FT: Could you begin by telling us about what you've achieved on this visit to London, bearing in mind the British presidency of the EU and the forthcoming EU-Ukraine summit in Kiev on December 1?
VY: Great Britain with its foreign policy, like Ukraine with its foreign policy, today are developing new policies, new directions. These are countries which have brought their positions closer to one another and have much greater mutual understanding than a year ago.
For us, it's important that ties with Great Britain in many questions and on many issues are developing in a significant way and getting closer. Our starting position is that Ukraine's new foreign policy (developed since the Orange Revolution) accords with the interests of many countries including those of Great Britain. Our strategic goal is integration into the EU, into the European institutions, and for this we have to travel a long path both in terms of bilateral relations and also relations with the EU.
The subject of our negotiations (this week with British officials) was the question of achieving market economy status and we feel that we are quite close to achieving this. A lot has been done towards achieving this worthwhile aim. A lot of work has been done at the expert level. Ukraine has given the EU final information which was requested and that information from Ukraine was accepted without further questions being asked. This was information about those reform measures that we have to take. Issues of price control and issues of bankruptcy and other questions which made the possibility of achieving market economy status more difficult. I think that this has worked well. We've done very well on both sides. This was the issue of our discussion yesterday with the experts.
The second issue was moving towards Ukraine's membership of the WTO. We have been involved with this issue, working on this issue since the spring... Today we have a feeling that about 60 per cent of this road we have travelled.
Work is being done on bilateral protocols about mutual access to markets of goods and services. About 30, 36, 37 such protocols have been signed, only ten protocols are left. We offered to discuss (the issues).... The problem here is the question of signing protocols with certain countries. We passed this information on to the British prime minister and we also made our position clear about concrete questions about the problems with the signing of these protocols.
We also talked about the next step which we're waiting for after getting membership of WTO. This is the beginning of negotiations with the EU about forming a free trade zone.
In parallel we're talking about the question of a liberalization of the visa regime. In April Ukraine eliminated visas for EU citizens and we think it would be logical if the EU softens the visa position towards such categories of people from the Ukraine as journalists, students, business people who have western partners, and cultural workers...dynamic people in society who can bring a new style into politics. We have the impression that with the EU we have a mutual understanding on this question.
We spoke (with British officials) about the action plan of Ukraine towards the EU, which is a three-year plan. We talked about the summit which will take place on December 1 between Ukraine and European Union where we are putting forward as a joint goal to draw conclusions on our action plan for this year...That's the sort of question which was discussed with prime minister Blair.
FT: A question of great interest to our business readers in particular is privatization. We have heard today that parliament voted against the privatization of Kryvorizhstal. Will you go ahead with this anyway? Are you worried about the bad signal the vote gives to potential investors?
VY: Yes of course this is a bad signal which has purely a political meaning, nothing more... It was just a decision, it's just a vote and so it's not a legal document which can be used either by the government or the state property fund in its action on the privatization of this company. Today the state property fund has already made a statement to this effect which is that it doesn't change the timetable of all the work connected with the reprivatization of Kryvorizhstal.
FT: What would be your attitude to other possible reprivatizations?
VY: We've had a meeting with many different business leaders over the past 30 days including a big meeting on Friday. I think that was the final meeting of the series of meetings that we were having as a dialogue with business. It was a meeting of big business with (representatives of) about 25 leading economic structures.
I didn't hear any disagreements in any of the meetings with the view that the privatizations over the past few years, particularly specific high-profile exercises.. with the view that there was very little that was in keeping with the laws...and therefore (with the view that it was necessary) to re-examine the privatization of some specific enterprises, considering the circumstances of their privatization, and acting (on the basis of ) mutual agreements (and of) some sort of peace treaty...
... I felt that business understands this. It understands its social responsibilities. They want to be honest owners and they don't want to be owners with people going behind their backs saying 'you stole this factory'. And we're saying 'you didn't steal the factories but did get them at an inadequate price and this must be corrected'...The government has passed from politics of confrontation to a politics of mutual understanding of the problem of privatization and of certain - and I'd like to emphasize - strategic enterprises...
... What happened in Ukrainian privatization was that ..the Ukrainian authorities acknowledged (these companies) as private property and the Ukrainian authorities (today) through the system of laws and judges take upon themselves the responsibility to defend this private property. This is the fundamental method for business. We don't want anyone to have the impression that there is a system of revision (of privatizations) which gives the wrong impression about the character of relations between the authorities and private property.
FT: At what point on the long road of integration with the European institutions should an explicit signal be given of future European Union membership?
VY: First of all, the question (of integration) is a question of harmonization...This process can't happen too aggressively. It seems to me that for me and for you one thing is understood. Ukraine is not the borderland of Europe. It has always been Europe and we feel ourselves today to be European. The question of membership of the European Union which requires very specific standards and circumstances is a separate question.
Ukraine will be in Europe when it raises its internal standards, adapts them to those of the European Union. We're talking about 2,000 - 2,500 laws which either have to be changed or amended. This is a change of consciousness...The nation has to understand the system of European values and has to form a commitment to realizing these values, to defending these values.
It seems to me that European values can be naturally adapted to the traditions (of Ukraine) ... Whether we're talking about the political traditions or the democratic traditions or human rights. (European values) are very close to the Ukrainian nation.
