Total “synergy”

Ukrainian and Russian leaders welcome various forms of joint business ventures which create synergy effects, and promise to promote them, assured Ukrainian President Viktor Yanukovych at a joint press conference with the RF president Dmitry Medvedev in Kyiv on Monday.

Yanukovych also informed that, on Monday, the intergovernmental commission headed by the two presidents, charged the governments of both countries with bolstering development in a set of mutually beneficial areas of cooperation. “These are shipbuilding, aircraft engineering, space engineering, and a number of energy projects. These are important areas for economic growth, and, most importantly, obtaining financial results,” explained the president of Ukraine.

Specific suggestions were voiced by business representatives from both countries on Tuesday at a joint business forum in Kyiv. In particular, German Gref, president and chairman of the Board of Directors, the Savings Bank (Sberbank) of the Russian Federation, shared the plans to implement a Social Card project in Ukraine, together with the Ukrainian Post.

Gref emphasized that the Savings Bank views recent developments in Ukraine as positive. “As we can see today, the government of Ukraine is quite favorable towards international investors,” he added.

Among the Savings Bank’s current projects in Ukraine Gref mentioned the joint Sberbank-Rosatom participation in the completion of several power units at the Khmelnytsky Nuclear Power Plant. Also, according to him, the Savings Bank is finishing the purchase of a big object in the Crimea. However, he would not disclose its name.

But it was machine construction that was in the limelight at the forum. Thus, Aleksei Fedorov, chairman of United Aircraft Corporation, announced the creation of a joint venture with Ukraine’s Antonov. “We have agreed with our colleagues to create a joint venture for the purchase of materials and parts, sales, and post-sale services for Antonov aircraft,” Fedorov said. He expressed a hope that in the nearest future the participants of the project would be able to report to their respective governments.

“Our ambition for the nearest future is to renew the production of the unique aircraft An-124 Ruslan (Condor), and put it on the market. Also, we are planning to saturate the Russian market with the regional aircraft An-140,” remarked Fedorov. He added that soon a string of joint Ukraine-Russia projects might be published.

Shipbuilders are trying to keep abreast with the aircraft engineers, and to be as good at “synergy.” The United Shipbuilding Corporation (USC) is planning to found a united Ukraine-Russia shipbuilding cluster, said USC president Roman

Trotsenko. “In the framework of our company we buy 200 million US dollars worth of parts and materials for shipbuilding from Ukraine annually. We think this sum can go further up, and so we aim at founding a united Ukraine-Russia cluster for manufacturing parts and materials for shipbuilding,” he remarked.

The Ukrainian party, represented by Yanukovych, declared that it relies on the Russian Federation’s good faith in what concerns Ukraine’s return to the Central Asian oil and gas market. Addressing Medvedev at the forum, he noted: “I would ask you, Mr. Medvedev, to take into account the fact that over the past five years Ukraine has left the markets of Central Asia not of its own accord. Ukraine was pushed out.”

The president of Ukraine also remarked that the country did not, and would not put forward any further claims in this respect. “However, we would like to come back to this question and discuss it thoroughly, both oil and gas matters,” said he.

We would like to remind that synergy (from Gr. synergys working together) means increased effectiveness as the result of integration and merging of separate entities into a whole. What results of such “merging into a whole” should the Ukrai-nian economy expect, and how soon? This is what The Day asked our experts, the participants of the business forum.

COMMENTARIES

Viacheslav BOHUSLAIEV, president, board of directors, Motor Sich JSC, MP:

“Within the framework of this cooperation, a joint Ukraine-Russia company for the managing of Antonov programs will be created. However, now we are discussing the creation of a working group of scholars, including those from the Ukrainian National Academy of Sciences, which will help avert any possible problems.

“At present, we do not raise the question of shares in such a company for Russia and Ukraine respectively, because the Ukrainian and Russian aircraft engineering industries differ considerably. For one, in Russia these enterprises are joint stock companies, while in this country they are owned by state. There also are issues in the spheres of customs clearance and taxation. This complex of questions has to be solved on a day-to-day basis. I think we will be able to do it in 2010.”

Rinat AKHMETOV, owner, SCM, MP:

“As a result of Ukraine-Russia agreements, the metal industry enterprises may emerge stronger and bigger. Business does not need any preferential treatment. Ukraine must be open for all, Russian business included. It will only benefit from it.

“Over the past five years, we have not seen anything good, only conflict. Conflict does not pay for business, nor does it bring the improvement of living standards to Ukrainian citizens. On Monday, we saw a cordial meeting of the two presidents. This is exactly what our relations should be like.

“The new Ukraine-Russia friendship means that it is necessary to get rid of the additional obstacles for Ukrainian and Russian businesses, as well as other investors. This is what we should aspire to. When you have ambitious goals, you have to look for means to attain them. Then they become quite feasible, I think.”

Hanna HERMAN, deputy head of Presidential Administration:

“I think business elites ought to know they are protected by the law in both countries, so they need not worry about their investments, and may bring in capital: there aren’t going to be any shady deals or revolutions. Money loves quiet, peace, and order, and business owners should feel that this is what awaits them, and they can invest safely.”

Volodymyr LANOVY, president, Market Reforms Center:

“These accords vary in terms of their importance for the Ukrainian economy. Lower gas prices, for example, are doubtlessly a positive factor for most Ukrainian industries, considering that many of them, like the chemical and steel industries, haven’t received any revenues over the past year. On the other hand, plans for combining certain Ukrainian and Russian government managerial systems appear quite controversial; they are economically ungrounded. Such joint managerial systems will only increase the bureaucratic apparatus without providing new production capacities, so these systems aren’t expedient. Another argument against such joint systems is their being absolutely at variance with the market development of this country. After such mergers separate enterprises will be unable to compete on an individual basis on the world or European market; they will have to bear in mind their partners’ performance, and this doesn’t always serve the national interest. After all, no one has canceled the geopolitical factors.”