Davos experience

The World Economic Forum ended on Thursday in the famous Swiss resort of Davos. Key issues, such as prospects of economic development, strengthening stability and peace, and the situation in various hot spots are discussed in a formal atmosphere at this forum. This year Ukraine was represented by President Viktor Yushchenko. The EastOne Investment and Consulting Company and the Viktor Pinchuk Foundation conducted the fourth Ukrainian luncheon conference entitled “Ukraine: What’s Next?” The Viktor Pinchuk Foundation also held a roundtable on philanthropic issues.

The Russian delegation headed by First Deputy Prime Minister of Finance of the Russian Federation Aleksey Kudrin did not include Putin, Medvedev, or Zubkov.

How efficiently does Ukraine use the World Economic Forum to advance its interests? What is the difference between the World Economic Forum and the Rome Club or similar gatherings of political and political elites? What model of development should our state adopt and what impact can Russia have on the world order? These and other questions are raised in The Day’s exclusive interview with the founder and head of the International Management Institute, member of the Rome Club, the International Academy of Management, and the World Academy of Art, Dr. Bohdan HAWRYLYSHYN, who directly contributed to the founding of the World Economic Forum.

TAKING PART IN THE FORUM IS VERY USEFUL

Ukraine has been taking part in the World Economic Forum since 1992. How efficiently is this forum being used by our country to advance its interests or establish its position before the world community?

Of course, there is an opportunity to use the forum. Are we doing this effectively? No. The reason is that we are not accustomed to working in these kinds of conditions. You have to go there in advance in order to arrange good meetings or propose a good breakfast, lunch, or supper. You have to make certain who will be attending and even make direct contact with them. A great number of meetings and parallel sessions take place at this forum. Over 100 politicians, prime ministers, or head of states, and around 2,000 businessmen, representatives of non-governmental organizations and the press attend. Ukraine is gaining experience, although so far it is not doing this effectively. Our missions or embassies neither act on a very high level nor have good contacts. But taking part in the Davos forum is very useful because we can organize meetings with the president of the World Bank or the Director General of the International Monetary Fund.

MUCH DEPENDS ON THE COOPERATION BETWEEN THE PRESIDENT AND PRIME MINISTER

People in the West say that Ukraine has a lot of problems, particularly with the judiciary system and corruption.

Such problems do exist, and they are typical of a country at this stage of development. And we are not the only ones. At the same time, we are establishing an agency to fight corruption. But because we do not have a significant majority in the Verkhovna Rada, it is rather difficult to adopt all the laws quickly to reform the judiciary system. It is easier to do when there is a great majority in the Verkhovna Rada, a strong government, a strong president. Then this can be done. Unfortunately, we are not in this kind of situation, although the Ukrainian government has serious intentions.

Speaking about the economy, is the government capable of implementing reforms and attaining success?

I don’t know. Very much depends — and this troubles me a lot — on whether there will be cooperation between the president and the premier. We have a very positive experience of Viktor Yushchenko being the prime minister and Yulia Tymoshenko — the deputy prime minister. I was the president’s advisor at the time and I saw them meet and debate. At that time they both worked very well and they complemented each other. They are somewhat different by temperament and ideology. But that was a very good team. However, a conflict emerged between them, and Tymoshenko did not manage to retain her office. Now more depends on Yushchenko than on Tymoshenko, because once again people have started thinking about the presidential elections here. These are the main pieces on the chessboard: it is a pity that they are being manipulated. That’s why I have certain concerns about this. I am also concerned for another reason. I don’t think that the subject of NATO should be raised at the moment. Everything will turn into a political question again. Instead, it would be better to engage seriously in an information program for a few years. People from various milieus and different regions should be sent to NATO. Let them discuss it there.

Because of the problems with the former Yugoslavia and because of our people mainly listening to Russian reactions to these events, the majority of the population is against NATO. Why should it be pushed through? The result will be worse. People will become more opposed to NATO and this will weaken both Tymoshenko’s government and the Verkhovna Rada. This was not a very wise thing. Excuse me, perhaps someone may not like this, but I am saying what I think. I am personally in favor of Ukraine becoming a member of NATO. But this should be done only when the population is ready.

ON THE ACTION PLAN AND TELEVISION

But what is at issue here is only the Action Plan on NATO membership.

True, this is the Membership Action Plan. But it means that we are moving towards membership. I would like to draw attention to the fact that television is particularly harmful in Ukraine. It often turns out that debates on a conflictual question are taking place like in a circus. They act as intensifiers of misunderstandings or conflicts. The differences among the regions and the attitude to the Ukrainian or Russian language are important questions, but none of them are as dramatic as what we see on Ukrainian television. It turns such questions into a kind of circus because this probably attracts an audience. And this is very harmful.

Instead, we must hold informative debates on the NATO issue, jointly with NATO officials as well as officials from member countries, including Ukraine’s neighboring countries, to hear from them why NATO is so important to them.

THE WEST WILL ADOPT A POSITIVE ATTITUDE TO OUR APPLICATION

Dr. Hawrylyshyn, you know many representatives of the Western elites. How do you think the NATO countries will respond to Ukraine’s request for the Membership Action Plan?

The West will mostly favor our request, but at the same time they will be closely observing Ukraine’s steps after it submits this application. Generally speaking, the West wants Ukraine to become a member of NATO because this will help it get closer to the European Union. For me, this is one of the positive elements. On the other hand, once they see how negative the reaction may be, this will also worry them.

What course do you think the relations between Ukraine and Russia will take after Ukraine submits the MAP application?

