Setting a “different” example

The president’s son, who shunned publicity for a long time, has given his first ample interview. Like all the children of top politicians – presidents, premiers, and ministers – Oleksii Poroshenko is under close media scrutiny. While this usually concerns the high-society aspects of life, we met to find out his views and attitude to the key points of Ukrainian politics.

“GOVERNMENTAL AUTHORITY IS OF A MUCH HIGHER QUALITY THAN BEFORE”

We have put this question to many guests of Den, but it is interesting to hear the opinion of you as member of the parliamentary committee for taxation and customs. How can Ukraine, where an oligarchic system holds sway, be turned into a country of civilized business?

“Ukraine has changed very much in the past 18 months. Civil society has begun to control not only the leadership and governmental institutions, but also the oligarchs. Besides, the current Verkhovna Rada is qualitatively new in comparison with the previous one. In general, governmental authority is now of a much higher quality than before. I think it is a result of the Revolution of Dignity – people are now more exigent and capable of controlling. It is by encouraging active citizens to control the authorities that we will be tackling this problem and striking a balance between different strata of the population – between ‘servants of the people’ and the people themselves, between the well-to-do and the grassroots.”

Did you follow the conflict situation over Ukrtransnafta?

“I followed it through the media. In my opinion, some things are inadmissible.

“I can say certain steps should not have been taken. What happened to journalist Andrushko is hard to take in. A developed civil society must pressure and forbid statesmen and politicians to deal with journalists in the way it happened. For example, it is customary for US politicians to set an example for society of how to behave. But we saw a negative example near the Ukrtransnafta office. If we do not react to this kind of things, we will never achieve EU standards and the desired level of relationship between the authorities and society.

“We must admit that Kolomoisky has done a good job in his office, and Dnipropetrovsk oblast became a stronghold of Ukrainianness and Ukrainian statehood. But it is intolerable that unidentified armed people, who failed to explain what organization they belonged to, blocked the entrance to a state-run facility and beat up a member of parliament. When the country is in a state of war and there is an external front line, no additional factors of destabilization need to be created in the capital.”

But do you think the other side took a right step, when the Ukrtransnafta management was replaced under the cover of night by people from security guard companies? If it is a state, why does it resort to oligarchs’ methods?

“I don’t know all the details of this event, but I absolutely agree that good things must not be done by taking wrong steps. The state must always set an example.”

“THERE STILL IS TOO MUCH POPULISM IN PARLIAMENT”

You are a first-time member of parliament. What impressions did you gain from working at the Verkhovna Rada?

“Although I saw the previous Rada from TV screens and newspapers, it seems to me that the current convocation is qualitatively better. The key gain of the Revolution of Dignity is that we have a pro-European coalition of more than 300 MPs. Had we had something of the kind before, we could perhaps have avoided the death of Heavenly Hundred heroes and many misfortunes that befell us later.

“I will be perhaps wrong to say that all is OK in this parliament. In my view, there still is too much populism in this Rada. Sometimes the impression is that people in the coalition are not always aware of being responsible, together with other power-wielders, for the situation in the country. They do not always understand that being in government means a burden of responsibility rather than a way to obtain more power or resources. In a storm – war and economic crisis – it is important to keep our country’s boat from capsizing and sinking. Each faction, of the coalition as well as the opposition, should be aware of this. Therefore, instead of engaging in populism and playing down to voters, one must take a more responsible stand for the sake of indispensable reforms – you should come out to people and explain unpopular decisions to them.

“In general, there is so much talk about unpopular decisions, but when it comes to voting for a certain ‘unpopular’ bill, not all are capable of doing so. Here is a very telling example: when we were discussing the mortgage credit question, many MPs were saying they should help these people by finding money in some other place. Yes, but if we find the money in some other place, this will mean that we withdraw it from the economic revival sector – and we have a lot of other problems to tackle.

“In general, society can see that, as the war is going on and we are in an economic crisis, some objective factors are affecting the situation. They know that it will perhaps be bad for some time but will be better later. But if we miss this chance now and continue to be guided by populism, it will be difficult for us to explain later why it has not become better.”

You are a coalition member from the Petro Poroshenko Bloc (PPB) faction. Four MPs quit the PPB recently. What impact do you think this will have on its strength?

