Get the story--New Orleans

Things like this just torque me--ABC News: Reporters' Blog: Raw Accounts from the Front Lines of Katrina.

We've got to stop and turn around," I said to cameraman Dan Holdren, who was behind the wheel. Next to a bus stop a frail elderly black woman sat in a wheelchair with a suitcase beside her. She looked as alone in the world as anyone I've ever seen.
In a heavy Southern drawl, Bobbi Sanchez told me she was waiting for a bus to take her to a shelter. "You're gonna die if you don't go," she told me, her glassy eyes ooking directly at me. "It's true."

Another elderly woman walked over to greet us. Bobbi was not there alone. Her sister, Lois Bass, was accompanying her on this exodus. They were heeding the mayor's call to evacuate New Orleans. But like so many of the city's black people they did not have the means to drive out of town or pay for a bus ticket or rent a hotel room on their fixed incomes — Bobbi lives on her disability benefit, Lois lives on Social Security. So they waited for the bus.

I have been thinking a lot about Bobbi and Lois these last few days. When I left them on Sunday I wished them safe passage and assumed they would be taken to the safety of the Superdome, New Orleans' shelter of last resort for those who simply couldn't afford to leave town.

I guess being an objective reporter means you take the story and leave the people. The urgent "we've got to stop and turn around" was not to save the woman but to get her story.

There have been reports from places like I-10 where people have congregated for days. These have come from reporters on the scene. These reporters had to get there some way. Why couldn't they pick up some of these people?

Another reporter from I can't remember where helped to save a man who was stranded with his dog, so it did happen. But I don't think I could live with myself to have phoned in a story, or whatever it is they did, about people I left to fend for themselves.

More on the looting

Some more on the looting going on in New Orleans here. Food and water are one thing, but this?

Days after all the looting that accompanied the Los Angeles riots (after the Rodney King police officer acquitals), some people came to their senses and felt the shame of it. A lot of them brought the stuff back. Maybe the same thing will happen here.

Some questions asked

An anonymous commenter has asked some questions that ought to be talked about. He/she may have meant them to be rhetorical but they are important questions nonetheless.

Increased investment would be great as well as Ukraine being a member of WTO. That being said it does matter who eventually benefits from the investment and more foreign owners will generate jobs

- hopefully more people will stay in the country as more jobs are available

People will stay. The reasons they are leaving is for the money. Some of the advertising here takes advantage of this. One subway poster for a company that allows for wire transfers of money is split into two panels. On the left is a woman setting a table--a waitress? a domestic?-- with a smile on her face. On the right is a young fellow sitting in what is obviously a college class looking rather wistfully--or is his look uncertain? "will it get here in time?"--into the camera. It's all about the money.

The question though is whether the diasporists will come back when things begin to pick up. Maybe if it reaches European levels, maybe. But you have to figure that people get their lives oriented a certain way and get set somewhere and that has to make it difficult to come back.

The big elephant in the room in all this is the movement of people from the villages to the big cities. Ukraine is one of the most rural countries in the world. Lots of people live in villages and there is a kind of culture linked to it. Everyone in the big city has someone they are related to or know who lives in the village. That has been an advantage in allowing them to eat during the bad times because they have had access to the produce of the village from those links.

The problem is that the villages are dying. There is no opportunity for the young people there, no business other than agriculture for them to be involved in. And the agriculture is monopolized by what are often no more than the old party bosses or the new capitalists that are indistinguishable from the old party bosses, who are farming the land non-productively and taking the cream for themselves. They just limp along providing nothing for the young to get involved in and no real economic benefit for the community.

And for those of us who are looking for ways to make the villages more productive, we are faced with three facts that stand in the way, booze, apathy and theft. A lot of village men spend a lot of time either drunk or looking for a drink. That gets in the way of doing something productive. In one village I am aware of, the men got together to set up a fishing business. They would stock a local pond with fish and charge for fishing. I was asked to invest but couldn't see how it would be an economic benefit for the community, how it would generate money and create jobs. The only people I could see who would want to fish there--at the equivalent of the local fishing hole--would be locals, the same people who need businesses to come in so they can have jobs to make money and provide opportunity for the young. This sort of arrangement didn't make the economic pie bigger, which is what is needed, it just rearranged it.

But they went ahead without me anyway and set it up. They sold their memberships to locals, about 72 of them representing most of the male population of the village. And they stocked the pond. Now, on a lot of days, you will find men getting up early to go fishing. They make their way down to the pond and fish?--no, they spend it drinking with a line dangling in the water. And they leave their wives home to work the land and harvest the crops.

Now I have heard that all the fish have died from some kind of a disease. It's hard not to say that it serves them right. But it does.

What will happen is that the young will leave for the big cities leaving the old for the villages. It is happening right now as a matter of fact. When these elderly villagers die off, that will be it. And the link between the village and the city, a link that saved many lives in Ukraine I am convinced, will be severed.

The cities will be hard pressed to deal with the influx of people. Where are they going to live? Housing prices in Kiev have skyrocketed the past couple of years making it unaffordable for a lot of people. They might be able to rent a room here or there but there will be a shortage of places to stay. In Latin America, the problem is solved with shantytowns, slums on the outskirts of town or up in the hills (Caracas.) Might be what Ukraine is faced with. I hope not.

Of course, the decline in the birthrate might solve some of this problem. But it will create another. Who will be around to generate the economic activity needed to take care of an aging population?

-but will the wages be livable?

They aren't livable now. The fortunate thing is that virtually no one is carrying a mortgage payment and energy rates are low and produce comes in from the village--the above linkage. But energy rates could rise to more European levels and that would affect a lot of people. One economist said that if that happened in Russia and mortgages became a much more accepted and common thing, people would be forced to mortgage their flats to pay for their energy consumption. It would put everything at risk. Something like this could happen here.

Western companies pay higher wages here and they provide better benefits on the whole. The low wages and poor working conditions have come on the Ukrainian watch. Incredible wealth has been amassed by a select few while the rest of the people have been scratching out some sort of existence at the wages offered by the companies of these moguls and "entrepreneurs." Looks like feudalism dies hard.

For Western companies, you can't oppress your workforce and end up with anything productive. That may be in their self-interest and nothing to canonize them about. But it does benefit the employee. And there is some conscience involved in this with some. Some people don't surrender their humanity just because they get involved in business.

and the owners will be the ones who ultimately benefit and will they invest in the country (spanning the spectrum from philanthropy to Gucci stores) or will it end up elsewhere?

Privatization in Russia and Ukraine meant capital flight and it still does to some extent. Most of the Western advisors promoted the idea that state companies should be in private hands-- any way they could get there was fine. The argument (and major assumption based on Western cultural perspectives, I might add) was that the owners would take care of those assets, invest profits back into them and lift all boats as a result. That didn't happen. The companies were stripped of profits and the money sent offshore. And the people were impoverished. Needless to say that that wasn't useful.

I think the economists had to invent a new stage of development to account for it. Milton Friedman said that he had been one of the loudest with, "Privatize, privatize, privatize!" He now says he was wrong, it should have been, "Rule of law, rule of law, rule of law!" He still has it wrong. It should have been, "Culture, culture, culture!"--a much different problem.

Western companies are profit focused. They will reinvest and that will improve things. Again, it is in their interest to do so, their long-term financial interests to do so.

what about taxes?

Taxes will be paid. It creates too much risk to not pay them and companies don't like that kind of risk.

The real problem is to make sure that the tax system, including collection, is transparent and fair. Tax inspectors here have had a lot of power and corruption is rife among them. It has been common to get a visit from an inspector who holds his hand out, so to speak, as he tells you that you owe more than you have paid. These arrears have a tendency to disappear when the hand is filled...or not if you are a political opponent or someone in the way of a powerful financial interest.

Businesses tend to understate profits to avoid the risks this presents. So they end up keeping two sets of books, one for the inspectors and one for the business itself.

Yuschenko has made tax policy a focus of his administration and rightly so. He wants to entice businesses back to paying their taxes by overhauling the tax administration and making taxes simpler and fairer. That will help a whole lot. He has done some things and is working on others and there is already evidence that what has been done is working--tax revenues are up.

Good questions.

Charities for hurricane victims

It is Thursday here and in response to Glenn Reynolds' request that we suggest a charity and link to his charity list, I propose Catholic Charities. They have a good reputation for getting things to the people who need it.

By the way, for some of us it has never been about red states and blue states but always about us as Americans.



flood aid
hurricane katrina

New Orleans

I have been to New Orleans and have visited many of the areas now under water. I can't believe that about 80% of the city is under. And they say that it could be a month before people will be allowed to return, around a million people. I can't imagine that. Looks like a lot of people are going to have to open up and take some of them in. I hope they do. Nothing seems to makes us as equal as tragedy does.

Looks like all of us are going to need to contribute to help.

Looting by the poor

I was reading through the hurricane coverage, minding my own business when I hit Brian Williams post here---Nightmare in New Orleans - Nightly News with Brian Williams - MSNBC.com--and tripped over this little jewel:

On a clear morning after the hurricane, water started filling up some of the only dry city streets--including the old French Quarter, this city's storied tourist mecca.

Later, in the downtown area, we also saw what can happen when people have nothing. Looting was everywhere and it was flagrant." (Emphasis mine.)

