Commerce as Diplomacy: Penny Pritzker Goes to Kiev

U.S. Commerce Secretary Penny Pritzker speaks during a press conference in Kiev on Sept. 27, 2014. Photograph by Genya Savilov/AFP/Getty Images

As the U.S. continues to play a soft hand in the Ukraine crisis, President Obama dispatched Commerce Secretary Penny Pritzker to Kiev. On Saturday, Sept. 27, she met with Ukraine President Petro Poroshenko and other political leaders, who are eager for U.S. technical expertise (with tax law, anticorruption initiatives, etc.), if not for a return of western investment. Pritzker stressed the need for rapid—and lasting—reform. Ukraine has been down this road before, raising the hopes of western investors and commercial interests in the wake of the Orange Revolution, only to slip back into an everglade of corruption and inefficiency. Washington has provided Kiev with a $1 billion loan guarantee, as well as $291 million in aid. But this, along with the first tranche of a $27 billion rescue package from the IMF, has made no one believe that stability is around the corner.

Pritzker is an Obama intimate. The billionaire Hyatt Hotel heiress served as his national finance chair in 2008 and co-chair of his reelection campaign. Her visit, therefore, held more than commercial promise for the Ukrainian leadership. Her great-grandfather emigrated from Kiev to Chicago in 1881, adding a touch of sentiment to her visit. Kiev was tacked onto Pritzker’s scheduled trip to Warsaw and Istanbul in her role as chair of the President’s Export Council, an advisory committee on international trade.

The Commerce Secretary spoke with Bloomberg Businessweek from Kiev’s Hotel Ukraine overlooking Maidan square, the site of the country’s clashes over democratic reform.

You met with President Petro Poroshenko and Prime Minister Arseniy Yatsenyuk. What message did you give them? And what did you learn from them?
Now is the time to take the tough steps toward reform. And what I found, though, is that they are committed. [President Poroshenko] said, “I have a set of objectives and time lines, and I will share those with you.” He even showed it to us, but it was in Ukrainian, so he’s having it translated for us.

What are the goals of this particular trip?
The first goal is to really understand what’s the situation on the ground from businesses that are actually here, from the people really here.

American businesses?
But also from Ukrainian businesses. And then to work with the government to say, ‘Look, here’s our assessment of things you need to do.’ To be honest, our assessment and their views are pretty aligned as to what needs to happen. But then, frankly, to offer where can we of assistance. How can we support an effort not just to have the anticorruption law passed, but how can we help them implement that? … There’s also a lot of technical support that they’re looking for, whether it’s in tax policy or tax implementation or e-government. We have a list. Frankly, I think we’ve got 15 or 20 different, separate items that they’ve asked our assistance with. A lot of it is advisers, technical support, introductions. The fact that the conversations got quite granular, I think, is quite positive, because this is no longer rhetoric.

Another purpose of this trip is to say the world is watching, and the enthusiasm that exists today for the potential of Ukraine is not going to be present forever if they don’t take action. There’s a limit to what we can do, frankly. The current political leadership has to have the political will to do the tough stuff now.

What can you do within these limits?
We can not only provide technical advisers we have in government; we can also go to the private sector or the academic sector where there are experts. We can bring those people to the table. I’ve already reached out to, I’ve spoken to the deans of the Stanford and Harvard business schools about particular macroeconomic advisers that the president and prime minister are interested in. Each had a list of different types of advisers that they want to make sure we bring to the table. They’re looking for how do they implement rule of law. What do they have to do to the court systems?

You’ll be visiting Poland and Turkey next. Poland is a neighbor here, but what a different situation it represents, its economy growing at a rapid rate. What can Ukraine learn from the recent Polish experience?
The lesson of Poland is you need to do the reforms now. You need to do them simultaneously. And you need to stay vigilant in their execution. And we’ll stay side by side with you to help you. What is the take-away from the Maidan? The take-away is this is a country looking to pursue its European democratic opportunity. We owe it to Ukraine to support that effort. The people have been paying a very significant price. Some have paid with their lives. Many are paying with the financial crisis that they’re enduring right now. The perseverance is extraordinary. But this moment can pass unless action happens.

Since many U.S. businesses are paying a price over the sanctions, does Ukraine owe an extra effort to make real reform work?
I’ve talked to dozens of American CEOs who have business in Russia. They find the behavior of the Russian leadership unacceptable. And they have been very patriotic in understanding that we can’t tolerate the violation of national sovereignty and of borders. It’s not really about what Ukraine owes the United States. That’s not been the conversation. It’s really been about the kind of respect that nations need to have for one another. And without that kind of respect and without a commitment to respecting borders and the sanctity of a nation, they realize that their economic security is at risk. It’s not about what Ukraine owes the United States. It’s really about what’s not tolerable behavior in modern society.

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