["National Defense Authorization Act for Fiscal Year
2002," Library of Congress Web Site,
http://thomas.loc.gov.]
{Entered 10/10/2001 RG}
CTR FUNDING FOR
UKRAINE, FY 2000 AND FY 2001
Program
FY 2000 Funding
FY 2001 Funding
Strategic Offensive Arms Elimination
$41,800,000[1]
$34,100,000[2]
Sources: [1] "National Defense Authorization Act for Fiscal Year 2000," Library of
Congress Web Site,
http://thomas.loc.gov. [2] "Floyd D. Spence National Defense Authorization Act for Fiscal Year
2001," Library of Congress Web Site,
http://thomas.loc.gov.
{Entered 4/6/2001 MJ}
CUMULATIVE CTR FUNDING FOR UKRAINE THROUGH
JANUARY 1999
CTR DEVELOPMENTS IN UKRAINE: 10/28/2001: CTR PROJECTS IN UKRAINE
TO BE FINANCED THROUGH 2006 UNIAN
reported on 28 October 2001 that a representative of the US Embassy in Kiev
stated that the US government will continue funding CTR
projects in Ukraine until at least 2006. Following the completion of bomber
and silo elimination CTR
efforts will be focused on eliminating the remaining missiles, strategic air base
infrastructure, improving Ukrainian export control system, and other missions.
["SShA budut
finansirovat programmy umensheniya yadernoy ugrozy v Ukraine, po menshey mere,
do 2006 goda," UNIAN, No. 043 (183), 22-28 October 2001.] {Entered 6/13/2002
MJ} 12/5/2000: UNITED STATES AND UKRAINE SIGN PLAN OF
COOPERATION TO CONTINUE ASSISTANCE ACTIVITIES FOR 2001 On 5 December 2000 US Defense Secretary Cohen and
Ukrainian Defense Minister Kuzmuk signed a Plan of Cooperation for 2001 between the US Department of Defense and the Ukrainian Ministry of
Defense, including a continuation of Cooperative Threat Reduction program
activities.
For more information, see the 12/5/2000
entry in the Other US Assistance Programs entry. {Entered
3/6/01 RG}
8/7/2000: US FUNDING FOR
BOMBER ELIMINATION TO CEASE IF ADDITIONAL BOMBERS TRANSFERRED TO RUSSIA At a 7 August 2000 press conference in Kiev, US Ambassador
to Ukraine Steven Pifer announced that while the United States respects
Ukraine's desire to transfer additional strategic bombers to Russia (for
more information please see the 7/31/2000
entry in the Bomber Decommissioning/Transfer
Developments section) in return for cancellation of its energy debts
to Russia, it will not continue financing their dismantlement if more bombers
are transferred.[1] According to the chief of the Ukrainian Center for the Implementation
of Strategic Arms Reduction Treaties, Volodymyr Shapovalov, Ukraine could
lose $7 million in US aid allocated, but not yet disbursed, for bomber elimination. Shapovalov said that
the loss of US funding could mean Ukraine would
not be able to eliminate air force base infrastructure, conduct environmental
studies, or carry out other related projects. In addition, Shapovalov was
concerned that the transfer of additional strategic bombers to Russia could
undermine Ukraine's attempts to secure US funding for eliminating
non-strategic bombers, such as the Tu-22 and the Su-24.[2]
Sources: [1] "SShA ne budut finansirovat programmu
likvidatsii strategicheskikh bombardirovshchikov, yesli Ukraine peredast
raketonostsy Rossii," Interfax, No.4, 7 August 2000.
