U.S. Department of State

Annex A: Assessments of Progress in Meeting the Standards of Section 498A of the Foreign Assistance Act of 1961

UKRAINE

Ukraine has progressed unevenly in building a democratic society since gaining independence in 1991. The 1994 election of Leonid Kuchma to the Presidency against incumbent Leonid Kravchuk constituted the first peaceful, democratic, contested transfer of executive power in the former Soviet Union. Kuchma was reelected in November 1999, in Ukraine's third presidential election. Kuchma won with over 56 percent of the vote, compared to 38 percent for his communist rival. The election failed to meet a significant number of OSCE standards, due to government manipulation, harassment of the media, and the systematic involvement of government officials in the campaign. Despite problems in the election, some observers saw the result as a rejection of the communists and an endorsement by the Ukrainian people of continued political and economic reform and a pro-Western orientation, to which Kuchma had committed himself during the campaign. The April 2000 referendum on changes to the Constitution that would have increased Kuchma's power at Parliament's expense also gave rise to charges of irregularities. According to the Organization for Security and Cooperation in Europe (OSCE), the March 2002 parliamentary elections were an improvement over the 1998 parliamentary elections in some respects, but important flaws persisted. A general atmosphere of distrust pervaded the pre-electoral environment due to factors that included flawed implementation of the legal framework, interference by the authorities in the electoral process, and abuse of administrative resources, including allegations of pressure against public employees to vote for certain candidates. Observers found state media coverage to be biased, and opposition candidates did not have access to the media. On the day of voting, however, results of the exit polls tracked closely with official results.

The Constitution mandates an independent judiciary, headed by a Constitutional Court that determines the constitutionality of laws and acts by all branches of government. In practice, however, the courts remain subject to considerable political interference and are a weak check on the power of the executive branch. The legislative branch, the Rada, has been a relatively more effective check, though its practical ability to influence Kuchma's authority has been limited. Allegations of vote buying in the Rada persist, as do charges that pro-presidential groups use coercive administrative methods to prompt defections from opposition parties and influence voting.

Civil society is increasingly important in Ukrainian political life. Non-governmental organizations played a significant role in the March 2002 elections. Ukraine has an active NGO community; for example, the local NGO Committee of Voters provided thousands of domestic monitors during the 1999 presidential election as well as the 2002 Rada elections. Several NGOs have come into conflict with the Government and face pressure from authorities. In late 2000 and early 2001 multiple political crises--the unsolved murder of outspoken journalist Heorhiy Gongadze, sharp political battles, and street protests--created virtual political deadlock from December through May 2001. Protests flared again in 2002 on the anniversary of Gongadze's disappearance. Although there were confrontations between protestors and police, and a number of arrests, the protests were largely non-violent. The Rada's no-confidence vote in popular and reform-minded Prime Minister Yushchenko in April 2001 caused worries about reform in Ukraine. His successor was replaced in November 2002 in a government reshuffle based largely on President Kuchma's interest in solidifying the pro-Kuchma majority in Parliament. Fallout from the Gongadze scandal continues to play a role in political decision-making and points to the need for continued democratic reform, strengthened rule of law, and more governmental transparency and accountability.

The run-up to, conduct of, and results of, the presidential election scheduled for October 2004 will be key for Ukraine's democratic development. Pre-campaign political activities by the opposition have been subject to government-sanctioned harassment. On December 11, the Rada approved a resolution establishing an ad-hoc commission to investigate foreign and foreign-funded NGOs. The Commission appears to be aimed at stifling support for the opposition. In the fall of 2003, the parliamentary majority introduced draft constitutional amendments, prepared by the Presidential Administration, that would result in major changes to Ukraine's political system, including moving from popular election of the president to election by the Rada (in 2006). Many observers interpret the proposals as an effort by pro-Kuchma forces to prevent unofficial front-runner Yushchenko from becoming president or to weaken his presidency. Parliament passed these amendments in a controversial first-round vote in December 2003 plagued by opposition-led obstructionism and procedural irregularities. The opposition plans to contest the legitimacy of this vote. A final vote is expected in spring 2004. Prospects for ultimate passage are still uncertain. On December 30, 2003, the Constitutional Court -- which usually follows a pro-presidential line -- ruled that President Kuchma could, should he desire, run for another term.

