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Pritzker Practices ‘Commercial Diplomacy’ in Ukraine, Turkey

Pritzker Practices ‘Commercial Diplomacy’ in Ukraine, Turkey

U.S. Commerce Secretary Penny Pritzker isn’t afraid to travel to hot spots. Recently returned from a mission that took her to Ukraine, Poland, and Turkey, she is ready to enter another volatile area if she thinks her style of "commercial diplomacy" can make a difference.

The former hotel magnate says she thinks commerce plays a vital role in quelling many forms of civil unrest, including armed conflicts.

Commercial diplomacy is a tool, just like military force and political pressure, that the United States can use to address crises of all kinds, she said during an interview with Foreign Policy on Tuesday, Oct. 7.

"It should be part of the DNA of our international engagement," said Pritzker, a billionaire whose family owned the Hyatt hotel chain before its 2009 public offering. Talking on a business, entrepreneurial, and commercial level is just another way the United States can interact with other countries, she said.

While visiting Ukraine, which she said was a "follow-up" to President Petro Poroshenko’s mid-September visit to Washington, she told Poroshenko — another former business leader — to use the international spotlight shining on his country to address systemic corruption and make the former Soviet republic more attractive to foreign businesses.

"Let’s not waste a good crisis," she said she told Poroshenko, paraphrasing Chicago Mayor — and former White House chief of staff — Rahm Emanuel.

"The time is now to enact the reforms necessary to encourage companies to consider doing business in Ukraine," she said in Poland in a Sept. 29 speech at a meeting sponsored by the American Chamber of Commerce in Poland. "A prosperous Ukraine, where there is efficiency instead of overregulation, where there is transparency in place of corruption, and where people in all parts of the country are free to do business with one another and with partners from outside, will be a better supplier, better customer, and better trade partner," she told the audience.

She said Poroshenko’s government took a crucial first step shortly after her visit by giving an anti-corruption bill a first reading in the Ukrainian parliament on Tuesday. It is scheduled for a final reading next week. Kiev is still trying to claw back billions of dollars that former President Viktor Yanukovych allegedly stole. U.S. officials have been advising Ukrainian investigators on their efforts since April.

Pritzker said that some of the turmoil in eastern Ukraine was fueled by public anger with the previous government’s corruption. The fighting — while on hold under the terms of a tenuous cease-fire — is driving Ukraine’s budget deeply into the red. Ukraine has been getting by on money from the International Monetary Fund — installments of a $17 billion bailout the fund agreed to in April. Kiev could face a $19 billion government shortfall next year if fighting doesn’t end soon, according to a recent IMF report.

The only way to turn Ukraine’s economy around is to implement IMF-mandated austerity measures, ensure that the government operates openly and transparently, and entice overseas companies with a hospitable business environment, she said.

She also said that U.S. assistance to Ukraine need not be monetary — Barack Obama’s administration already backed Ukraine’s $1 billion bond offering in April — or military to help the country out of "the real pickle" it finds itself in.

In an address to a joint session of the U.S. Congress, Poroshenko asked lawmakers and Obama for weapons to help his country fight pro-Russian separatists. After his trip, the White House offered Ukraine $46 million in security assistance.

On Pritzker’s trip, which wrapped up last week, she took her commercial diplomacy to Turkey, which is increasingly threatened by the self-proclaimed Islamic State’s territorial gains near Turkey’s border with Syria. On Tuesday, the Pentagon warned that the key city of Kobani is in serious danger of falling to the militants.

Turkey, which aspires to be the world’s 10th-largest economy by 2023, has a lot of work to do if it is to come close to achieving that goal, she said.

"Clearly, American businesses see great opportunities here, but they still suffer from a lack of access to Turkish markets," she told an Istanbul audience on Sept. 30. "Too often, U.S. companies come to the Department of Commerce with concerns about a wide variety of barriers to entry," particularly those concerning "transparency in government procurement, commercial offsets, and hurdles in obtaining ‘good manufacturing practices’ certification," she said.

Pritzker was accompanied to Turkey and Poland by eight CEOs, including the leaders of Xerox and Lockheed Martin. Twenty other executives, most of whom are members of the President’s Export Council, took the trip, the council’s first under Obama.

Pritzker said President Recep Tayyip Erdogan was receptive to her message, but his government is moving in the wrong direction, as evidenced by its slapping a new customs tax on imported shoes.

"I can’t hear you; your actions speak too loudly," she said about the country whose trade with the United States reached almost $20 billion in 2013.

Pritzker departs for a much less risky mission to Japan and South Korea later this month but will continue to dole out commercial diplomacy.

Since becoming commerce secretary last year, Pritzker, who served as Obama’s campaign co-chairwoman in 2012 and as his national finance chairwoman in 2008, has visited Saudi Arabia, Qatar, the United Arab Emirates, Ethiopia, Nigeria, Ghana, Vietnam, the Philippines, China, India, Malaysia, and Myanmar — making her the first commerce secretary to ever travel to the country formerly known as Burma, which is newly open to Western businesses. She was accompanied by 10 CEOs on that trip.

In November she will attend the Global Entrepreneurship Summit in Morocco as the president’s point person for entrepreneurship. After that, she and her aides, who "are looking at a variety of potential places," will decide where to dispatch her next.

As for her willingness to deploy to other areas with conflict, crises, or unrest: "I’ll go wherever our commander in chief asks me to go," she said.

Jamila Trindle contributed to this report.