When it comes to economic (issues)..., the implementation of economic reforms, legal reforms, the adaptation of the financing of the economy, of investments, of fiscal customs and other policies, the adaptation to the unified standards of the European Union - we consider this our homework.
We have a plan of action which is set out for three years. I would like to underscore that this year ... we've done about 50 things in this direction. This is a concrete answer to some of the daily questions which Ukraine has to do vis-a-vis the European Union. Very often this is a great technical job, often easily overlooked. We have ratified six agreements over the past four months with the European Union. We have taken joint decisions with the European Union on questions of foreign policy ... Ukraine politically (shares) the European vision of foreign policy.
FT: Can I ask a follow up question on that. You can go to countries such as Georgia or Azerbaijan. Leaders there will talk about membership of the EU not for the economic benefits but for the political symbolism which is part of belonging to the Euro-Atlantic community... Are you restrained from making the same sort of declaration by the precarious relationship with Russia?
VY: Conducting a policy of European integration, we don't feel any discomfort in our relationship with Russia... To realize our membership of Europe meets our strategic desires and interests. We want to be in this market. We want to work on these shared rules. We want to gain millions of jobs from this (cooperation)... We are talking about the economic context. We are also talking about the political context. We are also talking about the security aspect. This brings benefits which are among our strategic interests.
I am persuaded that these are standards to which we must aspire because this is good not only for the country but for the ordinary person. I desire that the Ukrainian pension should be as good as the European pension and this ... looks after the interests of the Ukrainian pensioners. I want the citizens to have the full democratic rights and guarantees which citizens in the EU have - and this is good for everyone.
We are talking about those things to which it is worth aspiring. These are better standards and this is a movement, a natural and obvious movement, there's no coercion, there are no parts (of our integration) which are unpredictable or are hidden under the table...
... And so we're talking about something which is our own, not something which is foreign.
The key thing, is that this is not a policy which is formed against somebody. This is not a step of revenge or disrespect. We are talking about the national strategic interest.
When we talk about the eastern sector..( we also have)... great strategic interests. It would be a great mistake for Ukraine to lose them. I'm not talking only about the fact that in that direction goes a third of Ukraine's exports...(or the fact that it's a whole economic system which finds its interests in co-operation in this direction. We're talking also about human links...about tradition, about history. There are millions of Ukrainians who live there, who want to remember their Ukrainian language, who want to read Ukrainian books, and watch Ukrainian films. These things (interests in the west and the east) are not mutually exclusive. They're not in conflict.
I'll tell you what is delicate is that as we conduct western policies we have to understand that these policies are conducted with various instruments, with various mechanisms. The methods which are characteristic for western integration... don't necessarily work in the eastern markets. You have to speak with a different alphabet. You have to talk about different approaches, about different mechanisms... But the main thing is that... (our actions in the east)...mustn't block our path to European integration.
FT: On the subject of reprivatization. You are saying you wish to avoid an arbitrary process and you wish to have a process governed by proper procedures. I wanted to ask you on what objective criteria would you define those enterprises that you say need special attention and what particular action you might take, for example a windfall tax?
VY: I understand very well the state of the legal and judicial system in Ukraine. And that is why to talk about the problems of privatization we very often have to refer also to the morality of what happens after privatization... We have to do a lot in the system of establishing our legal system, and particularly our judicial system there is a lot of work still to be done. I'm speaking very delicately but I hope that you are reading between the lines. I hope you are understanding what I am saying. This is one point.
Second point. In the privatization process which (has taken place in Ukraine there are some elementary problems with procedures)...For example, how can you talk about privatization when ... something is privatized in an uncompetitive way... How can you talk about a privatization where in the competition there was only one participant? ... Or a privatization which took place without a competition... (because)... there were three structures which took part but they are all owned by the same person.
I don't think you have to be a specialist, a lawyer to understand that something is not right. This is not about what suits business. There has to be an act of justice ... It's about such things that we're talking.
FT: Do you have a time limit in mind for this process of reconsideration?
VY: We do have in mind a term and it must be very limited... We do not want it to be the main question in the Ukrainian market. It should be a very, very secondary issue. Business should be working on the Ukrainian market. It should bring investment. It should work openly and honestly according to Ukrainian law. This is ... (our) policy ... in terms of the relation between the state and business. And the fact that there will be a reprivatization of a few companies...this is just the sacrifice, the cost of (our transformation).
FT: Could the Orange Revolution stimulate further revolutions in other parts of the former Soviet Union?
VY: I am convinced that after the Orange Revolution we are ... better, more decent. Such feelings appear ... which make us stronger, regardless of where we live. And (into) that conflict between truth and falsehood, between dictatorship and freedom which continues in some parts of the world including some parts of the former Soviet Union, the Orange Revolution sends a new stronger signal that people have begun to look at things differently as they consider (various) questions.
Will they have enough will to get together in the sort of mass national coming together as happened in Ukraine or will it be smaller? It is a significant personal question.... Millions of people began thinking differently about freedom and about democracy in the whole terrain of the former Soviet Union. It cannot be ignored and that is what has created a new quality (of political life). To predict scenarios where the revolution will be exported to this or that country is very difficult thing to do. You need to have a great understanding and a lot of facts to do this. (But)...in the human arsenal, in the political arsenal, there is now a new way of doing things, the Orange Revolution way. I think this is a good argument for tens of countries.
