ACCESSION NUMBER:343903
FILE ID:POL407
DATE:05/12/94
TITLE:U.S., UKRAINE AGREE ON DEFENSE CONVERSION JOINT VENTURE (05/12/94)
TEXT:*94051207.POL
U.S., UKRAINE AGREE ON DEFENSE CONVERSION JOINT VENTURE

(Perry says it will help stem weapons proliferation) (640)
By Jacquelyn S. Porth
USIA Security Affairs Correspondent
Washington -- Defense Secretary Perry and Ukrainian Deputy Prime Minister
Valery Shmarov stood side-by-side at the Pentagon May 12 to announce the
first U.S.-Ukrainian joint defense conversion project.

Perry said the joint venture, to be implemented in Khar'kiv, Ukraine, will
help "stem weapons proliferation" by helping Ukraine convert one of its
former military industries into a "productive civilian enterprise."

This "significant step forward," the secretary said, was made possible under
the Nunn-Lugar program which will provide a $5 million cost-sharing grant
to Westinghouse Electric Corporation to join with Khartron Production
Association in Ukraine to form a new firm called Westron.

Shmarov said Khartron formerly produced control and navigation systems for
military missiles.  Now, Perry said, the two industrial giants will
cooperate for "peaceful purposes."  Westron will produce state-of-the-art
instrumentation and control systems for nuclear, coal-fired and
hydroelectric power-generating plants.

Shmarov said the announcement marked an "historic day" because the political
decisions of Ukraine and the United States had finally reached the stage of
"practical implementation."  Now, instead of producing weapons, he said,
the new Ukrainian firm will be producing equipment for managing and
controlling nuclear reactors and power stations.

Because Ukraine has had problems in the area of nuclear energy, Shmarov
said, it is important that his country develop these kinds of instruments
and control systems.

The Ukrainian official described the planned transition of Khartron as a
"very good example" of economic reform being put into practice in his
country.  The joint venture, Shmarov noted, will pull together government
and private sector funds from both the U.S. and Ukrainian governments as
well as Westinghouse and other Ukrainian firms.

John Hay, vice president of government affairs at Westinghouse, told
reporters at the Pentagon that the joint venture represents a "significant
investment" for his company.  He also said the project will improve the
safety of nuclear reactors in Ukraine.

1estinghouse will provide technology, management, manufacturing equipment,
customer demonstration, training and commercial skills, while Khartron will
supply the production plant, engineers as well as manufacturing personnel
and equipment.

Perry said the $5 million grant is part of the $40 million Nunn-Lugar
Cooperative Threat Reduction program agreement signed by the United States
and Ukraine on March 21.  Perry said the agreement announced May 12 is
among the eight agreements and a memorandum of understanding between the
United States and Ukraine included in a total of up to $277 million in
Nunn-Lugar assistance.

The assistance provides funding for business ventures between American
companies and former Ukrainian military industries interested in converting
to civilian enterprises.  Some of the money will be spent to build housing
for Ukrainian military personnel who have been demobilized as the result of
Ukraine's decision to eliminate its strategic nuclear forces.

Asked how many missile warheads have been sent to Russia for dismantlement,
he said 120 SS-19 Stiletto and 60 SS-24 Scalpel intercontinental ballistic
missiles have been shipped out of Ukraine for reprocessing in Russia.  He
said Ukraine has worked consistently to implement its commitments under the
Strategic Arms Reduction Treaty and the trilateral accord.

Perry said he and Shmarov first discussed the idea of defense conversion in
Kiev in December.  At that time, the secretary said Shmarov presented him
with a wooden and metal Ukrainian mace and urged him to use it to overcome
obstacles in the American bureaucracy.  Perry displayed his gift from
Shmarov at the Pentagon May 12 and said he was able to use it effectively.
Perry said he was pleased with the progress made in such a short time,
noting that it represents "real partnership...(and) cooperation" between
the Ukrainian and American governments.

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