Section 498A(a)(2): "make significant progress in, and is committed to the comprehensive implementation of, economic reform based on market principles, private ownership, and integration into the world economy, including implementation of the legal and policy frameworks necessary for such reform (including protection of intellectual property and respect for contracts)."

Ukraine continues to make progress towards creating an economy based on market principles, private ownership, and integration into the world economy, but much work remains to complete the transition. The Kuchma administration's chief challenge in economic policy is to institutionalize structural reforms to permit sustainable economic growth. Ukraine recorded its fourth year of positive economic growth in 2003; the year-end estimate for overall GDP growth is approximately eight percent, up from 4.8 percent in 2002. Inflation rose somewhat and ended 2003 at around 8.3 percent. Ukrainian foreign currency reserves increased to over $7 billion by late 2003. There was progress during the year on economic reform, including passage of a pension law as well as a bill lowering personal income tax and eliminating a range of privileges and exemptions. Investment has not yet played a major role in supporting growth, foreign direct investment remains low, and the recovery is not self-sustaining. Consistent annual growth above five percent will depend on boosting investment and ensuring that investments flow to their most productive uses. This will require sound macroeconomic policies, a much stronger banking sector, and structural reforms to strengthen governance. Governance and rule-of-law issues remain a serious concern and limit FDI and domestic investment. The Government continues to try to reform the Value Added Tax (VAT) system and reduce VAT refund arrears, which remain a key concern of the International Monetary Fund (IMF). Ukraine is seeking a precautionary stand-by agreement with the IMF. The IMF, however, is not supporting the request due to lack of progress on tax reform and the outstanding VAT issues. In late 2003 the World Bank disbursed the first tranche of a second Programmatic Adjustment Loan (PAL) of $250 million.

The Government privatization program continued in 2003. Privatization revenues exceeded the budgetary target and ended the year at approximately 2.2 billion hryvnias (USD 400 million). Reform in the energy sector yielded some dramatic results in 2000, and in 2001 several regional electricity distribution companies (known as oblenergos) were privatized through an open, transparent international tender process. Energy sector reform stalled subsequently and remains largely incomplete. The privatization of more oblenergos has been put on hold pending legislation to restructure the companies' debt. A Land Code passed In October 2001 allows farmers to trade land and use it as collateral, and will allow land sales beginning in 2005. A new Mortgage Law was passed in June 2003.

Serious problems persist in the investment climate, with widespread corruption, arbitrary government actions, lack of respect for contracts, and lack of enforcement of property laws and court decisions. Although the constitution guarantees the legal equality of all forms of ownership and the inviolability of private property, the Rada has not passed legislation to implement these constitutional guarantees. In early 2003, President Kuchma signed into law a modern Civil Code but also signed a retrograde Commercial Code that conflicts with the Civil Code. Several long-standing disputes involving U. S. firms remain unresolved. The Financial Action Task Force (FATF) placed Ukraine on its list of Non-Cooperating Countries and Territories in September 2001 for inadequacies in its anti-money-laundering regime. Faced with the prospect of counter-measures by FATF members, Ukraine in late 2002 and early 2003 enacted anti-money laundering legislation that FATF found to be consistent with international standards. Ukraine remains on the NCCT list pending review of its implementation of its new anti-money laundering r�gime.

With a few significant exceptions, imports and exports are largely unrestricted, but an array of taxes and duties and a cumbersome regulatory framework remain major obstacles to trade and investment. Ukraine made progress during the year towards its goal of joining the World Trade Organization (WTO). It negotiated bilateral market access agreements with a number of countries, and drafting of a Working Party Report is underway. Much work remains before Ukraine can accede to the WTO, particularly the passage of WTO-compliant legislation. Ukraine has a bilateral trade agreement with the U.S. providing for reciprocal Normal Trade Relations, and has been determined to be compliant with the freedom of emigration provisions of the Jackson-Vanik Amendment (subject to a semi-annual reporting requirement on its continued compliance with these provisions). In November 2001, Ukraine announced a ban on imports of U.S. poultry due to a trade dispute over veterinary certification; a new veterinary certificate was signed in June 2003, and by year's end imports of U.S. poultry had resumed. The U.S.-Ukraine bilateral investment treaty (BIT) entered into force in November 1996 and Ukraine has an OPIC agreement.