Their relations will not become more favorable. What is Ukraine’s biggest problem? Energy. The other economic problems would be easier to fix if we solved the energy problem. We must cut back on our energy consumption, conserve our energy, and increase the output of domestic products. I have made some simple calculations. If we used our own knowledge, we would be able to export rather than import gas in a matter of years. Ukraine would then be in a totally different position in its dialog with Russia. One of the reasons preventing this is that the people who are carrying out these gas and oil import transactions are making big money. Also, these people hold important posts in the higher echelons of power. Therefore, we lack a strong will among high-ranking government officials and business people to put an end to such practices. Ukraine has been attracting a great deal of foreign investment. In 1994 British Petroleum wanted to launch a gas-extracting project in Ukraine, promising to increase output by 20 billion m?. Unfortunately, there was no legislation on the division of production at the time. Shell was also interested in gas extraction. But once their people started coming here, they encountered numerous bureaucratic hurdles: here you have to wait; there you have to pay someone off. At that time it was difficult to carry out an effective project in this country.

ABOUT “DARWINIAN” CAPITALISM

Getting back to the World Economic Forum in Davos: what is its role compared to the Rome Club or the Rotary Club?

Those forums are totally different. They are mostly business clubs that gather people who want to do something good for society. They have nothing to do with politics. The Club of Rome has 100 members, who are seriously concerned about the fate of mankind, even more so than in 1972, when its first report The Limits to Growth was written. Now it is possible to state that, compared to its assumptions at that time, the situation now is much worse from the economic and genetic standpoints. Social, political, and economic phenomena are not developing proportionately or in arithmetic progression. The Club of Rome deals with all this. Personally, I have long been troubled the fact there is only one economic, military, and political superpower that naively believes that it has the best political, economic, and social system, even though there are 48 million impoverished Americans. All this gave the United States not only the right of force but the moral right to tell the rest of the world what to do. In addition, from the economic standpoint, we have found ourselves in a phase of Darwinian capitalism. How can our large businesses continue to operate, knowing that their end goal and performance criteria lie in increasing the value of stockholders’ shares? Very often chief executives who are dismissed are also given the so-called golden handshake, worth millions of dollars. But how are ordinary employees, now called human resources, dealt with? People are not a resource but an objective. Meanwhile, our businesses are concerned about their stockholders, customers, and equipment. On the other hand, depending on the conjuncture, they lay people off or, in other words, throwing tens of thousands of people on the public garbage dump in order to save money. This is horrible.

We must do more than switch to a multipolar world. I predicted that the US would lose its superpower status back in 1980, in my Dorohovkazy maibutnioho. Now we have the European Union, which is inwardly more peaceful and diversified, among whose members are countries that can serve as examples to be emulated by others. The EU does not threaten or punish. This is a considerably better option. There is also the Confucian world.

A POISONOUS GIFT AND THE SCANDIVANIAN MODEL

How do you see Russia’s role, which is gaining strength? How can it influence the world order?

Unfortunately, I see it as a negative one — and I am emphasizing the word “unfortunately.” Russia has intellectual potential and a wealth of natural resources. I don’t know why Providence has conferred this on it. This can be a poisonous gift. Oil can be poison for certain countries because this country does not want to become a modern free country and forget about its former imperialistic legacy. Instead, Russia wants to become a factor to be reckoned with and feared by others. It is too bad that this process is underway.

I think that China can play a positive role. Confucian philosophy is not bad as a social base. It has preserved China as a whole country, because it could have fallen apart. It was preserved not so much by Marxist ideology as by its Confucian heritage.

Unfortunately, Russia is not choosing a path like those embarked on by China, Japan, or India. Russia’s population wanted order and a strong leader. This is their tradition; these people are used to the idea that God vests power in the tsar or some chief commissar — or president, as is the case now. The Russians are really proud that Russia is a major player on the world chessboard, although not quite an example of social progress. I often refer to the Scandinavian countries as an example to be emulated because we have used the United States as an example too much. But the Scandinavian countries are where you find true political freedom, economically effective societies, and social justice. There are very rich people but no poor people. There is access to education and health care. They have also realized that you have to co- exist with nature, not just exploit.

So are we to understand that Ukraine should emulate the Scandinavian example?

Absolutely. Thousands of people know about America, but very few know about the Scandinavian countries. Our people can learn a lot of things there and make good use of this knowledge in Ukraine. Our people still hope that social justice will be restored. Our pensioners were well provided for in the last 20 years of the Soviet Union; the health care system was more or less adequate; the system of education was in excellent shape, barring the distorted humanities and social sciences — precisely the way the situation is in the Scandinavian countries.

DAVOS IS ADAPTING

You were one of the organizers of the Davos forum. How did you conceive the idea and how do you see its prospects?

In 1969 I received a letter from Klaus Schwab, the current president of the World Economic Forum. He asked for a job with the International Management Institute and said he wanted to write a book. I gave him a job after two of my colleagues listened to his 20-minute lecture. The institute’s 25th anniversary was to be marked in 1971. Schwab suggested a large-scale conference in lieu of a big party in Davos. He also asked me to give him full organizing authority for the festivities on the institute’s behalf. I signed the letter and I presided over the first Davos conference in Jan. 1971, which was attended by 500 people. Schwab did a good job of organizing the event. This man can do everything, from concept to planning to realization. Encouraged by this successful beginning, we decided to continue the project. Originally it was known as the European Management Forum and it lasted 11 days. We had to start working early in the morning. At 4:00 p.m. the businessmen would start skiing. Some journalists were critical, saying that the forum was an excuse for businessmen to have a winter holiday. Schwab saw the forum’s big potential. Without telling me, he set up a separate foundation and told me about it during the first Davos meeting.

I must say that the Davos project showed a great deal of progress. The whole idea turned out to be brilliant. Schwab is very pragmatic and he chose the right themes. Davos is now adapting, but I don’t know if this forum can be made more topical or more important. I also fear that Schwab can be too pragmatic. He is not an idealist; he is a brilliant organizer.