[2] "SShA mogut prekratit finansirovaniye
likvidatsii bombardirovshchikov, yesli Ukraina peredast ikh Rossii--spetsialist,"
Interfax, No.3, 4 August 2000. {Entered 8/10/2000 MJ}
4/25/2000: CRIMINAL CASE BROUGHT AGAINST 43RD
ROCKET ARMY OFFICIALS IN CONNECTION WITH MISUSE OF US AID FOR STRATEGIC
WEAPONS ELIMINATION On 25 April 2000 the Ukrainian General Prosecutor's
Office initiated a criminal case against 43rd Rocket Army officials, investigating
the tax status of the Strum company and questionable sales of military
property and scrap metal. An article in Ukrayina moloda
alleges
corruption on the part of various 43rd Rocket Army officials involved in
strategic weapons elimination, stating that top officials had sheltered
the Strum company, which allegedly had issued false documents to US officials
to cover up the embezzlement of assistance funds. The Strum company
has close ties to 43rd Rocket Army generals: 66 percent of its shares
are held by Oleksa Bykovskyy (a former Ukrainian
Security Service employee reportedly with close ties to Rocket Army
officials) and Olena Bushuyeva (daughter of General Major Vladyslav Bushuyev,
Deputy Commander of the 43rd Rocket Army in charge of weapons). Despite
the fact that Strum did not have a license to eliminate strategic weapons,
Ukrayina
moloda claims that Strum received about $22 million in weapons elimination
contracts from US integrating subcontractors, and then wrote 339 subcontracts
with other Ukrainian firms, paying them 23 million hryvnyas to complete
the work (about $4.2 million as of 25 April 2000). According to Ukrayina
moloda, Strum blocked many state-run enterprises and Ukrainian Defense
Ministry enterprises from bidding on weapons elimination. Strum also obtained CTR funds by entering artificially low bids. The company
won the contract for the experimental dismantlement of a Tu-160 bomber
by bidding only $70,000, whereas Ukrainian aviation repair facilities had
bid $140-160,000; Strum eventually billed the US government $190,000. The
Yuliya company, which is reportedly controlled by Deputy
Minister of Defense Volodymyr Mykhtyuk's wife Tetyana, his son Anatoliy,
and Olena Bushuyeva, and the OIK company have been involved in similar
activities. In its inspection of strategic weapons elimination programs,
the General Military Inspectorate under the Ukrainian president found that
the 43rd Rocket Army was involved directly in questionable dealings as
well. For instance, the Rocket Army allegedly ordered two US KMK-6200 mobile
cranes worth over $2 million; when they could not be used for dismantlement
work, the Army Command ordered them to be sold for about 400,000 hryvnyas
(about $73,000 as of 25 April 2000). Similarly, a $1.7 million EDK-900
railway crane was only used once and then sold for 432,100 hryvnyas (about
$79,000 as of 25 April 2000). The General Military Inspectorate also found
that only five of 21 Chevrolet Suburbans, only two of six Ford F-350 ambulances,
and none of the seven Caterpillar-950F unloading vehicles sent to the rocket
troops by the US Defense Department had been registered. Vinnitsa Oblast
Control and Auditing Administration (KRU) officials have also been investigating
the Rocket Forces. They found that the Rocket Army counterfeited
a debt to a commercial structure for the construction of nonexistent apartments,
and other mismanagement of funds.
[Serhiy Chornous, "Strategichno-nastupalnyy
kryminal," Ukrayina moloda, 25 April 2000, pp. 1,4,5.]{Entered 10
May 2000 CC}
11/30/99: UKRAINIAN CABINET RESOLUTION LEGALIZES
TAX-FREE STATUS OF ALL SUBCONTRACTORS INVOLVED IN STRATEGIC WEAPONS ELIMINATION Ukrainian Cabinet of Ministers Resolution No. 2185
of 30 November 1999 extends tax privileges to all subcontractors involved
with strategic arms elimination, regardless of their role and legal relations
to the US subcontractor.
[ Serhiy Chornous, "Strategichno-nastupalnyy kryminal," Ukrayina moloda, 25 April 2000, pp. 1,4,5.]{Entered 10
May 2000 CC}
9/7/99: CHARGES AND COUNTER-CHARGES IN USE OF US AID FOR STRATEGIC
WEAPONS ELIMINATION On 21 August 1999, Valentin Kovalskiy, in an article for
Segodnya,
reported that the tax administration had sent "an armed group wearing masks"
to the headquarters of the 43rd Missile Army. The Kovalskiy article
charged the tax administration with exceeding its authority by attempting
to tax contractors working on the elimination of strategic weapons, in
violation of the 25 October 1993 US-Ukraine CTR framework agreement.
