Thursday, March 09, 2006

Re: Sweet words...

I have been meaning to comment on what LEvko posted here from a radio address of Yuschenko's. LEvko quotes him as saying categorically that there will be no more privatizations and that he will work to forge a closer relationship between business and government.

On the business/government point, it is tempting to make an argument that business and government are too close as it is. One of the rather disgusting things about this Parliamentary election is how many people are on the rolls of the parties who have no experience whatever that would be useful for much of anything in terms of public policy. There are any number of personalities--singers and entertainers are big--on the rolls of the major parties, including Our Ukraine, I might add. They are there probably for the draw of their names but it is hard not to draw the conclusion that it is a good career move.

And there are any number of business interests lining up for their shot at a place in the Verkhovna Rada. Why is this? The usual reasons, money and power, or to be more accurate, power equals money.

But I think what Yuschenko means, and he means it sincerely, is that government needs to take into account the requirements of business more than it has in the past. And that is what is needed. There are any number of large businesses in Ukraine. They can fend for themselves quite well with their contacts and relationships. It's the small and medium sized business that suffers here. And it is those businesses that will create the jobs that will raise the standard of living of Ukrainians, not the large businesses. In the US, 80% or more of new job creation comes from small to medium sized firms. They need to be cultivated here and, I'm afraid, protected by the government. That Yuschenko says this and keeps saying it is a good thing. There is a need however to get things done to make it happen.

The privatization is something that has been known for awhile. That they won't privatize any more is no surprise.

The question I have though is why Yuschenko is making these points right now? His party is in the middle of a campaign for the Parliament where they are trailing. An assurance that there will be no new re-privatizations may make investors feel more comfortable but those investors are mostly foregin investors--they won't be voting. It is difficult to see how this will reassure average Ukrainians at all. As a matter of fact, most Ukrainians who participated in the OR want to see some justice meted out for the sins of the oligarchs and they see re-privatization as a way to it. To say there won't be any more may in fact hurt Our Ukraine.

And making the case that small to medium sized businesses ought to be cultivated without linking it to people and their lives doesn't help in the election either. In fact, they might see it as a case of just what I posted above-- more of the usual with businesses lining up to carve out for themselves a fat piece of the state hide.

So I am at a loss as to why he is making these statements now. Maybe there is some done deal that gives him confidence in some continuity as LEvko has suggested? Or maybe he just has a government to run and this is a matter of course?

Levko comments: Many of the Ukrainian electorate feel cheated that in the days of Kuchma, a favoured few benefited hugely in fixed privatization deals. Voters were led to believe that after the Orange Revolution these assets would be seized from their oligarchic owners, and resold properly, as in the re-privatization of Kryvorizhstal. [Yuschenko, unlike Tymoshenko, apart from Kryvorizhstal, to my recollection, played down the theme of re-privatization at the time.]

It's now apparent that any further large-scale re-privatization schemes would scare off desperately needed foreign investments Ukraine. There is a 'third way' possibility of which little has been heard - retrospective 'one-off' windfall taxes to be paid by those who bought former state assets at artificially low prices in rigged tenders. The slate would be wiped clean, and cash recouped for the state coffers.

One of the reasons why the lists of all of the leading parties in the Parliamentary elections are so loaded with the oligarchs and magnates who benefitted from 'prykhvatyzatsiya' [which means seizure, but sounds very much like pryvatizatsiya], is that when they take their seats in Parliament they will ensure that any possible laws on reprivatization or retrospective windfall taxes will be strangled at birth.

1 comment:

Anonymous said...


I heard that roughtly 1/3 of all in RADA are businessmen - to protect and expand their businesses. The next large group is actually educators coming it at about 8.5%