Andriy Pyshnyi:The further Ukraine is from the Customs Union, the better

17 December 2012, 14:18

In 2000 Pyshnyi began to work as the Head of the Legal Department at Oschadbank (State Savings Bank of Ukraine), rising to the position of First Deputy Chairman, and in 2004 – 2005 he was acting Chairman of the Management Board. From May 2007 until June 2009 he was the Deputy Secretary of the National Defence and Security Council of Ukraine. He entered the parliament as No. 19 on the Batkivshchyna party list. The newly-appointed politician enjoys the trust of Arseniy Yatseniuk: In the Front for Change, he headed the Party Control Committee and during the election campaign, was one of the Deputy Heads at the Election Headquarters.

UW: What are your views on the 2013 State Budget?

If I’m not mistaken, Members of Parliament only received the draft budget around lunchtime on 4 December. One thing that catches the eye is the fact that there is a change in emphasis: from the “carrot” budget, to a “stick” budget. Taxpayers will once again pay for everything: UAH 1.6bn less income tax will be collected from Ukrainian enterprises, while it is planned that UAH 1bn more tax will be collected from private individuals, in other words, from the citizens.

At the same time, there doesn’t appear to be a light at the end of the debt tunnel, which Ukraine is hurtling through for the third consecutive year – the direct and guaranteed national debt is reaching an enormous UAH 600bn.    

In early 2012, the budget deficit constituted UAH 8bn, but increased to UAH 38bn in the third quarter alone. To understand the actual budget deficit, it is necessary to add to this the official Pension Fund deficit, state guarantees (including for NJSC Naftogaz of Ukraine), UAH 40bn of VAT that has to be repaid, UAH 16bn of overpaid profit tax … If you add all of these together,  the actual deficit exceeds the planned deficit by 100%. 

It’s the same situation with the draft 2013 budget. The official deficit is UAH 50bn, 3,2% of GDP. However, they forgot to count the Pension Fund deficit – UAH 40bn, financial support via government bond borrowing to Naftogaz and Oschadbank – UAH 8bn and UAH 1.4 accordingly, the loan to the Agrarian Fund – UAH 5bn and state guarantees – UAH 50bn. It turns out that the actual deficit is at least 9% of GDP! All of this means that the basic microeconomic indices at the present time do not only have blurred contours – they don’t even exist as such. Budget planning is dead.

UW: But if everything is really so bad, how can the country exist at all in the coming year?

Ukraine is facing an extremely difficult year. Internal incompetence and insatiability are aggravated by external challenges . This budget was written “on the run”, in haste and does not reflect anything, other than Yanukovych’s attempts to stay in power at all cost. As a result, funding for the General Prosecutor’s Office increased the most – by UAH 550mn, the SBU (Security Service of Ukraine) – by UAH 160mn and twice as much has been allocated to maintain public order than for national defence. The main enemy of the Ukrainian government is within the country.

This is the reason why  Yanukovych had to have the budget passed, no matter what, by the current Verkhovna Rada, which is under his control. Political idiocy: the lame-duck government – forwarded the budget to the equally lame Verkhovna Rada. As a result, Ukraine does not have a budget, but the cost estimate of a war against its own people.

 Yanukovych feels that the next parliament will be considerably more difficult for him. I was on air at one of the TV channels yesterday and one of the participants, an MP from the Party of Regions frankly admitted that his party does not know how to work with the new parliament and the opposition in this parliament. There is no pro-presidential majority. To be more accurate, it will be situational and Yanukovych will have to put it together anew each time. And, of course, the main achievement of society lies in the fact that the government will never have the 300 votes required to change the Constitution. By the way, this explains why the current majority was so quick to approve the law on an all-Ukrainian referendum, in violation of regulations and the Constitution. After its initial rejection, it spent two and a half years on the shelf.

UW: Is there a threat that the referendum can be transformed into an instrument of power for Yanukovych, bypassing parliament?

Absolutely. This instrument allows the implementation of the plan to usurp power. This law allows changes to be introduced to the Constitution and laws to be approved without parliamentary participation. It also allows Yanukovych to “give his blessing” to decisions, related to such fundamental issues as the sovereignty and territorial integrity of Ukraine. I presume, that having recovered after the defeat in the election, the Presidential Administration has realized that it has lost – that Ukraine now has a parliament that that stands in the way of the usurpation of power and will be a hotbed of opposition.

The main value of the new parliament does not lie in what it can do, but in what it can prevent. This is why the government has started looking for alternative routes, one of which is the resuscitated anti-constitutional law on the referendum.

This law is made out in such a way, that in many cases, the person formulating the questions can programme responses. The executive hierarchy completely controls the vote-counting process. The Central Election Commission (CEC) does not even publish the results – merely “announces” them! And under this law, it is the CEC that determines the constitutionality or non-constitutionality of the questions included in the referendum. We all saw last month how the CEC works, when it was completely unable to establish election results in so-called “problem” districts, even with the protocols stamped with original ink seals in their hands.

The government will try to throw questions that will polarize society into the referendum. They are constantly busy with this to distract public attention. For example, this is what happened in July, when it was “selling” the law on the destruction of the Ukrainian language. This is how it was able to mobilize its own electorate. 

