Ukraine's Debt-Repayment Plan Widens Rift With Russia
UKRAINE won support earlier this week among top officials of all the republics of the former Soviet Union except Russia for its proposal to alter an original agreement for repayment of the estimated $70 billion Soviet foreign debt.
After months of insisting it would go it alone and pay its own share of the foreign debt, Ukraine expressed its willingness to assume the debt of other former Soviet republics not included in the original debt treaty.
Ukraine has long objected to Russia's serving as the only guarantor of debt repayment as outlined in that agreement. Ukraine and other republics have also accused Russia of seizing more than its share of former Soviet wealth, including hard-currency assets abroad.
A joint communique incorporating the proposal was adopted Tuesday by the deputy prime ministers of the new states at a meeting in Kiev called by Ukraine's prime minister, Vitold Fokin. The revisions would allow two or more states to serve as guarantors for all 15 former Soviet republics. The document will be put before leaders of the Commonwealth of Independent States at a summit scheduled for March 20 in the Ukrainian capital.
The development is expected to strain the already tense relationship between the commonwealth's two most powerful co-founders, Russia and Ukraine.
Representatives at the meeting complained about Russia's conspicuous absence from the day-long talks. Prime Minister Fokin said during a press conference that Russia's leaders had promised until the last moment to send representatives to the Kiev negotiations.
The draft formulas adopted Tuesday would revise Russia's plan of Oct. 20, that eight of the 15 former Soviet republics, including Ukraine, would be "jointly and severally" responsible for debt repayment. The agreement was made in conjunction with the Group of Seven (G-7) leading industrial nations.
The draft formulas adopted in Kiev foresee the formulation of an interstate council made up of 15 states, each with equal representation and voting rights, which would be responsible "for the extinguishing and servicing of the foreign debt and the utilization of assets of the former Soviet Union."
Working groups from the commonwealth states have until March 15 to work out the draft charter, which would allow constituent states to turn over their share of foreign debt, as well as their assets, to a guarantor who consequently would assume their voting rights.
Under the agreement the Vneshekonombank, the former Soviet Bank for Foreign Economic Affairs, which is responsible under an earlier agreement for servicing the debt, would be transferred to Minsk, the informal capital of the commonwealth, and to the jurisdiction of the new interstate council.
"Ukraine's position is very clear," Fokin said during a new conference concluding the Kiev negotiations.
"We wanted to find a way out of this deadlock.... That is why Ukraine, in a bid to respect the interests of our creditors, came up with this variant of joint responsibility with two main guarantors," the prime minister said.
Of the six republics who did not sign the original debt repayment plan - the three Baltic states, Armenia, Azerbaijan, and Uzbekistan - so far Latvia has expressed an interest in allowing Ukraine to assume its share of foreign debt, Fokin said.
"Latvia has agreed in principle. I think it would be quite possible that three, four, maybe six republics may approve this decision, though I wouldn't want to jump to conclusions," he said.
"This would be actual observation of the principle of joint responsibility, as we see it. The G-7 countries want the international debt to be serviced by states who assume the commitments of joint responsibility, so they can be satisfied by this," the Ukrainian prime minister said.