Kovalskiy cited the case of the Strum company, which was fined 486,000
hryvnia ($111,000 as of 21 August 1999) because it was not able to show
the Vinnitsa tax authorities a Defense Ministry authorization relieving
it of tax obligations. When the firm later produced this authorization,
its money was not returned. Strum appealed to higher authorities,
who instructed the Main Tax Administration not to eliminate the tax privileges
of contractors working in weapons elimination. However, Strum not
only did not receive any money, but instead was fined an additional 768,000
hryvnia ($175,543 as of 21 August 1999) by the Vinnitsa tax authorities.[1]
On 7 September Aleksandr Ilchenko, in a second Segodnya article,
stated that the Kovalskiy article had been instigated by the 43rd Army,
and reported that the tax authorities say that contractors directly involved
in weapons elimination are not being taxed. The tax authorities' investigation
of CTR contractors began on 16 June 1999, when General Military Inspector
Colonel General Vasyl Sobkov ordered the tax administration to clarify
the situation regarding the 43rd Missile Army's use of foreign aid in its
strategic weapons elimination program. According to Ilchenko, the
tax administration found that commercial structures founded by relatives
of 43rd Missile Army Commander and Deputy Defense Minister Colonel General
Volodymyr Mykhtyuk and Deputy Commander Major General Bushuyev had been
illegally subcontracting out $5 million in weapons dismantlement contracts,
while failing to pay taxes on these subcontracts. The possibility
of the embezzlement of US aid may well become an issue in the upcoming
Ukrainian presidential elections.[2]
Sources: [1] Valentin Kovalskiy, "Ne sprovotsiruyut li ukrainskiye
nalogoviki mezhdunarodnyy skandal?" Segodnya, 21 August 1999. [2] Aleksandr Ilchenko, "Money for Disarmament Or For The
Mafia In Uniform?" Segodnya, 7 September 1999; in "Tax Police
Defend Raid On Missile Troops," FBIS Document FTS19990919000719. {Entered
9/23/99 CC}
7/31/99: CTR FUNDING EXTENDED UNTIL 2006 While on a visit in Ukraine, where he met with his Ukrainian counterpart
Oleksandr Kuzmuk, US Defense Secretary William Cohen announced the extension
of the US-Ukrainian Cooperative Threat Reduction (CTR) "umbrella" agreement
until 2006.[1] The agreement provides the legal framework for supplying
US equipment, services, and technical advice to Ukraine and will encourage
defense and military contracts between Ukraine and the United States. Ukraine
has received $569 million under the CTR program through FY 1999.[2] The
CTR assistance will be allocated primarily for elimination of SS-24 ICBMs,
SS-24 missile silos, Bear and Blackjack heavy bombers, air-launched cruise
missiles, and nuclear weapons infrastructure.[1,2]
Sources: [1] AFP, 31 July 1999; in "Cohen Extends Cooperation Accord
With Ukraine," Lexis-Nexis Academic Universe, http://web.lexis-nexis.com/universe. [2] "U.S., Ukraine Extend Cooperative Threat Reduction Agreement,"
USIA Washington File, http://www.usia.gov,
2 August 1999. {Entered 8/3/99 SK}
7/27/99: BECHTEL WINS CTR CONTRACTS IN UKRAINE The Defense Threat Reduction Agency (DTRA) awarded Bechtel National Inc.
a contract in Ukraine under the CTR program to dismantle two SS-19 ICBM
liquid fueling facilities near Pervomaysk and Khmelnytskyy, demolish nearby
nuclear weapons facilities, and eliminate all ICBM apparatus, silos, launch
control installations, and operational support infrastructure at the sites.
