US-Ukraine Business Council

U.S. AMBASSADOR WILLIAM TAYLOR'S SPEECH AT KYIV INTERNATIONAL UNIVERSITY, KYIV, UKRAINE
Kyiv, Ukraine, November 5, 2007

Ambassador Taylor:

It's great to be here on the morning of the first snow in Kyiv this year I think this is an auspicious beginning, and I am very very pleased to continue in the tradition of U.S. ambassadors coming to speak to Kyiv International University. Thank you very much for having me.

The first part of this discussion, as the rector has said, is what I have to go through in order to get to the second part of this morning, which is what I enjoy more, which is your questions.

So I will make some remarks this morning talking about Ukrainian politics, Ukrainian democracy, something about American democracy, but then I would very much appreciate the opportunity to hear your reactions and to get your questions about anything that I've said, or anything else that's on your mind. So again, thank you for having me.

I understand that the rector is the first and the only rector of this university, and I am pleased that I am able to speak to the students of a private university that is here in the capital of Ukraine that is moving in the direction that you want to see it go.

I got here about a year and a half ago. And when I got here a year and a half ago in June, this was June of 2006, you'll recall, I got here after your elections of March 2006, and you were still in the process of putting together a government, you were putting together a coalition When I arrived, I told some people, maybe some of the people of the press who are here, that I was glad to be here.

I was going to be here for 3 years, I was going to have a 3-year tour, and I said in June of 2006 that I was glad to be here during a time that there would be no more elections. It turned out of course that I was wrong, that you and your leaders decided that there would be elections.

Democracies have elections, so elections are a good thing for a democratic people. I was very pleased to have been here to see that election, even though it surprised me. I didn't think that I was going to be able to see one And those elections, now a month ago on the thirtieth of September, were free and fair and good elections.

And now, of course, you are in the business, your elected officials are in the business, again, of putting together a coalition, and you are again listening to the different kinds of coalitions that could be formed.

I have said before and will continue to say that the United States Government doesn't have a preference on what kind of coalition your elected representatives put together, whether it is an Orange coalition, or a broad coalition, or some other coalition.

Since there was a free and fair election, the United States Government, I think most governments around the world are very pleased to work with whatever government emerges from those free and fair elections.

What we do think is it's a good idea to form that government. We think that there are decisions to be made, and actions to be taken, governing to be done that are necessary right now in Ukraine, and I'll come back to this a little later on. But basically these elections I think were good elections of a young democracy.

The rector and I were talking about how Ukraine is a young democracy, only
16 years. But let me talk to you a little bit about a young democracy. I'm going to talk to you briefly this morning about a country that is within two decades of its independence.

I'm going to talk to you this morning a little bit about a country that is coming off of a world famous revolution - a revolution that the whole world watched and applauded. I'm going to talk to you about a country that is picking its way, is kind of feeling its way between two major world powers.

I'm going to talk to you about a country that has recently elected its third president. And in that election for the third president of this young democracy was a controversy, was an unusual election that didn't follow exactly the script of normal elections according to the constitution of that country.

One candidate of this election for the third president, this young democracy I'm talking about, was inclined towards one of those two world powers, that I mentioned, and the other candidate for president in that presidential election, was inclined towards the other of the global powers that they were picking their way between.

This country, this young democracy that I'm talking about, is divided, in many people's view, into section of the country - geographic sections, but also political sections, political divides between the two sides. And there are in this young democracy oligarchs that are associated with one or the other, actually associated with one of the regions of this young democracy.

Now, what young democracy am I talking about here? That's the right answer.
I will be talking about Ukraine. However, I could make the same statement, all of those statements I just made, I could make the same statement about the United States in 1801. Let me just run through those statements again and think about how they apply to Ukraine, but let me also tell you how they also apply to the United States.

I mentioned that this young democracy was within two decades of its independence. Well, the United States didn't get its independence until
1781 or so. It started in 1776, when it declared its independence, but then had to fight for it. So we were, the United States was within a couple of decades of its independence, just like Ukraine was within 16 years of its independence.