In January 2002, the U.S. Government imposed trade sanctions on Ukraine under Section 301 of the Trade Act of 1974 as amended in 1988. The U.S. had previously suspended Ukraine's benefits under the Generalized System of Preferences (GSP) program. Sanctions were imposed due to Ukraine's failure to fulfill its commitment to the U.S. to stem rampant copyright piracy, which is causing substantial losses to U.S. industry. An optical media licensing law enacted in 2002 contains serious deficiencies and needs to be amended. Although increased enforcement has led to a decline in production of pirated media, Ukraine remains a distribution center for pirated optical discs.

Section 498A(a)(3): "respect internationally recognized human rights, including the rights of minorities and the rights to freedom of religion and emigration."

The Ukrainian Constitution provides a legal framework for protecting civil and political rights, though some constitutional provisions still await the passage of enabling legislation. Actual human rights practices often do not conform to constitutional requirements. Ukraine has a large and active independent press, but criticism of the president is often not tolerated by the Government. This issue took a sinister turn with the death of internet journalist Heorhiy Gongadze in fall 2000. Amid allegations of presidential involvement in his death, absence of a prompt and transparent investigation into his killing remains of great concern to observers. The United States Government continues to call for a full, credible, and transparent investigation. Beginning in 2002, the Presidential Administration began on a regular basis to instruct the press on how to cover news events through so-called "temnyky," or "guidance" sent to influential media outlets. The Government of Ukraine also uses tax audits, license revocations, and libel suits to harass and stifle independent media. Despite tightening government pressure on journalists, opposition media remain vocal.

Abuses continue in the unreformed legal and penal systems, particularly in pre-trial detention facilities where police and prison officials regularly beat detainees and prisoners, and in the military where incidents of violent hazing of conscripts have led to fatalities. In a positive development, the Rada enacted a progressive criminal code, which entered into force on September 1, 2001, and which includes penalties for torture. Lengthy pretrial detention is common. Violence and discrimination against women and ethnic minorities persist. Harassment of ethnic minorities, including by the police, is a problem. There were some limits on freedom of movement; however, in 2001, the Constitutional Court held that the Soviet-era internal passport system was unconstitutional. In January 2004, President Kuchma signed a law passed by the Rada in December 2003 that guarantees all citizens of Ukraine, foreign citizens, and individuals without citizenship the right of unrestricted travel and residence, provided it does not contradict the laws of Ukraine. The new law replaces the old "propiska" system with a simpler registration procedure.

Ukraine is an important source country for girls and women trafficked for sexual exploitation. The Government has taken steps to address this problem. The new criminal code passed in 2001 criminalizes trafficking in persons, and anti-trafficking police units have been established at the national and local levels. A number of criminal cases have been initiated. Other sections of the criminal code, including fraud and illegal business activities, are also being used to help combat trafficking.

The national Government generally does not interfere with the registration or practice of religions and has allowed seminaries and Jewish and Muslim religious schools to open. There are some restrictions by local authorities on the activities of some minority religions. But the national Government's overall record is good on interethnic and inter-communal matters. This is particularly so in the case of Ukraine's Jewish community, whose size varies in estimates from 300,000 by some foreign observers to 103,600 by the 2001 census, which could be even smaller in 2003 largely because of increasing emigration to Israel and the West. Some minority religions complain of unequal treatment in matters of property restitution, leasing and use. Foreign religious workers and some Islamic groups have had difficulties in some regions, and it is unclear how effective federal authorities have been when local authorities infringe on religious liberties.

With OSCE assistance, the Governments of Ukraine and Uzbekistan agreed in 1998 to simplify procedures for more than 65,000 Crimean Tatars to relinquish their Uzbek citizenship and to abolish the fee charged by Uzbekistan. Ukrainians who wish to travel abroad can do so freely. Exit visas are not required. The Government can deny passports to individuals with access to state secrets, but this is rarely done and can be appealed. Since 1997, Ukraine has been found by U.S. Presidents to be in compliance with the emigration requirements of Jackson-Vanik legislation.

