“Ukraine is destined to prosper”

Last week, Oleksii PLOTNIKOV, Ph.D., member of the political council of the Party of Regions, was The Day’s guest. We started the conversation with Dr. Plotnikov, professor, honored economist of Ukraine, who defined his area of responsibility in the ruling party as economic policy, with the most relevant topic: the absence of money in Ukraine’s budget.

“The budget for 2013 was passed under specific conditions: one convocation of the Verkhovna Rada was outgoing, and it was unclear who would come next. It was implied that the budget would be revised as soon as it was adopted. That is why there is nothing revolutionary about it.”

Are there funds to increase spending? The results of the first six months show that industrial output has fallen by five percent.

“We need to look at the program of the long-term financing. Indeed, spending in some areas, which are not our priority, must be cut. For example, if construction is planned for five years, it can be stretched to six or seven years... If the situation with some programs is normalized (for example, with infrastructure construction funding which is not our primary task), money can be found.”

So, is it possible only through saving? Today the economy is not making money, is it?

“You just mentioned the GDP dynamics for industrial production. Of course, I will not say that suddenly a source of income appeared out of the blue, which would let us review the budget due to growth.”

How do you explain the drop in the economy?

“There are two reasons. We are tied to foreign markets. Forty-seven percent of the GDP are export-oriented industries. During all years of independence, raw products (such as chemicals and ferrous metallurgy) made up more than 50 percent of export. For developed economies the share of finished products is no less than 80 percent.

“We have a specific export structure. And this makes us very dependent on external processes. If a crisis happens somewhere in the world, it affects Ukrainian manufacturers right away.

“The second compound: we have some problems with the national economy development. For example, it is hard for entrepreneurs to work with such high gas prices.

“Yet I am more inclined to think that external factors are the main reason.”

Recently, when Party of Regions MP Yukhym Zviahilsky was asked in Donetsk why reforms were stalling, he answered that officials should not steal that much. Is this a right conclusion?

“I do not want to comment on Zviahilsky. Apparently, he had some reasons to say this among his fellow countrymen and colleagues in Donetsk.

“Oddly enough, there are a lot of obstacles for reforms on the local level. This is not an excuse.

“We are now in the Sviatoshyn district of Kyiv. During the previous convocation of the Verkhovna Rada, this territory was assigned to me. There was a ‘wonderful’ head of the district state administration, who did not care much for the district, but was rather intent on pursuing his own interests. He had a hobby of fighting the Party of Regions and the president. It was impossible to remove him. Oleksandr Popov tried to dismiss him from the post for quite a while. Finally, they found a pretext – they fired him for failing to clear away the snow. In two weeks, he surfaced as the Kyiv chief emergencies officer. This is the path of an official who does not do anything.”

This touches upon the topic of another reform, the administrative one. It was also announced. What are the results?

“It was started and it is not completed yet. At least on the level of central government we can see that we have only three deputy ministers in every ministry.

“Until recently, the Russian Federation insisted on either full membership, or nothing at all. And the fact that we received an observer status is rather the realization of our vision than that of Russia or other members of the Customs Union. This is our understanding of the way we would like to connect with the Customs Union. This is the victory of our foreign policy.”

“From the perspective of duties redistribution, the reform is finished. But we would also like to increase the prestige of state officials’ posts, raise the salaries, which is a part of the fight against corruption, and this is yet to be done. So far, we have not completed this, therefore this direction is considered as an uncompleted one.”

Does the ruling party see the opposition as a decent competitor?

“The parliamentary opposition of the seventh convocation is rather specific. Firstly, Svoboda has made it to the Verkhovna Rada. Secondly, the processes that are taking place in Batkivshchyna are rather destructive. The opposition leaders are more likely to destroy each other than become a consolidated, European-style force. By eating each other, they help the government.”

What about UDAR?

“It is a more moderate political force. Ukraine would benefit if all of the opposition was like UDAR. This party is capable of working. It is ready for negotiating and compromising.”

Mass media today often write that the government and the opposition basically coordinate their actions and make arrangements. Certain governmental business groups cooperate with Svoboda and UDAR. What can you say about this?

“Normal working conditions in the parliament provide that political forces can discuss something, determine the agenda, or carry out a conciliatory meeting.”

At the summit in Bratislava, Polish president Bronislaw Komorowski announced that the European Council President Herman Van Rompuy and he had been discussing what the West could do to stimulate Ukraine sign the Association Agreement with the EU. What do you think it was?