The project will be carried out over a two-year period and will cost $5.3
million.
["Bechtel Wins Soviet Missile Dismantlement Contracts," Post-Soviet
States & Eastern Europe Monitor, 9 August 1999, p. 19.] {Entered
8/26/99 SK}
2/26/99: UKRAINE DESTROYS LAST SS-19 MISSILE For details of this development, see the 2/26/99
entry in the file Ukraine: Missile/Silo Dismantlement.
12/3/98: DESTRUCTION OF SS-19 MISSILE SILOS COMPLETED For details of this development, see the 12/3/98
entry in the file Ukraine: Missile/Silo Dismantlement.
10/1/98: UKRAINE DESTROYING SS-24 MISSILES For details of this development, see the 10/1/98
entry in the file Ukraine: Missile/Silo Dismantlement.
7/98: DOD AMENDS CTR AGREEMENT
WITH UKRAINE The US Department of Defense (DOD) has amended its
CTR agreement with Ukraine in order to allocate up to $76.7 million in
additional funds. These funds will be used to help eliminate strategic
nuclear arms that were left on Ukrainian soil after the breakup of the
Soviet Union. Among other things, the new funding will be used to
support the elimination of SS-19 and SS-24 ICBMs, along with their silo
launchers and command centers. The additional funds will also help Ukraine
to eliminate 44 strategic nuclear bombers. Since the inception of the CTR
program, the US has commited $520 million in aid to Ukraine, including
the additional amount mentioned above.
["News Release," Office of Assistant
Secretary of Defense, http://www.ctr.osd.mil/docs/1998/98-07-27.htm] {Entered
12/21/98 SP}
11/97: MORRISON KNUDSEN AWARDED CONTRACT TO DISMANTLE SS-24s The Morrison Knudsen Corporation has been awarded a contract by the Defense
Special Weapons Agency to dismantle Ukraine's SS-24 missiles. The multi-million
dollar project will involve designing, building, and operating missile
storage and disassembly facilities in Pavlohrad,
Pervomaysk and Mikhailenky. Morrison
Knudsen's Environment-Government Group will be responsible for actually
dismantling the SS-24s, which still contain traces of chemicals and fuel
in their housings, despite earlier removal of warheads.[1] The new project,
part of the Cooperative Threat Reduction Program, is expected to be completed
by November 2001.[1, 2] (Please see also the missile
silo dismantlement file in the Ukraine: Nuclear Weapons section.)
Sources: [1] "MK Hires on to Dismantle Soviet SS-24s. New Contract
Arises from Work Already in Progress," Idaho Statesman, 12 November
1997; in Inquisit Agent Report. [2] "Company Dismantling SS-24," Eastern Economist,
24 November 1997, p. 16. {Entered 4/1/98 SP}
5/6/97: US GRANTS UKRAINE $47 MILLION TO DISMANTLE SS-19 SILOS The United States will grant Ukraine $47 million to dismantle SS-19 ICBM
launch silos. An agreement to this effect was signed in Washington by US
Secretary of Defense William Cohen and Ukrainian Minister of Defense Oleksandr
Kuzmuk. According to Cohen, the money will allow Ukraine to implement the
"bold, progressive choice" that it made in 1993 when it declared itself
a non-nuclear weapon state. Cohen also noted that Ukraine "has set the
world an example of peaceful disarmament." Kuzmuk stated that any preconceived
notions that he and members of his delegation held of the United States
were "gone with the wind." The funds will be allocated within the framework
of the Nunn-Lugar Program.
[Igor Borisenko, "Missiles Gone With the Wind," Trud Ukraina,
6 May 1997, p. 1; in "Defense Minister Welcomes Secretary Cohen Visit,"
FBIS-SOV-97-126.] {Entered 4/3/98 SP}
8/28/96: UDOVENKO SATISFIED WITH US DENUCLEARIZATION ASSISTANCE Ukrainian Foreign Minister Hennadiy Udovenko said that he was satisfied
with US-Ukrainian cooperation in the area of nuclear disarmament during
a meeting with US Senator Richard Lugar (R-IN) in Kiev.
