Ukraine Agrees to Pay Its Share of Soviet Debt

TIMES STAFF WRITER

After intense pressure from Western bankers, including a threat to cut off foreign credits, Ukraine on Friday agreed to accept collective responsibility for the estimated $68 billion that the Soviet Union owed to creditors when it dissolved.

Prime Minister Vitold Fokin, attending a meeting here with other heads of government in the Commonwealth of Independent States, said that Ukraine now acknowledges joint responsibility for the Soviet debt, a principle it had fought for three months as a perpetuation of the Soviet Union and acceptance of Russian leadership.

"We were obliged to reckon with the creditors' opinion," Fokin said, referring to Western bankers' repeated warnings to Ukraine to join the other Soviet republics in jointly agreeing on measures for the debt's repayment or face a credit blockade.

Coming after Ukrainian President Leonid Kravchuk's declaration Thursday that his country was halting the transfer of its nuclear arms to Russia and preferred to dismantle them itself, the Friday debt agreement was a startling breakthrough in the strained, difficult relations among members of the Commonwealth.

Kravchuk's statement on nuclear arms destruction, dramatically reneging on one of the Commonwealth's fundamental agreements, has put the future of the Commonwealth into serious question, as it seemed to suggest that Ukraine was demonstrating its desire to proceed alone in one of the most perilous areas, that of national security and foreign policy.

In Washington, the Bush Administration sought a clarification Friday of Kravchuk's statement on disarmament.

State Department spokesman Richard Boucher said that Kravchuk's remarks Thursday in Kiev "seem to diverge from the previous agreements and understandings that had been reached" between the United States and Ukraine, which call for the prompt elimination of all nuclear weapons in the republic.

"We're seeking additional information and clarification from the Ukraine government," Boucher said.

In Moscow, Russian commentators on Friday warned Ukraine of the dangers inherent in its latest course. They saw it effectively turning itself into a nuclear power and taking upon itself the risk and responsibility for the estimated 4,300 tactical and strategic nuclear warheads on its territory. Moreover, with such a policy, Ukraine was dooming the Commonwealth, they said, for the trust that been been built up in the last three months would be destroyed as such crucial and basic agreements were broken.

Along with other members of the Commonwealth--the successor to the former Soviet Union--Ukraine had agreed in December to transfer all tactical nuclear weapons to Russia by July for storage and eventual destruction; it planned to phase out its strategic nuclear weapons over a longer period.

But, besides his announcement that his republic would stop sending weapons to Russia because, he said, there was no guarantee that the arms would be destroyed and would not "fall into evil hands," Kravchuk also had called on the United States and Western European nations to build a factory in Ukraine to dismantle the devices.

Washington has promised to help pay for weapons destruction in Russia, and Congress has appropriated $400 million for that purpose. U.S. officials speculated Friday that Kravchuk might be motivated by the prospect of obtaining American or European money to be spent in his republic. But they said this was unlikely. One senior official said it would take several years to build a suitable facility. He said such a delay would be unacceptable to Washington.

On Capitol Hill, Richard A. Clarke, assistant secretary of state for politico-military affairs, said that before Thursday, Ukraine's record on nuclear matters was excellent.

"Ukraine has asked us to work with them to establish an export control regime . . . and turn (non-proliferation guidelines) into domestic law and regulation," Clarke said. "They've asked for our help. We are providing them that help."

The Ukrainian move on nuclear weapons appeared to set the scene for a major confrontation with Russia at the next Commonwealth summit, scheduled for next Friday in Kiev, the Ukrainian capital. There, unresolved military issues will again be on the agenda.

But the prime ministers' meeting here was, in the words of Yegor T. Gaidar, Russia's deputy prime minister for economic reform, "the quietest and most constructive" of all the top-level Commonwealth meetings.

Fokin's announcement that Ukraine would agree to collective responsibility for the Soviet debt appeared to reduce the level of animosity. It meant, as Fokin pointed out, that Western credits would now be available for everyone. "We are interested in joint serving of the foreign debt," Fokin told the other prime ministers. "This step removes obstacles on the way of Western credits to Commonwealth members. And everyone is interested in credit lines being opened."

The debt-sharing agreement among the 11 Commonwealth members allocates 61.34% to Russia and 16.37% to Ukraine, its largest members, but makes all responsible for total repayment. The former Soviet Bank for Foreign Economic Affairs, Vneshekonombank, will handle the repayments.

Differences, sometimes sharp, still emerged at the daylong meeting.

Fokin bluntly told Russia, which has embarked on a course of radical economic reform, that no Commonwealth member should unilaterally start demanding world prices in trade with others. "We think that the free movement of goods, capital and workers is acceptable (as an economic principle within the Commonwealth) if no single state transfers to world prices unilaterally," Fokin said.

Gaidar quickly replied that Russia "does not insist on raising prices for fuel to world prices in a single step," a move that would eliminate the huge subsidies in all energy prices and jeopardize the economies of other Commonwealth members.

But he added later that, in the long run, such a move was essential for development of a free-market economy here. "We can't give up our concept," he said, "because it would bring about absolutely unbearable economic disproportions that we would not be able to cope with--none of us."

The prime ministers accepted 16 of 18 agreements on the day's agenda, failing to resolve issues only on railway transportation and on settling of economic disputes. Some of the sharpest exchanges came, oddly enough, over which state should pay a retiree's pension--the state where he had worked or the one where he had retired.

Times staff writer Norman Kempster in Washington contributed to this report.

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