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Parliamentary Joint Committee on Foreign Affairs, Defence and Trade - 17/02/2012 - Australia's overseas representation

ROMANIW, Mr Stefan, OAM, Chairman, Australian Federation of Ukrainian Organisations

STASHEVSKYI, Mr Stanislav, Charge d'Affaires ai, Embassy of Ukraine

[14:45]

CHAIR: I welcome the Australian Federation of Ukrainian Organisations and the Change d’Affaires, Mr Stashevskyi. You have before you a document that has some procedure advice to witnesses, and I have allowed you to have a quick read of that so you can familiarise yourself with the information. Before proceeding to questions, do you wish to make a short statement?

Mr Stashevskyi : I would like to make a short statement in addition to our submission.

CHAIR: Go ahead.

Mr Stashevskyi : Firstly, I would like to thank the committee for inviting the embassy and the Australian Federation of Ukrainian Organisations’s submissions regarding the Australian representation in Ukraine, as well as taking them into account in this inquiry. We noted the indication by the committee in July 2011 of Australia’s diplomatic underrepresentation in Ukraine in the review of the DFAT’s annual report for 2009-10.

I would like to give a brief analysis of the current state of play in the bilateral relations between Ukraine and Australia in the three major dimensions—political, trade and economic and social and economic. It is a pleasure to note the increasing dynamics of the Ukrainian and Australian political dialogue in the recent period. In particular during 2010 and 2011, we had four meetings at the level of foreign minister at multilateral events, as well as Foreign Minister Rudd’s communication to the President of Ukraine, Yanukovych, during the December 2010 Astana OSCE Summit. We expect the first official visit of the Australian Foreign Minister to Ukraine in the first half of this year. It was arranged by our foreign ministers in their meeting in Vilnius in December 2011, along with the business delegation to Ukraine.

From 2009 to 2011 His Excellency Mr Michael Potts, the Australian Ambassador to Ukraine, with residence in Vienna, Austria, paid numerous visits to our country in terms of his working agenda and accompanying relevant Australian officials. For example, the next visit of Mr Potts is scheduled for March this year with Dr Russell Trood, Special Envoy of the Australian Prime Minister for Eastern Europe, the Balkans and the Caucasus, to hold meetings in Kyiv with the Prime Minister of Ukraine, head of the presidential administration, foreign minister and deputy foreign minister. We also have a constructive and mutually beneficial close interaction with Australia within the UN agencies, OSCE, the Australia Group and other organisations and groups.

The trade and economic dimension and trade records of our bilateral cooperation prove a significant potential for further development of trade and economic interaction between our countries. At the same time, the statistics of the trade turnover between the Ukraine and Australia shows there is no stability in the trade due to the absence of fully fledged bilateral diplomatic representations in particular in our country. For example, in 2007 the bilateral trade turnover was $138 million, and in 2008 the trade turnover was almost $500 million. In 2009, when the global financial crisis happened, the trade turnover downsized to $165 million. It then started to rise again, up to $300 million, and in the previous year we again had a downsizing. This instability in the trade turnover shows that there is a necessity to take particular steps to support the business and trade links in both countries and to keep the stability of trade and growth.

Investment cooperation has also been developing. We have Australian investors here. As you may know, our Group Privat is present in Western Australia in the mining industry of Australia. This is Consolidated Minerals. This was a considerable investment to Australia, of about approximately US$1 billion. From the Australian side, we also have the investments in Ukraine. Some of them are already acting in Ukraine. We have projects. Some of them are standing ready to act, studying the internal environment in Ukraine. For example, the official representatives of the Treasury of the Australian government will pay a visit to Ukraine in February this year to hold negotiations with the National Bank of Ukraine regarding the investment matters.

We believe the establishment of up-to-date diplomatic resources between our countries and, first of all, the direct diplomatic representation of Australia in Ukraine, would assist in fostering our business and investment links, and help in the opening of our markets for their closer engagement.