So the poor are responsible for the looting because they just don't have anything. They must be happy about this kind of disaster then because it allows them to loot which is getting something for their nothing. It is, well, obvious that it has to be the poor because they do have nothing and not some bottom feeding parasites taking advantage of people's misery to make a quick little profit for themselves with not much risk and "no money down." No, it can't be that kind of person at all, it has to be the poor. They are crawling out of their little hovels, picking through the flotsam to get a bit to eat.

And it is, well, obvious too that some of these poor will have guns--too many guns in America! is the awful reason-- and will shoot at the police who are trying to apprehend the poor who have nothing. One particular poor man shot a police officer in the head as that officer disturbed him in his foraging. The policeman will survive fortunately but we will have to be forgiving to that particular poor man because he was just trying to find something to eat. Our hearts will go out to him and to those who depend on him for their daily bread in love and charity because we understand him and them and their plight. If America didn't cast up so many of them--oh cursed land!-- there would not be any poor to loot and shoot.

Of course, these people are taking television sets and microwaves, sports jerseys and clothes as well as other non-edible things. No one made any mention of them taking any food. I guess they don't have any of these things--that is what it means to have nothing--and so they go out and take it. Or maybe they will just sell this stuff to get money to eat. They may be poor but that doesn't mean they are not enterprising.

But not everyone thinks this way. The unfeeling members of our society, usually those closest to what is going on, know that any one of these guys would shoot any of us down like dogs if we made it just a little bit more difficult for them to do what they are doing.

Or is it that people left with nothing will loot? That's gotta be worse.

Come on, Brian! That may cause the Brie eating set to swoon at their dinner parties and charity functions, but the rest of us know better. Why not just report the facts and keep the little editorials that fit in with your social class out, huh?

Give me a break.

UPDATE 9/2: People are now looting for food in New Orleans and that is understandable. It is a catastrophe there and getting them help is difficult. Looting for food you can understand, especially now. But taking TV sets, sporting goods, computers, all kinds of other equipment, and stealing cars is not.

My problem with this was that the "they did it because they were hungry" line was pulled out when the winds hadn't even died down yet to explain people packing away TV sets and carrying guns. It's the explanation of choice for a certain segment and, let's admit it, a certain social class. It has been pulled out to explain 9/11 and terrorism generally, even though it is well known that the people doing these things are often middle class or higher. It ain't the poor.

And it's so damned condescending to people. People can't act any differently because they are hungry. Reminds me of the young girl in one of the concentration camps of WWII I read (or heard) about. She had had her meager rations, some liquid concoction they gave the inmates, flung in her face and, though the temptation to do so was strong and for many (including me) probably overwhelming because she and the others were slowly starving to death, she refused to open her mouth to take any of it in that was dribbling over her lips as it coursed down her face. She found some dignity in that. She found it because it was there. And isn't that one of the meanings of being human, of being a real human being?

It has become tiring to hear it and it, frankly, gets in the way of seeing what the real problems are and of making sound policy to confront them. But it plays to the constituency (or class) and that is what it is meant to do. Politics sets the value of everything.

But there is a wickedness in this world that belies economics.

More expansion commentary

Here's a comment on EU expansion that says including Ukraine is a moral issue--Guardian Unlimited Guardian daily comment We owe them a debt of honour. It is.

I was in Kiev a few weeks ago, talking to journalists. Kiev isn't Istanbul or Ankara. It is stately and tree-lined and well-ordered, with cafe society flourishing along the river bank. Go to the British ambassador's summer party, and the brass band and cucumber sandwiches seem utterly natural.

Of course, out there in peasant country, poverty still hangs heavy - just as it did in Poland 10 years ago. Of course, there are many years of development and sacrifice to go before the EU is accomplished reality.

But reality began, only eight months ago, in the orange revolution, when hundreds of thousands of Ukrainians camped out for days in the central square until a corrupt presidency was bundled into history and a tainted election was overturned. Ukraine defined itself on the streets of its major cities as 2005 began. It chose Europe, not more truckling to Mother Russia. It chose its own passionate version of freedom. It looked to Brussels, not Moscow.

And what has Brussels offered in return? Fair words and fair action, a new "neighbourhood policy" with 150 or so tests and reforms that clear the way for
full entry application. These tests go hell for leather after democracy and market economics. They mean reform, expense, pain and some electoral unpopularity - but Kiev is gritting its teeth and ploughing on. It finds faith at the end of this rainbow. With Warsaw's profound encouragement, it has taken Turkey's route to defining national identity...

But old Europe is blocking arguing there is no point to further expansion absent a constitution to guide the EU, a position he calls cynical but which has some logic to it. (I don't know that it does have any except maybe politically.)

He ends:

We helped Turkey's new government put its life in our hands. We said we were there with the orange revolutionaries of Kiev. We owe them both debts of honour. We can't just pack when it begins to rain this autumn. We're leaders, aren't we?

He's right you know.

Some find it hard to see national interests at work asserting themselves in the EU. They seem to see it as an "all for one and one for all" arrangement. But if you look closely enough it is not very hard to see that the EU is appropriate for France, for example, because France has a great deal of power in it. That having to give some of it up might be a reason for some of its intransigence is not something that should be dismissed out of hand.

Questions

It's nice to have some astute commenters contributing here. Makes things more interesting.

Ron has stopped back by and has asked about Ukraine and the WTO. Good question. I also don't think much of the WTO for the US but it may not make all that much difference in practice. The US is the 800 pound gorilla and that means people want to sell there and have to sell there. That gives the US a lot of clout which ends up meaning that we tend to negotiate our way around the WTO when there is a problem. (Foreign sales corporations and the EU are one example.) That sounds like much the same result that would occur without it.

For Ukraine though, I think WTO accession would be a good thing. It would open up more markets for Ukrainian goods and allow for more competition here. (If anyone is looking to break the power of the oligarchs, more competition here is the way to do it.)

But it also imposes a kind of discipline on the goverment that it doesn't seem to be able to come up with on its own. To have to liberalize and do it in some sort of time frame self imposed or not has a tendency to give the government, at least parts of it, some focus. They need that.

So I think it a good thing.

Some respond that that accession would leave the Russians with more power here because they are the only ones who can stomach the risk here right now. (We think that overstated though, the risk part.) There is some truth to that but the response is more liberalization. That means more competition. Deals with it the same way as it would in dealing with the oligarchs.

Ukraine marks independence anniversary for the first time without a military parade

This is a significant thing. Kyiv Post. Ukraine marks independence anniversary for the first time without a military parade.

Power and its projection were celebrated in Soviet times and even afterward here. All parades were military parades and they were for domestic as well as for foreing consumption. To cow the citizenry? Maybe there was some of that but a lot of the citizenry identified with the military and remembered the sacrifices made during the Great Patriotic War against fascism. It was more of a unifying theme for the people, something they all could identify with and made them a part of the whole, a Soviet. And that helped the state, of course.

It was said that Stalin couldn't get anyone to fight for the party so he brought back the concept of the Motherland. The citizens were engaged in protecting the Motherland in the fight against Hitler. I guess that means that communists were pragmatists too. (Stalin is even supposed to have brought back Orthodox religious worship and I think even gave back some of the sacred church icons. All to aid in the war effort. Was the Soviet Union all about communist dogma or was it simply a matter of maintaining power? But I digress.)

But that changed yesterday and I think that means the identity has changed too. Maybe it also means a lack of a unifying theme for the country, I don't know. It is all a result of more democracy but many might be a bit nostalgic here in a few years for those good old days when they were all in it together. (Didn't Plato say that a democrat--small "d"-- had so many things he could possibly do that he had a hard time concentrating on any one of them to the exclusion of all the others? Something like that?) If more were put into cultivating it, the Maidan and the Orange Revolution might just be able to take its place.

Independence Day

Today is Independence Day here in Ukraine. It is the day that independence from the Soviet Union was declared back in 1991. It was declared but not much changed in real fact. The real declaration has been the result of the Orange Revolution.

We were treated to a fireworks display about a block away from our apartment. Could see it all from our windows which was nice for the kids. Must not have been official because it happened after 10 p.m. But it was impressive all the same; these were no squibs. Sounded like mortar rounds and they lit up the sky.

Anyway, congratulations to Ukraine. Took a long time to get here.

Atlanta economist to Ukraine

This sounds like it could be good news.
Atlanta Economist to Advise Ukrainian Prime Minister.

Ms. Tschinkel, who served as senior vice president and director of research at the Federal Reserve Bank of Atlanta, has advised Lithuanian, Bulgarian and Uzbekistani governments on implementing economic reform policies since she left the Fed in 1995.

Dealing with debt management, fiscal policy reform and the decentralization of banking systems, Ms. Tschinkel has assisted representatives of the International Monetary Fund, the U.S. Agency for International Development and the World Bank.

While she describes her work as helping to implement economic reforms into the day-to-day framework of a country, she is careful to note that she only takes an advising role when working with local government officials. She facilitates discussions between government officials and representatives from international aid agencies and coaches officials into making their own decisions on economic policy, she said.

"It's their government. [Officials] have to make the decision(s) on their own, and they have to take responsibility for their decisions," she said, adding that most government officials who she had worked with had been extremely motivated to implement economic policy changes but needed guidance in making their decisions.