Section 498A(a)(4): "respect international law and obligations and adhere to the Helsinki Final Act of the Conference on Security and Cooperation in Europe and the Charter of Paris, including the obligations to refrain from the threat or use of force and to settle disputes peacefully."

Ukraine adheres to commitments under the Helsinki Final Act and the Charter of Paris and respects international law. Ukraine has no territorial claims on other states. In 1997, it signed a treaty with Romania to assist in resolving border disputes. Ukraine also reached a border agreement with Belarus in 1997, which was signed by both presidents and later ratified by the Ukrainian Rada. The Belarusian Parliament has yet to ratify the agreement, but it is being observed by both sides. In addition, Ukraine sought the advice and counsel of the OSCE in resolving peacefully outstanding political differences regarding Crimea. The OSCE mission in Ukraine, its mandate on Crimean issues largely fulfilled, was replaced in May 1999 with an OSCE project office. The project office administers a number of activities in such areas as legal reform, media freedom, military reform, assistance to the human-rights Ombudsman, anti-trafficking in persons, and other areas. OSCE observers monitored the two rounds of the presidential election in October and November 1999, as well as the March 2002 Parliamentary elections. In November 1999, Ukraine joined the other OSCE states in signing the Charter for European Security, which reaffirms full adherence to all existing OSCE documents.

Ukraine has played a constructive role in the search for a peaceful resolution of separatist disputes in its region. In Moldova, Ukraine works with the OSCE as a mediator in multilateral talks to resolve the conflict in the disputed region of Transnistria. Ukraine has also facilitated the withdrawal of Russian military hardware from Transnistria. While serving on the UN Security Council in 2000-2001, Ukraine participated in the informal Friends of Georgia group focused on resolving the conflict in the Abkhazian region of Georgia. A treaty with Romania, signed in 1997, resolved most questions involving a highly politicized border question and established a procedure to resolve the remaining issues. Remaining border issues persist with Romania and have been the subject of talks between the Governments, but have not been the source of serious tension. In May 1997, Ukraine and Poland signed a Declaration of Historical Reconciliation to improve Polish-Ukrainian ties. In 2003, Polish and Ukrainian leaders jointly commemorated the sixtieth anniversary of the inter-ethnic conflicts in the Volyn region.

In 1997, the Governments of the Russian Federation and Ukraine signed several agreements towards resolving issues concerning Sevastopol and the former Soviet Black Sea Fleet and also signed a Treaty of Friendship and Cooperation, both of which have been ratified by the respective parliaments. In 2003 Ukraine actively engaged Russia in an attempt to defuse a dispute over Tuzla Island, the Kerch Strait, and the Sea of Azov. On December 24, the Ukrainian and Russian presidents signed an agreement to regulate maritime borders in the Azov from seabed to surface.

Ukraine is contributing more than 3000 peacekeepers to missions in Iraq, the Balkans, the Middle East, and Africa. Since November 1999, Ukrainian peacekeepers, with the support of the U.S. and other Allies, have been deployed in Kosovo as part of the UKRPOLBAT Ukrainian-Polish battalion, attached to the U.S. sector commander. Ukraine provides one of the largest contingents of soldiers in the Polish-led division of troops of the coalition forces in Iraq.

Within its own borders, Ukraine fostered peaceful resolution of political differences with Crimea by inviting and encouraging the active participation of the OSCE in evaluating the situation and making recommendations. The constitution grants a certain degree of autonomy to Crimea. Ukraine also has made clear efforts to guarantee rights of persons belonging to minorities and has been free of widespread ethnic conflict. Ukraine has offered to host an OSCE institution devoted to inter-ethnic relations.

Section 498A(a)(6): "implement responsible security policies, including--

(A) adhering to arms control obligations derived from agreements signed by the former Soviet Union;

(B) reducing military forces and expenditures to a level consistent with legitimate defense requirements;

(C) not proliferating nuclear, biological, or chemical weapons, their delivery systems, or related technologies; and

(D) restraining conventional weapons transfers."

For a number of years, the United States has engaged Ukraine in a dialogue on nonproliferation and arms control. Our efforts are designed to support an end to Ukrainian entities' military cooperation with countries of concern and improve cooperation to combat the gray arms trade by pursuing an effective and lasting implementation of Ukrainian export control laws and regulations. In 2002, U.S.-Ukrainian bilateral relations were strained by confirmation that President Kuchma had authorized the sale and transfer of a Kolchuga early-warning system to Iraq. Consequently, we intensified our non-proliferation dialogue with Kiev.

