Re: Capitalism in Donbass

The article which LEvko linked to is a good one and highlights one of the major problems that the government and Our Ukraine has had: There have been virtually no efforts at all to court the people in the east. I think Yuschenko's pact with Yanukovych was some kind of recognition of this and might have set the stage for something better (and Yuschenko might not have taken such a hit with it if he had made the case for the east then better than he did.) This is all after Yuschenko's OR performance where he was close to perfect in talking about the east and the people of the east. After that though there was silence. I wonder why?

This article also provides some hints about the relative power government and business have had for the past number of years. DLW mentioned that there has always been a close connection between government and business in any country because of the government's monopoly on the use of force. The problem with that is that, like with many things, it is a bit more complicated than that here in Ukraine. (And in Russia for that matter.) Government had no power to guarantee much of anything for a long time (and still suffers from that defect to some extent today.) We may lament the rise of the criminal groups in Russia and in Ukraine and the thuggish practices of the oligarchs, but they did impose an order on things that the government simply could not impose. They provided for a kind of rule of law, or at least rule by a certain set of rules, which allowed for more predictability and the enforcement of contracts that the government could not provide. (These groups actually enforced contracts.)

This is true still today. RosUkrenergo is a company set up to siphon off profits from the gas industry. There is no disputing that. But it also provides some sort of confidence to the principals involved, that something will be done when the parties say it will be. These companies have people who are linked to other people who give each other confidence that they will do what they say they will do. Of course the fee for this is exorbitant and not the result of any kind of arms length negotiations which is a problem. But this is the way business has been done here and there has been a reason for this in the relative powerlessness of government to guarantee the rules of the game.

Things can be done differently and should be done differently and no end of problems occur with the way things are set up in business. We have discussed some here at length. And it is getting better. But these people provided stability when it there was none and maybe, at least as a way of appealing to the east, there ought to be some acknowledgement of that. It may take some holding of the nose to do it but it might be a good thing to do.