She's highly qualified and is well recommended. (She was recommended to Tymoshenko by US Ambassador Herbst. Herbst is a competent and effective ambassador.)

Maybe we'll get a coherent economic policy from September (when she assumes her duties) on. Let's hope we do.

More on Yuschenko's son

More on Yuschenko’s son.

Even if the Orange Revolution has since turned red (As in Soviet red) preserving its nostalgic remembrance means that it requires safeguarding. This, of course, is obviously why the Orange brand was quietly given to the playboy teenage son of President Yushchenko for safekeeping:

"…Local media said the revolutionary slogan 'Tak!' (Yes) and a downward-facing horseshoe symbol were now registered trademarks owned by [Yushchenko's] 19-year-old son, Andriy.

"The President's eldest son, Andriy has been under media scrutiny after the internet newspaper Ukrainska Pravda publicized his high-stepping lifestyle. "Andriy, a university student, says he has a part-time job that enables him to rent a BMW and a spacious Kiev city centre flat, pay for a personal bodyguard and hang out in chic restaurants, nightclubs and casinos."

Kommersant newspaper adds: "…the Orange theme is widely used till now and Orange goods cost pretty [large amount of] money. For example Orange flag with slogan 'Tak!' costs from 5 to 20 UAH ($1-4) – it is 10% of [the] average Ukrainian pension. So, if an old man decides to present ten [of] his old friends with such flags he must spend all his monthly income given by the state…

Then the usual about how much the brands are worth. (Millions of course.) And then

While the analogy is not exactly precise, there is something to be said here. Ukraine has developed the worst characteristics of America – or at least tiny slivers of its elite have. In 2005, Revolution Industry has become so professionalized that nothing is allowed to be forgotten: the anticipated future profits of branding yesterday's uprisings are earmarked for a sort of trust fund, so that the president's teenage son can enjoy a life of luxury far beyond that of the average Ukrainian, while simultaneously proliferating a legacy that never was.

But why should they complain? After all, like the article said, they can enjoy their civic right to patriotic pride, just by paying their meager pension to feel the special joy that only orange revolutionary souvenirs can bring. After all, this was a revolution of the people. I don't know how the fruit mongers are doing, but chances are among all the problems facing Ukrainians, scurvy isn't one.

Very clever that. My take:

Signing over the brands to the son.

This is suspicious. I have posted about it before. But let’s look at this a little differently. What if it had been reported that the President had created a foundation to protect the symbols of the revolution and had put his son in charge of that foundation? This sort of thing happens all the time in the West, family members putting other family members in charge of foundations to take care of some charitable something or other. Would that sound suspicious? It is nepotism but a nepotism that is expected. I just found out the other day, for instance, that the wife of Christopher Reeve is the head of the foundation created to further research into paralysis. It happens all the time and no one blinks at it. Seems even kind of noble, the family member stepping in to further the legacy.

I can hear the loud voice now, “But there is no foundation here. That’s the difference.” And that is true but misunderstands the problems here in Ukraine. Yuschenko signed over the rights to his son and no foundation was involved. But that is just the sort of lack of connecting of the dots that is so frequent here and maddening to those trying to make some sense of it. Formalities are not necessarily the first thing on people’s minds here when they look to do things. One of the big reasons is that the courts haven’t really meant much of anything-- the rule of law argument. (Ever noticed that the judges in Ukraine sit at a desk rather than on the bench? It has been more a bureaucratic job, getting done what the people who have power want done.) The people have had to depend on players in government with power to get things done, in order to get things done. That means graft and bribes and corruption but it also has meant a kind of personalized sort of justice. The point is that personal contacts and relationships have been more important than the legal niceties.

So it is not unreasonable to suspect that Yuschenko signed over these brands to his son personally for him to make sure that the symbols of the revolution were safeguarded by him personally. A father giving his son some responsibility in helping to safeguard what was in part his legacy.

This makes more sense to me because of

The brands problem

He makes a lot here about the worth of the brands and puts it in the millions. I tell people who want my help putting together a business plan that it is easy to add zeros to any figure. The problem is getting those zeros to match what is actually possible.

In the West, those sums would be the real value of the intellectual property rights in those brands. But Ukraine is not the West. That value in the West is really a function of enforcement more than it is anything else. In Ukraine, there is no such enforcement. A couple of years ago, Microsoft made a big announcement that it had reached an agreement with the pirates in Ukraine regarding its software. Microsoft would grant them a license to sell their software at a reduced rate.

Before that announcement, you could buy a copy of Windows for about $2.50. After that announcement, I went to the local pirate bazaar to check to see how much a copy would cost. I found that you could buy a copy of Windows for $2.50. It was the same price; there had been no change. The point is that what Microsoft had done resulted in nothing changing. Pirated copies of Windows were still being sold. Microsoft stopped nothing.

The same thing still holds true today. The penalties for selling pirated software have been increased in Ukraine following all that push for WTO friendly legislation here. Has that stop the pirates from selling? No, sell it they do. I haven’t checked prices yet but I suspect they haven’t changed..

What is the problem? E-N-F-O-R-C-E-M-E-N-T, enforcement. You can have all the laws on the books you want about things but if they won’t be enforced it is all dead letter.

One reason for this is the same problem--rule of law. But what under girds the rule of law problem is a cultural apathy toward intellectual property rights. The feeling tends to be, If I have a copy, everyone can have a copy. And that is about what happens.

I don’t know of any company here that has a department dealing with IP issues or anyone in a company dealing with them, other than Western companies. It’s just not an issue. This means that when a company here looks to use a symbol—in this case a symbol used very publicly and openly as part of a people’s revolt—they are not all that concerned (read: “not concerned at all”) with determining who the rights belong to. Of course, Yuschenko’s son could have found out that a company is using the symbol and made a demand for a royalty payment. That is a possibility. But I don’t think they could have done that without some sort of disagreement about it that would have eventually spilled over into the public domain. So it is possible but I think it unlikely.

So why then is the price so high? Supply and demand. What we are finding now which we didn’t find in the past all that much before the revolution is that there are a lot of tourists here now. They came after the revolution even before the lifting of the visa requirement but they are out in force now. And they want a piece of the revolution. That usually means a souvenir. For them, what is high priced for a Ukrainian is nominal or even cheap by European and American standards. So I think the price reflects the market for sales of the stuff; the tourist market. They are willing and able to pay the price for that stuff.

Which leaves the

The part-time job/jobs

So if the money isn’t coming from royalties, where then is it coming from for Yuschenko’s son to live the luxury life he seems to be living? The part-time job/jobs he has is where I think it is coming from. That he could not get the kind of money he is alleged to be throwing around from any kind of job he might get at 19 is true. And none of us would be naive enough to think that he is not getting the money he is supposed to be getting in spite of his being Yuschenko’s son. I think it would be clear that he is getting it because he is. And suspicious minds would say that he is simply getting paid for what others before him in the same situation could provide: access to people in power. It is that facial similarity with the ways of the past that makes this very suspicious and is the driving force behind it. And I think legitimately so.

But there is another, more innocent possibility. In the US, in a lot of companies, as an attempt to make investors less jittery about a risky investment or to give the company, usually fledgling, some instant credibility, high profile people are often recruited to sit on the boards of directors of the company. This is true for even legitimate enterprises. It happens all the time. And that director is usually paid handsomely, has an office he never visits, is often given a car and other perks, at company expense, all for lending a company his name--that is, for doing not much of anything.

I think something like that may be going on here.

Putin allied with Yanukovich?

If this is right, it just goes to show how idiotic the Kremlin's foreign policy toward Ukraine still remains--The Jamestown Foundation.

Russian President Vladimir's Putin's Unified Russia party has already signed a cooperation agreement with defeated presidential candidate Viktor Yanukovych's Regions of Ukraine party. Russia's Rodina party has agreed to cooperate with the Socialist Party of Ukraine, while Russia's and Ukraine's Communists are eternal allies.

But from a Ukrainian perspective, good. All the polls I have seen have shown that if an election were held today, Yanukovych's party would be lucky to poll half of what they did in the (final) election. (About 14% is the figure.) Maybe Putin can hit up the oligarchs again for $300 million to line the pockets of the Mercedes and BMW drivers here once more. Some of it is bound to trickle down to the people on foot, the vast majority, and that's got to improve the economy here. In one stroke, Putin can pull the chain of the oligarchs reminding them once again who is boss and improve economic conditions in Ukraine at least a little. And he can cement a reputation for having an abysmal understanding of what is happening in Ukraine.

The fact is that Yanukovych is non-existent. He is nowhere to be found these days. An opposition should be opposing and there is none of that. You hear at times Yanukovych's campaign manager, his last, come out and say things, Taras Chornovil, but that is just nuisance sniping from the trees not the frontal assault an opposition ought to be engaged in. It doesn't sound like he speaks for any organzied opposition.

And the administration has been vulnerable the past few months, very vulnerable. The only opposition that has been detectable (and interesting) has been from the administration itself. Nothing from Yanukovych.

I did make a prediction that the Kremlin would cut ties with Yanukovych and that appears to be wrong but I assumed a reasonable amount of reason was available. Bad assumption.