In June 2003, the U.S. sent a joint experts team with the United Kingdom and Poland to Kiev to review overall arms export processes and to offer recommendations for tightening controls. Drawing on our previous successes with the NATO invitees, we will continue to cooperate with Ukraine to improve Ukrainian enforcement and enactment of structural reforms, but significant policy and technical changes are necessary to achieve effective oversight of defense industries, arms exports and the related services.

Overall, Ukraine's commitment to reduction of nuclear weapons has been good. In 1992, President Kravchuk made a written commitment to the United States that Ukraine would have a "non-nuclear status." In 1994 Ukraine signed the Trilateral Statement with the United States and the Russian Federation, which among other things committed Ukraine to transfer all nuclear weapons on its territory to Russia for elimination. Later in 1994 Ukraine acceded to the NPT as a non-nuclear-weapon state. Ukraine's safeguards agreement with the International Atomic Energy Agency entered into force on January 22, 1998. Ukraine also signed the Additional Protocol to the safeguards agreement in 2000, but it has not yet entered into force. By mid-1996, all of the nuclear weapons on Ukrainian territory had been transferred to Russia. To our knowledge, Ukraine is not engaged in the proliferation of nuclear, biological, or chemical weapons, or related technology. Ukraine is a party to both the START and Intermediate and Shorter Range Nuclear Forces (INF) Treaties and participates in the Joint Compliance and Inspection Commission and Special Verification Commission to implement those Treaties.

The Ukrainian Rada approved the CFE Treaty in July 1992. Ukraine ratified the 1996 CFE flank agreement in 1997, and participated actively in negotiations to adapt the CFE Treaty, which was signed by Ukraine and representatives of all 30 CFE States at the Istanbul Summit in 1999. Ukraine has substantially complied with the CFE Treaty and Ukrainian government officials have reaffirmed their commitment to full implementation. We continue to engage Ukraine on a number of implementation and technical CFE concerns bilaterally and in the context of the CFE Joint Consultative Group (JCG). Ukraine actively participates in the CFE Joint Consultative Group, the Treaty's implementation body. Ukraine has provided data on equipment as required by the Treaty and has also hosted on-site inspections as provided for in the Treaty.

Ukraine is also one of 55 participating states to the OSCE's Vienna Document on confidence and security building measures. Ukraine has regularly submitted annual Confidence- and Security-Building Measures (CSBM) data declarations since 1995 and has willingly accepted CSBM inspections and evaluation visits in accordance with the OSCE Vienna Document.

Ukraine is also a party to the Treaty on Open Skies, which establishes a regime of unarmed aerial observation flights over the territories of States Parties. Ukraine actively participates in the Open Skies Consultative Commission, which is the Treaty's implementation body. Prior to the Treaty's entry into force on January 1, 2002, Ukraine cooperated with 26 other signatories in trial flights and other preparations for the Treaty's entry into force. Ukraine hosts one annual U.S.-Canadian overflight of its territory, and in 2003 successfully participated in supporting two U.S. overflights of Russia through leasing its AN-30 observation aircraft.

Ukraine has cooperated with efforts to limit proliferation of weapons and technologies of mass destruction. An original signatory to the 1993 Convention on the Prohibition of the Development, Production, Stockpiling, and Use of Chemical Weapons and their Destruction (CWC), Ukraine ratified the agreement in October 1998. Ukraine is a party to the 1972 Convention on the Prohibition of the Development, Production, and Stockpiling of Bacteriological (Biological) and Toxin Weapons and on their Destruction (BWC). Ukraine has actively supported U.S. and international efforts to promote nonproliferation in South Asia, including chairing the multilateral South Asia Task Force during 1999. Ukraine is a member of the Nuclear Suppliers Group and as such has adopted current international export standards, including the NSG commitment to require full-scope safeguards as a condition of nuclear supply. Ukraine has cooperated constructively on individual cases of concern raised by the United States and has stated that it will not provide assistance to unsafeguarded nuclear programs. In March 1998, Ukraine took the positive, politically difficult step to terminate the participation of a Ukrainian firm in a project to provide key components for an Iranian nuclear power plant. Ukraine adhered to the Missile Technology Control Regime (MTCR) Guidelines in 1994, joined the MTCR in 1998 and became an original Subscribing State on November 25, 2002, to the International Code of Conduct Against Ballistic Missile Proliferation.