We went through a world famous revolution. In our case it was the American Revolution, in your case it was the Orange revolution.

We were picking our way through two world powers. In our case it was France and England, in your case it is Russia and the West, but again those similarities.

And in 1800, the United States elected its third president just like in 2004 you elected your third president. And in 1800 Thomas Jefferson and John Adams were the two candidates for president of the United States, and Thomas Jefferson was more inclined towards France and John Adams was more inclined towards England, so again, there were these parallels.

I mentioned that the country was divided geographically and politically.
In the United States there were actually three divisions that we can see.
In the United States there were the New England States in the northern colonies. There were the Central Atlantic States, the Middle Atlantic States. And then there were Southern States. And in the Southern States there were oligarchs. Now in our case, these were large plantation owners.
So you can see the parallel between the United States and Ukraine.

I'm not making this point just to point out these parallels. I'm making the point that the United States was a new democracy in 1801. Ukraine is a new democracy now. There are lessons to be learned, I think. I hope that Ukraine can learn from the mistakes that we made.

We independent Americans have had more time than independent Ukrainians to make mistakes, so we've made more mistakes than Ukrainians in this case. We hope that you will be able to learn from our mistakes. We hope that you will be able to learn from our successes - we've done some things right - and we hope that we can help pass those on.

We had to do some trials and errors. We made some mistakes and we learned from them. One mistake that we made that has application here in Ukraine, I believe, is that our first constitution in 1781 turned out not to work. It turned out that this constitution was too loose, did not have an identifiable and strong enough central government. So our first constitution failed and we started over and we had a second constitution in 1789.

There are those in this country, maybe some even in this room that would say that the current Ukrainian constitution has some amending that could be necessary, that there are some improvements to the Ukrainian constitution that would be of value.

Our Supreme Court didn't start out to be a very strong democratic institution. Our Supreme Court began, really, as just a clause in this document called the Constitution of the United States, and it took our most distinguished Chief Justice of the Supreme Court, John Marshall, 35 years to establish the U.S. Supreme Court as a real strong respected institution of democracy.

He had some conflicts. John Marshall, the Chief Justice of our Supreme Court, had some conflicts with President Thomas Jefferson. He had conflicts with President Andrew Jackson. And he took some time, and took some effort, to establish our Supreme Court as a very respected branch of our government.

So again, you can learn from our mistakes.

Now, coming up to Ukraine's new democracy. I observed over the last half a year, three quarters of a year, that is back in April and May of this year, some difficulties that a new democracy goes through. And I observed that there were actions taken by several parts of the government - on the presidential side, on the prime minister's side, on the Rada's side, on the courts - several actions by these very parts of the government that in my view tarnished the respect for the rule of law in Ukraine.

There was pressure put on the courts from all sides. There were political pressures put on what should be independent organizations, or at least non-political organizations, like the General Prosecutor, like the Constitutional Court, like the National Security and Defense Council, that these should be non-political organs that help the young democracy move forward. So I suggested that there was some repair work to be done to the respect for the rule of law here in Ukraine.

Again, young democracies go through these kinds of challenges, and Ukraine is going through it. Ukraine had a very good election, as I mentioned, on September thirtieth. All of the political parties who are now in the new Rada have now committed to taking their seats in the new Rada, and that wasn't the case in the old Rada. As you know, some political parties did not take their seats in the old Rada, so I think this also is a benefit and is a sign of progress.

I mentioned earlier that the new democracy under the new government has some decisions that I think need to be made. One of the first decisions that the new parliament, the Verkhovna Rada, is going to have to make is a final decision on joining the World Trade Organization.

All of the parties in the last Rada... That's not true, the main parties in the last Rada supported the steps necessary, the legislation necessary to join the World Trade Organizations, and I hope that the new Rada will take the final steps, and pass the final law that is necessary to join the World Trade Organizations. That, I think, will improve the economy

I think that will indicate to the world that Ukraine is ready to join a rules-based trade regime. I think that's very good for Ukraine, I think that will be good for this region. And even more importantly, I believe, is what will follow from Ukraine joining the World Trade Organization, and that is serious negotiation on a Ukraine-European Union free trade agreement.

