GORE IN CHORNOBYL, URGES ECONOMIC REFORM IN UKRAINE. U.S. Vice President Al Gore on 23 July visited Chornobyl and the town of Prypyat, whose 55,000 inhabitants were evacuated after the 1986 nuclear accident. The site is a "menacing monument to mistakes of the century now slipping away from us," AP quoted Gore as saying. Ukrainian President Leonid Kuchma announced the same day that he and Gore will convene a conference of private donors to raise funds to strengthen the concrete sarcophagus covering the reactor that collapsed in the 1986 nuclear accident. Winding up his visit, Gore repeated his call to Ukraine to carry out economic reform in order to attract foreign loans. "I am confident that if Ukraine carries out a truly bold program of economic reforms, the international community is prepared to respond with new financial support," Reuters quoted him as saying (see also "End Note" below). JM

IMF MISSION IN KYIV TO DECIDE ON $2 BILLION LOAN. An IMF mission arrived in Kyiv on 23 July to make a final decision on a $2 billion loan to Ukraine. If the IMF decision is positive, the World Bank will release credits to Ukraine totaling $800 million, Ukrainian Television reported. The Ukrainian government sees a possible IMF loan as crucial to stave off Ukraine's financial collapse and to continue economic reforms. The IMF, for its part, is afraid that Ukraine's leftist-dominated parliament may frustrate the government's reformist efforts. "Finally, Ukraine has agreed a very sensible program with us, but they're having great troubles getting it through the parliament," Reuters quoted IMF First Deputy Managing Director Stanley Fischer as saying on 23 July. JM


U.S. Vice President Al Gore's trip to Kyiv this week ended with his resisting Ukrainian President Leonid Kuchma's calls for public U.S endorsement of an IMF bail-out package. Kuchma sought such an endorsement to strengthen both his bargaining position with an IMF delegation arriving this weekend and his political standing as he seeks re-election next year. He had counted on US help on both accounts.

Yet, there are good reasons why Gore hesitated. First, although no one doubts the seriousness of Ukraine's economic crisis, as early as next month the government may not be able to meet its debt service obligations. There are widespread doubts about the Ukrainian government's commitment to reforms as well as its ability to implement them if adopted.

Second, bad economic policy is not the only source of this crisis. Bad politics are at work as well. The Ukrainian political establishment does not see political and economic reforms as an urgent matter. The most intense struggles in Ukrainian politics take place, not between parties, ideologies, or branches of government but among the political and economic leadership, in both Kyiv and the regions. Various coalitions of leading politicians, bankers, new- and old-style business leaders and government bureaucrats struggle for control over the state's wealth and especially for the positions of state power that control it (and that make the rules for its privatization). As long as Ukrainian politics is dominated by this still unfinished competition for power and property, there will be little energy left for sound economic policy.

Third, the US is right to be wary of appearing to back a candidate in the Ukrainian presidential race given the absence of real progress toward ending the country's political and economic stagnation. For Kuchma, the bail-out is a crucial element in his re-election campaign. The presidential contest has influenced most of the decisions taken in Kyiv during the last six months and will likely influence all decisions in the next 15. Yet the U.S. wants an independent and stable Ukraine. Kuchma has real accomplishments to his credit, especially in foreign policy and in launching the first set of economic reforms in 1994. But he is presiding over a country heading backward. In such circumstances, the U.S. must be pro-reform, not pro-Kuchma.

Vice President Gore heard from Kuchma and his senior advisers another impassioned argument for U.S. and Western assistance to Ukraine and to Kuchma personally: the fiscal crisis and the resulting economic and political damage that will come in its wake, threatening the "survival of the state itself."

Yet it is precisely Ukraine's survival that is not an issue. Even the staunchest left-wing politicians in eastern Ukraine dismiss the collapse of the Ukrainian state and its re-integration with Russia as an impossible scenario.

Rather, the question is now what kind of state Ukraine will become. The broad alternatives can be stated starkly as a choice between gradually becoming a part of Europe or remaining relegated to Europe's periphery. A European Ukraine requires bold choices and actions that have so far been beyond the ability of this or any other Ukrainian government. A peripheral Ukraine comes by default: the leadership need only follow the political rules of the game already deeply ingrained in the country.

If this is the state of Ukrainian politics, why should the West care? If Ukraine has successfully muddled through so far., why not let it continue down this road? Perhaps the West should simply let the Ukrainian leadership steer the country toward stagnation and obscurity on Europe's periphery. As tempting as such a conclusion is, Ukraine's choice between Europe and Europe's periphery matters to the continent as a whole.

A choice in favor of the status quo does not merely perpetuate today's Ukraine. It undermines the foundations that have made the current situation bearable inside the country and less dangerous for Ukraine's neighbors. It would certainly put in danger the policies that have dramatically lowered inflation and brought Ukraine a stable currency. It would exacerbate economic deprivation in the country as a whole, particularly along crucial ethnic and regional fault lines. A peripheral Ukraine would increase the danger that enlarging European institutions like NATO and the EU would find themselves on a much more unpredictable and unstable frontier.

These strategic realities give visits like Gore's additional importance. Senior U.S. and Western officials cannot force the Ukrainian leadership to act against its immediate political interests. They cannot impose economic reforms on an unwilling country. Yet they must be a strong stimulus for these reforms by reminding Ukraine of the choice it faces and the consequences of failing to act. They must also sketch out--as they did so successfully to a Ukraine unsure of whether it should proceed with nuclear disarmament- -the support Kyiv can count on if it recognizes the seriousness of the situation and makes the hard reform decisions needed for the country to move forward.