While Ukraine has the potential to be a major arms supplier, it is a member of the Wassenaar Arrangement and supports its goals and objectives. Additional information relevant to conventional arms transfers has previously been provided to Congress on a classified basis. We occasionally receive reports of missile-related cooperation between Ukrainian entities and countries of proliferation concern and have sought cooperation from the Government of Ukraine to prevent such transactions.

Section 498A(a)(7): "take constructive actions to protect the international environment, prevent significant transborder pollution, and promote sustainable use of natural resources."

Significant environmental problems remain in Ukraine, particularly from the after-effects of Chornobyl and widespread industrial pollution. The Government of Ukraine's capacity to manage regulatory programs is insufficient to the task, as many environmental functions have been decentralized. Nevertheless, environmental consciousness is growing, led by an active green movement.

In 1995, Ukraine signed a Memorandum of Understanding (MOU) with the G-7 on a comprehensive program to close the Chornobyl nuclear power plant by the year 2000. The United States worked closely with Ukraine and our G-7 partners to implement the MOU. The program seeks to help Ukraine undertake energy sector reforms and power sector investments needed to ensure that Ukraine's power needs will continue to be met after the closure of Chornobyl. On December 15, 2000, the final Chornobyl reactor was shut down.

The Government of Ukraine has taken steps to address environmental issues, mainly through the Ministry of Environment and Nuclear Protection (now the Ministry of Environmental Protection.) Ukraine has met its commitments under the UN Framework Convention on Climate Change and is developing investment projects for the mitigation of greenhouse gas emissions. Given the Ukrainian economy's poor performance to date, however, full implementation of a pollution fee system taxing air and water emissions and solid waste disposal has lagged.

National environmental NGOs are slowly gaining access to the policy-making process on environmental issues. Ukraine has shown an interest in regional cooperation on environmental issues and has agreed to the establishment of a coordination and information sharing mechanism as a first step toward fuller cooperation on international environmental issues. During the December 1999 meeting of the former U.S.-Ukraine Binational Commission, President Kuchma and Vice President Gore signed an agreement establishing a Regional Environmental Center (REC) to strengthen civil society and support sustainable development by promoting public awareness and participation in environmental decision-making and providing modest project grants to NGOs for projects. The U.S. and the EU have provided funding for the REC, which opened in 2000. However, the REC is presently experiencing difficulties due mainly to non-transparent activities. In December 2002, the U.S. Environmental Protection Agency (EPA) froze the REC's funding. The Government of Ukraine, the U.S. and the European Commission are hoping to resolve these problems and to put the organization back on track. Ukraine is also working with the U.S., EU and others to address pollution problems in the Black Sea. In May 2003, Ukraine hosted the UNECE Environment for Europe conference.

U.S. EPA does have a successful capacity building program in place that is assisting national and regional level environmental managers by providing them with risk assessment and financial management skills. This hands-on program is already yielding results. Regional representatives of the Ministries of Health and Environment are working together to build risk assessment models and corresponding risk management plans. Industry stakeholders, oblast officials and communities are also getting involved. The EPA-funded Dnipro water quality assessment program has also been providing technicians in both Mikolayev and Kherson oblasts with skills to continue monitoring the water quality of the Dnipro. All measurements are now being done by local administrators and EPA is providing modeling expertise. The oblasts will use the information to determine pollution sources and perhaps use risk assessment and management tools to determine the best way to tackle the problems.

Section 498A(a)(8): "deny support for acts of international terrorism."

Since September 11, 2001, Ukraine has supported the global campaign against terrorism. It has given assistance in several areas, including sending a contingent of troops to Kuwait for the Iraq War and to Iraq as part of coalition stabilization forces, intelligence sharing, allowing over 10,000 overflights of Allied aircraft participating in operations in Afghanistan and the region, and enhancing the Afghan National Army by transferring small arms and equipment to the fledgling force. The Government of Ukraine does not grant sanctuary from prosecution to individuals or groups that have committed acts of international terrorism or otherwise support international terrorism. Ukraine has ratified all of the twelve international counterterrorism conventions and protocols.