Each of these steps, the WTO and the free trade agreement with the European Union, I believe will demonstrate to Ukrainians and the world that Ukraine is ready to continue to move, and take serous steps toward moving to Europe.

Again, the rector and I were talking about you students, we were talking about the faculties in your university, were talking about attitudes toward going towards Europe. And my sense in talking with a lot of Ukrainians around this country, East and West and in the South, is there's a general consensus that Ukrainians feel about moving toward and into Europe.

Ukraine is a European country, and there are political institutions and there are security institutions, there are political values, democratic values that I believe, and what I hear Ukrainians telling me, suggest that Ukraine ought to continue its move toward Europe.

This is one of the questions that I'm looking forward to your comments on as we go through this discussion, as we get to the end of the first part of this morning, and get to the second part which is your questions and your comments, I would be interested in your sense of the direction that you think Ukraine should be moving.

This is a university with a well-established international relations institute, and your views are very important to shaping the rest of the country's views on the overall foreign policy direction of Ukraine, and I would like to hear your views on that.

There are other things that the new government is going to have to do, after WTO and after the free trade agreement with the European Union. Everybody understands that the new government is going to have to attack corruption.

The United States has been helping, other countries have been helping, previous governments have been working, the new government will also have to work very hard to identify and attack corruptive influences in all parts of the society - in the government, in education, in the private sector. This is an important task of this next government; it will be an important task, again, for moving into Europe.

The courts, I mentioned the courts before when we were talking about the problems of April and May and June of this year, the courts coming under influence, accused of corruption, accused of being bribed. The court system in Ukraine has a lot of reform it's going to have to go through. This is going to important for the people to support, and it's going to be important for the government to take strong action.

Improving the investment climate. All of the main political parties during this last election campaign said that they were going to improve the political climate and the economic climate and the investment climate here in Ukraine so that investors, both Ukrainian investors as well as international investors, would feel comfortable in bringing their money and their investments, their interest and their talent to Ukraine.

So there's no difference between Party of Regions and BYuT and Our Ukraine on the need to improve the investment climate. Now the hard part of actually making those changes and reducing regulations, cleaning up corruption as I've mentioned, having a court system that can adjudicate disputes between investors.

These are all important things that all three major parties seem to agree that they are going to move forward on. I think that this is an important feat.

It is very important to get investors, in particular international investors here, because another thing that's coming up very soon that this new government is going to have to address is 2012, the European Cup.

This big sporting event in 2012 is going to take an enormous amount of work, an enormous amount of money, an enormous amount of effort to build the roads and the stadiums and the airports and the hotels, and the state budget in Ukraine, I think, is not going to be able to cover all of those expenditures.

That money is going to have to come from investors. Investors are going to have to come invest in stadiums, invest in hotels, invest in roads, and the only way investors are going to come bring their money to help get ready for
2012 is if the investment climate works, and it goes back to what I was talking about in corruption, regulation, courts. So those are very important pieces, I think, of what this next government is going to have to do.

A young democracy has challenges, and one of the challenges in this country is there are many people in Ukraine who grew up under a totally different system, who grew up under a system that is very different from the one you're looking at today. My own view is Ukraine made the right decision, is making the right decisions to move to Europe, to establish a real democracy - it's a young democracy, but it's clearly a real democracy.

The United States Government is very please to be a partner with Ukraine as it moves in this direction, but your generation, your class and the classes before you and after you here at this university, you have a major responsibility for your country and for your country men and women.

So that's why, again, as I started out talking about young democracy, I'm talking about a new generation that can move forward, that didn't grow up in the old system, that didn't work in the old system, remembering what the old system is like because you know what your parents and grandparents have said, but you have the opportunity to move forward in a fresh way, in a vibrant way to establish a new democracy in a way you want to. The United States is very pleased to support you in this.

