Only steel and ore from Ukraine

On January 29 the Council of Entrepreneurs, affiliated with the Cabinet of Ministers of Ukraine, discussed the draft State Program of Economic Development in 2013-14. It will be recalled that, in the recent article “They Have a Dream” (The Day, January 29, 2013), we made a brief analysis of the main aspects of the government’s business plan to revitalize the economy, noting that the main “plus” of the document is an open and critical diagnosis of the current economic situation and the “minus” is an openly lobbyist treatment of the malady.

Yet we would like to note what we think an important point about political activity of the Ukrainian business milieu. It is not about protest actions or a “close” friendship with MPs and ministers but about readiness to enter debates on the strategic development of not only the national, but also the European and worldwide economy. Significant in this context is the recent international conference in Davos. Which Ukrainian businesspeople represented Ukraine? Those who went to Switzerland were representatives of non-governmental and business associations, such as Oksana Prodan (UDAR party MP and chief of Fortetsia, an association of small and medium entrepreneurs), a governmental delegation, the president, a political and oligarchic pool. A huge IT panel: a lot of innovational business representatives from India. And from Ukraine? Viktor Pinchuk? The point is not even in personalities but in the fact that Ukrainian progressive business is so weak that it cannot send its people to Davos. Does it lack money to pay for participation or is it just not invited to go there? As a result, Ukraine still remains “steel and ore…”

A Ukrainian participant in the 2011 business forum, who belongs to the progressive Ukrainian IT business, admits: “Ukraine’s image, particularly as far as the investment and business climate is concerned, is very negative today.” So, in his words, it is clear to an entrepreneur that, having paid a high Davos forum admission fee (thousands of dollars), he or she does not have an earthly chance of deriving some concrete commercial benefit. “And, frankly speaking, the Davos platform loses the heat of debate with every passing year,” our interlocutor notes. It is about the real matters that worry business today, including the mounting tax pressure (Den wrote in the article “Four Scenarios for Ukraine” that 4,500 French businesspeople promised to renounce their French citizenship if the government imposes a 75-percent income tax), he explains. “To attend the forum, one must have a concrete program of meetings and negotiations,” the interviewee concludes. Otherwise, a question arises: what’s the use of going there at all?

Oleh RYBACHUK: “Now let us get back to medium- and small-scale business. I have only one piece of advice to them: small and medium businesses should understand that if they unite with each other and with society, they will be able to influence the situation in this country. Any problem will be solved if you rally together over it. So far, the lack of new leaders somewhat restrains the government. Yet in any case the current system in not viable. So I am saying to business: you should understand that you are not biomass. It is now just the time to form and grow a different type of politicians. And it is important to be aware of what we are striving for.”

In the previous years, it was the European Business Association that prepared visits of the Ukrainian business pool to Davos. So The Day asked Anna Derevianko, the association’s executive director, why Ukrainian business, frankly speaking, ignored this year’s forum in Davos. She said it is not quite right to make such a conclusion, for “there were some delegated participants.” Bur Derevianko notes that representation of the interests of small and medium business is a different question. In her view, the organizers must ponder over this point. In other words, the “authors” of new economic trends must hear the voice of all businesspeople, not only big capitalists. Otherwise, another wave of the crisis will show how vulnerable the “giants” and those who rely on them are.

COMMENTARIES

Konstantin von EGGERT, World Map program host on the Dozhd TV channel; political commentator for Kommersant FM radio in Moscow; member, Royal Institute of International Relations:

“The Davos forum raised the problem of appropriate housing and employment for young people. But we now witness a situation that differs from the one that existed 30 years ago: if youth fall short of expectations in their own country, they no longer sit in a ‘trench’ (Kyiv, Moscow, or Minsk), waiting for a new president – 10 years later – to give them an opportunity to realize themselves. They just leave such an unpromising country. In this sense, globalization undoubtedly poses a threat to authoritarian regimes because this undermines the very possibility of an authoritarian modernization. For, after all, somebody must carry it out. So the post-Soviet-type poorly institutionalized societies are facing the acute problem of losing a real possibility for development and reaching the point of no return. Even if these young people come back in five years’ time, they will be unable to do anything. So the government should ponder on the possibilities of economic development in this and next years.

“There was a popular opinion in the Soviet Union for a long time, which various regimes took advantage of in different ways: all young people are pragmatics (in the sense that they are interested in money only). But, as the Russian experience of 2011 and 2012 shows, it is wrong to think so. Present-day young people tend to be worried by the problems that are not connected with profit-making but concern the development and condition of society. Society will only be able to tap this potential if political elites become aware that there is no other way than to build institutions based on moral values. This will lay the groundwork for the formation of new identities in post-communist countries.”

Milan VALASEK, chief, risk management department, Erste Bank Ukraine:

“Slovakia also used to be in the situation in which Ukraine is now. We were at the crossroads of reforms and could not decide where to go further. There was also a lot of populism before 1998. There were some kinds of totalitarian moments. But the collective public awareness had risen by 1998, and liberal parties won. This was followed by 8 years of difficult reforms. I mean that competitiveness is the only answer to everything being debated now. There is no doubt that Ukraine must raise its competitiveness. But there is no short way to this. Competitiveness means blood, sweat, and tears. Slovakia has gone through this, carrying out the reform of the financial, tax, and labor systems. This created favorable conditions for competition. In my view, Ukraine is at a crossroads which leads to a more active competitive environment. I am very optimistic about Ukraine’s future. But I wonder when large industrial conglomerates will begin to invest in the modernization of steelmaking. For 30 percent of steel is still produced in open hearth furnaces.”

Oleh RYBACHUK, leader of the Honestly movement, ex-vice-prime minister of Ukraine for European integration:

“The current model [of economic management] does not inspire much optimism, for it is uncompetitive and will hardly live a long life. I have some experience of mingling with those who are called oligarchs. It has always surprised me why they do not really support democratic standards in Ukraine. Instead of going to Stockholm, they would better make sure that our Pechersky Court does not differ much from the Stockholm court. But when inquired about the profits our pragmatic businesses reaped last year, I saw that, in spite of all the crises, the average growth was three and in some cases even five times. It would be a good idea to recall Karl Marx say: if big business sees a prospect of 300-percent enrichment, it is losing common sense. But in this particular case, it is positive in a way. We have already spoken about our president’s talented children. One of them in fact poses a threat to this system of big business, for redistribution is already underway in it. No oligarchic group wields as great deal of clout as he does, as far as personnel, resources, courts, and law-enforcement bodies are concerned. Big business does not have all this. And this scares big business.

“Now let us get back to medium- and small-scale business. I have only one piece of advice to them: small and medium businesses should understand that if they unite with each other and with society, they will be able to influence the situation in this country. Any problem will be solved if you rally together over it. So far, the lack of new leaders somewhat restrains the government. Yet in any case the current system in not viable. So I am saying to business: you should understand that you are not biomass. It is now just the time to form and grow a different type of politicians. And it is important to be aware of what we are striving for.”