Clinton Visit to Kiev An Opportunity to Seal New US-Ukraine Direction

July 1, 2010

Early in his administration, Viktor Yanukovich emerged as the surprising star of Barack Obama's nuclear proliferation summit in Washington, winning favorable comments by erstwhile US critics who entertained decidedly low expectations of the new Ukrainian president. In doing so Mr. Yanukovich opened the door to a new relationship with Washington based on mutual respect and Ukraine's balance of interests between East and West. The upcoming visit of Secretary of State Hillary Clinton is an opportunity for the Obama administration to get the US-Ukraine relationship off to a fresh new start.

Early signals for the relationship were not promising. In March 2009, Secretary Clinton reiterated support of a key policy initiative held over from the Bush administration: Ukrainain accession to the North Atlantic Treaty Organization (NATO). It seemed that inertia rather than change and original thinking would be the hallmark of Obama’s foreign policy vis-à-vis the countries of the ex-Soviet Union.

In view of later developments, that impression may have been inaccurate. No doubt strongly influenced by Washington's need to "reset" relations with Moscow, and the accession to office of Mr. Yanukovich, a new approach to Kiev has proved unavoidable for Washington.

It seems Mrs. Clinton understands that. Asked about the April 2010 agreement between Kiev and Moscow to extend the presence of the Russian Black Sea Fleet at Sevastopol -- an action that would have enraged the Bush Administration -- Mrs. Clinton coolly termed it part of a "balancing act" by Kiev: "I think given Ukraine's history and Ukraine's geographic position, that balancing act is a hard one, but it makes sense to us...That's what he [i.e., President Yanukovich] is trying to do, and to keep a foot, if you will, in both sides of his country."

Mrs. Clinton, thus, has come to a realistic perception of Ukraine’s position, in marked contrast to the previous US administration, which seemed at times almost deliberately blind to obvious political realities. In view of her own record of support for "humanitarian interventionist" policies (the Democratic Party's counterpart to Republican "neo-conservatism") in the Balkans and the Middle East, her apparent openness to new realities is a pleasant and somewhat unexpected development.

The Secretary will travel from Kiev to Krakow to attend the 10th anniversary celebration of the so-called "Community of Democracies." COD is the brainchild of former Secretary of State Madeleine Albright, the personification of everything that went wrong with US policy in the Bill Clinton and George W. Bush years as the US sought to impose "benevolent global hegemony"--in the name of "democracy," of course. A factory for "color-coded revolutions" of the sort that landed Ukraine in a state of suspended animation for five years, COD is Washington's version of the Comintern (or maybe a neo-Trotskyite "Demintern"?) Now a decade old, this fossil of a bygone era in US foreign policy should be laid to rest once and for all.

So let’s hope Mrs. Clinton's stopover in Krakow is only a rhetorical parenthesis as she conducts real business in Kiev, Yerevan, Baku, and Tbilisi. Coming on the heels of the Obama-Medvedev "hamburger diplomacy" in northern Virginia just prior to the Toronto G8 and G20 meetings, it is no accident that Mrs. Clinton has been dispatched to the capitals (with the exception of Yerevan) once assigned leading roles in the previous US administration’s efforts to strategically encircle Russia, partly through the absurd and now-moribund GUAM organization (Georgia-Ukraine-Azerbaijan-Modova).

Mr. Obama has abandoned the policy towards Russia that underlay GUAM: "President Medvedev and I are deliberately trying to avoid framing U.S.-Russian relations in zero-sum terms," he said, referring to the Cold War calculus under which anything good for one of the nuclear-armed rivals was bad for the other.

Accordingly, Mr. Yanukovich can welcome Mrs. Clinton in the expectation that US policy will continue to respond to the balanced, prudent and realist course he has set for Ukraine. It may be too much to expect that Secretary Clinton will withdraw NATO’s invitation to Kiev to join the Alliance, issued in 2008 at Bucharest. Great powers do not like to admit mistakes, but hope springs eternal. At the same time, Mr. Yanukovich can take the opportunity to tell his American visitor that GUAM is a dead letter. And perhaps both can agree on US cooperation with Kiev, Moscow, Berlin, and Paris on a new security architecture for the whole pan-European realm.

President Yanukovich and Secretary Clinton should also address important matters of joint economic cooperation. The recent announcement of a new agreement between the Overseas Private Investment Corporation (OPIC) and the Ukrainian Development Network (UDN) to support the development of small and medium sized businesses (SMEs) indicates the potential for bilateral economic relations.

The agreement takes the form of a US-Ukrainian alliance called the Enterprise Development Network (EDN), which expands the ability of OPIC—the U.S. government agency charged with facilitating U.S. private sector investment abroad—to provide financing to SMEs doing business in emerging market countries, such as Ukraine.

As Bloomberg reports:

“Under the agreement, UDN (which is owned by United World, an international charitable organization co-founded by Rada member Eduard Prutnik, who witnessed the signing) plans to proactively work with their extensive network of local relationships in Eastern Europe to source potential projects, including those within investment banks, law and audit firms, business associations, and federal and regional governmental agencies. Potential enterprises must also adhere to ethical principles and realize the significance of social responsibility – a major problem in Ukraine in the past, where corruption has discouraged U.S. and other foreign investment. With a focus on companies looking for long-term acquisition and the expansion of capital of up to twenty million dollars, the OPIC-UDN cooperation promises to strengthen prospects for attracting investment, especially from the United States.”

In another positive development, Kiev has announced a significant privatization of state assets. Again, Bloomberg reports:

“…Ukraine’s government plans to sell state assets and cut the government’s role in the economy to between about 20 percent and 25 percent in five years from 37 percent now in an attempt to intensify economic growth. In particular, the government will sell VAT Ukrtelecom, the state phone company, heating utilities and electricity distribution companies, according to Deputy Prime Minister Serhiy Tigipko. The government expects to sell 92.7 percent of Ukrtelecom in one chunk, said Oleksandr Riabchenko, head of the State Property Fund, at the conference. The company is currently worth about $1.2 billion, he said.”

The bottom line is that freed from a sterile and counterproductive geopolitical agenda, U.S.-Ukrainian partnership can now be placed on a constructive track. The OPIC and privatization announcements by Kiev indicate the direction in which Ukraine needs to go. Secretary Clinton’s task in Kiev is to expand U.S.-Ukrainian cooperation according to a new, refreshingly realist bilateral agenda.