Will there be applause after the reforms?
On September 27, while the President of Ukraine Viktor Yanukovych was summarizing the first conclusions of the activity of the committee on economic reforms at its enlarged meeting, experts once again asked the question: “Are we reforming in the right direction?”
Experts, domestic and foreign business, opposition politicians and officials of the highest echelon evaluated the efficiency and the main direction of the current initiatives of the government at the conference “Ukraine: Reforms, Competitiveness, Investments” organized by the Foundation for Effective Governance and the Financial Times.
“We invited businessmen and investors from all over the world to the conference to let them know that Ukraine is on the road of reform, and soon conditions for conducting business will improve.”
“According to the program of reforms presented by president, such important transformations as the tax and budget reforms, restructuring natural monopolies and finishing the process of privatization, land reform etc. will be conducted,” stressed Natalia Izosimova, director of the Foundation. “This is a real opportunity to ensure economic growth, and we will try to take advantage of it.”
Fortunately, even representatives of the opposition don’t doubt the fact that Ukraine is moving in the direction of reform. For example, Natalia Korolevska, the head of the parliamentary committee for industrial and regulation policy and entrepreneurship, pointed out in her speech at the conference that Ukraine is moving. However, the deputy added, it is still not clear in what direction and at whose expense. “Though I want to believe that the country entered upon the path of reforms,” Korolevska said. “We should avoid the situation when the word ‘reform’ becomes an obscenity, as the word ‘privatization’ once became.”
Even the government recognizes some uncertainty in the chosen path in society as a whole. “Regarding the reforms Ukraine started carrying out, society assessed them ambiguously,” Prime Minister of Ukraine Mykola Azarov stated at a press conference. “Some say that long expected reforms started, others are scared by them.”
The tax reform constitutes the lion’s share of today’s reforms. Experts, in their turn, continue expressing concerns regarding many elements in the Tax Code. Particularly, in the opinion of Borys Krasniansky, the managing partner of the international consulting company PricewaterhouseCoopers in Ukraine, the Code is currently abundant in norms that after the adoption of the document can worsen the investment climate in our country, which absolutely contradicts the declared goal.
These examples demonstrate communication problems between governmental structures and society, believes Martin Riser, director of the World Bank in Ukraine, Belarus, and Moldova. “In order to carry out a reform, it is necessary to better explain to the population what kind of economic growth such measures will bring. It is also necessary to elaborate mechanisms to oppose bureaucracy, and convincing proofs that the rules will be mandatory for everyone, including members of the government and business elites. This is a challenge for political leaders, and if it is accepted, Ukraine will feel positive results,” singled out Martin Riser.
As Azarov assured in his speech, government officials are still ready for dialog with those unsatisfied, and they are open to criticism and suggestions. At the same time, he asked to remember that these were the first radical reforms for many years. So the government officials have the right to small mistakes. Azarov promised to gradually correct them by introducing amendments, particularly, to the Tax Code.
It is interesting whether the government of Azarov expects to hear applause for their reforms. As the Vice Prime Minister for Economy Serhii Tihipko said, applause for reforms would be possible only in five to eight years. “When you start reforms, you shouldn’t expect applause. Instead there’ll be severe criticism,” stated Tihipko.