There is also one important social and economic dimension in our bilateral relations, which shows the lack of, or complete absence of, Australia’s diplomatic representation in Ukraine. From year to year more and more Australian citizens visit Ukraine on tourist and business matters. We have given some statistics in our submission. Our embassy of Ukraine has been receiving numerous signals from Australian citizens showing their strong interest in the opening of an Australian embassy in Kyiv. There is a situation that often happens that whilst in Ukraine on business or tourist matters many Australian citizens very often appeal to the Ukrainian authorities seeking some help or assistance in resolving their matters. Mostly they call to the Embassy of Ukraine here in Canberra, because Australia does not have an office in Kyiv, asking what they have to do, where they have to go and how to set up an issue. The Embassy of Ukraine in Canberra does all we can to help Australian citizens and will continue to act in such a manner, but at the same time this situation has signs that, in particular, that Embassy of Ukraine in Canberra makes a double function as here and in Ukraine as well. The most important signal is that our people, and in particular the Australian citizens, feel the lack of the official representation of Australia in Ukraine, which could provide assistance and protection for their rights, interests and businesses in Ukraine.

We also have close people-to-people links between Ukraine and Australia, and our history has given us such an opportunity and possibility. We have a great Ukrainian community here in Australia and we have perfect relations with our community. This opportunity gives us the possibility to recognise our countries on deeper levels than just the formal one between people. We are proud of the Ukrainians who came to Australia since the late 1940s and actively contributed to the development of your country. They and their children are now native to us Australians and we have natural spiritual and cultural ties with them. That may also explain the essential perception by many Australians for the historic issues of Ukraine reflecting in their public activities regarding our country.

In all of these major dimensions and, first of all, in the social and economic dimension and the trade and economic dimension, we have a clear signal highlighting the real necessity to establish the Australian direct diplomatic representation in Ukraine. Further to this, I can add that there is also the necessity to take into account the geopolitical role of Ukraine in the region and the whole of Europe. There was a short description of the geopolitical and geographic position of Ukraine. Ukraine is the largest country in Europe, the second largest including the European part of the Russian Federation. We have considerable human potential and in terms of the future development there is a huge economic market for all our foreign partners, including Australia. Our potential in trade and business shows us that we can achieve real results, for example, $500 million of trade turnover per year. We achieved that result without any bilateral business councils and forums. This is just a natural one. Imagine what can be had if we take serious steps to maintain these trade, business and investment links. This is the most important thing when you analyse the perspective of resourcing your diplomatic representation in any country. In the case of Ukraine, there is a clear perspective, which is obvious, that there is a need for direct Australian representation in Ukraine. It is really necessary. I would also add many things by answering your questions, and will hand over to Mr Romaniw.

Mr Romaniw : Thank you for the opportunity. As our Change d’Affaires outlined, the key word is ‘potential’. In our submission we have indicated that there have been lost opportunities. I refer to a number of things that we did, for example, in Victoria for the Department of Innovation and State Development in the early 2000s about the potential markets. The Australian Federation of Ukrainian Organisations sees itself, also quasi sometimes, acting on behalf of Australia because I, personally, and others spend time in Ukraine. Spending that time in Ukraine, we have also been able to make those business links. We have also been empowered. For example, the Confederation of International Trade Unions has given us power of attorney to speak on their behalf in terms of promoting. The Ukrainian Chambers of Commerce and Business in Ukraine have said, ‘We see the potential.’

We have also made representation at a different times to the post in Moscow, primarily to have this discussion, that we see the regional potential. We can look at Ukraine and see all the pluses for opening up an embassy in Ukraine and, at the same time, if we look at the region and we look at what has been achieved, given that we have had 15 or 17 former satellites of the former Soviet Union now being looked after in one embassy, the question is: what is the potential? Previously in the mid 2000s we suggested that there be a split. In other words, that there be two embassies, one in Moscow and one Kyiv, primarily because there is a lot of potential. I think the potential is growing.