“In general, what really matters in the coalition is quality, not quantity. Our faction, which consists of about 150 deputies, is a powerful team, where everybody has their own opinion. We often have lively discussions at our meetings. But I don’t think the withdrawal of four deputies from the PPB poses any problem to the strength of the coalition or the faction. I don’t believe that this will change something essentially.”

Could you tell us about the PPB’s particularities of dealing with its young members? Does the faction heed you?

“It seems to me that young MPs took the most active stand at the very beginning. And it is very important that the faction combines enthusiasm and new vision with experience and professionalism. We have a lot of deputies who can give advice. We exchange views about what we should do to be closer to Europe. I think our faction is rather democratic – we hold regular meetings, where each of the deputies can express their views. There is no such thing is unanimous decision-making – some deputies can have their own vision of a problem. We reach a certain compromise and bring it to the session room.”

There are a lot of young people in this parliament, who were elected for the first time. Many of them have formed groups. You are admitted to this circle. How do you cooperate with them?

“Do you mean the group Euro-Optimists?”

This too.

“I mingle with many MPs – beginning with those who were elected together with me in Vinnytsia oblast’s neighboring constituencies and ending with really young deputies. In my opinion, we are all on good terms. We discuss all kinds of matters. My ‘neighbors’ in the session room are two Euro-Optimists members – Ivanna Klimpush-Tsyntsadze and Vladyslav Holub. We have rather lively discussions about many draft laws. I am also in touch with Oleksii Riabchyn from Fatherland and Natalia Katser-Buchkovska from the Popular Front.

“We cooperate in the framework of not only parliamentary groups, but also of the Professional Government program which incorporates graduates of many Western universities, who may become statesmen in the future.”

In the words of your father, President Petro Poroshenko, it was your personal decision to run for a parliamentary seat. Now you are an MP. Did you think of society’s reaction to this step, taking into account the negative example of Viktor Yanukovych Jr.?

“I regard being an MP as serving the state. I did not hide in an election list but went to a first-past-the-post constituency to win the people’s trust. Naturally, it would be unwise, to put it mildly, not to hesitate in this situation. One should always weigh all the pros and cons. As long as I can remember myself, I have always taken the following approach to things: if you think that something is right, do it. I have a Western education. I have the experience of working in Western companies. I hold an MBA degree. I have the experience of diplomatic service at a state-run institution – I worked at Ukraine’s Consulate General in Shanghai, China. I saw how effective a state can and must be – when you can come to a governmental institution, receive a service in 15 minutes, and the state does not look at you as an ‘overseer’ and does not intend to rip more ‘taxes’ off you. In a word, I think this combination of unique experience and the inside vision of how our state works, without the illusion of whether certain changes can be made difficultly or easily, should be put into practice. But if you have this in your brain and still do nothing, you are also irresponsible.

“Frankly speaking, I do not consider myself a politician. I had some experience of political activity in a regional council before I went to parliament, and I was disgusted with backstage talks and deals there. But I know that if parliament is not changed qualitatively, we will not bring about the desired transformations. Therefore, I consider working in parliament as a challenge of sorts: I must somewhat pay off my debt to the country in which I was born and which brought me up and provided me with adequate work and education. It is this attitude that made me take a very difficult decision to be a member of parliament. And it is disappointing for me when somebody considers this as lust for power or makes comparisons with the previous president and his family. I hope so much that when my parliamentary works comes to an end, this country will see an example that is opposite to the one we had. And, maybe, it will be easier for some of the children of the next presidents, who will have the strength, skills, and wish to work for the state, than it is for me.”

“WHAT WAS VOTED INTO LAW IN DECEMBER IS NOT A TAX REFORM”

Although you do not consider yourself a politician, you are already in politics. People usually go to parliament in order to address a certain problem. What concretely do you wish to achieve as a Verkhovna Rada member?

“I am an MP for the first time in my life, and my expectations always vary in spite of my experience. Particularly, this also applies to what can be achieved in real terms. Having an economic education and some experience of working in a corporation, I think economics and taxation is my field. This is why I work today at the parliamentary committee for tax and customs policies. I have already moved four tax-related bills. One of them has already been passed. I must emphasize that I am not striving to register as many draft laws as possible or to be an MP with the largest number of speeches or queries. What really matters to me is the qualitative, not quantitative, aspect of work. On the one hand, it is legislative work in the field of taxation – what attract me here is deregulation and entrepreneurship. On the other, I think that an MP, especially one from a first-past-the-post constituency, must above all be in touch with his voters. This makes it possible to help the nongovernmental sector. For example, I am currently working, in conjunction with public activists, on a project of a system that will allow entrepreneurship to develop on not only the legislative, but also the real level.”