Economics Ukrainian style

This is what you get here a lot when talking about the price of things--someone somewhere is conspiring to raise it simply because they want to. Kyiv Weekly.

Particularly depressing is a drastic rise in the prices of poultry products in Ukraine, which is the most prosperous sector of the country's animal husbandry industry. But that is not the worst of it. Poultry farmers have decided to go a step further. One of the largest producers of poultry in Europe, the Myronivskiy Khliboproduct joint-stock company, which owns the trademark Nasha Ryaba chicken products, announced its intention of gradually raising the prices of poultry to the level of pork and beef. Not only is this a violation of the pricing agreement in the memorandum between the Cabinet of Ministers and the producers of poultry products. It is also another test for consumers...

and

Certainly, compensating the shortage of these products currently estimated at 400,000 tonnes with imported products can fill the market for a certain period and urb price growth. But many experts believe that a prolonged stabilization of the situation in the meat market and a drop in retail prices are possible only in the event that quotas are introduced on imported meat products and directing the proceeds from sales based on these quotas to developing the domestic livestock breeding industry...

The same sort of argument is made seriously here about gas prices. The Russians have refineries they have closed down ostensibly for them to be upgraded but the real reason is to cause a shortage and a rise in the price. The same sort of thing is said about grains and sugar each year; the traders are sitting on supplies to raise the price and then come into the market to make a killing.

To date, this kind of argument has been made for poultry, pork, gasoline, and wheat.

I guess it is possible for a couple of players to so dominate a market as to be able to control prices though I think that means a kind of coordination that I don't see as being a realistic possibility here. Maybe other places but not here. But even if this is the case, the response should not be more control, it should be to open up these markets to competition. But that isn't happening. The reason is that opening up markets would cause a lot of dislocation and that is the last thing the government would like to see. The problem though is that this kind of finessing of a soft landing doesn't seem to be doing anything but cause shortages and rising prices.

A DEMOGRAPHIC PROFILE OF ORANGE REVOLUTIONARIES

Here's some interesting information on the demographics of who participated in the Orange Revolution---NEW DATA CREATES DEMOGRAPHIC PROFILE OF ORANGE REVOLUTIONARIES, VOTERS - Eurasia Daily Monitor.

It ends:

The Orange Revolution succeeded because western Ukraine provided participants while eastern Ukrainians remained passive. Some 45% of the Orange Revolution protestors were from western Ukraine, especially from the three Galician oblasts: Ivano-Frankivsk (69%), Lviv (46%), and Ternopil oblast (35%).

A striking 35% of western Ukrainians took part in the Orange Revolution, and 23% of west-central Ukrainians. Besides western Ukrainians, more than one-third of the residents of Kyiv participated, a figure close to that of Galicia. These figures were far lower in eastern (15%), east-central (9%), and southern Ukraine (8%) respectively.

These studies by Democratic Initiatives and IFES point to a close interconnection between national identity and civil society in Ukraine, with eastern Ukraine dominated by passivity and a "managed" civil society. The 2004 election also showed that violence came from eastern, not western, Ukrainians.

The study also states that those in the East believed that those on Maidan were paid to go. This isn't anything new. But the reason for this belief is interesting: They, in the East were paid to go to rallies so those on Maidan had to be paid too. What I see and understand is what everybody else see and understands. In cultural studies this is called self reference criteria and it is the main thing I deal with when teaching people--mostly Americans-- about cultural differences.

More shenanigans

This kind of thing still happens--

TWO GERMAN COMPANIES SAY THEIR UKRAINIAN PARTNER IS INTIMIDATED, ASK GOVERNMENT FOR HELP – DEUTSCHE WELLE

Interfax-Ukraine, Kyiv, Ukraine, Tues, August 9, 2005 KYIV - Representatives of two German companies Jungheinrich and Dufelsdorf Handelsgesellshaft producing agricultural and other equipments have appealed to the Ukrainian leadership, saying their Ukrainian partner –Kyivtractordetal – is intimidated.

They threaten to leave the Ukrainian market, which may serve a negative signal to German business circles, the Ukrainian service of Deutsche Welle reported. They call upon Ukrainian authorities to avert instability at the Kyiv-based enterprise.

Employees of the Ukrainian producer accuse courts and the Public Prosecutor's General Office of assisting elimination of the enterprise to have its land for
construction of a prestigious housing complex. Particularly, the plant's director
was detained, Deutsche Welle informs.

Now the German businessmen doubt over the execution of its commitments to other European partners because every ready-made mechanism has Ukrainian parts.

Adolf Dufelsdorf, the CEO of Dufelsdorf Handelsgesellshaft, said it is absolutely unclear what is going on for those used to work in another legal framework. He said they had been much more optimistic previously but now see how long Ukraine needs to cover on the way to Europe.

--and it needs an aggressive response by the business. It doesn't look like they have a direct approach to Yuschenko except through official channels so the success of that kind of appeal might be in doubt. But the new openness here creates other opportunities (and lessens risks) for the company to shine all kinds of light on this to get these officials to back off. And this needs to be pursued aggressively by the company to have any success. So an official appeal to Yuschenko is something that should be done but it is one prong of a multipronged attack the company should be pursuing.

One thing to remember is that there is rule of law here except when it makes a difference. That surprises Europeans and Americans and results in some paralysis when it hits them and makes it hard for them to understand what to do next. The rules of the game are no longer the rules. But it simply means that the legal solution is not going to work. There are other extra-legal (and perfectly ethical) methods that work better in these kinds of situations. And they all come down to shining lights on this sort of thing. Get this out in the public. Make it well known. There is a real sensitivity to this kind of thing right now so making it public knowledge will be very effective. One story in the newspaper won't do it, though.

Still the wild east--Russia

It is strictly business, you understand, nothing personal---Canadian Lives to Tell His Tale.

First he had to give up his Mercedes to avoid being killed. Then a man who owed him $1 million tried to kill him, and his girlfriend took out a contract hit on his life. In February, he was kidnapped and forced to pay a ransom of $1.5 million.

Incredibly, businessman Igor Lantsov, who claims to be a victim of circumstance, has not soured on working in Russia and is forging ahead with plans to build several golf courses. Maybe only after that will he go home to Canada.

"I don't walk around with bodyguards, and I don't owe anybody any money. It's strange, but what can you do?" Lantsov said of his recurring troubles.

Moscow city prosecutors on Tuesday charged two men, including a Moscow region police officer, in the February kidnapping of Lantsov, the vice president of the Russian National Association of Professional Golf and a former deputy director of the Kremlin Trading House, which provides food to the Kremlin, Vremya Novostei reported Wednesday...

It may not be like the 90s, though some say it still is, but this sort of thing continues to happen in Russia and here. I think though with the greater openness and transparency the Orange Revolution brought to Ukraine, it will be a harder thing to do from now on.

This also goes to show that unrestrained competition is not what is wanted. Competition must have a basic set of rules that people live by or you will get this sort of thing.

Yushchenko Registers Revolution Symbols

This is the kind of thing that is bound to come up in the scramble for information on Jr. that the press conference touched off--Yushchenko Registers Revolution Symbols.

My response to this new information is that those rights may be worth a small fortune in the US but they aren't worth much in a country where the latest Hollywood film is available for about 3 bucks. (You may have to put up with the occasional dipping of the camera or one or two moving silhouettes--like the old Warner Brothers cartoons. And the picture can be kind of grainy. But if you want better quality for that movie, just wait a couple of weeks.) The point is that intellectual property rights here are virtually non-existent. They may have registered the rights with Yuschenko's son but it will be a tough thing to get any value from them because there is really no serious enforcement going on for any such rights now anyway.

There were a number of musicians that became famous during the Orange Revolution. Grynjolly is the most conspicuous of the bunch. But I think you will find they did not make any money on the song they wrote even though just about everybody has a recording of it. The reason? Pirate copies out there. People around here may think that intellectual property rights are all for those rich Americans but the creative industry here suffers for the lack of enforcement of those same rights too.

So it might look suspicious that Yuschenko Jr. got the rights but in Ukraine they don't mean much of anything. You might say they are not really worth the paper they're printed on.

By the way, it is not as if there isn't a way to protect intellectual property rights. There is. It just takes a bit more than looking at it as a legal problem. And these options are not open to Yuschenko's son at this point.

An apology

From Ukrainsky Pravda:

KYIV - Ukrainian President Viktor Yushchenko has admitted that his answer to a question about his son at a news conference earlier this week was "too emotional" and said that this was "a lesson to him". Yushchenko called the journalist whom he offended at the 25 July news conference, SerhiyLeshchenko, and suggested shaking hands.At the news conference, Leshchenko asked him to comment on rumours that his son lives beyond his means, but Yushchenko called him "a hitman" and said the he "lied" in his articles.

Leshchenko authored a series of articles on the Ukrainian web site Ukrayinska Pravda exposing the reportedly lavish lifestyle of Yushchenko Jr.The following is the text of a report by Leshchenko posted on Ukrayinska Pravda on 29 July: Yushchenko's press secretary Iryna Herashchenko called Ukrayinska Pravda today. She asked me not to switch off the phone, as the president would call in two minutes' time. And so it happened.