And now I am very eager to take your questions and to take your comments Thank you very much.

(Applause)

Moderator: Ladies and Gentlemen, if you have a question, you can ask Mr.
Ambassador.

Question: Mr. Ambassador, what do you think about situation in our country.
If the election will be very open, will it be a good situation for work of the government, and also for people, in our country?

Amb. Taylor: Thank you. I mentioned at the outset that when I arrived here a year and a half ago, I thought that it would be a good thing, in the summer of 2006, that my whole tour, from 2006 to 2009 would be a time when Ukraine could settle, that Ukrainian democracy could settle, that Ukrainian economics could settle, that investors could have a time to be able to take a look and see where the investments would make sense, and investors would gain confidence in coming here.

I thought there was a need for a time of some settling, some stability, and I said I was hoping that for the three years from 2006 to 2009 when I was going to be the Ambassador here from the United States that there wouldn't be elections. But I was wrong; your leaders decided there would be an election.

You're asking, I think, if there should be more elections, and of course there should be more elections. But, you don't have to have an election every year. (laughter) You don't have to have... Now, don't get me wrong, I am very much in favor of elections, but there's a limit, there's too much of a good thing if you have it every year.

It makes it difficult for the democracy to settle, for the economics to settle, for the people to settle in. When I walk around both this city, but when I visit other places - I was in Odesa and Mikolayev last weekend. I was in Poltava earlier. I've traveled to a lot of places in this country - and I hear people's views and people's desires and people's goals that are not grand issues.

In particular, they're not specific issues that have to do with Kyiv, but people around the country want to get on about their lives, they want to educate their children, they want to have good health care for the parents and themselves and their children, they want to have good jobs, they don't want to have inflation erode their earning power. These are the things that the government needs to address. And it's difficult, frankly, to address those kinds of issues when there's an election every year.

When you're preparing for an election you have to think about what would sound good to the electorate, and of course that's important because you want to get the views of the electorate and the people of Ukraine need to make decisions, they have made decisions. But, I would suggest that now's, again, a time to kind of settle in, make these decisions, form a government and make these decisions that I mentioned and take steps forward.

Moderator: Next question.

Question: Thanks once again for coming, and we really appreciate your visit. I'm a freshman at this university, and going back to may question is I'd like to hear your opinion about NATO and Ukraine. As far as we know, the action plan was adopted on November 22 of 2002, and there were actually a lot of issues involved. What do you think, what chance does Ukraine have to join this organization, and if it has, how long will it take our country to accomplish this? Thank you.

Amb. Taylor: Thank you. An excellent question. My simple view on Ukraine and NATO is it's up to Ukraine to decide. That's my first point. I mentioned that there are a lot of people in Ukraine who grew up under the Warsaw Pact. Ukraine was a member of the Warsaw Pact, and the opponent, the enemy of the Warsaw Pact was NATO.

I served in NATO. I was in NATO in 1987 to 1992, and during that time while I was at NATO, the Berlin Wall came down, and then in 1991 the Soviet Union disappeared, and the Warsaw Pact of course, was dissolved. So NATO at that point had to reevaluate itself, and NATO changed itself.

It is now an organization of political and security interests, and it has expanded by ten new members in Eastern Europe. Eastern Europeans that are now members of NATO - and here we're talking about Slovia and Poland and the Baltic States and Romania - here we're talking about countries who have asked the same question you did, said, "As a citizen of the Czech Republic, or as a citizen of Poland, or as a citizen of Latvia, should our country join NATO?"

What is NATO? Well, NATO today is not an organization in opposition to the Warsaw Pact. NATO today is a club, is a group of countries that share values - democratic values, economic values, security values - that takes on challenges around the world.

Takes on challenges on terrorism. Takes on challenges of cyber crime.
Takes on challenges of economics. In some cases, NATO has done that. So there are a lot of people in Ukraine who are learning about what the new NATO is. And there are a lot of questions that Ukrainians deserve answers to about NATO.

