ACCESSION
NUMBER:353519
FILE ID:EUR510
DATE:07/15/94
TITLE:UKRAINE IS GENERALLY ON TRACK ON NUCLEAR AGREEMENT (07/15/94)
TEXT:*EUR510 07/15/94
UKRAINE IS GENERALLY ON TRACK ON NUCLEAR AGREEMENT
(CIA sees mixed outlook for Russian economy) (610)
By David Pitts
USIA Staff Writer
Washington -- The agreement Ukraine made to remove nuclear weapons from its
territory "is generally on track," John McLaughlin, the director of Slavic
and Eurasian Analysis at the CIA (Central Intelligence Agency), said July
15.
Testifying before the Joint Economic Committee of Congress, McLaughlin said
Leonid Kuchma, who won the recent presidential election, "feels that
Ukraine has not been sufficiently compensated" for the agreement, but "he
has said he will maintain the agreement."
1n the economic situation in Ukraine, McLaughlin said the country lags "far
behind Russia in economic reforms to date." He said that both Ukraine and
Belarus "have made limited progress in liberalizing prices, output, and
domestic trade, and both have proceeded slowly with the privatization of
small firms."
The bulk of his testimony concerned Russia. McLaughlin said that Russia
"has made enormous economic progress in the two and a half years since the
breakup of the Soviet Union." But he also said, "The goals of a thriving
market economy and Western levels of material prosperity for Russian
citizens remain a long way off."
"In material terms, Russian living standards have roughly stabilized, but
remain substantially below 1990 levels," McLaughlin remarked. "Moreover,
rampant crime and corruption have emerged as key factors in Russia's
attempt to reform its political and economic institutions," he added.
In terms of the road ahead, McLaughlin said, "Russia continues to face the
choice between high inflation and rising unemployment." He said the pain
of more unemployment "cannot be put off indefinitely." In the longer term,
he said "much work remains to be done in developing the legal and
regulatory base for a market economy."
William Grundmann, director for Combat Support at the Defense Intelligence
Agency (DIA), spoke about Russia's military and security policy. He said,
"Russia's evolving interpretation of its national interests is increasingly
leading it to more assertive foreign policy and security goals." It
particularly sees the near-abroad as part of its "sphere of influence," he
added.
Russian-Ukrainian relations "remain strained" over the Crimea and the
continuing dispute over the status of the Black Sea Fleet, Grundmann
remarked.
Noting the step Russia took in joining the Partnership for Peace, Grundmann
pointed out that there are "still major factions in the military and
political leadership who view the Partnership program with suspicion,
describing it as an attempt to impose a NATO-dominated security system that
denigrates Russia's great power status."
The size of Russia's military continues to decline. Grundmann said "from
about 2.8 million in early 1992, authorized strengths have fallen now to
slightly more than two million. President Yeltsin affirmed a 1.5 million
goal for restructuring last month." Defense outlays in 1993 were "less
than 30 percent of peak Soviet levels in the late 1980s," he added.
John Gannon, a CIA specialist on Eastern Europe, said that the economic
situation "is steadily improving across the region." Eastern European
countries "are generally staying the reform course," despite the victories
of the left in some recent elections. "Reforms have largely become
irreversible," he added.
The Polish economy grew at a rate of four percent last year, Gannon noted.
Whereas output either fell or stagnated elsewhere, it was on the rise by
the end of last year, he added. The economies are "likely to show
continued steady improvement in 1994," he noted.
On the downside, however, Gannon, said that output is still "below
pre-reform levels" and inflation and unemployment is still in the double
digits.
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