Business Leaders Gather in Ukraine

KIEV, Ukraine -- Ukraine welcomed presidents from neighboring states and dozens of business leaders Thursday to a forum that the new government hopes will convince investors that last year's Orange Revolution has set the country on a business-friendly path.

The World Economic Forum agreed to hold a special round-table in this former Soviet republic at the suggestion of new President Viktor Yushchenko, who spoke this year at the group's annual meeting in Davos, Switzerland.

Yushchenko's team is hoping to use the two-day conference to sell the country to the international community and to hear firsthand what changes investors are looking for.

The peaceful Orange Revolution mass protests last year that helped usher the pro-Western opposition into power captivated the world. Yushchenko has been feted around the globe, but so far, little new foreign investment has poured in.

Investors attending a pre-conference breakfast meeting complained about recent government moves to set price controls, delays in returning value-added tax on exports and the decision to scrap its previous commitment to free economic zones. The breakfast was hosted by beleaguered tycoon Viktor Pinchuk.

"Revolution is a very complicated thing, but the test of power is even more difficult. Now we are at the first stage of that test," said Anatoliy Kinakh, a deputy prime minister who also heads a political party for entrepreneurs and industrialists.

"The Orange Revolution is an unique chance for Ukraine and this chance won't be wasted," said Kinakh, who said the government's goal was to give job-creators and tax payers "the highest status in our society."

Robert Bensh, head of Cardinal, an oil and gas producer, said he wanted to hear from the government that the Orange Revolution's promises to safeguard a liberal, market economy "are moving forward, albeit moving slowly."

Participants include the presidents of Poland and of former Soviet republics Moldova, Estonia, Latvia, Georgia and Azerbaijan. Some 145 business leaders, including officials from Microsoft Corp., the Royal Dutch/Shell Group of Cos., Mittal Steel Co. and Severstal, were also expected.

"There is a real sense that Ukraine is on the move, and these are the people who want to be in at the beginning," said Felix Howald, director of the World Economic Forum's Europe division.

A couple dozen protesters from opposition parties gathered outside the Ukraine House, a former Lenin museum, holding signs such as "Welcome to the Orange Ghetto" and "No to political repression."

During the conference, special sessions will be held to discuss the metals and mining industry, which is the sixth largest in the world in production capacity, as well as agriculture. Ukraine previously was known as the bread basket of the Soviet Union because of its rich black soil.

Participants will also discuss relations with the European Union, which Ukraine wants to join, and with Russia, its giant neighbor and major trading partner. Russian President Vladimir Putin declined an invitation to attend, Howald said.

Criticism is expected. The new government's efforts to undo some of the murkier privatization deals of the past decade have raised investor concerns about its commitment to ownership rights.

Yushchenko has ordered his government to limit the scope of their challenges, but the lack of clarity about how many and which deals will face scrutiny has added to uncertainty.

The Cabinet is due to meet Thursday to continue its discussions about the Kryvorizhstal steel mill, which the government seized last week from Pinchuk, the son-in-law of former President Leonid Kuchma and another tycoon.

The tycoons bought it last year for US$800 million (euro665 million) - a price that critics said was a giveaway. The government has said it will begin the process on Thursday of putting the mill back up for sale.

Source: AP