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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

Goodbye to Investors

29 May, 1999 - 00:00

By Oleksiy PLOTNYKOV, Ph.D. (Economics)
The President's Foreign Investment Consultative Council met for the third
session on May 21. Ukraine's further worsening socioeconomic situation
did not allow them to make another big official thing of it this time.

Foreign investment as an indicator of Ukraine's integration into the
world economic community is in glaring contrast with the official propaganda.
Statistics present a lamentable picture, so much so that they are seldom
mentioned officially, let alone compared with those of other Central and
East European states. As of April 1, 1999, Ukraine had a mere $2.815 billion
worth of such investment received during the years of independence. In
terms of direct foreign investment per capita, a comparative analysis against
last year's indices testifies that Ukraine's foreign direct investment
is 42 times less than in Hungary, 27 times less than in Slovenia, and 19
times less than in Estonia. And not because the Ukrainian population is
larger, not at all.

It is interesting to note the statements made by various high ranking
bureaucrats prior to the committee meeting. Most were low-key. At best,
they spoke of mind-boggling plans to reach $3.5 billion by the end of the
year. At worst (as in the case of a Presidential Administration official),
they attacked The Financial Times with its feature about the possibility
of Ukrainian default. In addition, the theory of domestic demagoguery was
enriched by a suggestion that the absence of foreign investment has a "seasonal
character" (sic).

And the session was purely a matter of protocol. Apart from the President's
discovery of a "cardinal turnaround in the people's psychology" and further
declarations about "deepening market transformations," they mostly discussed
individual foreign companies remaining in Ukraine. The President once again
promised to issue edicts settling a number of problems encountered by foreign
investors. This is about all the gathering accomplished.

In addition to the shaky legal basis and regime's instability, Western
business circles are, of course, duly impressed by the scope of the presidential
campaign. Foreign experts attending the session tried to recommend the
President pay more attention to the economy. They even explained that this
would have a positive effect on his campaign. Moreover, the current regime
cannot even come close to meeting the criteria for holding elections of
the developed countries, and the point is not only the President's monopolization
of the media. Why do official information sources insist that he receive
support during dubious actions starting at midnight on official television?
How will this be regarded elsewhere? As a symbol of the chief executive's
lofty intentions or evidence of the country's present economic status?

The current situation was vividly demonstrated by the underwhelming
foreign attendance at the session. In fact, Western businesspeople attended
not so much for the questionable pleasure of communicating with the President
and Administration bureaucrats (considering that they will most likely
have to go soon) as to take a closer look at the domestic situation, see
who stands a real chance of winning, and their vision of Ukraine's prospects.

The council meeting, judging by the socioeconomic conditions, is sure
to cause a definite reaction in the West. It could well be regarded as
a goodbye party for the remaining investors (they say that during the banquet
the President's promise to meet investors again in 2000 was not received
warmly - Ed.). Or as bidding farewell to the President summing up
his ill-famed course of "radical market reforms," which turned out not
only devoid of any reform but served to frighten foreign investors away.
Western business circles are fully aware that another term in office by
the current President would mean a farewell party for the Ukrainian state.

 

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