“Certain conditions were put forward. They are quite moderate. There is nothing imperative in that, saying that if this or that is not done, everything will fail. For example, for objective reasons, the Constitution cannot be technically amended.

“I would say that the list of requirements is a bit longer than what is really expected from Ukraine. There are certain ‘reserve’ requirements.

“The West could help us if it assessed its demands realistically.”

When Poland joined the EU, negotiations were very rough. Our neighbors defended their interests and producers fiercely. What is our government’s action plan in case the Agreement is signed in November?

“In case of Poland, negotiations were about its full membership in the EU. I cannot even speculate when we are going to reach that point. It can happen in 10, or even in 20 years.

“At this stage, what relates to the political compound of signing the Association Agreement, there is nothing extraordinary or nothing that could neglect Ukraine’s national interests.”

Andrii Yermolaiev, director of the National Institute for Strategic Studies, said in his interview to The Day that the memorandum signed between Ukraine and the Customs Union is basically the implementation of our “3+1” formula. Do you think that Russia has made concessions?

“Well, yes. Until recently, the Russian Federation insisted on either full membership, or nothing at all. And the fact that we received an observer status is rather the realization of our vision than that of Russia or other members of the Customs Union. This is our understanding of the way we would like to connect with the Customs Union. This is the victory of our foreign policy.”

Why did the Kremlin make concessions?

“Any international agreement is an ability to compromise, to see your partner as a colleague rather than an enemy. From this point of view this was perhaps a manifestation of good common sense. Yes, we all remember Putin’s words to Russian citizens: all or nothing. But as a result, we see concessions made. Maybe, there is some kind of secret plan in there: if we failed to involve them instantly, let them be observers, what if they like it.”

According to Yermolaiev, Ukraine can become a moderator in relations between the EU and Russia. Is this possible?

“The model of a messenger between the European Union and the Eurasian space looks more promising. This is a rather ambitious goal, and I do not think our neighbors envisage Ukraine performing this role.”

What levers can Russia use to impede Ukraine’s rapprochement with the EU?

“I am not sure Russia has such a goal at all. They can maintain a position like ‘if they want it, let them have it’ on the top state level. But if we think about levers, it might be the implementation of some economic sanctions or holding PR-campaigns carrying the message that Ukraine has nothing to do in Europe. Also, these might be actions against shale gas, saying that the public does not support it, therefore it is better to buy gas from Gazprom.”

By the way, the position of Svoboda (which opposes shale gas mining) on this issue coincides with Gazprom’s interests. Do you think they realize it?

“I have no idea. As far as I know, Svoboda accounts for their standpoint by the fact that shale gas mining is detrimental to national ecology. But technically speaking, opposing Ukraine’s energy independence is really playing into other country’s hands.”

The Party of Regions is known to have initiated the so-called antifascist marches in Ukraine. We have written many times that such a technology harms not only the Party of Regions, but also the entire image of the nation. Why did you opt for “antifascist” rhetoric as a tool?

“I think it is wrong to discuss the activities of my fellow party members. The process was launched, the marches took place, and as to their results, they are known from opinion polls.”

Do you agree that antifascist rhetoric is the rhetoric of poor countries?

“Why so? Take France as an example, where mass rallies are held against the nationalist Le Pen. Clearly, these are not a poor country’s parameters. Poor countries have other criteria.”

The difference between protests in Ukraine and in France is perhaps that in our country they are artificial and incited. Do fascist (or antifascist, for that matter) sentiments exist in Ukraine?

“Why do you think that we do not have fascist or antifascist sentiments? I do not think that antifascist marches are something that was unnecessary.”

After Viktor Yanukovych’s accession to power many experts spoke about the Party of Regions’ ability to evolve. After the use of antifascist technology this looks extremely doubtful.

“If you didn’t like this event, I can assure you that great numbers of citizens found it good.”

That didn’t show. Did Europe like the event, by the way?

“Europe reacted quietly. There were no comments. Some antifascist events were held, so what?”

Europeabhors fascism. An antifascist rally in Ukraine means that there have been manifestations of fascism in the country, otherwise why hold such rallies? Will Europe let us join in after that?

