Eurasian Affairs
Kyiv, Ukraine
February 6, 2012

ASSISTANT SECRETARY GORDON: Hello, everybody. Thanks for coming. Apologies for keeping you waiting. I’ve just come from a long series of meetings. I saw Mr. Lyovochkin this morning, I saw the Prime Minister, and I saw Deputy Foreign Minister Klimkin.

I’m here in Ukraine to talk to counterparts about the wide range of issues that we’re working on with this country and also to follow up on the meeting that Secretary Clinton had with President Yanukovych the other day at the Munich Security Conference. I’ll just give you a sense of what the Secretary had to say to the President and what I’ve been saying in my meetings here about this relationship.

We want to strengthen our partnership with Ukraine in a number of areas, from the economy to energy to security to democracy.

In the area of energy, the Secretary expressed appreciation for Ukraine’s efforts to reform the energy sector and an American willingness to help, particularly in the area of possibly exploring for shale gas.

She also expressed appreciation for Ukraine’s work with us in transferring the highly enriched uranium out of Ukraine that President Yanukovych promised at the Nuclear Security Summit. It’s a big priority for the United States.

We also talked about ways to increase American investment in Ukraine and I expressed, frankly, to my counterparts here today on this issue that there remain some obstacles to that investment in the form of regulations and in the areas of taxes and customs and on the question of corruption.

I met this morning - before seeing Ukrainian counterparts, I met this morning with a group of American business people and heard some of the difficulties they face in trying to expand investment in Ukraine.

American exports to Ukraine are up and I think at an all-time record high, but they’re still only around $2 billion which is much less than it should be. I also pointed out statistics showing that Ukraine ranks very low on a list of countries that are ranked by how easy it is to do business in Ukraine. I think it was ranked 152nd out of 183 countries, and that’s very unfortunate, because if it’s difficult to do business, then American businesses won’t come and Ukraine won’t develop. So we hope that some of these issues will be tackled on taxes, customs, regulations and corruption, because we want to see more Americans investing in Ukraine.

I also raised with my counterparts, and the Secretary raised with President Yanukovych, the issue of democracy in Ukraine. We stressed the importance of free and fair and transparent elections next October. And we expressed concerns about the perception of selective prosecutions, most notably in the case of former Prime Minister Tymoshenko. What Secretary Clinton said to the President is that this perception interferes with the full development of the relationship we would like to have with Ukraine.

It’s not for us on the outside to prescribe how Ukraine’s judicial system works, but the perception of selective prosecution is an unfortunate one and it stands in the way of full development of our relations, as between the Ukraine and the European Union.

So those are some of the issues that I raised here in Kyiv today, some of the issues the Secretary raised in her meeting. But the basic message was that we want to see increasingly strong U.S.-Ukraine relations. We think Ukraine has enormous potential and we want to see it continue down the course towards Euro-Atlantic integration, stability, prosperity and democracy.

I’ll be happy to take your questions.

QUESTION: [Through Interpreter]. Assistant Secretary, we do witness certainly more energetic meetings, a more energetic relationship: meeting of the Secretary with the President, your visit today here. You said and the Secretary expressed to President Yanukovych what you would like to see in relations with Ukraine.

It would be interesting to know, what is your perception, whether President Yanukovych and your Ukrainian interlocutors took what you told them on board, or whether you have any other secret diplomatic weapons to make sure that what your vision that you express will move forward. And whether we should see as an expression of displeasure of the United States with selected prospection in Ukraine, the fact that Secretary Clinton is not coming to Kyiv for the inauguration of the new embassy compound here.

ASSISTANT SECRETARY GORDON: Thank you. You’ll have to ask the Ukrainian government what their perception of our message is. All we can do is be clear about what we think, and I think we have been. We are very frank and transparent with our friends. We consider Ukraine a friend, and we say the same thing public as in private. I don’t think anything Secretary Clinton said about the Tymoshenko issue, about energy, about the investment climate, about our desire to expand our relations - I don’t think any of that will have come as a surprise to President Yanukovych. I would encourage you not to see the absence of a visit by the Secretary today as any sort of message. She has an enormously busy schedule. She of course visited Ukraine last year, had to get back to Washington, and while she would no doubt like to inaugurate every new embassy the United States has, that’s not always possible.