In our submission we have referred to what Deloittes say now in 2010, but we have also given you what Massey Ferguson and Avis said in the early 2000s as to what they saw as potential. As to that potential in terms of business and connection, which I think the Charge d’Affaires alluded to, I can give you one example. We have had discussions with the head of the administration in Ivano-Frankivsk Oblast, who has identified the cattle industry as being something that Ukraine wants to get involved in. He, together with ###Olive Vermeychuk, who is one of the prime businesspeople in the Ukraine, have indicated that they are looking at 300,000 head of cattle. We have had discussions with Elders and others. There are some protocols that have to be put in place. They are the sorts of things that I think the Change d’Affaires alluded to. These are the sorts of things that are being done informally. What could be done formally?

The other issue is having a presence on the ground. The previous people who were presenting on the Gulf made the point about this myth about how far we are from everywhere. We can build those bridges by having formal representation. Ukraine is serious. Ukraine has had an embassy here for some time, and this year is celebrating the 20th anniversary of its diplomatic post here. We see potential. We will be calling on the Australian government to make a decision in the positive to open an embassy and to also look at it from a regional perspective. As much as I have a Ukrainian background, I also want to see Australia grow in this.

What are the other areas? We know that there is an interest in the area of mining. We know that there is an interest in the area of engineering. We know that in the area of full fee paying students there is a huge interest in coming to Australia. People have a choice. I came back from New York last weekend. People are travelling to Canada, England and America.

In conclusion, one thing that we often underestimate, from an Australian perspective, is that we have so much knowledge in terms of intellectual property. At one point in time, if I am not mistaken, Queensland introduced the first paperless transfers of land. When you are looking at Ukraine wanting to get into the EU, there are those sorts of services. We can always talk about commodities, but at the same time there are those services and huge potential in terms of business, government services and giving advice. You need to have somebody on the ground.

The federation will continue to advocate for the Ukraine-Australia House, which is an initiative between the Ukrainians and Australians. It does a fantastic job. Helena Lehtmets heads that up. If you walk in there you would think you were in an Australian embassy, but they are not empowered. They can do as much as they can do. We would certainly look at this situation as being a favourable one for Australia in the first instance.

CHAIR: Thank you for your evidence today. Would it be an accurate reflection to say that because of our under resourcing in our diplomatic network we are not acknowledging the events of the last 20 years in trying to service everybody out of Moscow? Would that be an accurate reflection?

Mr Romaniw : I will leave the diplomatic answer to my colleague.

CHAIR: Is that the sense, though? That we have a structure that belongs in the past as opposed to acknowledging the future?

Mr Romaniw : I think you have hit the nail on the head. If you look at what is happening at the moment, you have part of the representation in Moscow and the other part in Vienna. It is time to centralise it into Kyiv. Over the last 20 years a lot has happened and a lot is happening at this point in time, which the Australian government needs to react to. It could be democratic processes. It could be doing what the US and others are doing in saying we want to build a better world, because there is another dimension to all of this. I think the underrepresentation has really been a lost opportunity.

CHAIR: I know it is hard to quantify these things. If you have a small trade it is hard to quantify what might happen to it if you had diplomatic representation. Is there an ability to quantify it in figures? This is one of the things the committee has run into, that is, how do you judge something that you have missed out on or might have missed out on?

Mr Romaniw : I can give you an example—Massey Ferguson. You can look at the whole agriculture area. You can look at where the Ukraine was and where it is now in terms of agriculture. All of that machinery is now coming out of other places. It was a market that somebody had to take on. You can ask: if you put in an embassy will things get any better? I would argue what I argued in the mid 2000s. If you have two posts—and I am not saying that they compete against each other—ultimately at a time they have to account for what they have done. I think you will get a better result for Australia in terms of business. I think Mr Stashevskyi can give you more information in terms of business, but his comment about how it spikes up and down all goes back to activity. We have had some discussion about that. As there has been more activity and interest it spikes and then it dies down. That is ultimately because of who the driver is. We have had Austrade at the Ukraine-Australia House. Part of my advice to the Ukraine-Australia House and to Austrade was, ‘If you want to give somebody a couple of thousand dollars and then say let’s drive something, if you’re serious then let’s drive it together.’

