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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

Demand for an anti-oligarch president

Oleksandr PASKHAVER: “To keep the credit of people, Poroshenko must fight the old system – his comrade-in-arms”
29 May, 2014 - 11:22

Since Sunday Petro Poroshenko has been receiving greetings on his victory. The Day has found out what steps business expects from the new guarantor of the Constitution. And real principle question remains a key one: will Poroshenko as an oligarch (or to be more correct after the promise “to sell business” to say an ex-oligarch) reform the oligarchic system of economy?

Allies is what Poroshenko badly needs to fulfill his promises. For after the return of the Constitution of 2004, the future president does not have levers to directly influence the economy of the country. “The executive power is in the hands of the government, which, in its turn, is formed by the parliamentary majority. The president can influence this process only as a politician. The only thing Poroshenko can influence personally is appointment the minister of defense and minister of foreign affairs,” expert with the Institute of Political Education Oleksandr SOLONTAI notes in a commentary to The Day. But, apparently, this is too little. But even with such a small arsenal of influence Poroshenko must make resolute changes in the country’s economy, in particular. For Ukrainian electorate, which is for the most part not very well aware of the difficulties of the bureaucratic machine, will expect from Poroshenko the promised “new life.” And the first task the new president is facing is overcoming corruption, president of the Center of Economic Reforms Oleksandr PASKHAVER noted in a commentary to The Day. The president of the Center of Economic Reforms thinks that at first the reasons of failures and their consequences should be separated. “I think we won’t be able to lower corruption to zero level, but it is possible to lower the upper border of the ‘corruption tax,’ the so-called ‘Yanukovych tax.’ In Kuchma time the bribes made 10-15 percent, Yushchenko’s time – 25-30, and in Yanukovych’s time – 50-60 percent. And this percentage was practically killing the economy. This is the reason why our economy has stopped to grow [that is why the Maidan broke out. – The Day],” he says.

“I would recommend the new president to revive the judiciary system by replacing the top officials, and inviting foreign judges who would spread honesty. Because within the system there have been practically no people left who will persistently fight for honesty and justice. We can draw an analogy with football here: when our referees proved to be unable to umpire a match, foreign referees were invited,” Paskhaver recommends.

“All developed countries by no exception have very rich people, whom we call oligarchs. But it does not create risks for them. Ukraine’s problem is not in having a considerable number of wealthy people, but the fact that they have become involved in resources. I.e., they are dealing with the lowest link in the chain of production of goods and services. Our oligarchs are draining the land of resources, hold primary, maximum secondary processing, and sell it abroad in such a condition. Therefore Poroshenko’s task is to involve them in higher production links, so that they produced ready goods, not were selling raw materials abroad. Then more jobs will appear, and the tax inpayments to budgets of all levels will grow,” the head of the Committee of Economists of Ukraine Andrii NOVAK adds “recommendations” in a commentary to The Day. Besides, the expert notes, whereas no obstacles should be created for big capital in business, it should not be let into policy. “This concrete connection, when the power is actually the biggest business should be maximally broken. This cannot be done at once, but we should start with something,” he explains. The best proof of this, according to the head of the Committee of Economists of Ukraine will become the selling of own business-actives by Poroshenko. “And then he will have to show strength of will and tame the appetites of our oligarchs – make them understand that we should build a system with the only rules of game. These rules include renewed tax, budgetary, tax, criminal, and other codes. Nobody should be given any preferences. It would be ideal to close the usage of offshore schemes, fictive reimbursement of VAT, on which tens of billions hryvnias were stolen every year,” the head of the Committee of Economists of Ukraine lists the main components of the maximum-task for Petro Poroshenko.

“Poroshenko must change the society, first and foremost, with his own behavior. The first thing the Singapore reformer-leader Lee Kuan Yew did was imprisoning his relatives who were robbing the country. And immediately the entire bureaucratic layer saw how serious it was. And our bureaucracy is very sensitive. It will understand immediately whether a person has serious intentions or not. Of course, there will be new secrets. But one thing is when corruption is done secretly, and another thing when it is open. The president must show that he won’t tolerate corruption. It is important for him to show this on the example of his close comrades-in-arms,” Paskhaver considers.


Ihor MITIUKOV, director of the Institute of Financial Policy, head of Ukrainian office of American Investment Bank “Morgan Stanley”:

“From Poroshenko’s presidency they expect real support of business in the country, equal relations between business and government, creation of equal conditions without any artificial preferences. This refers not only to economy – relations between business elites, but also the relations between law-enforcement bodies and business. The most important thing Poroshenko has is experience. Both, positive and negative. At some point of time law-enforcement bodies were exerting pressure on his business. Everyone knows this. And I think he, as a person who experienced this, will carry out a policy that will make force incidents impossible in the future. Everyone, both oligarchs and small companies need equal conditions today. And the new president understands this, so he will use his right of legislative initiative to solve this. From the economic point of view the main tasks for the president are increasing of the country’s GDP and life standards. And this can be made by helping a Ukrainian to work better, so that the feedback from his work was much greater.

“The greatest test for the president will be the negotiations with Russia on renewing the economic ties and projects that are meaningful and can be supported by both sides. Also helping the Ukrainian business which was oriented at the Russian market, either preserve our positions there, or find new markets. I think it will be better to reorient to new markets. This is hard. But no business should depend on such buyer.”

Aleks LISSITSA, head of association “Ukrainian Club of Agrarian Business”:

“First and foremost, the agrarian business is waiting for the president to put efforts together with the KMU and parliament to overcome corruption in the sector, which has not stopped after the Maidan, but, vice versa, started to mushroom. So, we hope that he will bring order to land relations, develop a clear strategy on taxation, develop a roadmap of drawing investments to agriculture and stabilize the course of hryvnia.

“Apparently, the minister of agrarian policy should be replaced. Ihor Shvaika does not fulfill his duties, he does not know the sector. We are waiting for a reform of the entire legislative and organization structure of our agrarian sector, i.e., the ministry, the Academy of Agrarian Sciences of Ukraine, branch education, etc. Therefore we need a person who could develop a new concept, unite all these institutes, develop and bring it to the president.

“And the time for land reform has come. But this should not be done hastily. We should start with the base of pilot projects and gradual implementation of the land market. If the legislative base is written out correctly, it will be able to launch the market of land in four years.”

By Natalia BILOUSOVA, Maria YUZYCH, The Day