On the contrary, if there was a message it’s that she wanted to meet with the President when they had the opportunity in [inaudible], and that was the first bilateral meeting she did after her speech.

QUESTION: Can I follow up on what you were referring to about the question of Tymoshenko? There’s been, over the last few months, attempts to persuade or convince Yanukovych about what he should - or [inaudible] the atmosphere he should create. Recently it was suggested by former Ambassador Steven Pifer that it might be time to start thinking about blacklisting - visa bannings of Ukrainian officials. It’s clear that Yanukovych either isn’t getting the message - he’s either ignoring it or not getting it or something along these lines - [inaudible] to do what Ambassador Pifer suggested.

ASSISTANT SECRETARY GORDON: I think as I said, we have decided that the best way for us to convey messages is to speak frankly, both in public and in private, and so the Secretary’s choice was to meet with the President to tell him exactly what she thought, which I think I shared with you here, which I have said to my interlocutors here, and I’m saying publicly now. I think that’s the best way we think we can convey messages on this issue.

QUESTION: [Through Interpreter]. However if your message gets ignored over and over again, do you have any other leverage that you are prepared to employ? And second, a very specific question, is the United States prepared to recognize the results of October elections here if Tymoshenko and her political force is not allowed to participate?

ASSISTANT SECRETARY GORDON: Two separate questions. On October, let’s not get ahead of ourselves. We have said that we want to see a full, fair and transparent election. That would mean that all legitimate opposition groups should be allowed to participate in that election. We have been assured that that is the full intention of the Ukrainian authorities.

Ukraine is going to be the next Chairman in Office of the OSCE next year and I’ve said it would be quite an appropriate symbol, gesture, for that incoming chairmanship to be the model in how you run an election, how you invite in international observers including OSCE observers, to make sure that everything is absolutely transparent, and, again, I was given assurances that that was the intention of Ukraine.

On your first question, I think what I said about the consequences of perceived selective prosecution was that it stood in the way of the kind of relationship that Ukraine could have with the United States and European Union.

In the case of the European Union, I think it’s very clear that includes that the European Union has said that a deep and comprehensive free trade agreement and the association agreement won’t be signed and implemented until political circumstances are appropriate. I think, by that, it’s clear that they mean this issue has to be dealt with.

The United States strongly supports that approach. We were in close contact with our European colleagues as they were proceeding in these areas. I was personally in touch with Commissioner Fuele, so we not only strongly support the EU’s approach, but in our own case, as I’ve said, this issue stands in the way of the development of the relationship and the way we would like it.

If Tymoshenko remains in prison, doesn’t appear to be getting appropriate care, and there are issues with party registrations for October, I think it’s fair to say that would stand in the way of relations with both the United States and the European Union.

QUESTION: Is Tymoshenko receiving appropriate care in your opinion?

ASSISTANT SECRETARY GORDON: I think there are real questions about that and they haven’t fully been answered yet. I haven’t personally seen her nor have representatives of the United States recently been able to, but that’s part of the problem. We’ve gotten some negative reports about her health and her conditions and her access to medical care. We can’t independently verify them, but they are of great concern to us.

QUESTION: [Through Interpreter]. Have you had the intention to visit her and couldn’t for some reason?

ASSISTANT SECRETARY GORDON: Our ambassador expressed an interest in doing so and has not been permitted to do so. On this very short trip I didn’t make a specific request myself.

QUESTION: [Through Interpreter]. Is this true that apart from the frank and friendly conversation the United States administration has no other ways to influence, no other leverage over the behavior of the Ukrainian government like the leverage the European Union has with its association agreement?

ASSISTANT SECRETARY GORDON: There is no pending specific issue that’s analogous to the pending association agreement and DCFTA. But it remains the reality that there are open questions about how the United States could help Ukraine, invest in Ukraine, assist it in achieving its objectives that we’re not able to do. It’s simply a reality so long as this problem remains.