Mr Stashevskyi : We have concrete examples of achieving a huge result for Ukraine and Australia in the bilateral trade, taking into account our geographic distance and the complete absence of bilateral business councils. Almost $500 million a year of trade turnover. This is a natural important sign that is existing of great interest from both countries. I have to say that the major part of the turnover is the Australian export to Ukraine, and it will rise from year to year. This is mostly the Australian export which goes higher or lower. This means that Australia does not have the mechanisms of maintaining it and making it of a stable growth. The Ukrainian export here is more or less stable, and if there is some instability it is not so considerable as with the Australian export. It may rise $100 million or $200 million, which is because of the complete absence of any Australian official representation in Kyiv.

There is also one more point. The absence of the representation does not promote the links between business, people-to-people, and tourism. I will just say that our people have to go to Moscow to get a visa and it takes additional time and money to send your documents. Business and tourist movements are very important when we are talking about trade and tourism. There are 45 million Ukrainians. This is a great market and a great tourism potential. They consider Australia as a very interesting place to go to, but there is this lack of presence in Kyiv. Business says that time is money and money is time. They do not want to spend amounts of money giving their documents to Moscow and waiting for them to come back.

CHAIR: We are making it hard for you.

Mr Stashevskyi : Yes. It is very important. From our side, Ukraine provides for Australians with the possibility to get visas here in Canberra. Moreover we really help Australians while there in Ukraine, because they do not know where to go or where to call. They call to our embassy here in Canberra asking us those questions. Of course we help. This is a strong signal of the necessity for Australia to have the representation there.

Mr Romaniw : I said we play a pseudo role. Recently when I was in Ukraine the international judo competition was on, and Australia sent a team. It was the federation that had to act.

Going back to the consular matters, though, what you can do in partnership—and I think this is what you have got here—you have a great opportunity because you obviously have the diplomatic side of Ukraine saying, ‘We want to partner with Australia.’ But even from a community perspective, if you look at the submission, post 2000 the overstay rate from Ukraine was about 39. It was only through partnership with DIAC that the federation worked very closely to say, ‘Let’s identify the problem.’ The problem was in Ukraine, because people had nowhere to go and the information they were getting was incorrect. If you look at it now, from my last understanding, it is about 2.05. That is why we are also saying to DIAC, ‘Isn’t it time to introduce the e-visa and so on?’ Those sorts of things involve having people on the ground. I totally support what Mr Stashevskyi was saying. The number of people I have dealt with will say to you that it is not only about sending your documents. People are scared about sending them. But you have to travel. You have to wait there, and that is if you can get it fixed on the spot.

CHAIR: How long is the trip?

Mr Romaniw : It is an overnighter, but then you need to stay, come back and then go and collect.

CHAIR: It would be the equivalent of us having to fly to Perth or Bali or something like that.

Mr ADAMS: The issue with the electronic documents is who would issue it and where it would be structured. If we are just dealing with the travel side, I think your submission is that we need to have a broader representation. There is always an issue with fluctuations in trade. I do not know whether diplomatic representation will overcome that. I do not know how easy it is to do business and whether there are impediments. Is Ukraine a member of the WTO?

Mr Romaniw : Yes.

Mr ADAMS: I do not think there would be too many problems, but I guess it is about a need. One nation or companies might see an opportunity. I can see the frustration with representation and what we are trying to achieve with our report. Do you see an opportunity, even if we had an e-visa application? You would have to set up somewhere for people to go to get it? We do not have those opportunities.

Mr Romaniw : If there were diplomatic representation with trade. The most frustrating point is that if you are a business person in Ukraine where do you go? You could go to the internet. Where do you go for the information? If you are in business your first port of call may not be the embassy, but at a point in time you will have to go to somewhere because you want to shore up certain things. That is what is lacking in Ukraine. People have the best intentions.

