By Matthias Williams
KIEV (Reuters) - The U.S. Agency for International Development (USAID) will not engage in more projects with the Ukrainian anti-corruption agency NAZK at this point but remains open to future cooperation, the U.S. Embassy in Kiev said on Thursday.
NAZK has been mired in controversy and blamed by the prime minister this week for delays to a flagship scheme obliging public officials and lawmakers to declare their assets in a publicly searchable database by the start of April.
The row underscored the patchiness of Ukrainian efforts to deliver on reforms promised to allies and the International Monetary Fund as part of a $40 billion bailout for its economy, which has been battered by conflict with pro-Russian separatists. [L5N1H64L4]
Adding fuel to the fire, NAZK's deputy head said on Wednesday that USAID had suspended cooperation with the agency to punish Kiev after lawmakers voted to amend a key piece of anti-corruption legislation. NAZK's chief denied this.
In its first comments since then, the U.S. Embassy said USAID currently supported one project with NAZK to do with party political financing. There had been discussion of other potential programmes, it said.
"We are not moving forward at this time, but the door remains open to potential additional future cooperation," the U.S. Embassy said in an emailed statement to Reuters, without specifying why USAID was not proceeding with new programmes.
The initiative obliging officials to publish their wealth was rolled out last year but has suffered repeated delays. Activists say vested interests have tried to sabotage it.
Corruption is endemic in the ex-Soviet republic. Critics says oligarchs control vast wealth, investors are routinely ripped off, and public officials take bribes. The Economy Ministry reckons around 35 percent of Ukrainian GDP runs in a shadow economy.
Nevertheless, the wealth declarations of leading politicians and officials have stunned Ukrainians, as officials on modest salaries listed millions of dollars in cash, expensive watches or luxury cars.
But activists say a recent legislative amendment forcing NGOs to declare their assets too would open them up to intimidation from law enforcement agencies with a vested interest in shutting down corruption investigations.
A group of G7 diplomats flagged their concern over the amendment at a meeting with President Petro Poroshenko this week. He promised to set up a working group on the issue.
Previously, USAID ended funding for a flagship customs reform project in the southern Odessa region as plans to tackle bribe-taking there petered out.
(Editing by Mark Trevelyan)