Markets make independent decisions. There are a lot of opportunities in the globalized world in which we live. Perceptions of political instability or negative reputation can have a very big impact that is not a specific policy decision but its consequences can be very big.

QUESTION: If we’re talking about the economy, it’s clear that Ukraine is in something of a bind right now. The Russians didn’t give them the gas deal they wanted, now they’ve suddenly started speed flying to Washington and trying to talk to Lagarde in Davos. These meetings are happening, but it’s not clear that Ukraine is actually bringing anything new to the table.

Is it clear to you what they’re bringing to the table? Do they have any new arguments? Or is their argument simply, please give us the money or we’ll have to take the money from Russia with all the political concessions that would entail?

ASSISTANT SECRETARY GORDON: Again, I’ll leave it to the Ukrainian government to describe how it intends to meet the challenges that you mention, but I think it’s true that they are seeking to renegotiate the gas deal with Russia and haven’t yet succeeded. They are hoping to get the IMF to move forward with another tranche of assistance but haven’t yet met the IMF’s conditionality. And they’re hoping to get more support and investment from the United States and European Union, but as I described, the combination of the Tymoshenko case and the challenges to doing business in Ukraine remain a constraint on that assistance at the same time.

QUESTION: [Through Interpreter]. What is your opinion, what is your view of the reforms that the Yanukovych cabinet headed by Prime Minister Azarov is said to be conducting? And secondly, what would be your comment to observations of certain cynical domestic experts who say that relatively soft reactions of the U.S. administration to misbehavior of the Ukrainian government is conditioned by either complete loss of interest in Ukraine or the fact that not all of the highly enriched uranium has been transferred from Ukrainian territory yet?

ASSISTANT SECRETARY GORDON: To clarify the second question, the suggestion is that the United States has been soft on the government of Ukraine either because we’re not interested or because we’re waiting for the HEU to be transferred? Is that the question?

QUESTION: [Through Interpreter]. Yes.

ASSISTANT SECRETARY GORDON: I guess I’d challenge the premise that we’ve been somehow soft. I’m not sure what that means. I think I’ve just described -- and I would also challenge the premise that we’re not interested. I’ve just described how very clear we’ve been about how this case stands in the way of the development of the relationship and some of the consequences that it has, and that our Secretary of State went out of her way to make this point clear to the President of Ukraine. I think that’s pretty direct.

I also don’t accept the notion that we’re not interested in Ukraine. Again, I think I’ve described not just the meeting that took place over the weekend and my visit here, but our consistent pattern of interest and engagement at so many levels over many months. I think you’ve seen a number of statements, letters coming under the direct signature of the Secretary of State. I’ve told you about some of my extensive engagements with the European Union. We have discussed it at the highest levels. Our President has met with your President. So I think there’s an enormous amount of interest in Ukraine. Again, I can attest personally to the Secretary of State’s interest who sees such potential in Ukraine and I think really wants to see it develop.

I owe you an answer to the first part of your question about reforms, and I would just say I do believe that the government is working hard on and is serious about reforms, and I had the opportunity to hear about them today. Ultimately markets are going to decide if reforms have been enough and I think what I described about this ongoing perception that there is still too much regulation, lack of transparency, and corruption standing in the way, it would be impossible to judge the reforms a success until markets and investors decide that Ukraine is a more attractive place.

QUESTION: [Through Interpreter]. You mentioned Russian-Ukrainian gas talks. Any advice for Ukraine how to influence the Russian position and get the conditions that Ukraine is seeking? Maybe the way to go is to sue in the International Arbitration Court. What would be your advice?

ASSISTANT SECRETARY GORDON: I think the most important thing Ukraine can do is work on its own energy efficiency, other sources of energy, and own sources of energy to make it less dependent on a single supplier. That’s ultimately the way to improve leverage in a negotiation about price. I think there’s a lot more that can be done in all three of those areas, and we would be ready to help.

Thanks, everybody.