You position yourself as an economist and a person interested in business. What do you think about the government’s policies? For example, speaking of the experience of tackling economic problems, such as the ones Ukraine is facing now, in Slovakia, Lithuania, and Georgia – Slovakia rode out the crisis by speedily preparing a comfortable ground for foreign investments, Lithuania by cutting public expenditures, and Georgia by suppressing corruption and legalizing capitals. But our Cabinet is “patching up budgetary holes” by means of money printing, borrowing, and taxing. To what extent is this right? Why did the government not make use of other mechanisms? And are MPs prepared to put up their proposals?

“Every country chooses its own path to reform. What is the particularity of the situation in Ukraine? The beginning of reforms coincided with the Kremlin’s aggression against Ukraine. I do not mean that only the war is to blame – reforms must be carried out. But here is a simple example: if the hryvnia considerably devalued in a normal situation, this would encourage export and foreign investments and, accordingly, stabilize the hard currency market and increase GDP. Japan, the EU, and the US used to devalue their national currency to revitalize the economy. In our situation, when we have an additional factor of war, a destabilized social sphere, and a very short period of planning, nobody wants to invest in the economy. This is why we see no increase in export or GDP. So, the government applies a classical method – tax hike – to receive additional hard-currency earnings and to protect the domestic market.

“As for fighting corruption, it is difficult to say why this has so far been done so slowly. But it is very good that the appointment of a new Prosecutor General has noticeably speeded up this process. In particular, first steps are being taken to bring judges and officials to justice.

“As far as I know, the government is heeding foreign experience. Slovakia’s former finance minister Ivan Miklos, the author of the reforms you mentioned, is an advisor to Ms. Jaresko and Mr. Abromavicius.

“I have read a lot about indignation at the government’s tax ‘reform’ and understand your question. But I personally believe that what was voted into law last December is not in fact a tax reform. Those were some isolated steps aimed at solving a specific problem – to fill the 2015 budget. And, in my view, it is too early now to draw conclusions from what was adopted at the time.

“We can see today a more integrated approach to the tax reform. This issue is now on the agenda of the president-controlled National Reform Council. For example, it is planned to hold a roundtable on this question on March 26 with participation of MPs and representatives of the public, the Cabinet, and the Presidential Administration.

“Taxes are a thing that concerns all strata of the population. The main purpose of a tax is to ensure that the state can effectively perform its functions by way of gaining revenues and equitably distributing them among all the strata. For this to be done, the population should be able to see that this distribution is fair.

“We can see now that the taxation sector must be decentralized, and local government bodies should be allowed to keep back more of the collected taxes and to decide how to utilize them to the maximum effect.

“There are some problems with the excise duties that were supposed to be left to local budgets. This mechanism is not working as effectively as we would like it to. So, it would perhaps be right to do as it is written in the coalition agreement: to determine what part of the individual income tax will be left in local budgets and work out a procedure of doing so.

“Changes have also been made with respect to the unified social tax (UST). We all remember only too well how this was going on. Many businesses are still in doubt about how to correctly implement what parliament has adopted and what will be the use of it in the future. Naturally, it is necessary to expound this matter more in detail and map out a UST reduction and wages legalization program for a longer period, not just for a year. This will allow business to leave the gray zone.

“Another important point, also mentioned in the coalition agreement, is VAT refund. This is directly linked with the problem of export stimulation. As before, many people do not regard export as a lucrative thing largely because VAT refund has posed quite a problem.”

When they were introducing the VAT in Europe, they meant to limit production in order to ward off overproduction. But we don’t have this problem. On the contrary, we need to encourage our producer, but the VAT is an obstacle, so he has to “throw in” floating assets. Are you going to propose that the VAT be rescinded? Or, maybe, you will offer the government other ways of filling the budget?