[INTERFAX, 8/28/96, "Udovenko Comments on Nuclear Cooperation
With U.S. Senator," in FBIS-SOV-96-168.] {Entered 2/21/97, SA}
9/30/96: UKRAINE: FY 97 FOREIGN OPERATIONS APPROPRIATION Ukraine will receive $225 million in financial assistance according to
the FY 97 Foreign Operations appropriation. Of this, $25 million was set
aside to assist in decommissioning the Chornobyl NPP and $50 million was
allocated to improve safety at Ukrainian nuclear reactors.
[Eugene Iwanciw, "Senate Approves $225 Million For Ukraine,"
The
Ukrainian Weekly, 8/18/96, pp. 1-2.]
6/4/96: PERRY/SHMAROV AGREEMENTS ALLOT ADDITIONAL FUNDS US Secretary of Defense William Perry and his Ukrainian counterpart Valeriy
Shmarov signed two CTR agreements which will allocate up to $29.7 million
in additional funds to the Strategic Nuclear Arms Elimination project,
and $13.4 million in additional funds to the Nuclear Infrastructure Elimination
project.
[Halia Pavliva, INTELNEWS, 6/5/96, in; "US Aid for Nuclear
Disarmament Detailed," FBIS-TAC-96-008, 6/5/96.] {Entered 11/19/96, mew}
3/20/96: ONLY $130 MILLION OF $350 MILLION IS PROVIDED According to Colonel Oleksandr Serdyuk, head of the Ukrainian Strategic
Nuclear Forces, the United States has thus far provided $130 million of
the $350 million promised in CTR funds.
[Serhiy Zhurets, "Nuclear Disarmament: An Expensive Matter,
Since, Not Every Missile Silo Can Become A Gold Mine," Narodnaya Armiya,
3/20/96, p. 1, in FBIS-UMA-96-065S, 3/20/96.]
1/26/96: UKRAINE IS THIRD IN TERMS OF US ASSISTANCE President Bill Clinton signed the Foreign Assistance Appropriations Act
for FY 96 which mandates "not less than" $225 million for Ukraine. Congress
made the assistance contingent on significant economic reforms in Ukraine.
Ukraine is the third largest recipient of US assistance after Israel and
Egypt.
[Eugene Iwanciw, "Clinton Signs Foreign Assistance Bill With
$225 M Earmark For Ukraine," The Ukrainian Weekly, 1/4/96, p. 3.]
6/95: LOCAL CIS CONTRACTORS USED In an effort to more effectively use available CTR funds in FY 95, the
United States began to use local CIS contractors, as opposed to exclusively
US contractors. In Ukraine, for example, Ukrainian companies were contracted
for work on the SS-19 neutralization project.
[Dunbar Lockwood, "The Nunn-Lugar Program: No Time to Pull
the Plug," Arms Control Today, 6/95, p. 10.]
12/5/94: PRESIDENT CLINTON ON CTR AT UKRAINIAN-US SUMMIT At the Ukrainian-US summit in 11/94, President Clinton pledged to President
Kuchma that the United States would speed up the disbursement pace of $350
million in Nunn-Lugar assistance. A schedule was to be drawn up which would
be acceptable to both parties. On 3/4/94, President Clinton announced that
the United States would nearly double Nunn-Lugar disarmament and security
assistance to Ukraine from $177 million to roughly $350 million.
Sources: [1] Kathleen Hart, "Clinton Pledges Faster Spending of Nunn-Lugar
Funds for Ukraine," Nuclear Fuel, 12/5/94, p. 3. [2] Dunbar Lockwood, "Ukraine Begins Transfer of Strategic
Warheads," p. 20. [3] Lockwood, "US Security Assistance To The Former Soviet
Union," Arms Control Today,1/94, p. 32.
