Update: Yushchenko Woos Investors to Ukraine

KIEV, Ukraine -- President Viktor Yushchenko appealed to investors to pour money into this former Soviet republic, pledging that the Orange Revolution's promises of a business-friendly market economy are irreversible.

"I have grounds to tell you that Ukraine is a very profitable field for investment," Yushchenko said Thursday, delivering the keynote speech before six fellow presidents and a hall packed with dozens of top business leaders.

Georgian President Mikhail Saakashvili (C), flanked by Ukrainian leader Viktor Yushchenko (R) and Polish President Aleksander Kwasniewski

The two-day conference organized by the World Economic Forum, at Yushchenko's request, is aimed at showing the world that the nation's new government remains on a market-oriented path - even if the transition has been a bit bumpy.

Yushchenko left the apologizing for some of his government's missteps to lower officials and instead took on the role of salesman, making an aggressive and upbeat pitch. He said investors should be attracted by Ukraine's proximity to the European Union, its highly educated and professional work force, and its experience in high-technology fields.

"I would like for each person and each country to take this forum as proof that Ukraine is extending a hand to you," Yushchenko said.

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 and the country's economy is slowing.

In what appeared to be a carefully timed move, Prime Minister Yulia Tymoshenko and Parliament speaker Volodymyr Lytvyn signed a memorandum Thursday in the presence of Yushchenko that commits them to uphold property rights.

Yushchenko told investors the memorandum shows that the government's probes into some of the past decade's murky privatization deals will not lead toward re-nationalization. Yushchenko also emphasized that all "quarrels regarding privatization will be solved only by the court," and he said he supports peaceful settlements with the current owners.

The first months of the new Ukrainian leadership have left some investors disappointed - and confused about the new government's commitment to a market economy.

First Deputy Prime Minister Anatoliy Kinakh admitted before the forum began that some mistakes have been made.

"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 Kinakh, 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," he said.

Deputy Prime Minister Oleh Rybachuk blamed a government decision setting price limits on gasoline earlier this year for helping delay a decision to bestow market economy status on Ukraine.

"The government is obligated not to meddle in price politics ... (but) you saw that interference," he said - but added that the lesson was learned. Yushchenko later ordered his government to let the market decide prices.

In an acknowledgment of some of the stifling bureaucracy that still slows investment in Ukraine, Yushchenko told the forum that 1,300 regulatory documents would be canceled. Earlier, officials also responded to investor complaints about delays in returning value-added tax on exports by apologizing and saying the government was working hard to rectify it.

Kinakh also admitted it had been a mistake by the government to scrap its previous commitment to free economic zones.

Silviu Popovici, general manager of Coca-Cola Beverages, Ukraine, said the nation has great potential but needs real reforms in its tax, regulatory and legal systems.

Conference participants were tackling those topics as well as Ukraine's metals and mining industry, which is the sixth-largest in the world in production capacity, and agriculture. Ukraine was known as the bread basket of the Soviet Union because of its rich black soil.

On Friday, participants will discuss relations with the European Union, which Ukraine wants to join, and with Russia, its giant neighbor and major trading partner. However, Russian President Vladimir Putin declined an invitation to attend, said Felix Howald, an official with the World Economic Forum.

Polish President Aleksander Kwasniewski said that Ukraine's desire to join Europe should be welcomed. "Ukraine needs Europe, but Europe also needs Ukraine," he said, citing the countries big market, geographic position and cultural and historic ties to Europe.

Yushchenko said Russia's push toward the EU remains on the agenda, but he added "the development of Ukraine and Russia relations is profitable not only for both of our countries but for the whole of Europe."

In addition to the Polish president, the presidents of Moldova, Lithuania, Estonia, Georgia and Azerbaijan also were participating.

Source: AP