“These matters need an integrated approach. I do not think that revoking the VAT or replacing it with an income tax, as some suggest, is a good thing. It is important to be able to adequately administer the reforms we carry out. We have already done some work in administering the VAT. It would be unwise to stop halfway now and say: ‘That’s all. Let’s drop what we have done and turn around – we are revoking the taxes we levied until now and introducing new ones.’ It is very important not to destabilize the situation. Coming back to your question about my impressions of the atmosphere in parliament, I will say: sometimes the impression is that, in pursuit of draft laws (or because some pursue one idea and others another), we can lose some good achievements. In my view, it is important in the current situation to take a compromise- and consensus-based approach so that all the interested parties remain at last satisfied or at least accept the final version of the tax, customs or any other reform.”

“WE ALSO NEED TO LAY A TRANSPARENT GROUNDWORK FOR NEW PRIVATIZATION”

What do you think about privatizing the rest of state-run property? Both the government and the president are saying it is an irreversible and urgent step for the state. But expert opinions differ. As far as I know, the two largest groups of foreign advisors to the government are taking different attitudes. The Georgian group claims that it is necessary to sell everything and immediately, even for one hryvnia, for this will allow the state to get rid of the burden and the holes through which money is being pumped out. The Lithuanian group is saying, on the contrary, that it is unwise to sell – we should carry out a high-quality reform of state-run company management. Which of these attitudes do you prefer? If parliament puts to a vote a bill on privatizing one state-run enterprise or another in the near future, which of the buttons will you press – “for” or “against”?

“The problem of privatization needs a well-balanced approach. From the macroeconomic point of view, now it is not the best time for selling enterprises. On the other hand, staff replacements are not always prompt and successful in this country. And if we leave the loss-making businesses in state ownership, we will run the risk of aggravating the problem. For, by doing so, we will in fact put their reformation on hold and freeze their development. So, I understand those who are saying that it is perhaps better to sell an enterprise at a low price and, as a result, to have a guarantee that it will have effective management, begin to grow, create more jobs, and pay more taxes.

“Naturally, we must first lay a transparent groundwork for this privatization.

“I think most of the people in this country agree that state-run enterprises should be privatized after all. The only question is when and how. I share this viewpoint. And the sooner we are prepared for this step, the better. On the whole, I support privatization.”

Speaking of staff placements which you say are not always effective, what is your attitude to the dismissal of Ihor Bilous, chairman of the State Fiscal Service of Ukraine, and his two deputies? Do you think the government was right to do so?

“Unfortunately, many people make a lot of complaints about the performance of the Tax Inspection and the Customs Service. It is no secret. For example, it happened yesterday that humanitarian aid was delivered to the border, but the customs house did not want to let it in and tried to send it back. So, I think there were grounds for this dismissal.

“It is right to give people a chance to change something. Bilous assumed a governmental office, having Western experience and the knowledge of right approaches. He got a chance. I think it would be right to assign a task to a person, announce the criteria of assessing his or her work, and, say, in a six months’ time, make a conclusion of whether or not he or she has coped with the job. Only then can it be decided whether to dismiss or renew a ‘contract’ with them. This would be a right approach. Unfortunately, it seems to me that we in Ukraine have not yet reached this ideal condition, but we are moving on.”

Were you in touch with Bilous as member of the relevant parliamentary committee? Did he attend sessions? Did he follow advice and answer questions?

“Yes of course. Almost every session of our committee was attended by a representative of either the ministry of finance or the fiscal service. And Bilous himself would also come.

“The dialog continues. We could not always reach a certain compromise or finally reconcile our positions. Still, there was a dialog.”

“BY FAR THE MOST EFFECTIVE WORK IS ON THE DIPLOMATIC FRONT”

Speaking of staff placement again: what do you, member of the Ukraine-United Kingdom inter-parliamentary links group, think about the fact that Ukraine has not yet appointed an ambassador to Britain? Do you know why the president is not exactly hasting to make this decision?

“It is better to put this question to the president or at least the minister of foreign affairs. It is difficult for me to comment on the causes of this. Naturally, this office is important, for Great Britain is one of Ukraine’s chief allies in Europe.”

Are we perhaps losing this ally by delaying the appointment of an ambassador?

“If we assess all the fronts (military, economic, anticorruption, and diplomatic) on which Ukraine is ‘fighting’ today, by far the most effective work is on the latter one. So, I am absolutely convinced that the minister of foreign affairs and the president are very well aware of what they are doing in this direction and are weighing all the pros and cons before making an appointment decision. What I can see in British press reports and in statements by British Prime Minister David Cameron shows that the United Kingdom is taking a good and friendly attitude to Ukraine.”