Viktor Yushchenko spoke in a quiet voice, though one could feel that the conversation was not an easy one for him. We discussed the recent developments
triggered by the publication about Andriy Yushchenko and the harsh answers by the head of state during the press conference on 25 July.

Viktor Yushchenko said at the beginning that this case had several aspects
to it. As to his son, he said that he had a tough talk with him. Andriy Yushchenko made conclusions and the main thing now is that he should take time to understand what he has been through."In order to [help him] live through this, I want to support Andriy as much as I can and have him near me," Yushchenko Senior said.

He also said that his answer to my question on 25 July "was emotional" and that "this was a lesson" to him. It was clear from his voice that it was not easy for the president to say those words. I said that I understand him and bear no grudge.Yushchenko suggested extending hands to each other and "turning the
leaf in this conflict", which was started during the press conference.

Making use of Yushchenko's own expression, I said that his hand would not hang in the air. We shook each other's hands on the line.Yushchenko added that the consequences of this story may be used to destabilize the situation in the country. To that, I answered that this definitely was not the aim we pursued with our articles.

Yushchenko suggested a meeting during my trip to Crimea tomorrow with a journalist team covering the Cabinet of Ministers' regional meeting. I replied that it is not worth troubling him when he is with his family.I also assured the president that the article in Ukrayinska Pravda was not ordered or paid for by anybody. He sounded as if he accepted my arguments. At the end of our conversation, Yushchenko said, "See you".

This is good.

Yuschenko and the press

There has been a lot of hostility toward Yuschenko from the press for the past few days here because of comments he made--accusations really-- at a July 25th press conference. This article is representative and goes into a bit of the whys--Them's fightin' words...Mr. President.

The problem occurred when a reporter asked a question about Yuschenko's son. His son, according to news reports, drives an expensive BMW, has a large upper story flat here, owns a platinum cell phone worth around $25,000, frequents expensive nightclubs and bars and has bodyguards to accompany him. All of this at the age of 19 and with no apparent means of support to maintain him in that kind of life style.

Yuschenko responded accusing the reporter of being a hitman. He then made the defense that his son had the cell phone from a rich friend, that the car was a rental and that he was able to afford his lifestyle and the bodyguards because of a consulting contract.

The response by Yuschenko hit the press here like a ton of bricks, they feel, from the blind side. A lot of them supported the Orange revolution and considered themselves to be a part of the family. 300 of them have asked Yuschenko to apologize, a thing interesting in itself.

What about the question? Was it out of bounds? I don't think so. The basis of Yuschenko's whole appeal is to end corruption. Yet his son is able to get a consulting contract that allows him to rent an expensive car, live in a flat that is about 5 times the size of our fairly sizable apartment, and to live an expensive nightlife--all at the age of 19. The only kind of contract that would pay that amount of money would be one that is politically indefensible for Yuschenko, at least to my mind. All of this was the elephant in the room in some circles so it was legitimate to ask.

Did Yuschenko have to answer it? No and he shouldn't have. He should have deflected it by saying something about it being his son's own life or that he, like any parent, had only so much influence with a son who no longer lives at home. Something like that. To antagonize the press like he did was not a good thing to have done. And by answering the way he did, he takes the problem on himself. Maybe that is the way of a good parent, I haven't thought that one through. (And I think Yuschenko is a good man and an honest one.) But it isn't wise for someone needing to change a government and in many ways a whole culture.

The problem is that after the initial shock wears off, a shock, by the way, that wouldn't have been felt in the US or Britain, the press are going to not only investigate the son and that won't come out good--too many questions that seem like they cannot be answered with anything politically viable--but they will also not be giving Yuschenko a pass on anything. This is particularly bad because there is no real attempt by the government to make its case. If it has to overcome a negative by the press, this will not be a helpful thing, especially if things begin to turn south with the economy.

And it is Yuschenko that is the liberalizing force in the government just about the only one. If he is dogged at every step and has to make his case over the press, that will just set reform and liberalization all that much further behind, especially again since there has been no attempt to make any semblance of a case for ,much of anything in public.

Why pick a fight with the press on such a peripheral matter and such a small matter? Maybe Yuschenko is frustrated and that frustration just came out at that conference. If that is what happened, he would lose nothing by apologizing and probably gain a whole lot by doing it.

I support Yuschenko and have since the revolution. I think he's an honest man and a good one. And I think the task he has at hand is one that borders near the impossible, at least in the time frames that are there for him to do it. But I want to see him succeed. He deserves it and the people do too, especially them. Ukrainians have had to endure decades of hardships and still endure them. They deserve to have something better than what it is they have now.

More on root causes of terrorism

When the theory conflicts with the facts, what do you do? Terror's Global Ambition. Jettison the facts.

By a week ago the prevalent view according to the British media was that the attacks were carried out by young men "angry about British involvement in Iraq."

This created the illusion of a rational cause-and-effect. The London daily The Independent put it starkly: Osama bin Laden had warned that if "we bomb his cities in Iraq" he would bomb "our cities" in the West.

The London daily did not bother with such uncomfortable questions as why, if Iraq
were the motive, no Iraqis were involved in the attacks. Nor did it stop to wonder why Iraq should belong to bin Laden, who has never even seen the place except on a secret visit in 1999, and not to the Iraqi people. Needless to say it also did not mention that the terrorists who are killing Iraqis in their cities belong to the same ideological family as those who attacked London.

At any rate, most Britons, having paid attention to their media and read reports of an analysis by the Royal Institute for Foreign Affairs, a think-tank which also claimed that London was attacked because Saddam Hussein was toppled in Baghdad, were about to go away convinced that they knew why Britain had been targeted.

Then came news of several terrorist operations thousands of miles away. These included explosions in three Algerian cities, in the Pakistani city of Quetta, in the Lebanese capital Beirut and, the deadliest of them all, in the Egyptian resort of Sharm el-Sheikh.

The same media that had wrapped things up by identifying the liberation of Iraq as the reason for attacks on London began to wonder if other reasons may have been involved.

That, in turn, led to the revival of the classical explanations for the latest attacks.

One explanation was poverty. Those who massacred innocents in Sharm el-Sheikh were angry about poverty, one pundit observed with a straight face.

The truth, however, is that most of the 90 or so people who died in Sharm el-Sheikh were poor people who had just found jobs in the tourist industry and were beginning to build a modest life for their families.

The attacks against Sharm el-Sheikh will not only not help alleviate poverty in Egypt but are sure to increase it dramatically. If tourism, the flagship of the Egyptian economy, is hurt it will plunge the country into recession, threatening over 100,000 jobs, according to official estimates.

Another explanation, by an American pundit, was that young Muslims were angry with the loss of their identity and were trying to revive their traditions. This, however, assumes that car bombs and random killing of people in public transport constitute part of the Islamic identity and tradition.

There's more of course.

Banned in China

I have a friend who just wrote me that he could not get this blog right now in China. He has tried but it won't come up. Getting access to it is not a problem for him in Thailand but he can't get it in China.

I find that to be a real compliment. To be blacklisted and banned by the Chinese government has to be one of the greatest honors I can think of. I will have to put it on my resume.

It has to do with my coverage of the revolution--it has to be. In fact, I would think it has to do with the word "revolution." That one would come up quite a bit in a search of this site. And that word is not something the Chinese government would be all that, umm, comfortable with.

Now I wonder if they would deny me a visa?

I would though hope that it is on the Chinese side and not Blogger doing it on this side

Bureaucracy, title and the rule of law

This story illustrates four problems here, rule of law, title, powerful monied interests and a bureaucracy to give them what they want--Kyiv Weekly.

Six families with 17 members live in tents next to a former dormitory in the village of Chabany not far outside of Kyiv. These people were ousted from their rooms after they were privatized together with the KyivSilMash plant. Then the rooms were renovated and sold to new owners.

The evicted claim that they were literally driven out of their rooms. Initially there was a complete blackout in the building and then the gas and water were cut off. Unidentified people crashed the doors of the building and broke the windowpanes.

A vandal caught by former residents explained that he was hired by builders and was preparing the windows for renovation. Now, those who were evicted from their rooms cannot access them. Residents saw through the windows how the hired builders gathered their belongings and covered them up with protective sheet. The worst part of the story is that the owners of these belongings were not even admitted to take them away. In addition to that, the builders welded the door of
the main entrance shut and pass construction materials through the windows.

There's more of course and it is illustrative.

Reminds me of the problem we had here when some people in our apartment building, a new building, wanted to create a home owner's association. There was an anti- meeting out on the playground. Lots of people and lots of loud talk. One lady, wanting to make her case--suspiciously, she didn't own an apartment here; there are reasons why she would be interested and not any of them good-- took out a legal paper and read a decision of a court giving an apartment block back to the city in the face of a home owner's association. That was open and shut for her and she had a look of triumph on her face when she finished reading. (The murmur that went from one person to another was, "She's an attorney! She's an attorney!" A hush descended over the crowd...or something like that.)

I thought to myself, What a joke. If you get to the right people you can get the verdict you want. If I researched it enough, I could probably come up with a score of contradictory verdicts on the same issue. What is it, the facts were different, the law was different? No, the people who had the connections were different.

So what does this say to potential investors? Probably not much more than they already knew. The returns here are high and the risk is high too. But we have found ways to deal with the problems here so we can note it, complain about it and get to work solving problems for clients.