What does it mean to be a member of the North Atlantic Treaty Organization?
Does it mean having foreign military bases on your soil? No. Does it mean having nuclear weapons on your soil? No. Does it mean you are forced to go fight in places that you don't want to fight? No.

NATO - again, I was there for about five years - NATO is an organization that only works by consensus. All 26 of those countries have to agree before any decision is taken. Now that's a hard job, to get 26 countries to agree. But, countries like Poland, the Czech Republic, and Slovakia, and Bulgaria, and Latvia, Lithuania and Estonia, they've all decided that they would like to join, and they indeed have joined. They've asked the question you did and they came to that conclusion.

So, I would say again, come back to my first point, Ukrainians need to decide. NATO allies - the United States, the Germans, the Brits - they're not going to be pushing Ukraine to join. We are not going to push Ukraine to join. Ukraine needs to want to join that organization in order to make it work.

If Ukraine doesn't want to be in, then NATO is not the place for it. If Ukraine does want to be in, if Ukraine decides after getting answers to these questions, after a year or two or however long it takes to get answers to these questions, if at that point Ukraine decides it would like to join the North Atlantic Treaty Organization, NATO, then the door is open.

The door is open for you to join. But, we're not going to be pushy. If you want to join, will be very helpful, but we're not going to push you to want to join. You have to want to join yourself. And that will to take some time. My bet is people in this room would have one view about NATO, and people who served in the Warsaw Pact they have another view. And they're all Ukrainians and they have different views about this. So this is a decision not for Americans, not for Russians, not for Europeans, but for Ukrainians to decide.

Now, you also asked how long would it take. So, let's just think. If, after a year or two of debate, discussion, dialogue, information campaign, trying to answer questions from Ukrainians, "What is NATO and do we want to join?" after a year or two of that discussion, if at that point the Rada decides, or there's a referendum, or some other way of deciding that Ukraine is ready and the government then applies for membership in a year or two, that would begin a process - that's not the end of the process, that's not the membership right then - after a year or two, Ukraine would apply for a Membership Action Plan, which is similar to the NATO-Ukraine Action Plan that you mentioned, but it is a more formal process that begins the process of moving towards membership.

It doesn't guarantee that there will be membership at the end, and some countries - I've mentioned these ten Eastern European countries - some countries take seven or eight years in order to get to the end point. Some countries are still working. So, we can't really tell, but it's not a quick process. But the decision to start that membership process, which doesn't guarantee an end point, but that decision is probably a year or two off.

I'm not sure I totally answered your question, but that's a shot. Good.
Thank you. Other questions? Yes.

Question: Mr. Ambassador, it's a great honor to see you here today.
Actually, I'm a freshman at this university, and I got a question to you.
Since we're sixteen years independent country, I think that's not exactly bad, because we're dependent on one country and it is Russia. I mean we're dependent on their energy resources, you know, and I want to hear your opinion, how long it's going to take us, I mean not being dependent on them, and how we can avoid being dependent on them. That's all.

Amb. Taylor: That's a good question. As you know, there are a lot of countries who are dependent on other countries for their energy resources.
The United States depends on foreign oil, on imported oil, to a large degree, and not only to a large degree, to a growing degree.

Every year the United States has to import more oil from abroad than the previous year. So we are dependent on foreign oil, and we have thought about the question that you asked, "How can you avoid dependence? Or how can you mitigate dependence?"

One way, that is to develop other sources of energy. So one way to do that here, of course, is to use less energy, so conservation is important.

Another way to do that is to identify other sources of natural gas, and so you're working on developing your own indigenous sources of natural gas.
Recently, actually within the last two weeks, the government signed a contract with an international firm, it happens to have been an American firm, to explore for oil and gas in the Black Sea.

Most countries have not been able to explore in the deep waters of the Black Sea because it's so deep and it's so difficult to drill in that environment, however, this company that just signed a contract with Ukraine is convinced that the Black Sea off of Ukraine will be the new Caspian Sea in terms of oil and gas resources.