You said that by far the best situation is on the diplomatic front. And what do you think about the effectiveness of diplomacy in the settlement of conflict with Russia in the Donbas? Was it perhaps a mistake for Ukraine to reject the Geneva format that includes the US, which is important to us, and opt for the Minsk and then Minsk-Normandy format?

“Diplomacy is a certain art of reaching compromises. The presence of such antagonists on the world arena as the US and Russia at the negotiating table would have produced no chances for reaching this compromise in the Geneva format.

“Naturally, Russia should take part in the negotiations, for it is a party to the conflict. It seems to me that both the German Chancellor Angela Merkel and the French President Francois Hollande showed their efficiency, at least in the role of communicators with Russia. As for the Minsk format and the overall effectiveness of diplomatic efforts, I think that if we have even the slightest opportunity to diplomatically resolve this problem and save human lives, we must seize it. Secondly, I am convinced that it would have been impossible to impose sanctions against the Kremlin without those agreements. We can see now a clear-cut consolidated attitude to Ukraine. We have heard Merkel, Hollande, and Obama say that if hostilities are resumed in the Donbas, there will be more sanctions and more aid to Ukraine.

“We must not show that we want to wage a war. The Ukrainians are a peace-loving nation. In this situation, we are defending our country with all the accessible means with due account of how Russia uses propaganda in its own and Western media and funds the opposition movements and parties to destabilize the situation in Europe itself and prevent Europeans from supporting Ukraine.”

“THE FIRST IMPRESSION FROM ATO SERVICE WAS DEPRESSING”

You were in the east and saw the real situation on the battlefield. Is our defense line strong enough now to stop the next Russian aggression?

“Russia has one of the world’s strongest armies. I think if it launches an open war and throws all the might of its armed forces on us, we will be unable to hold back our present positions despite an essential improvement of our armed forces in the past year.

“On the other hand, combining our gains on the military and diplomatic fronts and receiving support from other countries, we can achieve certain successes in the east and ward off further penetration into the territory of Ukraine.”

And why did you go to the front? You were aware that this step, as well as your participation in the parliamentary elections, could provoke a controversial response, weren’t you?

“There were a lot of reasons why I made this decision. Above all, it is conscience. I would like that 10 or 15 years later, when my son grows up and asks what is the right behavior in one situation or another, I could have a moral right to give him advice. So, I made this decision, first of all, in order to be honest to my conscience and my child.”

What impression did the front make on you?

“I was in an artillery unit. In the very beginning, we received a really bad logistic support – all we had was a mortar and shells to it, with no spare parts or an aiming circle. It was impossible to aim at a target. We didn’t even have range finders. In the course of time the situation improved a little. But the first impression was depressing: we have ruined our armed forces so much in 20 years that now, in wartime, we have to revive them literally ‘on the move.’”

Are you in touch with the guys you served with? Are they all well?

“I am, but, unfortunately, not with all of them.”

“SINCE FATHER BECAME THE PRESIDENT, WE HAVE COME ACROSS EACH OTHER TWICE A MONTH AT MOST”

Your father is an experienced politician, the president. Do you discuss political matters with him? Do you consult with him about what to do in a certain situation?

“Unfortunately, since father became the president, I have almost lost sight of him. We have come across each other twice a month at most. So, unfortunately or, maybe, fortunately, I have to make most of my decisions by myself. Naturally, sometimes I wish I could hear a piece of advice. But when you can see father once or twice a month, you don’t exactly want to talk politics. So, we talk more about everyday life matters, all the more so that he has a grandson whom he can see not so often.”

What is your hobby? What books do you read? What do you do at your leisure?

“I can perhaps divide the answer to your question into what it had been before and what it became a year ago.

“I liked traveling. It was always interesting to explore something new. At a certain period I began reading professional literature on personal growth and company management.

“My greatest ‘hobby’ now is to stay with my son. I really have very little time left for my family, let alone a hobby. I’ve forgotten when I last went to the movies. My wife invited me to a Makarevich concert to mark my birthday.”

What was your favorite school subject?

“Chemistry. And, frankly speaking, my choice boiled down to opting either for economics or for chemistry. I still wonder what my life would have been like if I had made a different choice.”