The thing that most people do not understand is that there was much the same sort of system during Soviet times. And there was much the same sort of system prior to Soviet times. As a matter of fact, there has been much the same sort of system in place for centuries. Not much has changed.

Local administrative measures

More administrative measures from government--Kyiv Weekly.

The purchasing price of milk in the Sumy oblast has been falling since the middle of spring. Milk processing plants offered local farmers Hr 0.80 and sometimes even Hr 0.75 for a liter of milk. Such an understated price clearly irritaated dairy farmers, who a month ago tried getting the attention of the government by writing several letters of petition.

When they did not receive a response from Kyiv, dairy farmers from several counties of the oblast refused to sell milk to the processing plants. The provincial government detected such cases in the Nedryhailiv, Romny, Sumy and Krasnopillya counties.

Deputy Governor of the Sumy Oblast Volodymyr Sapsai told KW that “unorganized milk strikes” had broken out in several other counties of the oblast. Meanwhile, the governor of the oblast briefed the Ukrainian president on the situation during the latter’s visit to the region and requested that he take measures to prevent potentially uncontrollable processes from breaking out in the villages.”

On its part, the provincial government recommended milk processing plants to raise
their purchasing price to Hr 1 per liter of milk. The Head of the Oblast Department on for Issues in the Processing Industry Hryhoriy Nehreba stressed in conversation with a KW journalist: “This price takes into account the interests of producers as well. Besides that, the Ministry of Agricultural Policy recommends processors to purchase milk for Hr 1.2 per liter.”

This is no doubt traceable to Kiev. More of the same.

More middleman talk

This is a big part of the problem--Kyiv Weekly:

Meanwhile, Ukraine's premier has her own opinion on the subject. Yulia Tymoshenko stated that 2005 harvest grain will be exported by state traders " State Reserve Committee and JSC Khlib Ukrainy. The objective of this is to minimize involvement of intermediaries who buy grain from farmers at very low prices and sell it at world prices. "The government is not looking to pressure grain traders," added Economy Minister Serhiy Teryokhin. "We are simply creating a system that will not allow a number of major grain traders to dictate prices to producers." On this issue, Tymoshenko and Teryokhin have the same position as the Agrarian Policy minister, Socialist Party member Oleksandr Baranivskiy, who has recently had serious arguments on other issues with the two officials. SPU leader Oleksandr Moroz also insists on holding the price through the state acquisitions: "If the government does that, the grain traders will not lower the prices lower than the state. Farmers should be given an opportunity to sell grain to the state at the price they like."

I wonder how it is they think they can have any real economy and any real jobs without any middlemen, only producers and consumers. It is stunning just how much of the Soviet style there is in this. Middlemen as enemies of the state.

The real problem here is the populism of Tymoshenko. She interferes in the economy with administrative measures and that interference causes shortages but her popularity goes up because she sticks it to the Russians and the new kulaks--the middlemen. The real fear is that Yuschenko gets the blame for any downturn that happens but Tymoshenko ends up the hero of the people and head of state. If that happens any liberalization of government and the economy will, at the very least, be on hiatus.

The people will probably be all for it which is their right as bad as that might be. Reminds me of the line in the Fellowship of the Ring:

"In the place of a dark lord, you would have a queen!"

Much more pretty of course but would there be any real difference? That is the question.

Sugar, the WTO and discipline

A few months back, we thought it would be a good thing to stock up on sugar. Ukrainians like to can and my wife is no exception and since the price of sugar tends to go up in the summer, we thought we could save a little by buying it then and buying in bulk.

So we bought two sacks of 50 kilos each. The price was about 125 hryvna per sack or about $25. We got a bit of a break by buying bulk so we saved some over the price at that time.

Today, however, that same sack of sugar costs 250 hryvna. That’s $50 American. So the price has doubled in about three months. That’s a steep rise in the price of sugar. Why such a steep rise? What’s going on here in the sugar market?

There’s a shortage of sugar on the market right now and producers aren’t producing more; they’re at capacity they say. Some of it has to be the canning season. Women are buying sugar to make sure they can preserve their strawberries, cherries, currants, etc. But we have never seen as steep a price rise as this in the past.

So I don’t really know what is behind it. I suspect that production capacity is part of it. It might be that consumption is increasing too. Wages are up here and people are buying more. That means they are buying what might be considered more discretionary items like candies and other sweets. So that could be a part of it too. It is too steep a rise to be accounted for by inflation alone so it can’t be that. This kind of price rise in such a short period of time would seem to be only possible with supply limits of some kind.

The thing is that some of the candy factories are hurting right now because of the price. One in particular had to shut down production because they couldn’t get the sugar they needed. The biggest maker of candies says they will have to increase their price by 20% because of this. I find it hard to believe though that a sophisticated company like that company is would get caught flatfooted like this. I suspect that they have the supplies to tide them over and that the price hike on their products is opportunism, but who knows. All companies are going to have to increase their prices by about that same percentage—20%--they say. And some do export products so that will make their exports less competitive at that price.

But the problem is really the fact that Ukraine protects its sugar industry. Sugar beets are what are processed to make sugar here and that crop is not the most efficient at sugar production. Sugar cane is better but that means imports and the importation of sugar is not going to happen. There was some talk about it the past couple of weeks by the government but the decision was no. They felt that there were sufficient stocks in the country to tide them over but I think that they really didn’t want to uncork the bottle and let the genie out. It might be hard to put him back in when the people see the price of sugar decline dramatically.

Sugar of course is protected in the US because of a small group of well connected producers in the south. They have been able to prevent competition from foreign sugar for a long time. And they continue to be able to do it. This means that people in the US pay about twice what is being paid internationally. But this constitutes a tax on the people of the US and it is a tax on the people here too. Businesses do not pay the increased costs; consumers always do.

There is though the argument that Ukraine needs to go slow, that it cannot completely open up its markets because that will cause a lot of economic dislocation. The point is that people would lose jobs and there would be a lot of them out of work if the doors were thrown open. This is true. The only question would be in what numbers this would happen. So there is a lot to be said for that position. The problem though is that it is going to have to happen some time in all markets here. To say they need to go slow should not be a cover for really not wanting to do it. It will have to happen. If they keep saying no for every industry it just means not that they are going slow, but that they are not going at all.

That is why WTO entry looks appealing. First of all, it tends to give some structure to the governments policies, something that the government is lacking right now. It also gives those policies a coherence that is also lacking right now. Focusing on the WTO gives them just that, focus.

Secondly, it commits the government, the whole government, to a policy of liberalization, not only of the economy but of institutions. It hasn’t been clear whether the government was for liberalization or not. There have been a number of people speaking with a number of voices on the subject so it has been difficult to tell. Commitment to WTO entry signals government intentions to liberalize.

Thirdly, there is a stick that goes with the carrot. If the country does not join the WTO, they cannot get trade privileges. No trade privileges means an inability to compete internationally in the end. And if Ukraine enters the WTO and fails to keep its commitments there, sanctions would result. This would provide a discipline for the government in economic and trade matters that it might not be able to generate on its own.

These are reasons why it looks so appealing.

A conservative responds to the shooting

A conservative reacts to the shooting in London---Telegraph Opinion Don't wait for a marksman - get stuck in.

If the defence of what happened to Mr de Menezes is that it was the right treatment but the wrong patient and we'd better get used to it, perhaps the British Tourist Board could post signs at Terminal Four: "BIENVENUE A LONDRES! WE SHOOT TO KILL!" On the other hand, the day before the Met inaugurated its new policy, three suicide bombers managed to escape through Tube stations full of people. At Mr de Menezes's station, Stockwell, according to passenger James Boampong, "an olive-skinned man" mumbled a final prayer and then attempted to self-detonate on the Northern line. It was, fortunately, a damp squib. But he left his smoking backpack on the floor and fled at the Oval, up the down escalator and out to the street. Three passengers and the flower seller outside the station attempted to stop him but failed. Where was everyone else? Were they, like Tube drivers on the Bakerloo later that morning, downing tools and withholding their labour?

"Defiance" has to be more than just the latest disposable cliché of the headline writers. It would have been better had the "olive-skinned man" been caught and Mr de Menezes had been allowed to go to his electrical job. To do that you need not killer cops but an alert citizenry that understands, when you're on a train underground and something funny starts, there's unlikely to be any elite marksmen down there to take care of it. It's up to you.

And in the broader sense, the pathetic public execution of an innocent man on July 22 joins the events of July 21 and July 7 as a reminder of why a narrow, reactive law-enforcement approach to terrorism will always penalise the populace more than the terrorists. You win this war militarily (in the badlands of Pakistan and elsewhere) and culturally (which is a much tougher battle). Shoot-outs on the Tube aren't going to be much help - though, if they advance from Brazilians at Stockwell to theatregoers at Leicester Square, overcrowding at the Olympics isn't likely to be a problem.

He's right. The problem is that I think this will end up defining a new reality for a lot of people. If the bombings don't end, everyone will clamor for it.

Man shot by British cops not terrorist

This is a real shocker. Man shot by British cops not terrorist. (It looks like I do regret it.)

British police hunting London bombers yesterday admitted killing a Brazilian electrician by mistake -- a blunder that dealt a blow to their efforts to track down militants they fear could strike again...

