May I say what a pleasure it is to see you chairing our proceedings, Mrs. Anderson? I am most grateful to the Minister for being here to respond. I shall examine the bilateral relationship between the UK and Ukraine before considering developments in Ukraine itself. Some 100,000 Ukrainians live here, and a number of organisations exist to link our two countries. I should like to highlight one in particular, the Ukrainian-British City Club, which provides a lively forum for the increasing number of Ukrainians working in the City of London. There are also student groups at the universities of Oxford and Cambridge and the London School of Economics.
Last year, the British Ukrainian Society was established to act as a bridge between our two countries and as an umbrella for the many bilateral groups here and in Ukraine. It encompasses contact at political and economic, as well as social, cultural and educational levels, and it already enjoys a considerable range of activities. I should declare an interest as the chairman of the society. I am also delighted that a course in Ukrainian language and culture has been established at the department of Slavonic studies at Cambridge.
Many links bind Ukraine and the United Kingdom. Whether in trade, defence, development and business or in our work through the European Union and other international bodies, the ties between the two nations are getting stronger. In recent months, London has hosted a significant number of Ukrainian events. Last month the Foreign Minister, Mr. Ogryzko, was in town. He had successful meetings with the Foreign Secretary and the shadow Foreign Secretary. To coincide with his visit, an early-day motion was tabled welcoming the important progress made by Ukraine in its democratic development and hoping that the relationship between Ukraine, the UK, NATO and the EU can be strengthened even further. It encapsulates the views of MPs across the party political divide.
In September, Lady Thatcher held meetings with Yuliya Tymoshenko. More recently, President Yushchenko met my right hon. Friend the Leader of the Opposition at the World Economic Forum in Davos. It was a very successful meeting. Next month, President Yushchenko will visit Britain. One aspect of his visit will be his desire, which is felt deeply and widely in Ukraine, to publicise the famine that killed millions of Ukrainians in the 1930s: the Holodomor, which was deliberately caused by Stalin. There is a remarkable archive on the Holodomor, and an exhibition about it is being planned with the help of the embassy and the British Ukrainian Society. On Saturday, a concert is being held in London to commemorate the 75th anniversary of the famine.
I pay tribute to Mr. Grogan, who has ably and imaginatively chaired the all-party group on Ukraine. He has done an outstanding job of bringing Ukraine alive for Members of Parliament, and I pay unreserved tribute to him for it. I am delighted that an Inter-Parliamentary Union visit to Kiev will take place in early June to build links between parliamentarians. I also welcome the formation of a new group in the Rada to forge contact and friendship between our two Parliaments.
The relationship between our two countries has never been better. Ukraine vividly caught the UK's attention during the Orange revolution, when Ukrainians bravely poured on to the streets to fight for democracy. Ever since those remarkable events, Britain has supported Ukraine in its reform process. It is fair to say that no country in western Europe is keener to promote the success of Ukraine than ours. Ukraine's geopolitical situation is fully recognised. Britain supported Ukraine's accession to the World Trade Organisation and fully supports its aspirations to EU membership.
I am a governor of the Westminster Foundation for Democracy, which was established in 1992 to assist in building and strengthening democratic institutions overseas, particularly after the end of the cold war. We are sponsored by the Foreign and Commonwealth Office and work with political parties, Parliaments and non-governmental organisations to foster democracy through training, experience sharing and mentoring in countries around the world. Since its establishment, the WFD has worked in Ukraine to support civil society organisations, political parties through direct UK political party contact, independent media and free and fair elections.
Despite the hope and optimism that the Orange revolution brought to Ukraine, democracy did not immediately consolidate as many first hoped. I believe that Europe did not seize quickly enough the opportunities to build on the outcome of the Orange revolution so as to entrench it, and we did not sufficiently understand its significance. Ukraine has faced teething problems, learned valuable lessons and managed to overcome many challenges thrown in its way. Through sheer determination, it has transformed itself into a new, functioning democracy. It now boasts a strong record of democratic elections, respect for human rights and free media. Of course there are sharply defined differences of view in the internal politics of Ukraine. The constitutional balance between the roles of the President and the Prime Minister is now under review.
The importance of Ukraine's development goes way beyond its own national interests. Ukraine's success provides a positive political and economic incentive to its neighbours. It could be a shining example and model for others in the region. If Ukraine succeeds, it could encourage neighbouring countries such as Belarus and Moldova to choose a similar path to success. It is therefore critical that the democratic underpinnings in place in Ukraine are firmly consolidated. Last week, I received some excellent news about an event that could go some way towards making that happen.
