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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

Domingo Carvallo: “Ukraine can avoid repeating Russia’s mistakes”

13 November, 2012 - 00:00
Domingo Carvallo

Ukraine has begun talking about the need to adopt the Argentinean way of development. Meanwhile, its author, Domingo Carvallo (ex-Finance Minister, dismissed by President Carlos Menem in July 1996) was invited to Russia as a government consultant but had a bad press in Moscow. Among other things, his recipes were condemned as unsuitable for Russia — and for Ukraine, for that matter — since they were rooted in altogether different realities.

Mr. Carvallo, however, seemed not dismayed. In fact, he visited Kyiv, met with Ukraine’s leadership, and agreed to an exclusive interview with The Day.

“In my opinion,” says Mr. Carvallo, “the Ukrainian situation has a lot in common with that in the Russian Federation. This is precisely why Ukraine can avoid repeating Russia’s mistakes or at least weaken their effect on Ukraine. Here is an example. A lot was privatized in Russia, but not in the best way. They decided to privatize a number of big monopolies, ignoring or overlooking the need to have competition among enterprises. I think that they should have adopted a clear-cut privatization program in accordance with transparent privatization laws. Rather than simply denationalize large monopolies, they should have set up small enterprises in advance which would then be able to compete among themselves within a given sector.

Likewise, Ukraine could have avoided this Russian mistake and prevented the decline in popular and investors’ confidence in banks accumulating their deposits and investments. When account-holders lose both their interest and deposit, when investors cannot take away their assets, their trust in government institutions is reduced to a minimum. There is an avalanche of bank customers closing accounts, prompting the government to start up the money-printing machines.

“This is called emission and it can cause another jump in prices, followed by inflation and hyperinflation.

“Argentina followed an intensive course toward stability and economic growth several years ago. I suggested a series of measures and an important role was played by the convertibility law when the peso-dollar exchange rate was rigidly fixed at 1:1.”

Q.: Yes, but then you were shown the door, weren’t you?

A.: I remained Finance Minister for seven years. Among the targets I set myself was a resolute struggle against corruption and criminal structures within the oversized, overregulated government machine... True, my opponents and enemies managed to obtain my resignation, but I consider myself victorious nevertheless. I left but my reform ideas remained and are still in effect. Somehow or other they proved necessary in other countries, as evidenced by my invitation to Russia, Ukraine, and several other countries and international organizations.

Q.: You are closely associated with the controversial Forbes Magazine. The title page of its September issue reads “Yeltsin’s Last Days.” Is the magazine preparing any special coverage on Ukraine, with maybe some articles written by you?

A.: The article you mentioned is not an editorial. It is signed and strictly speaking it reflects only the author’s view.

As for my articles, I write for the “Global Observer” column. I will perhaps write something about Ukraine. You are faced with very big hardships, but I think that you have two sectors of the economy — agriculture and energy — which could be developed quickly, provided, of course, private companies become prevalent there.

 

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