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Canadian Prime Minister Stephen Harper meets with Ukrainian Prime Minister Arseniy Yatsenyuk at Willson house in Chelsea, Que., on July 14.

Adrian Wyld/THE CANADIAN PRESS

Ukraine's Prime Minister is calling on Canadian investors to take part in a massive privatization of state assets organized by Kiev as a way of weakening the power of wealthy oligarchs blamed for spreading corruption in his country.

Arseniy Yatsenyuk cited, for instance, Ukrainian businessmen who have been "sitting like vampires" on the country's publicly owned energy sector.

Mr. Yatsenyuk spoke to The Globe and Mail Tuesday after he joined Prime Minister Stephen Harper in Chelsea, Que., to announce that Ukraine and Canada had struck a free-trade deal.

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Ukraine is preparing to spin off billions of dollars of government enterprises – including power generation and distribution assets and chemical plants – and the government wants Western investors to bring more orderly business methods to the Eastern European country.

"I don't want Ukrainian tycoons to buy these state-owned enterprises," Mr. Yatsenyuk said. "We would be happy to see Canadian folks buying Ukrainian assets and bringing into Ukraine good corporate governance, new investment and new jobs.

"That is what I asked the Canadian Prime Minister: 'Please tell your investors and your businesses to jump into Ukraine.'"

Mr. Yatsenyuk said Ukraine's leadership feels privatization and deregulation are the answers to the corruption that has plagued the country for decades.

"Big government always leads to big bribes and big corruption, so the less regulations you have the less authority the government has and the less chances to take bribes," Mr. Yatsenyuk said.

The trade deal with Canada represents more of a gesture of solidarity than a commercial breakthrough, as beleaguered Kiev struggles with pro-Russian rebels, crippling government debt and an economy expected to shrink by as much as 9 per cent this year.

Under the deal, Canada will drop almost all tariffs on Ukrainian imports while Kiev will remove duties on 86 per cent of Canadian imports, including those on industrial goods, forestry and wood products, fish and seafood and most farm goods. Canadian pork producers will gain some duty-free access, while other sectors, including beef, grains, canola, processed foods and animal feed, will get unhindered access to Ukrainian consumers.

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Mr. Yatsenyuk is under pressure from the West to demonstrate he's fighting corruption, which is endemic in Ukraine, and making the political and economic reforms that international lenders made a condition of their bailout of his country. Transparency International describes Ukraine as one of the most corrupt countries in the world, ranking it 142nd out of 174 on its 2014 Corruption Perceptions Index.

Ukrainian bureaucrats, politicians and judges have been fired, suspended or placed under investigation – with 3,000 charged in the past year – since Kiev's leadership remade itself after the ouster of pro-Russian president Viktor Yanukovych. The government has also revamped energy sales to cut out the middlemen who siphoned off fortunes in the past.

Mr. Yatsenyuk named Ukraine's customs bureaucracy and its tax collection apparatus as two areas where corruption is still rampant.

There's a bigger problem, he said: Ukraine needs to pay its public servants more so they aren't seduced by bribes. "Wages in the public sector are so low, and without fixing this problem we can't really tackle corruption," the Prime Minister said.

Kiev also needs money to buy weapons to fight Russia because Ukraine's NATO allies are still balking at the request and none of its international financial aid, including $400-million in recent loans from Canada, can be used on the military.

"To stop Russian aggression, to overcome all these challenges, it's not enough to have a very strong Ukrainian army. We need to have a very strong economy. That's why we signed a free-trade deal with Canada. That's the reason we had an investment conference in the United States."

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Canada has now lent Ukraine a total of about $650-million, supplied Kiev with a wealth of non-lethal military equipment and is soon sending about 200 soldiers to train Ukrainians to fight the Russian-backed rebels who still threaten eastern Ukraine.

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