The annual meeting of the European Bank for Reconstruction and Development showed us two contradictory things, Ukraine’s objective socioeconomic reality and the illusions of its top officials supported by the official mass media.
No other event in independent Ukraine’s existence has been accompanied by so much kowtowing to guests. Think of President Kuchma’s May 11 speech before to the board of directors in the Ukraine Palace May 11. He called the decision to hold the meeting in Ukraine “a sign of trust,” of “Ukraine’s belonging to the civilized world,” and so on. Along with propaganda about Ukraine’s prosperity, the EBRD got open advice, almost orders, about what to do in Ukraine. This was addressed to a major financial organization by a country, which is constantly begging for money.
Western Europe has already formed its opinion about Ukraine, which can hardly be changed by holding the Eurobank annual meeting here. Above all, this is a country, albeit located territorially in Europe remains on its fringes in terms of reform in the economic sphere, as the negative indicators compiled by the most varied international organizations are logical confirmation.
The miserable level of foreign investment, which testified to the state’s unattractiveness, also has external attributes. Recall that our foreign bonds are placed the highest interest rate (even for a transition economy state), the number of tax evaders is high, and there is no effective mechanism for paying wages, salaries, and other social payments. Ukraine tops the list of countries where political and economic risks are high, which does not augment it its attraction.
Repeated articles in the Western press on corruption and crime in Ukraine also do not serve to improve the attitude of international financial organizations and private investors. Unfortunately, Ukraine can now expect investment only from thrill-seekers or structures which fail to satisfy the strict control demands of Western countries.
The elimination of all restriction in order to attract foreign investment leads to hurting domestic manufacturers’ interests instead of attracting money. Think of the elimination of all restrictions on banks with 100% foreign capital.
Western businessmen remember the shadow economy and Ukrainian capital flight abroad. Anonymous bank accounts failed to legalize the shadow economy and turned out to assist its development. They also remember another two things: the privileges granted South Korea’s Daewoo, which called forth a negative reaction in the West, and the great love of Russian capital, which began to blossom after Kuchma’s latest visit to Russia.
The country, the “multi-vector orientation” of which hides constant changes of orientation, is unstable and thus cannot attract much foreign capital. Moreover, we can also assume that had Russian, Albanian, and Mongolian bankers held their meeting in Kyiv, Ukrainian officials would have talked about priorities of economic cooperation with these countries. A country in constant search of a new partner cannot possible call forth great enthusiasm from conservative Western businessmen.
As for the positive results of the meeting, Ukraine received two loans for the Chornobyl containment vessel totaling over $100 million. In addition, EBRD will grant other credit lines for small and medium business (the second totals $120 million). Such companies as Obolon, Ukrrichflot (Ukrainian River Fleet), and Svitoch have real chances for financial aid from the EBRD. The Eurobank is also interested in investing in infrastructure - energy, telecommunications, and urban projects. Personal contact with Western businessmen was also very helpful for Ukrainian entrepreneurs. And finally, Kyiv natives are very thankful to the EBRD meeting for how the city was cleaned up and repaired for it. For all the inadequacy of the propaganda and other efforts in terms of results, it could have been worse: there could have been no results whatever.
Everything that accompanied the EBRD annual meeting enabled the bank’s management and private businessmen to understand the difference between official political and economic well-being and reality. And the more state officials including President Kuchma tried to assure them that everything was fine in Ukraine, the less they believed it.
However, Ukraine really is a promising market for foreign capital and no one doubts it. Thinking ahead, meeting participants paid attention to Ukraine and a certain point of view regarding it. They also have many questions, which can be answered only after presidential elections in 1999. Most participants of EBRD annual meeting consider Ukraine a promising market but only after the coming elections.