“I have mentioned France as an example. Another example could be the Hungarian nationalist party Yobbik, absolutely monstrous in the light of European values. Nevertheless, Hungary is an EU member. Moreover, this party is a member of the European People’s Party, the West’s ruling elite. And what concerns Ukraine, you should know how the European Parliament reacts to a certain party named Svoboda.”

I must note that experts emphasize that Svoboda’s election to parliament results from the Party of Regions’ rule.

“It results from processes which exist in Ukraine’s society. To a lesser extent it is the result of political technologies. But what is happening in the parliament reflects the entire society and the situation in the country.”

Another structure Ukraine is negotiating with is the IMF. Iryna Akimova from the Presidential Administration has mentioned again that we are getting ready to receive another mission. This is a never-ending saga, those visits of IMF representatives to Ukraine. What do you think of the current prospects of our cooperation with the IMF?

“My estimation is rather positive, because at the moment we have an opportunity to close down a program which is not working, and open a new one instead. The new program involves approximately the same 15 billion dollars and a different set of requirements. For instance, the IMF demands that Ukraine raise utilities tariffs (this is what was happening under the previous program). The new IMF program focuses on the budget deficit and the sustainability of the banking sector. Yes, there are certain social elements of raising certain tariffs (for example, elimination of three groups of simplified tax payers), but this is not really painful.

“However, I don’t think that we critically depend on the IMF, we have lived without its money and we can keep on like that. But in any country, if an opportunity to attract external resources offers itself, why not use it?”

When do you think Ukraine will be able to produce sufficient money resources on its own?

“What does it mean ‘produce money resources’?”

When will we be able not only to ask for money, but invest it?

“Statistics show that we have Ukrainian investors who invest outside the country.”

By the way, this is due to the fact that Ukrainian business looks for countries where investing is safe.

“It is a mutually beneficial cooperation, when Ukrainian business invests abroad, and the answer to the question is: when we will have money available for investing.

“As for the question, when we will become another Switzerland or, say, Kuwait. We will never be the latter because we have no oil…”

But we have land.

“That won’t happen soon, maybe it will take 5, 10, or 20 years – but I am absolutely convinced that our country is destined to prosper.”

Coming back to land issues. Our newspaper recently published an opinion that countries staking on the development of the agricultural sector will never be rich. This is the poor countries’ niche. Do you agree?

“Ukraine is a half-agrarian country. Why should we be poor when there is a food crisis, and the demand for food products is skyrocketing? If we export food all over the world, we cannot be poor. The main thing is to make organic, chemical-free produce. Thinking in the categories of ‘agrarian countries’ belongs to the 1960s political economy, when there existed agrarian Africa and the industrial North. Now there is a different understanding of agribusiness, international division of labor, etc.”

Speaking about Ukraine’s independence, many use terms like “the wild capitalism period.” After the incumbent president’s rise to power, with his team, has the process of squaring the accounts from the 1990s begun? Do you think this will ever come to an end?

“What happened in the 1990s, remains in the 1990s. Economic relations will never function on that level anymore. That was the time of socialist, planned, administrative economy, and then our own market appeared. Today the situation is different. There are no longer such opportunities for capital accumulation like in the 1990s, this is history now. As for the redistribution of spheres of economic influence, this is a constant, global process. Some corporations come to the top, others step back. In Ukraine this is a livelier process.”

This reminds me of Pinchuk’s case in the London court. British journalists have already said that English courts expect “wars” between Ukraine’s oligarchs. What can you say about it?

“The British are used to similar processes. The most recent example is the case of Berezovsky vs. Abramovich. The Russians must be quiet now, so Britain is waiting to see who will be fighting next. However, I can see no real reasons to compare the citizens of Ukraine with Russians. It is a different league. Russians have different kinds of resources and different ideas about sorting out their problems.”

You are not in parliament now, although you were member in the fifth and sixth convocations of the Verkhovna Rada. Why weren’t you included in the party list this time?

“I feel most comfortable outside the parliament now. I keep my links with the party and I am doing what I must do. There are various kinds of work.”

What is Yanukovych’s economic program like for the next presidential elections? What is he going to stake on?

“I have a fairly good idea of what Viktor Yanukovych will offer before the elections. But it is still too early to talk about it. When the election process starts, everything will be published. I can say for sure that it is a rather well-considered program. I think that society will take it positively.”

Who is the key rival in the presidential elections, according to the Party of Regions?

“We are prepared to win over any candidate who will be brought to the second round of the elections by the citizens of Ukraine.”