Change Your Style!

The Blue Ribbon Commission (nothing to do with the campaign colors of a certain presidential candidate; blue is the color of the UN flag), created with UN assistance, has formulated a socioeconomic order for the Ukrainian president-elect. At a conference of leading Ukrainian economists, the commission (co-chaired by the noted Ukrainian expert Oleksandr Paskhaver and Anders Aslund, director of the Russian and Eurasian Program at the Carnegie Endowment for International Peace) presented a report entitled “Proposals for the President: A New Wave of Reform.” The commission was set up at the initiative of UN Assistant Secretary-General Kalman Mizsei, European Regional Director of the UN Development Program.

Ukraine is offered five key areas for reform. The fundamental problem facing this country, according to the BRC experts, is the fact that the government rules rather than serves its citizens. The conclusion: this relationship must change. Ukrainian citizens must be ensured an adequate living standard along with social stability and security. This requires upgrading the tax laws and fiscal legal framework. A clear line must be drawn between the state and private enterprise, so that property rights are fully guaranteed and corruption properly counteracted. To do so, this society needs an independent and competent judiciary system. Integration into the world economy must be facilitated through early accession to the World Trade Organization and closer integration with the European Union.

The report boils down to twelve brief recommendations, namely:(I) Enact an administrative reform based on the principles of accountability, transparency, and professionalism, and enshrining the rights of ordinary citizens; (II) Reform the judicial system to make judges independent and impartial, and to make the court administration more efficient;(III) Enact a territorial-administrative reform, improving the delivery of public services by devolving power and resources to regional and local bodies; (IV) Introduce mandatory public medical insurance, using a multi-level, insurance-based approach for financing that provides for competition among care providers; (V) Enact a liberal tax code that reduces the number of taxes, lowers tax rates, eliminates exemptions, and eliminates competing revenue services; (VI) Reduce public expenditures substantially by eliminating non-essential and harmful spending (such as enterprise subsidies) and target social benefits to the truly needy; (VII) Improve corporate legislation (and pass a modern law on joint-stock companies), by enacting rules to introduce ownership transparency and protect minority shareholders; (VIII) Eliminate conflict between two contradictory legislative frameworks, abolish the anachronistic Economic Code and develop the market-oriented Civil Code; (IX) Create functioning property markets by ending the moratorium on the sale of agricultural land and developing a unified property register; (X) Create a level playing field for economic activity by abolishing regulatory discrimination and subsidies and halting state intervention in pricing and trade; (XI) Join the WTO in 2005; (XII) Make Ukraine’s “European Choice” a reality by adopting European legal standards and forging an initial action plan with the EU that paves the way to a free trade agreement and makes future membership of the EU a real opportunity.

Along with listing the measures that the Ukrainian president should adopt, the commission justifies them, explaining why they were selected and how they should be implemented: “Ideally, we would like to provide the new administration with a concrete program for the very short term.” The authors of the report proceed from premises that one of speakers on the Maidan during the Orange Revolution described as being in the air. The Blue Ribbon Commission believes that Ukrainians want to have a democratic state; that they believe in the supremacy of law and a market economy based on private ownership. At the same time they want the economy to be expressly socially oriented, so that every citizen can enjoy a quality educational system, health care; so that poverty will be uprooted. According to the commission, Ukrainians believe in an open world, without any restrictions on the movement of people, ideas, and commodities. Ukraine’s leading political forces have identified these and other values as the European choice. Europe is that ambitious indicator that Ukraine uses to assess its achievements-and not just in the economic sphere. More importantly, Europe serves as a guideline/standard in terms of democracy, state administration, and supremacy of law.

In an interview given at the conference, Oleksandr Paskhaver was asked about what the authors of the report do not recommend to the new president and the new opposition. He told The Day:

“Both social and economic processes are markedly sluggish [in Ukraine], so any revolutionizing steps should be taken with the utmost caution. They can be planned, but their trajectory must be gradual and long-term. We can’t act on the premise that tearing down is always easier than building up. The new opposition and the new government must learn to think along strategic lines and to apply a strategy without first destroying and then rebuilding everything. Rash moves more often than not cause damage instead of bringing benefits. As for political power per se, a lot of problems have built up in this society, which concern the style of relations between the individual and the state, and [the latter’s] attitude can be summed up with one word: contempt. I hope that the new government will change this modus operandi. We all know how difficult relations are between ordinary citizens and the government. This awareness has become part of the subconscious. Upgrading this style will substantially alter the people’s attitude to their government and its reorganization. During the conference today we heard that our citizens don’t trust any reforms, the whole kit and caboodle. Why? The answer is precisely because all these reforms were carried out at a very low level, while retaining that contemptuous style with regard to the citizenry. We must not abandon such reforms; we must discard their modus operandi. This is what should be recommended to the new government.

“Now the opposition should be tough and constantly discharge its provocative function, that of monitoring the government. The tougher this monitoring is the more effective it becomes for the good of all of us. Those who wield power should be made aware of the advantages of this negative attitude to their actions-although I honestly don’t know how to bring this about. The opposition bill should be the first to be passed after the new government comes to power. The new government must take every step in order to convince the population that it is truly democratic; that they are aware of both the need to have an opposition and that this new government would be impotent without it. I would say that any uncontrollable government is ineffective. To this end we might as well discuss the currently proclaimed lustration procedures. Had they come out with them back in 1991, I would have never objected, I would have welcomed them. It’s good that the social order is changing, after departing from socialism toward a democratic, market-economy society. However, such lustration means a total rejection of the previous political system. As an economist, I can’t welcome this, not under the circumstances. We may discuss the previous government’s shortcomings; that it had adopted the wrong tactic and had a bad style of relations with the population, but this doesn’t mean changing the social order. Therefore, any lustration in this context would be damaging rather than beneficial.