I will give you the example of Ivano-Frankivsk, which is very keen to do business. I travel around Ukraine and I spend a lot of time there. You have different oblasts, regions, saying, ‘We want to connect. Just tell us who do we contact.’ We can do it through the federation. Business will find its own equilibrium. If we had to show you now or had to get you evidence, we would get you evidence of business who get frustrated and say, ‘I’m not interested in travelling to Moscow.’ I know there are Austrade delegations from time to time, but let me put another argument. I have put a question to Austrade and DFAT at different times about sending a delegation to the region. You could have an exhibition in Moscow, but when is the last time you had a serious exhibition in Kyiv? If your people are already travelling they will say, ‘There’s no interest.’ Of course there is no interest if you are not promoting it.

Mr ADAMS: It is the egg and chicken thing.

Mr Romaniw : There is the potential that we need to go back to.

CHAIR: It is an interesting point that if you are going to Moscow then why would you not—

Mr Romaniw : They may do it, but they do not do it as seriously. I will go on the record saying that, as far as the federation is concerned, they do not do it as seriously. To use the argument that people are not interested to me seems a bit of a funny argument when you say there is potential and all those sorts of things. Why are you not encouraging people to go? Why are you not saying the trip is going to be A, B, C and D? I think we are still looking from a regional perspective and I think Kyiv has a central role to play in the region, because Kyiv itself has been seen by some of the other countries or states in the area as being an alternative.

CHAIR: A central—

Mr Romaniw : Even politically it is seen as an alternative. We have not spoken about the politics of things, but it is also seen as—

CHAIR: There are some politics around that.

Mr ADAMS: That is a point that we should put as a discussion point for the full committee, if there is so much travel and so on. This is not the only region that we are dealing with. I think it is a point that we need to discuss.

CHAIR: That might be okay when you are dealing with a small population, but there are 50 million people.

Mr ADAMS: There are historical issues.

Mr Stashevskyi : All the G20 countries, except Australia, have direct diplomatic representation in Ukraine. That is an additional sign of the universal understanding of the importance of Ukraine in the geopolitical dimension as a market and as a huge human potential. We, of course, look forward to the opening of the Australian embassy in Kyiv or to the direct representation of Australia in the Ukraine as the last country from the G20.

CHAIR: It is interesting that you bring up that point. It is a graphic example. We have had some other submissions that talked about where we sit in the G20 in terms of providing resources to our foreign diplomatic network, and this is a pretty graphic example of some of the downfalls in what we are funding at the moment.

Mr Stashevskyi : Australia is the 13th economy in the world. You are not 19 or 20.

CHAIR: No.

Mr Romaniw : I come from Victoria. Our Premier is going to India, which is a huge market. What I think is being seen economically around the world is that you have to be diverse and not put all your eggs in the one basket. I am not comparing ourselves with India or whatever, but there is a region that is being underutilised. In the submission that we put to the post in Moscow we effectively took all of those countries, saw what the trade was between them and then we said, ‘If this is the best we can do for Australia ...’ The potential is there and Kyiv can be a driver. I think that is what you need. You need a driver. At the moment we are lacking a driver in the region.

CHAIR: One question that Mr Danby had of other people was that he was trying to ascertain whether there had been an offer of a location of land in Kyiv. That seemed to be a question he asked. You might want to take that on notice.

Mr ADAMS: Land to build an embassy?

CHAIR: I know it is question that he wanted answered and perhaps we will let you answer it through correspondence, but I would make that note.

Mr Stashevskyi : There was an offer about—

CHAIR: It seemed to be an open question. I think he had been told somewhere along the line perhaps that that was the case. He was just trying to ascertain whether it was correct.

Mr ADAMS: Can you take that on notice and give us a written response?

Mr Stashevskyi : Yes.

CHAIR: He is not here. He is in Melbourne. Thank you for your attendance here today. It has been most useful. If there are any other matters where we might need additional information, the secretary will write to you. He will also provide you with a copy of your evidence, to which you can make any necessary corrections to errors of transcription. Hansard may wish to check some details concerning your evidence, so if you wish to remain for a short time if they indicate that they need to talk to you. Other than that, thank you very much. It has been a useful presentation and particularly the last point regarding the G20, which we will certainly take on board.