A law eliminating customs duty exemptions for foreign humanitarian aid has already cost Ukraine at least $4.1 million in supplies earmarked for its neediest citizens. The delivery of a $3.7 million shipment of humanitarian aid from the United States to Ukraine Friday March 7 was made possible by U.S. Ambassador William Miller's 'personal involvement' in restoring the exemption for U.S. aid, according to the U.S. embassy.
Miller joined Ukrainian Deputy Prime Minister Ivan Kuras at a warehouse on the outskirts of Kiev to inspect a shipment of medical supplies, clothing and 40,000 pairs of leather boots to be turned over to the Ministry of Social Protection for distribution.
'The recent delivery of aid cleared customs two weeks ago and was in limbo, it was one of the first shipments [to arrive in Ukraine] that could have been sent elsewhere, and may have ended up in Moldova and Belarus,' said a Western diplomatic source.
Miller's intervention in January resulted in a Feb. 19 decision by the Cabinet of Ministers to restore to U.S. humanitarian aid the duty-free status denied it by a law signed Dec. 17 by President Leonid Kuchma. Even with the order, however, deliveries from the U.S. still face difficulties.
'Some shipments are getting through and some are not,' said a U.S. embassy official.
The Counterpart Humanitarian Assistance Program, an organization funded by the United States Agency for International Development that has brought in over $28 million in material assistance since 1992, has already diverted more than $4 million in aid to other countries since the passage of the legislation, which government officials say was intended to prevent the sale of duty-free goods smuggled into Ukraine disguised as humanitarian aid. 'Customs has an important job to do, keeping contraband out and national treasures in the country, but we are not part of the problem,' said Brian Propp, Counterpart's director for Ukraine and Moldova.
The Feb. 19 decree established temporary procedures for the approval of humanitarian shipments pending a new draft law on taxation to be debated in Parliament during the coming months. However many Western donor organizations, especially those not protected by the tax exempt status accorded to U.S. assistance, said the procedures are still unclear, adding that they will continue to advise donors to withhold shipments until the government clarifies its rules.
Perhaps the greatest consequence of the recent legislative flurry is a change in perception by donor countries and organizations. 'Many organizations facing an uncertain tax future will spread the word to be slow and cautious. This discourages the enthusiam and interest of the donor network,' said Salvation Army Country Director Wayne Froderberg. 'People give where their hearts are. [By complicating procedure] you can end up with a lot of broken hearts out there. There are many groups working on cultivating relationships with Ukraine. It's difficult to start that enthusiam and concern again,' he added. One Western diplomat reported that a shipment of oranges intended for an Odessa orphanage rotted while being delayed by customs and was later thrown into the city's harbor. 'I can't believe any country would deprive orphans of vitamin C in the middle of winter,' the diplomat said. 'Be it Bolivia, Zaire, Cambodia – none have created such a situation for the delivery of humanitarian aid during peacetime. Still the Ukrainian government is making it near impossible [to get deliveries through]. This is not the level of professionalism we would expect from the government of a country of 52 million people. They seem to brush it off as a non-issue.'
'This is a competitive world. Ukrainian is in the process of developing a free market system. The same rules apply for humanitarian assistance. Aid will go to countries that make it the easiest to receive. They may not always be the neediest,' Propp said.
The temporary procedures established by the Feb. 19 decree require organizations shipping humanitarian aid to submit letters of intent and full inventories in advance to the Humanitarian Aid Commission of the Cabinet of Ministers, which is to meet twice each month to review the proposals. The decree also requires letters of support from recipients and/or regional government officials. Upon approval, all goods must be stamped 'Humanitarian aid: not for sale.' Before Dec. 17, humanitarian aid shipments required only the signature of the deputy chairman of the commission, according to USAID. Donor organizations are concerned that the added delays will greatly increase transportation and storage costs and divert additional shipments to other countries. Organizations like Counterpart often spend $300 a day on renting delivery trucks.
In addition, aid organizations say the measures are unnecessary because sufficient safeguards against fraud are already in place. Counterpart makes aid applicants fill out an 8-page questionnaire requiring extensive financial data. After acceptance, recipients sign various control documents – all of which are subject to spot checks by the organization. The Salvation Army follows similar procedures.
Propp said he is aware of only one case of fraud, in which boots donated to an organization were sold at a Belarusian market in 1996. The case was not prosecuted because of lack of evidence, he said.
Neither Branislav Ometsynsky, deputy chairman of the humanitarian aid commission, nor Sergei Yaschenko, deputy chief of the customs service, would cite specific examples or amounts of humanitarian aid fraud, but both said it had increased before the December legislation was passed. Ometsynsky acknowledged that the new requirements are inconvenient, but stressed that the procedures are temporary. The new law is expected to contain a list of organizations and donors with a good reputation which would be subject to a less rigorous system, he said. In the meantime, the flow of aid has slowed. 'For now, we are having to advise our donors not to send anything with the hopes that clarification will come soon. We can't with any degree of responsibility encourage donors to send things at this point,' said Judith Gardiner, Press and Public Affairs Officer at the British Embassy. The Dutch embassy is also advising organizations to wait for the new law, or to make extra phone calls to make doubly sure they will not have problems at customs, according to Second Secretary Hidde van der Veer. The embassy reported difficulties with two shipments since Dec. 17, one of which contained frozen food stuffs which thawed. 'Clearly donations for the first two months of the year are less than the first two months of last year,' van der Veer said.
The German government is also telling donors to withhold donations and place them in storage, said Christian Reissmueller, First Secretary at the German Embassy.