Police expressed regret for having killed the Brazilian man a day earlier and identified the victim as Jean Charles de Menezes, a 27-year-old electrician who had been living in London for three years.

I guess he thought Immigration was after him when he took off. Looks like this is what is given up. You'd think police had more on the guy than it looks like they had. In fact, it looks like they had nothing.

What a terrible thing.

UPDATE 7/26: Contrary to what I posted, it looks like he was there legally. As to why he would run, someone has suggested that being followed by men who end up brandishing weapons would make anybody run.

Someone once said that if it is a choice between stability and freedom, societies will choose stability. [Originally wrote "freedom" but that was not what I meant.] We in the West may think that people fundamentally desire freedom. That may be true to some extent in the West because the West has been so stable for years. But it is not really true. Others not of the West would just as soon have stability. They have seen what freedom can do and what change can do and they don't like it. And even in the West what will people think about freedom if the bombs keep going off, in the malls, the stores, at public gatherings, at any place we go to as part of our lives? If it is a choice between this or giving up freedom, I think society will choose giving up freedom every time.

One London terror suspect shot

One terrorist suspect has been shot in London--London bombs terror attack The Times and Sunday Times Times Online.

Three officers had followed him to Stockwell station after he emerged from a nearby house that police believed to be connected with Thursday's attempted bombings.

The suspect, described as being of Asian appearance and wearing a thick, bulky jacket, vaulted over a ticket barrier when challenged by police and ran down the escalator and along the platform of the Northern Line.

When the armed officers reached the platform with their guns drawn, they shouted at everyone to get down. As waiting passengers and those already on a train that had pulled into the station dived to the floor, the suspect jumped on the train. Two witnesses said that as he entered the train he tripped, ending up half in and half out of the carriage, on all fours. Within seconds, as the clock tower outside the station chimed 10am, the officers caught up with the man and pushed him hard to the floor. Witnesses said that they then fired up to five bullets into him at close range, killing him instantly.

I know this is a terribly rude thing to say and I will probably regret it but it seems so fitting: "MIND THE GAAAP!"

This appears at first glance like the sort of thing that you might expect from a third world country. When I was in Venezuela a few years back, there was a hold up at a bank, I think it was. (It was a hold up. Whether it was a bank is the memory problem.) The police got to the scene fairly quickly and chased them down. One of the criminals was downed by a shot early on. When the officers passed him on the sidewalk, they pumped more bullets into him. Due process, at least in the sense that they thought he was due it.

But this is only superficially like that shooting. This guy was supposed to have wires hanging out of his coat, at least that is what some reported. That he didn't have a bomb or that he might not have had wires in fact running out of his coat in the end, doesn't really change the risks the situation presented to the officers and to those others on the subway car. If he had had a bomb and could have set it off, there would have been casualties, possibly lots of them. To shoot him would be the lesser of two evils. It also may end up defining a new reality.

This may be unsatisfactory to some. But I would ask what the alternative is to it? Even those who might be crying out against such an outrage--"he didn't have a bomb!"-- would themselves demand it if they were faced with the constant threat of bombs going off in all areas of London, week after week after week. The point is that due process tends to become nothing more than a procedural nicety when a society is under attack.

But maybe something will be lost with that in the long run. I don't really know.

Is Islam to blame?

Here's another interesting commentary on the why of terrorism--Is Islam to blame?.

A lot of people won't agree and will say his is a racist explanation. This case is kind of hard to make here; he's a Muslim. They will insist that it is poverty or Palestine or some other root cause. But for a civilization that holds multiculturalism as something on the order of the Ten Commandments, this is being guilty of seeing everything through our own Western eyes.

Among other interesting things, the author says:

Even now, the Muslim Council of Britain adamantly insists that Islam has nothing
to do with the London attacks. It cites other motives "segregation" and "alienation," for instance. Although I don't deny that living on the margins can make a vulnerable lad gravitate to radical messages of instant belonging, it takes more than that to make him detonate himself and innocent others. To blow yourself up, you need conviction. Secular society doesn't compete well on this score. Who gets deathly passionate over tuition subsidies and a summer job?

Reminds me of what Orwell said: "At the time of another war, George Orwell made this point: "The Western democracies [the US and Western Europe], he observed, had come to think that 'human beings desire nothing beyond ease, security and avoidance of pain.' Whatever else could be said about it, fascism was 'psychologically far sounder than any hedonistic concept of life.' Hitler knew that men and women wanted more than 'comfort, safety, short working hours, hygiene, birth control.' 'Whereas socialism and even capitalism have said to people "I offer you a good time, "Hitler has said to them, "I offer you struggle, danger and death," and as a result, a whole nation flings itself to his feet." The True and Only Heaven, Christopher Lasche, p. 79."

We don't understand this. It doesn't register with us. But you can't understand the appeal until you understand this fact.

Grain exports burdened

And this isn't even because of corruption--FirsTnews / Articles. Unless, of course, bureacracy is corruption.

“We have reached the moment when it [grain export] is completely unprofitable if traders don’t receive refunds of the value added tax. If you look back for several years, there were thousands of traders. Only a relatively few remain; famous companies are disappearing before our eyes,” Volodymyr Klymenko, executive director of the Ukrainian Grain Association (UGA), said in remarks delivered at the meeting.

However, this year promises to be a good grain harvest, and exporting continues to be the most profitable option, agriculture minister officials claimed.

“According to our forecast the export potential consists of more than 9 million tons of grain. Of that, wheat represents about 6 million tons. This potential represents the opportunity to earn money and to have income,” the First Deputy Minister of Agrarian Policy Ivan Demchak said.

Talk of potential income brings ironic smiles to the faces of grain traders. In Ukraine, delivering grain from a producer to a ship’s cargo hold is a complicated system in which every step requires a payment. Klymenko provided information that he said shows the expensive process of delivering grain from elevators to ships with traders required to make 22 different payments for services related to the transfer.

“All costs, which are born by those who take the product from an elevator inside the country and deliver it to a ship, add up to more than $40 in Ukraine. In Europe this sum would be $20,” Klymenko said in an interview with FirsTnews.

It's just a lot of bureaucracy and they set the prices according to which, transparent governmental policy, economic forces or administrative needs? Take a guess.

Bribery Soars to $319 Billion Per Year--Russia

This is a real drag on business and a tax on the people--Study: Bribery Soars to $319 Billion Per Year--though there appears to be good news here.

Bribery is on the rise, with businesses and individuals forking out $319 billion per year to bureaucrats, police, educators and doctors, according to a study released Wednesday.

However, people are gradually growing more reluctant to pay bribes, it said.

Bureaucrats and other state-paid employees are putting increasing pressure on people to pay bribes, despite well-publicized efforts by the Kremlin to crack down on corruption, according to the two-year study by Indem, an anti-corruption think tank, and Romir Monitoring.

"The stable growth of corruption is provided by the extra pressure that the authorities are putting on ordinary people to make them pay bribes," Indem president Georgy Satarov said at a news conference.

"However, ordinary people have appeared to become more reluctant to pay bureaucrats, finding other ways of solving their problems, and this a very positive effect," he said.

Ukraine is on a par with this at least if you factor in the number of people. A lot of experts say that bribery hasn't stopped under Yuschenko even with the efforts made and despite his own personal pleas. And some say it has actually increased. (It has increased, they say, because the risks to the bribe-takers have increased--they have to charge more and get more to cover their risks. That might be good news.)

What a shame this is. What kind of real uses could that money be put to to increase the standard of living of Ukrainians and Russians? That amount in Russia is larger than the oil hedge fund they have. What a real waste.

Ukrainian Traffic Police to be Disbanded?

This is a good thing--Ukrainian Traffic Police Officers Confused.

Ukraine's traffic police were confused about their fate Tuesday, a day after President Viktor Yushchenko said he wanted to disband the 23,000-member traffic police department because of widespread corruption.

I have written about this before. It is a fact that the traffic police are corrupt. And I can't see any bad result from not having 23,000 traffic police on the road. It couldn't cause havoc in the streets because there is already havoc in the streets with 23,000 traffic police on duty.

Ukrainians are some of the worst drivers in the world. As a matter of fact, I can't think of any worse. (I used to think Utah drivers were the worst until I visited New York. But drivers in Venezuela are worse than that and topped my list until my stint here.) Traffic rules are violated with impunity and the higher priced the model, the more you can expect that the rules will be broken. Could it be that the people who drive the Mercedes' and BMWs think they can get out of any problem when stopped? The answer is "yes," by paying money which they would have enough of. But everyone does it.

There is no such thing as a driving lane, for one. You find cars all over the place even on roads where the lanes are marked. Some drivers appear to be using their hood ornament for positioning; they put it right on the line.

A few weeks back, we took the family out of town. To get to where we live to where we wanted to go, we had to cross one of the bridges that span the Dnieper River.

When we got to the bridge, traffic was backed up. There had been an accident upfront we later learned. The road had six lanes, three to a direction but there were five lanes that were backed up. How could there be five you ask? Wouldn't it be all six or just three? That is what would happen in the US but not here. Some enterprising drivers moved over to two of the opposing lanes to get some advantage. That left one lane for traffic going in the opposite direction. This happens all the time. It may seem clever or at least practical but my question is, What do they do when they come to a hill? The traffic going in the the opposite direction is not backed up and is going the speed limit--or higher. (Mostly higher.) It is a catastrophe waiting to happen.