So the first thing is: diversify your resources, and one way to do that is to develop your own resources in the Black Sea. Onshore as well, there are a lot of deposits of oil and gas in Ukraine that can be developed that haven't been yet developed. There are alternative sources.

Ukraine, of course, has the best agricultural land in the world, and agricultural land now is becoming the source of energy. Bio-fuels, Bio-diesel fuels are being grown around the world and turned into fuel for cars and for power plants and Ukraine has a great potential to do that.

There are wind possibilities. There are nuclear possibilities. Now, nuclear gets to the same problem. Right now, all of your nuclear fuel comes from Russia. It doesn't have to be that way, and indeed there's an experiment going on right now in one of your nuclear power plants to see if another company from another country has the capability to manufacture nuclear fuel for Ukrainian reactors, and so far this experiment is going well, and the company, Westinghouse, is going to do another evaluation of how this experiment is going.

If the experiment works, and it looks good so far, then Ukraine would have two options. It would undoubtedly continue to buy most of its fuel from Russia. That's the established pattern and relationship. But, it would have the option of buying from another company that could provide competition.

Competition is one of the main ways - not the only way, there's another way that I'll come to in a minute - but one of the main ways to deal with dependence. If you have competition from other fuels, domestic fuels, other energy resources, other alternative fuels, competition works. Competition is one way.

The second way, and again the United States has had some experience in this because we are dependent on foreign oil, because we are dependent on oil coming in from South America, from the Persian Gulf, and in particular oil supplies from the Persian Gulf as we know from history, recent history, can be interrupted, we have come up with a way, not a perfect way, but at least a way to begin to deal with that dependence, and that is by putting oil in the ground.

We have a strategic petroleum reserve in Louisiana. It turns out that there are some big salt domes in Louisiana that are just perfect for storing many hundreds of thousands of barrels of oil, millions of barrels of oil. So if there were another oil supply disruption, we would not be totally dependent on that and we could go through this strategic petroleum reserve to replace that oil for some period of time.

So there are some emergency measures you can take. There are some competition work that you can do to diversify the sources of energy and those are two of the ways.

I would say one third of the way that you can deal with it, and that is by making the contracts that Ukraine has for its natural gas, just for an example, transparent. The contract right now under which Ukraine buys its natural gas, the gas that comes from central Asia and comes from Russia, those contracts are not very transparent.

Those contracts actually depend on a middleman, a company that is between Russia and Ukraine that has gotten the ability, through fairly non-transparent ways, to import gas into Ukraine. It's not clear to us why you need a non-transparent organization in the middle. So a third way of reducing dependence is to make all the contracts transparent and commercially driven and according to European standards.

So, there are ways that you can address that situation.

Moderator: Any other questions?

Amb. Taylor: Yes, there's someone all the way in the back.

Question: (microphone malfunction)

Amb. Taylor: Very good. The question was the role of the Ukrainian army in various hot spots around the world, if I got that right.

Ukraine, your government, has decided that it will support various military actions around the world like in Kosovo, like in the Balkans, like in Africa, like in Afghanistan and for a while there was participation of a brigade in Iraq, and these decisions were the decisions of governments, your governments, over time.

I can say two things about that. Number one - those deployments of Ukrainian armed forces against common enemies is very much appreciated.
The United States appreciates it. Other Western European countries appreciate Ukrainians' participation and contribution.

People in the Balkans where instability threatened and the international community had to send military forces in to keep the peace and try to facilitate movement toward new democracies in the Balkans, Ukraine helped out in those areas. Same thing in Afghanistan, same thing in Iraq. So, number one, the international community appreciates the work that Ukrainian soldiers have done.

Number two. Ukrainian soldiers have done a very good job in these places.
Ukrainian soldiers have shown that their commitment and their training and their capabilities are very good. Ukraine is the only non-member of NATO that is a participant in all of the NATO activities around the world, and it's because Ukraine has capabilities that the international community appreciates and that are needed in order to provide stability in these countries. So it's appreciated and Ukraine has done a very good job.