11/14/94: HORBULYN EVALUATES IMPLEMENTATION OF TRILATERAL STATEMENT Volodymyr Horbulin, President Kuchma's National Security Advisor and Secretary
of the National Security Council, assessed the implementation of the Trilateral
Statement thus far, giving Ukraine "excellent" marks, Russia "good" marks,
and the US "fair" marks. The rationale for his evaluations was that Russia
was providing the fuel rods to Ukrainian power plants but the United States'
deliveries were less than adequate and failed to meet Ukraine's needs.
Horbulin noted that there was neither a precise mechanism nor a schedule
for the delivery of Nunn-Lugar aid.
[UNIAN, 11/14/94; in "Horbulyn Assesses Trilateral Agreement,"
FBIS-SOV-94-220, 11/14/94.]
10/3/94: TABACHNYK CONCERNS ABOUT FORTHCOMING US ASSISTANCE Dmytro Tabachnyk, head of the president's administration, expressed concern
that the financial and technical disarmament assistance promised by the
United States has not been sufficiently forthcoming. He emphasized that
Ukraine continues to abide by its Trilateral Statement commitment of pursuing
disarmament, yet its partners--Russia and the United States--are not upholding
their sides of the bargain.
[KYIV RADIO UKRAINE WORLD SERVICE, 10/3/94, in FBIS-SOV-94-192,
10/3/94.]
9/94: UKRAINE FOURTH LARGEST RECIPIENT OF AMERICAN ASSISTANCE As of 9/94, the United States committed a total of $550 million for economic
assistance and $350 million for disarmament and defense conversion aid
for Ukraine. This made Ukraine the fourth largest recipient of American
assistance and the second largest, after Russia, in the CIS.
[Paul Mann, "United States, Ukraine Sign Space Pact," Aviation
Week and Space Technology, 11/28/94, pp. 26-27.]
8/94: FUNDING BREAKDOWN The US has allocated $277 million of the promised $350 million in Nunn-Lugar
assistance. Of the allocated $277 million, Ukraine has received only $6
million. Under Secretary for Arms Control and Disarmament Affairs Lynn
explained that implementation of Nunn-Lugar assistance had been slow due
to the necessity of signing agreements for specific projects and then contracting
the projects out. The $277 million has been allocated as follows: Strategic
Nuclear Delivery Vehicle Dismantlement--$185 million, Nuclear Reactor Safety--$11
million, Emergency Response--$5 million, Gov't-to-Gov't Communications
Link--$2.4 million, Science and Technology Center--$10 million, Material
Control and Accounting--$12.5 million, Export Control--$7.26 million, Defense
Conversion--$40 million, Military-to-Military contacts--$3.9 million. Davis
expressed optimism that Ukraine would receive the full $277 million over
the course of the next few months. Contracts worth $69 million have been
obligated.
[Department of State, Daily Press Briefing, 8/2/94, 12:45
PM; "Trilateral Statement and the NPT," Department of State Fact Sheet.]
7/27/93: UNITED STATES RELEASES FUNDS TO SPUR ARMS DISMANTLEMENT The United States decided to release some of the Nunn-Lugar funds to encourage
Ukrainian action on strategic offensive arms elimination; these funds were
supposed to be contingent upon Ukraine's ratification of START I and NPT
accession. Secretary of Defense Les Aspin told Defense Minister General
Morozov that the United States would release a portion of the $135 million
designated for the dismantlement of ICBMs. This would effectively de-link
the Nunn-Lugar money from the arms control treaty negotiations but would
then link it with specific missile dismantlement. General Morozov said
on 7/28/93 in a speech to the Atlantic Council that $135 million would
not be sufficient. He maintains that Ukraine needs more than $3 billion
in aid to completely retire the nuclear weapons on its territory.
[Lockwood, "Ukraine's Position Hardens Despite Some Positive
Signs," Arms Control Today, 9/93, p. 30.]
To return to the main
foreign assistance entry, see the 