And I have seen cars forced off onto the shoulder by cars passing slower traffic going in the opposite direction. It has happened to us, as a matter of fact. (Again, the more expensive models are the worst culprits. It seems that they feel it is an entitlement.) They just get the idea to go and anyone coming up from the other direction has to get out of the way. It creates all sorts of risks and is frankly really stupid but it happens all the time. When we go out of town and travel on a two lane road, I crowd the shoulder to keep out of the way. And I have to pay attention to avoid problems.

So I don't think that disbanding the traffic police will change anything. People now flaunt the traffic rules with impunity with all these police on the beat. How could it be worse?

Population decline in Ukraine

This problem has been brewing for a long time---:: In 20 years there will 10 million fewer Ukrainians :: Ukrayinska Pravda.

Radio Era reported the other day that there were roughly half the number of births as deaths for the first five months of the year in the country. That is part of the reason. There are not enough babies to take the place of those who die. There have been incentives to try and reverse that. The government makes a one times payment to parents of about $1600 on the birth of a child, for example. But we are hearing that there is a lot of paperwork that goes along with it--what here doesn't take paperwork and a lot of it--and it may not be all that easy to qualify for as it seemed originally.

The other problem is that Ukrainians aren't living as long either. Life expectancy in Ukraine (and in Russia for that matter) has declined since the collapse of the Soviet Union. For males the decline has been sharp--I think the figures now are 72 years for women and 60 for men.

A lot of that decline in male life expectancy may be linked to alcohol. It has been said that a significant percentage of men die drunk. That would make alcohol the other other problem. And it is a scourge here. More about that later--maybe.

Only Aiding the Terrorists

This can't be a good thing---Only Aiding the Terrorists.

...At the same time, powerful anti-American forces in Moscow have recently been doing their best to further subvert the already fragile anti-terrorism alliance. Airat Vakhitov, a Russian Muslim who was captured by U.S. forces in Afghanistan and held in Guantanamo until March 2004, held a news conference in Moscow two weeks ago and decried the desecration of the Quran by U.S. solders. It later became known that Vakhitov did not see the desecration himself but was told about it by a fellow inmate at Guantanamo.

The news conference of this not very credible witness of U.S. abuse was organized by the pro-government RIA-Novosti news agency. Vakhitov's statement that the Quran was flushed down the toilet appeared all over Russian television and was repeated for days afterward by the state-owned Rossia channel.

A high-ranking Kremlin insider told me on condition of anonymity that Vakhitov's story was "a Soviet-style anti-American propaganda operation," organized by our intelligence services. The same source confirmed that the promotion of Vakhitov's tale was authorized at the highest level.

Moscow is undermining anti-terrorist solidarity in other ways as well. The Pentagon states that the main bases for terrorists operating in Iraq are Syria and, to a lesser extent, Iran. Syria and Iran are the main sponsors and safe havens of Islamist terrorists and at the same time enjoy close political and military ties with Russia. Moscow is selling Syria modern anti-aircraft weapons that may be deployed to defend terrorist bases from U.S. air counterattacks. A deal is in the works to equip Russian-made Iranian Kilo submarines with supersonic Club-S anti-ship missiles, which could be used against the U.S. Navy in the Persian Gulf...

A ghazava?

Here's an interesting perspective on why they are doing it, why the terrorist attacks---And this is why they did it--Times Online guest contributor's Opinion.

Moments after yesterday’s attacks my telephone was buzzing with requests for interviews with one recurring question: but what do they want? That reminded me of Theo van Gogh, the Dutch film-maker, who was shot by an Islamist assassin on
his way to work in Amsterdam last November. According to witnesses, Van Gogh begged for mercy and tried to reason with his assailant. “Surely we can discuss this,” he kept saying as the shots kept coming. “Let us talk it over.”

Van Gogh, who had angered Islamists with his documentary about the mistreatment of women in Islam, was reacting like BBC reporters did yesterday, assuming that the man who was killing him may have some reasonable demands which could be discussed in a calm, democratic atmosphere.

But sorry, old chaps, you are dealing with an enemy that does not want anything specific, and cannot be talked back into reason through anger management or round-table discussions. Or, rather, this enemy does want something specific: to take full control of your lives, dictate every single move you make round the clock and, if you dare resist, he will feel it his divine duty to kill you...

There's more of course and it is interesting.

London attacked

A terrible, terrible thing yesterday. I have only seen the pictures from news sites. We are without a television right now so we haven’t seen any of the footage. But the pictures are very familiar.

I love London. It is one of my favorite cities of the world. In 1998, I was there for a few weeks and got to know the “tube”-- the subway-- very well. I took it everywhere. I got to know it so well in fact that I could answer Londoner’s questions about how to get to there from “here.” (Some actually asked me.)

So I am familiar with some of the station names in the news yesterday and today. And I think it was Tavistock Square that I passed on my way to the British Museum when I was there. (I don’t have my maps here from that trip so I am not absolutely sure. But I did pass a square when I came to the museum from the north. See the map here.) That is the square near where the bomb went off on the double-decker bus.

Those who have spoken on the bombings have talked in terms of innocents. To the enemy they are not innocents at all but are part of Dar al-harb or that part of the world not under the sway of Islam that fundamentalist Islam is at war with. Those not under Islam are not innocent ac\cording to them. They are the enemy to be dealt with as enemy. To these fundamentalists, there is no such thing as non-combatants. All are combatants, all are the enemy, and that makes all guilty.

But that point of view is not limited to fundamentalist Islam, I’m afraid. We in the modern, tolerant West find whole classes of people to be guilty simply because of how they are classified. So people in the red states are dismissed as something less than human to be discarded at the first opportunity; the unborn constitute a threat; those who are religious are the real enemy; and so on and so on. And the hatreds of so tolerant a people thicken the air.

After the dust settles and the blood is all mopped up, you can expect that some in the tolerant West will actually argue that the people who were killed were not really so innocent after all. It has started already with the “if-these-people-weren’t-so-poor-they-wouldn’t-have-done- this” kind of talk. (Read: “If we weren’t so greedy in the West this wouldn’t have happened.” All are guilty of greed.) It will be said that these people who were killed and maimed were really a part of the oppressors who keep the rest of humanity down. They may not all say it—some things may still be beyond the pale, especially now—but what will be unstated is that they really did deserve what they got. Falwell, Robertson et al, will say these people deserved it because of wickedness. “But these guys are religious bigots. They would say that. Now give me the class struggle. That’s a entirely different thing altogether.”

Anyway, yesterday innocent people were targeted and killed. The only thing good to have come from that is that it could have been much, much worse. It may end up being called Britain’s 9/11 but it won’t have been on that kind of scale. That is not a criticism--it is something to be thankful for.

Lack of Trust Carries Heavy Toll--Russia

I think something like this is true in Ukraine too--Lack of Trust Carries Heavy Toll

Would you trust a stranger on a train to look after your bag while you run to the toilet?

Probably not if you're Russian. Seventy percent of people in Russia believe "you can't be too careful in dealing with people," while only a quarter agree that "generally most people can be trusted," according to a poll of 1,500 Russians conducted by the Bashkirova & Partners market research firm last month.

The lack of trust does not just translate into a greater air of suspicion, it also carries a heavy price that weighs down the entire economy.

In the absence of effective mechanisms that enforce contracts and protect property rights -- what economists broadly call "legal institutions" -- trust is left as one of the few informal pillars of economic activity.

Although the costs of mistrust are indirect and hard to quantify, they undeniably take a heavy toll on economic activity. Insecurity forces companies into unprofitable businesses to secure supplies, confines entrepreneurs to dealing only with close partners and deforms the whole structure of the economy.

There are ways of dealing with this, of getting around this we have found, but to not have real rule of law, or, to put it as one analyst does more accurately, to have rule of law except when it matters, affects the smooth and efficient functioning of the system. It means predicitiblity and that allows businesses to better plan.

But there are also personal costs involved with it. Uncertainty has been a part of Ukrainian life for centuries. It is not something started after the Revolution under the Bolsheviks. It was a way of life under the Czars. In the end, it might just be one of those things that has shaped the Ukrainian soul.

No visas for US citizens?

It was reported on Radio Era this morning that citizens of the US will no longer be required to get a visa for entry into Ukraine. They can stay for 90 days visa-free.

The Ukraine Embassy website still says that visas are required but that may mean that this is new and hasn't had time to trickle down through the bureaucracy yet.

The US Embassy here has reciprocated by lowering the fees for visas to the US. Not much but it is something.

Some may think this benefits Americans only. This is shortsighted. I have always wondered why the Ukrainian government would think that the fees generated by the visa requirement which make it difficult for people to come in to sightsee and vacation are worth more than the money that tourists would leave here. The money tourists leave creates jobs. Payments to the government do not.

Tourism is a plus for everyone here. Let them come in and spend. Its money that will help the economy.

UPDATE 11:30 a.m.: The Moscow Times says the same thing. Of course this will be good for attracting investment too. But tourism is a more immediate benefit.