The much-vaunted Kharkiv Initiative campaign, which the US government viewed as capable of not only compensating Ukraine for canceling the gas turbine contract for the Bushehr nuclear power plant in Iran but also producing significant economic results, has fizzled. Over the years of the initiative, Kharkiv has received several dozen tons of medicines and second-hand medical equipment from the US military bases being disbanded in Germany and nothing more. Now this program is called Kharkiv Partnership. Is it time to abandon the hopes that the Kharkiv region will become, with overseas aid, a prosperous entrepreneurial area, an investor’s paradise? This is the question
The Day’s correspondent asked Mykhailo STANCHEV, chief of the international and foreign economic relations department of the Kharkiv Oblast State Administration.
“This problem should be viewed in the broader than usual terms. Yes, after Madeleine Albright had persuaded Ukraine to cancel a very lucrative order to supply turbines to Iran, the Kharkiv Initiative came into existence. The announcement was made by Zbigniew Brzezinski in Kharkiv. At first the idea looked promising, for it presupposed the creation in Eastern Ukraine of an entrepreneurial atmosphere that would in the long run make up for the losses incurred by the order cancellation. It was supposed to generate a business climate to speed up economic reforms. There was a vision of a new regional economic development model in which multifaceted cooperation with the United States would play a major role. In the final analysis, Kharkiv residents expected new investments. Among the priorities set out in the Joint US-Ukrainian Declaration was the development of business cooperation; the attraction of investments in the strategically important enterprises; the development of small and medium busines; the commercialization of scientific achievements; and the development of agriculture and the processing industry.
“However, US capital is slow to come here in spite of a special investment regime in Kharkiv. At first this appeared puzzling. Then we understood that investors were kept at bay by the unstable economy and inability of our managers to utilize investments to make profits. In other words, American businessmen refused to be led by American politicians.”
“So, instead of officially closing the Kharkiv Initiative, the oblast administration has simply renamed it the Kharkiv Partnership.”
“No, the very essence is different. This long-term program is aimed at training people to work under market conditions. This especially applies to those working in public administration and local government.
“The first project as part of the Kharkiv Partnership is mapping out a strategy of Kharkiv oblast development. We are establishing strategic planning sections in district councils and a number of district administrations. Their functionaries will do advanced studies in Ukraine as well as abroad, for example, in Bulgaria, Slovakia, or the Czech Republic.
“Another project is community contacts. As part of this undertaking, entrepreneurs — small and medium businesspeople — are upgrading their skills at US enterprises and firms. We are preparing three groups to go there in the fall.
“It is very important to know the region’s requirements and potential. Now, within the Kharkiv Partnership framework, we are setting up an international development agency, a non- governmental consulting organization. We are also drawing up a program to set up a joint registration chamber.”
“The Kharkiv Partnership efforts in this direction are clear and logical. But, still, they should produce concrete economic results. Is there at least one contract which can be honestly considered a result of the Kharkiv Partnership?”
“There is. The Kharkiv Heating Networks and the America’s Parsons have signed a contract on raising the energy effectiveness of the city’s heat-supply system. Now the Americans are pressing the World Bank for half a million dollars to work out an investment program. This will involve an estimated $200 million in total investment. The World Bank promises to issue a loan. The main work will start in December.
“Yet, we must not ignore the experience gained within the framework of the Kharkiv Initiative. It says we should not so far expect a stormy flow of investments or display impatience. Even if only two out of ten of our programs are implemented, that would be good. This is why the Kharkiv Partnership is a long-term project.”