The Foreign Office plans to give the Westminster Foundation for Democracy a substantial amount of matched funding towards a parliamentary strengthening programme in Ukraine—£600,000 in total. It is a clear recognition of Ukraine's importance that it has been singled out for the programme, and it is a hugely welcome development. As Ukraine is a new democracy, its Parliament has a limited number of people available who are experienced and knowledgeable in parliamentary practice. The pace of development in that field has been inhibited by the lack of programmes to institutionalise the experience and knowledge of Ukrainian MPs and parliamentary staff and transfer relevant knowledge and experience from more developed Parliaments. The WFD has taken the lead to form a consortium of leading UK experts in parliamentary strengthening to address more effectively the issues faced by Parliaments such as Ukraine's.
Despite the political problems, the country has been enjoying strong economic growth, and the signs of prosperity are apparent. I recently attended a Ukrainian investment seminar here in London. It was evident that despite growing inflation in Ukraine, its economy as a whole continues to go from strength to strength. From January to March this year, Ukraine's gross domestic product grew by 6 per cent. annualised.
The drive for reform is led in many respects by the Ukrainian business community. Ferrexpo, the UK holding company that owns Ukraine's largest iron ore exporter, began trading last year on the London stock exchange. Many other companies have been or will be listed here in London. Despite high inflation, the Ukrainian economy demonstrated robust economic growth in 2007, higher than that of most other countries in the region and central and south-eastern Europe—an impressive performance, despite huge increases in the price of imported natural gas and high world crude oil prices.
Investment opportunities continue to look good for exporters and investors. Britain is the fourth largest investor in Ukraine, and there are now more than 85 companies in Ukraine with British connections, representing a cross-section of sectors. Property and real estate, trade, finance, transport and communications and machine building currently attract most of the British investment.
Ukraine is an attractive investment destination for a number of important reasons. Ukraine has a highly educated work force with almost 60 per cent. university enrolment, a large domestic market with increasing purchasing power, an improving business climate, relatively low wages and excellent agricultural, industrial and high-tech potential, in addition to the prolonged period of economic growth that the country has enjoyed. Because all of us as parliamentarians are so acutely aware of it, it is worth pointing out that at a time of pressure on world agricultural production, Ukraine, with its huge agricultural potential, is in an increasingly important position to take advantage of it. It is not for nothing regarded as one of the world's bread baskets. At a time of world food shortages and ever higher prices, Ukraine has lifted grain export restrictions, which is most welcome.
After 14 years of negotiations, Ukraine has been accepted as a member of the World Trade Organisation. Hailed, by President Yushchenko, as a truly historic moment and a decisive milestone in the country's development, accession has been a joint accomplishment of the past four Governments, which I greatly welcome. Analysts predict that membership of the WTO will lead to an even greater acceleration of economic growth, resulting from an increase in exports and investment as European businesses are given greater access to the Ukrainian market.
As a result of WTO membership, Ukraine has already started official negotiations with the European Union on creating a free trade zone, which should include not only a free trade area, but energy sphere co-operation and strengthened reform efforts and civil society in Ukraine. President Yushchenko forecasts that the new enhanced agreement will be signed in September. We know that, despite the very considerable burden imposed by the European Commission through the Copenhagen accession criteria, the road to EU membership does encourage the political, judicial and economic reform process.
The EU appears to be suffering from something approaching enlargement fatigue, and the signals to Ukraine have been mixed at best. The Minister will know that enlargement commends itself to all hon. Members in the House, in contrast to attitudes prevailing in some European countries. I hope, therefore, that he will take this opportunity to reiterate our clear support for Ukraine's EU membership objectives and our intention to work constructively to speed up the process, in the interests of Ukraine and the whole continent of Europe. If flexibility is required, rather than a one-size-fits-all approach, it should be supported.
Ukraine's application to join NATO is another recent development. Despite no specific date for the membership action plan, NATO's declaration that Ukraine would eventually gain membership has been welcomed. It is the only partner country to support actively all NATO-led operations and missions, as well as practically every international peacekeeping mission under the auspices of the United Nations and the Organisation for Security and Co-operation in Europe. The aim of NATO enlargement is a broader and more secure Europe—a goal to which Ukraine would certainly contribute.
All in all, in its major contribution to the peace and stability in the Euro-Atlantic area and beyond, Ukraine has proved to be a very valuable NATO partner. However, NATO membership would require broad support in Ukraine. The close historic ties between Russia and Ukraine, and the former's very specific view of the latter, is a source of tension between the two countries. However, after the past delivery and payment problems with energy supplies, it is good that Ukraine has paid off its gas import debts to Russia, which I hope will result in a generally more comfortable relationship between them.
Undoubtedly, Ukraine has some tough choices ahead, but with its increasing economic prosperity, the chance to showcase itself to the world as host of the 2012 European football championships, and the continuing consolidation of democracy, I am optimistic that Ukraine faces a very hopeful future.