UW: But the opposing camp was also mobilized – look at the numbers gained by the Svoboda Party.

Indeed, this initiative worked on both sides. But the essence lies elsewhere: in three years of the Yanukovych regime, the provisional division of the country into East and West has lost the mobilizing significance, which is so important for the Party of Regions. Society has begun to group along the government – people line. So, having thrown in a provocative subject, the Presidential Administration is trying to distract society from the socio-political situation and work on the division of Ukraine.

I do not rule out that the law on the referendum will be used for the polarization of Ukrainians at critical moments for the Party of Regions, for the purpose of thrusting its destructive scenario on society, which has nothing in common with the real needs and interests of the people.

UW: So what can the opposition do with this law?

First of all, refuse to recognize it. Secondly, we are working on an appeal against this law in the Constitutional Court. Thirdly, it is necessary to set up effective communication with society, which would express its aversion to this law just as decisively.

By the way, this is the top-priority task – the organization of not only an effective opposition in parliament, but also consistent communication with society for the purpose of its active engagement in political life.

UW: Is the opposition intending to cancel or change such ambiguous laws as the law on the principles of foreign and domestic policy or the language law, and if so, how?

As far as the law on the principles of foreign and domestic policy is concerned, even today it provides for European integration as a foreign policy priority, which is why Yanukovych has no choice by to execute it. The only thing that has been removed is the clause on NATO membership, which has been replaced with Yanukovych’s Kharkiv deals, under which Ukraine pays the highest price in Europe for Russian gas, gave Russia part of Ukrainian territory and also limited its own foreign policy field.

UW: Do you consider NATO membership to be irrelevant?

First and foremost, I see NATO as an organization, capable of forming a reform agenda for Ukraine. This includes the establishment of sound civil society institutions. In general, democracy is a privilege of healthy societies. In this context, the standards of NATO member – states are important – just as important as EU Association, since it is pointless searching for a better plan.

UW: In your opinion, should Europe agree to this Agreement under Yanukovych’s presidency, or should it block it until there is a change of power in Ukraine?

I am one hundred percent behind the Agreement being concluded as soon as possible, this is why Europe should not abandon Ukraine, but on the contrary, must strengthen pressure on the ruling regime, personifying responsibility. Together with the effective work of the opposition and a combination of external and internal factors, the government will be forced to make extensive compromises with society. 

Opposition to the prospects of the signing of the Association Agreement under the Yanukovych presidency is demonstrated by the fact that international isolation has been imposed against Ukraine by the West. What is less obvious is the fact that political isolation has tangible consequences in the economic sphere. More specifically, this is why Ukraine cannot continue its cooperation with the International Monetary Fund.

UW:  In your view, will Ukraine still be able to borrow money abroad on the scale necessary to support the economy in the coming year?

Ukraine is already borrowing at greater expense than pre-default Greece. If the increase in foreign borrowing during Yanukovych’s government is calculated, it will emerge that on average, it has grown by almost UAH 7bn per month.

This is what the regime is capable of: take money while it is being given, and spend it at will. It’s catchword from “stability to prosperity” has a new resonance: in June – a 1% fall in industrial output (in comparison to the same period of the previous year), July – 1.5%, August – 4.5%, September – 7%… Recession is rampant in Ukraine. The foreign trade balance: 2010 – minus almost USD 10bn, 2011 – up to USD 14.5bn and in the first nine months of 2012 – USD 11.5bn. By the end of the year, Ukraine could possibly reach a negative balance of USD 17bn! How’s that for “stability” with a trend towards “improvement”. 

41% of goods on the market are imported. The domestic market is actually in ruins. Each imported item means fewer jobs for Ukrainians. When Yanukovych came to power, the raw material component in the export structure comprised 68%, today – 70%. In the meantime, raw material markets are falling at the fastest and deepest rate, which is why Ukraine lost almost 15% of its GDP in 2008. So what does the Party of Regions do? Having acquired total power, it not only failed to improve the situation, it made it even worse. Why? Because a raw material-based economy is the source for ensuring the prosperity of a dictatorship.

UW: In other words, this is being done deliberately?

If the economy is not based on raw materials, the government must build a completely different system of communication with small and medium-sized business. And this is a completely different organization of state power.

I often met young people during the election campaign. I asked these young people: why doesn’t Yanukovych, with all his power, resolve the issues of the reformation of higher education, ensure the first job placement and construction of housing for young people? Huhe funds are available for the repair of presidential dachas (country residences), so could it also have been possible to find some resources for a youth policy? The answer is that Yanukovych is not interested in young people. After all, they don’t vote for him!

They demand a completely different quality of life and a completely different quality of political power. Therefore Ukraine’s current government is interested in reducing the numbers of these progressive citizens, and having more that are completely degraded. And this is why it is recreating a raw material-based economy. Actually, the same applies in Russia. I recently looked at some statistics – in Russia, raw material accounts for 85% in the structure of exports, while advanced technology products – only 4.5%. And even this, I think, is military-industrial complex production. This is why I oppose the Customs Union. The further Ukraine is from the Customs Union, the better.

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