A Post-Revolutionary Business Plan

“Bravo, Medium Business!” This was the cheerful slogan painted on an orange-colored banner in the assembly hall hosting a conference of the nationwide business association Nova Formatsiya [New Formation] entitled “Elections 2004: A New Format for Politics and Business.” In making such an assessment of their role in recent events, owners of medium-sized enterprises were obviously not stretching the truth.

A VICTOR’S IMAGE

One of the heads of Nova Formatsiya, the president of S.V.S. Corporation, Volodymyr Spivakovsky, believes that the elections have transformed the domestic business environment. “Big business is not sticking out its chest today, preferring to survive, while small business is not strong enough, and is looking on. But most probably it supports future changes. Meanwhile, medium-sized business hasn’t been a bystander. It assisted the orange revolution with its energy, finances, and moral support,” Spivakovsky said. Therefore, the victory scored by medium business appears to be quite a natural phenomenon.

Spivakovsky believes, however, that medium business is wrong not to publicly announce this victory. It will probably have no other opportunity to build a positive image for itself. “A dubious attitude toward business has existed at all times in our country, but this is changing now, and it would be good to consolidate this victory today,” he said. Spivakovsky thinks that Ukraine’s medium-sized businesses, which have come to be identified with the middle class, could rank on a par with such Ukrainian calling cards as Ruslana, the Klychko brothers, and Andriy Shevchenko: “If the middle class can become a leading force, if only for a certain period of time, it should be promoted as a national brand.”

Perhaps it is the fate of Ukrainian business to seek international recognition through politics instead of the economy, says Sakura Concern president Oleksandr Dichek. As he put it, “It’s rather difficult to remain outside of politics in our country. Business people tend to be apolitical in the West, because they feel free. The situation in Ukraine is different, and it’s not enough for people to be engaged only in business.”

Recalling the days of the orange revolution, general director of Ecotekhnika Serhiy Proskura pointed out the rare unanimity with which his employees flocked to Independence Square. He was equally surprised by their labor productivity in those days, which was higher than normal, fueled by the elation and enthusiasm that set the pattern for their workdays.

WHAT WILL TOMORROW BRING?

No matter how great the euphoria from the victory, sooner or later it will dissipate. And that’s when the question arises: What next? In the case of entrepreneurship, the answer is that we need a government that would be loyal to business. Unfortunately, neither of the presidential frontrunners was able or wished to send a clear message to his constituents about what kind of political and economic system Ukraine will have after the elections. This uncertainty about what the future holds has the nation’s business people feeling uneasy.

It’s time we left the events of the seventeen days that shook Ukraine for the historians, says Vadym Hurzhos, former chairman of the Council of Entrepreneurs at the Cabinet of Ministers. In his view, today we should be thinking not of what we will be doing tomorrow, but what the country should be like in the next ten to fifteen years. Hurzhos is concerned about the vague model for the country’s development: “We don’t know what either of the candidates is bringing to the table. Personally, I don’t understand what we are going to have tomorrow, and this is my major concern.”

The speakers dispensed advice to the future head of state. In a nutshell, he will not have to do anything supernatural. According to DUAC president Viktor Chernylevsky, the algorithm for successful business is simple: a government that enjoys popular support must come to power and select the best possible model for the country’s development. Then one day we will wake up to “an effective legal system of the EU, which will open the way to capital flows.” Chernylevsky believes that today’s businesses cannot function properly because of the shortage of money. “Our money supply is strictly limited. In our country of 48 million, there should be one trillion dollars in circulation. As soon as there’s a lot of money in Ukraine, great opportunities will open up for business.”

Office Solutions general director Oleh Derevyanko believes that the problems faced by medium business are due to an unfavorable legal climate and a taxation policy that is clearly biased in favor of natural monopolies and big businesses. The government is offsetting the resulting imbalance by applying significant pressure to medium and small businesses. “If the accents shift toward the latter, with big businesses shouldering the bulk of the tax burden, medium businesses will develop much quicker,” Derevyanko is certain.

“It is essential for the new government not to pursue the current policy of privileges,” says Carmen president Oleksandr Bondar. “We need a clean sweep of all privileges to provide a level playing field for all businessmen. Second, the taxation system must be changed in such a way as to make doing business in the open more worthwhile than working under the table.” As he put it, today not a single company is doing business fairly from the legal standpoint. This doesn’t mean that everybody enjoys living under the Damoclean sword of justice. It’s just that the rules of the game are like that today. At the same time, Bondar believes that the new president’s team should in no way sink as low as to punish those who are not working exactly as the law requires. First, they must think of a way to bring the bulk of the economy out of the shadows.

However, the orange revolution has not filled all businessmen with optimism: “I have no illusions that in the nearest future the economic situation will improve. Today we are waking up to a country of total corruption. What can the new government do? How can it force the traffic policeman or customs officer not to take bribes? After all, you can’t fire everybody.”

AN OUTSIDER’S VIEW

Answers to some of these questions were given by Maciej Bossowski, vice-president of the International Union of Polish Entrepreneurs in Ukraine. Poland has two interesting laws. The first deals with the civil liability of public officials: citizens can file lawsuits against them if they have violated the law. Meanwhile, if the law is ambiguous in disputes between the state and an individual entrepreneur, it is always interpreted in favor of the latter. Wouldn’t that be a nice bill to lobby for in parliament?