Gast describes work of USAID in Ukraine and his view of how the country has changed
Earl W. Gast was sworn in as the new Director for the United States Agency for International Development’s Kyiv-based Regional Mission in August 2005 to manage more than $105 million worth of projects in Ukraine, Moldova and Belarus. Gast has worked for USAID since 1990 in the Philippines, Moscow, Ukraine and the Caucasus, serving as Deputy Mission Director in Kosovo and Iraq in 2002 and 2003, respectively. In this interview with the Post, Gast describes the work of USAID in Ukraine and his view of how the country has changed.
KP: You’ve been in Ukraine since September, working as the new mission director of USAID. How does Ukraine differ from other places you’ve worked?
EG: Actually, I have some experience working in Ukraine before. I was here from 1996 until 2000. I returned five years later. It’s a very different country, and a very different Kyiv. When I first arrived in July 1996, there wasn’t much going on. Let me give you a few examples. Coming from the airport, along the way I saw all of these unfinished buildings that had been started during the Soviet period and had gone unfinished for four or five years. Now, as one drives from the airport, those buildings have been finished along with many new buildings. There’s a huge construction boom going on. And of course, that’s resulted from economic development here – the economic growth that took place right at the time I was leaving in 2000. So, there’s been success, successive years of steady economic growth, which has made a major difference.
The other major difference is what transpired last year. The elections [of Nov. 2004, when initial results showed that Viktor Yanukovych had been elected president] convinced people that fraud had taken place during the elections, and the people held the government accountable for it. As a result, there were ultimately free, open and fair elections in Ukraine [when Viktor Yushchenko won a repeat vote in Dec. 2004]. I think that in some way USAID and other governments played a part in that. From the very beginning of our time here, not only did we concentrate on economic reform and economic development, but we also supported civil society development.
I can say that at the macro level, the atmosphere is very different. Let me give you another example: the willingness of groups to take on responsibility. Whereas in the past – in the early ‘90s – most of our partner organizations were American-led, now I see Ukrainian organizations leaving their legacy. They were initially supported by Americans, but today they are Ukrainian organizations. And while some of them are still receiving financial support from us, they are all Ukrainian-led organizations.
KP: How effective has USAID been in helping Ukraine? Can you provide a general overview and specific examples?
EG: We are just one implementer of technical assistance in Ukraine. The U.S. government also provides assistance through the departments of Energy, Commerce, Agriculture and other agencies. USAID has truly broad goals in supporting Ukraine’s transformation.
One is economic growth. The other is promoting democracy. The third area is social programs, mainly in the health sector, but also trafficking in people, as well as other major social issues. We work through three sets of institutions to help Ukraine achieve these objectives. One is the national government; the other would be Ukrainian non-governmental organizations; and the third would be local government.
When we first arrived in the early ‘90s, assistance programs were much larger. We directed most of the resources toward the national government level to support economic reform, and we helped in many ways on very large macro issues: monetary policy, macroeconomic policy advice and energy-sector reform. We also worked in business development, but mostly it was at the macroeconomic level, and many important economic reforms were achieved at that time. Inflation was halted, a new currency was issued, and an incremental tax policy was being implemented. However, we reached a point where we weren’t achieving as much progress at the national level as we should have been. And so we made a conscious decision – I guess in the very late 90s, 1999-2000 – a strategic choice to work more with local governments and with civil society organizations.
I think that over a period of time that was the right decision, because civil society did play a role, and it is playing a strong role now. There is a free media here now and a much more active civil society, which is demanding results from the government, and the government has no choice but to listen to civil society.
KP: How much technical assistance, in dollar terms, has USAID provided for Ukraine since independence? What is the annual budget for this year, and how much bigger or smaller is it than in previous years?
EG: Since independence, the U.S. government and U.S. Congress have appropriated more than three billion dollars to Ukraine in assistance. But USAID is just one of several governmental agencies implementing technical assistance and assistance in general in Ukraine.
The portion of that amount that has gone to USAID for carrying out programs is roughly $1.3 billion over the past 14 years. In the early days, when I was here in 1996-1998, a lot of that money from the annual U.S. assistance budget went into the energy area, especially the Chornobyl shelter program.
The assistance level has tapered off since then, although last year there was a spike in assistance, where Congress appropriated an additional $60 million to support the reforms of the new government. I think we are at the point now – and of course it’s subject to change – when we’ll have a leveling off. We expect assistance budgets over the next three years to remain roughly the same.
KP: How is the focus changing for this year and the near future? Will there be more attention to projects dedicated to energy efficiency and judicial reform, for example?
EG: I would say that roughly 45 percent of our budget is going into democracy programs, roughly 35 percent into economic development, and 30 percent into health and social programs.
So our priority remains promoting democracy here, and it will continue to be over the next few years. I think we will also become more engaged in the health sector. We have three critical problems in the health sector: one is HIV/AIDS, which has become a problem here; tuberculosis is another big problem; and also maternal and infant health care…
On the economic reform side, agriculture is obviously still a priority for us. However, we are moving out of land titling, which has been a very successful program. Now our emphasis will be to look at some critical policies that need to be addressed in order to have a truly market-oriented agricultural sector. There is a lot of overregulation in Ukraine’s business environment. We have had some successes already in working with the new government. Some 4,900 regulations have been cut from the books to make it easier for businesses to operate and flourish. As everyone knows, the more steps you have in the process of getting a permit or getting a signature, the more it opens up opportunities for corruption. So by shortening the period [should this be process???] we hope to reduce opportunities for corruption.
That’s one priority, but there are other priorities that we have had to respond to in the short term. One is avian flu. When there was an outbreak in Romania in October, we moved very quickly. We had programs underway in Ukraine in mid-October, and of course avian flu wasn’t detected in Crimea until December. We felt that a priority needed to be a public information and public education campaign. The U.S. government, not just USAID, has been very much involved in helping Ukraine address avian influenza because it is not just a problem for Ukraine – it could be a problem for the whole world.
Another increasingly important issue is energy efficiency. We didn’t have too much success in the energy area previously. We tried to set up an independent energy regulator; we tried to break up the vertical monopoly in the energy sector; and we also tried to privatize a lot of the distribution companies. Unfortunately what perpetuated a bad system was that bartering was taking place: exchanges of goods and back-and-forth trading. There wasn’t a cash system in place. When you have bartering, it really promotes corruption. We felt there weren’t sufficient significant reforms in the energy area to justify our continuing involvement in energy. But now we think that the incentives are right to re-engage and get involved in energy efficiency.
One is that industrial consumers will now have to pay market rates or near market rates for their fuel, for gas, because of the recent increase in gas prices. The other thing is that many industries are now owned by the private sector, and of course the private sector has an interest in making sure they are efficient.
I also want to mention that USAID has been promoting public-private partnerships, and by that I mean we’ve been working with companies that have an interest in development programs. We’ve done a number of them around the world.
We’ve recently signed a partnership with TNK-BP, where we will work together addressing a particular problem. The problem that they have selected is maternal and infant health care. They’re principally headquartered in Luhansk Oblast, and while mother and infant health care is a national issue for Ukraine, TNK-BP as part of its social corporate responsibility program would like to work with USAID in addressing that problem in Luhansk Oblast as the start of an overall national strategy.
KP: Considering that Russia has been imposing limitations on the activities of foreign-funded NGOs, is there a chance that some of the funding directed at that country could end up in Ukraine instead?EG: Funding decisions at the country level are made in Washington; they are made within Congress and the administration. So I really couldn’t speak to that. I believe they are already starting to discuss the 2007 budget, but I don’t know what impact the new Russian NGO law would have.
