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24 October, 2013

Is There Life After 28/11?

My former colleague, a journalist, once wrote that all critics of Viktor Yanukovych before the Vilnius Summit are the Fifth Column. If the signing fails at the last moment, they will be the ones to blame because they interfered with his plans.

Honestly, I can’t bear to even think of a failure. The Association Agreement with the EU and Free Trade Agreement is such a critical point for Ukraine and such an effective vaccine of independence, freedom and responsibility for Ukraine that I will obediently shut up for the next six weeks until the summit. One other thing I can’t stop thinking about is whether there is life after November 28?

Does the government realize the mental gap between its current habits and rules of the economic space we are preparing to join? How is it going to overcome this gap? Is it actually going to?

How will my country feel in the free trade area? It offers free movement of goods and money. This means that we will be able to sell our goods to the EU provided that they meet European standards. And investment will come from there to gradually transform our economy. Beautiful! Just one tricky question: does it have a place for a young lady who posts her pictures in fancy lingerie with a bottle of champagne on the social media at night and puts on her judge robe next morning to fulfil instructions from those who appointed her in return for taking off that lingerie? The lady will surely decide that you never invested anything, the money actually belongs to a Donetsk-born Viktor, and a Van Rompuy is not her boss anyway. 

The Association Agreement is a detailed roadmap with well-marked stops, not an abstract declaration of intent. This stands for a piles of laws, directives and instructions to be implemented by specific deadlines and to be followed further on. But this is in theory. In practice, corrupt tax inspectors and police officers, and the lady judge mentioned above will still work all over Ukraine. Their loyalty granted them full power in the country of 45.5 million. And just like any system based on irresponsibility and impunity, this system fails regularly when it’s not about the interests of the country’s leaders. The leaders will hardly notice the failures – they are busy with other things up there at the top.

A few years ago, a gutsy foreign investor decided to invest into a promising IT product in Ukraine. The investor was not only gutsy, but familiar with the local business environment that involves the corrupt tax inspectors, police officers and judges. To bypass all these, he went straight to one of the top officials. The top official – well-known at home – estimated the prospects and promised his support in return for a stake of just 49%. Not 51%! Pretty fair, wasn’t it? The investor expected to share 25% so he took his idea elsewhere. Now, his IT group travels between Ukraine and a close neighbour which is now member of the EU. It is likely to eventually stay there.

My personal belief is that mocking Ukraine’s disastrous economy, including zero GDP growth in 2013 as projected by the World Bank, is shameful. But it is hardly caused by the whims of its aggressive neighbour which paralyzed Ukrainian exports. The reasons include Ukraine’s own M&A practices that translate as “was yours – is now ours” on the local market, loans at 40% and corrupt officials – all the notorious aspects of Ukraine’s business climate. I wonder if the country’s leaders realize the mental gap between their current habits and the rules of the economic, let alone civil and political, space we are preparing to join. I wonder how they intend to overcome this gap. I wonder how soon they intend to do so. I wonder whether they intend to overcome that gap at all.

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