After the Ukrainian government was forced to adopt austerity measures to tackle the economic crisis in a move aimed at restoring the flow of payments under a $16.4 billion International Monetary Fund (IMF) loan, the country is looking for private equity funds and government loans to fund public infrastructure projects, a senior Ukrainian diplomat has said in Ankara.
Sergiy Korsunsky, the Ukrainian ambassador to Turkey, told Today’s Zaman that his government will finance major projects through private funds and is especially looking to Turkey for direct foreign investment to keep the economy going. Stressing that current investment by Turkish firms has reached $2 billion, Korsunsky finds Turkish investors to be in an upbeat mood. “None of them said they would be shelving expansion projects in Ukraine,” he said, referring to a meeting with senior managers of Turkish firms in Ankara.
Noting thatUkraine is an investor friendly country, the ambassador said the prime minister and legislators are working in tandem to improve regulations and the legal environment to attract foreign investment. “If you are patient and serious in your engagement with the Ukrainian economy, you will be welcome no matter which party is in government,” he assured.
Turkey and Ukraine have no outstanding issues in bilateral relations and both countries are working together on many regional issues. “It is a problem-free relationship,” Korsunsky reported, adding, “I have an easy job here.”Turkey was one of the first countries to recognize Ukrainian independence. On many issues, both countries take a similar stance, ranging from energy transit to safety and security in the Black Sea which connects them.
Ukraine joined the World Trade Organization (WTO) last year after 14 years of negotiations, increasing investors’ confidence and clearing the way for a valuable free trade agreement with the European Union. At the suggestion of Korsunsky, who helped broker the agreement with the WTO as part of the negotiating team, Ukraine also started negotiations with Turkey to establish a free trade agreement. “The agreement with Turkey will pave the way for immense opportunities for the Ukrainian economy as the goods will easily flow to the Turkish market,” he noted.
The trade volume between Turkey and Ukraine stood at $8 billion annually as of 2008 – up from $5 billion in 2007. The projection for 2009 is grim though. “I would be satisfied if we keep the same volume for this year,” he said, underscoring the difficulties in the economies of both countries because of the global economic crisis. Still, the volume represents a stark contrast when compared to Russia’s $38 billion trade volume with Turkey – $26 billion in the energy trade alone, mostly gas and oil exports to Turkey. “When you subtract the energy portion from Russian trade, Ukraine becomes far more important for Turkey, as trade consists of many commodities including steel, chemicals and agricultural products, making Turkey Kyiv’s second most important trading partner after Russia.”
Korsunsky pledged that his government has not and never will use transit pipelines carrying Russian natural gas through Ukrainian territory to Turkey and western European markets as a tool to pressure governments. “We have officially declared that we would like to have very good relations with our neighbors, especially with the West and EU member states,” he said. “The idea that we could use a pipeline to blackmail others goes right against this policy.” He added, “We would never think of harming our relations with strategic countries like Turkey just for gas.”
Relations between Ukraine and Russia were strained in January over Russian gas supplies and resulted in Russian gas being cut off to Europe for more than two weeks. It ended after Prime Minister Yulia Tymoshenko struck a deal with Russia for a long-term supply deal. Korsunsky blames the Russians for the gas crisis and mentions the EU findings that laid the blame on Moscow. “I would not say I’m happy with the current deal but it is a deal anyway,” he acknowledged.
Another rift recently occurred with Russia over the modernization of pipelines in Ukraine. Kyiv urged the EU to allocate $5 billion to improve the pipeline system, rather than embark on expensive alternative routes bypassing Ukraine. Moscow reacted negatively to the deal and claimed it had not been consulted on the plan, resulting in a threat by Russian Gazprom to issue fines to its Ukrainian client for failing to buy enough gas as directed by the contract – a reversal of the previous announcement by Gazprom, which had said it wouldn’t impose fines in recognition of Ukraine’s dire financial plight.
The ambassador dismissed the accusations and said the deal is for the benefit of Russia as well. Korsunsky argued that the Russian alternative – the 900-kilometer-long South Stream pipeline going through the continental shelf of Ukraine in the Black Sea, thus requiring Kyiv’s approval – is environmentally dangerous. “It comes with a large bill as well,” he said, noting that the 25 billion euro price tag for a 31 billion cubic meter annual gas flow simply does not add up. “What we are saying to Russia is that if you invest $5 billion in our existing pipeline for upgrades, you can increase the pumping capacity to 60 billion cubic meters annually,” he underlined, adding “I would be very happy if I were in Russia’s shoes.”
The Ukrainian diplomat says he appreciates Turkey’s full support on the membership of his country in NATO – a strategic goal reaffirmed by successive Ukrainian governments and staunchly opposed byMoscow. Korsunsky says the alliance is much more than a military pact, rather a security bloc dealing with energy and other nonmilitary issues as well. “As such we need to be in NATO to maintain our safety,” he emphasized. Ukraine is currently the only non-member state of NATO that participates in all of the alliance’s operations.
He concedes that Ukraine has many issues to deal with before it can be considered in full compliance with NATO standards. “We need to upgrade our military forces, stabilize our economy and work harder to get increased public support for membership,” he said. Around 30 percent of the public rallies behind NATO – an increase of 10 points over last year – and 50 percent remain uncommitted while the remainder is opposed. Korsunsky cites NATO’s operations in Bosnia and Kosovo as the reason for low public support but largely blames Russian propaganda. “We need to do a much better job informing our citizens about what NATO means for our future,” he added.
ANKARA 15 April 2009, Wednesday