Section 498A(a)(9): "accept responsibility for paying an equitable portion of the indebtedness to United States firms incurred by the former Soviet Union."

In October 1991, shortly before the Soviet Union dissolved, Russia and nine other Soviet republics signed a Memorandum of Understanding (MOU) declaring themselves jointly and severally liable for the foreign debts of the Soviet Union (Ukraine did not sign this MOU). In December 1991, Russia and seven other former republics, including Ukraine, signed an agreement that assigned to each of the newly independent states a share of all the external assets and foreign debt of the former Soviet Union. The December 1991 Agreement provided that Ukraine's share of the debt of the former Soviet Union would be 16 percent. Beginning in 1992, Russia sought to replace the joint and several liability principle by seeking full liability for the debt in return for all the external assets. In December 1994, Ukraine signed a "double-zero option" agreement with Russia under which Russia agreed to pay Ukraine's share of the debt of the former Soviet Union (FSU) in return for Ukraine's share of the assets of the FSU. However, Ukraine's Rada has not ratified the agreement, and Kiev is still negotiating its details with Moscow. Disputes over ownership of former USSR diplomatic property continue.

Please see section 498(a)(9) of the Russia assessment regarding indebtedness to the United States incurred by the former Soviet Union.

Section 498A(a)(10): "cooperate with the United States Government in uncovering all evidence regarding Americans listed as prisoners-of-war, or otherwise missing during American operations, who were detained in the former Soviet Union during the Cold War."

The U.S. effort to uncover evidence of American POWs and MIAs in the former Soviet Union is being conducted through the U.S.-Russian Joint Commission on POWs/MIAs, established in March 1992. The U.S. side of the Commission visited Ukraine in December 1992 and August 1993. They made two additional visits in 2003. Ukraine continues to cooperate in the search for evidence on American POWs/MIAs.

Section 498A(a)(11): "terminate support for the communist regime in Cuba, including removal of troops, closing of military and intelligence facilities, including the military and intelligence facilities at Lourdes and Cienfuegos, and ceasing trade subsidies and economic, nuclear, and other assistance."

We have no evidence from which to conclude that the Government of Ukraine is providing military, economic, nuclear, or other assistance to the Government of Cuba.

UKRAINE

No. The President has not made such a determination at this time. However, many problems exist in the observance of democratic practices. We will continue to work to address existing problems in the area of democracy and human rights not only through diplomatic efforts but also through our assistance programs.

Section 498A(b)(2): Has the President determined that the Government of Ukraine "has failed to take constructive actions to facilitate the effective implementation of applicable arms control obligations derived from agreements signed by the former Soviet Union"?

No. The President has not made such a determination at this time. Ukraine has taken numerous actions to facilitate the implementation of arms control agreements signed by the USSR.

Section 498A(b)(3): Has the President determined that, after October 24, 1992, the Government of Ukraine "knowingly transferred to another country --

(A) missiles or missile technology inconsistent with the guidelines and parameters of the Missile Technology Control Regime; or

(B) any material, equipment, or technology that would contribute significantly to the ability of such country to manufacture any weapon of mass destruction (including nuclear, chemical, and biological weapons) if the President determine[d] that the material, equipment, or technology was to be used by such country in the manufacture of such weapon"?

No. The President has made no such determination at this time.

Section 498A(b)(4): Is the Government of Ukraine "prohibited from receiving such assistance by section 101 or 102 of Arms Export Control Act or sections 306(a)(1) and 307 of the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991"?

No.

Section 498A(b)(5): Has the President determined and certified to the appropriate congressional committees that the Government of Ukraine "is providing assistance for, or engaging in non-market-based trade (as defined in section 498B(k)(3)) with the Cuban Government? If so, has the President taken action to withhold assistance from Ukraine under the Foreign Assistance Act within 30 days of such a determination, or has Congress enacted legislation disapproving the determination within that 30-day period?"

No. We have no evidence from which to conclude that the Government of Ukraine is providing military, intelligence, economic, nuclear, or other assistance to the Government of Cuba.