Introductory Research Trip to Kyiv, Ukraine - Report

Dátum: 16.09.2005

Project: Economic Reform Know-How Transfer to Ukraine (SLOVAKAID/UNDP)
INEKO + ICPS, Ukrainian partner ngo

Travel:
Sept 12, Bratislava (8.30) – Vienna Schwechat (10.35) – Kyiv (13.40)
Sept 18 Kyiv (15.20) – Vienna Schwechat (16.25) – Bratislava (18.15)

Accommodation: Hotel Ukraina, Institutskaya 4, Kyiv (breakfast incl)

Goals:
1. Select 5 policy topics for pre-election policy briefs after hearing the opinions of local experts, economists, sociologists, journalists, voters, taking account abilities of INEKO and its own experts
2. Establish firm framework with ICPS as a partner in the projects, sign agreement, explore media opportunities for promotion of project output
3. Understand better Ukrainian reform problems, local attitudes and thinking about economic reforms

Conclusions

Goal One: Five policy brief themes were selected

Summing up and averaging all the opinions heard (see table ), the following topics have been selected:

Business Environment (to be written by expert Jan Mladek, Czech Republic)
Taxation (Maciej Grabowski, Poland)
Poverty Reduction (Miroslav Beblavy, Slovakia)
Healthcare (Lajos Bokros, Hungary)
Pensions (Eugen Jurzyca, Slovakia)

Goal Two: Agreement signed, all project details and deadlines discussed with the partner, including the media part (meeting with the Den daily and Kyiv Post weekly journalists)

Goal Three: Reform Atmosphere Findings

We were impressed by the high quality of Ukrainian experts in the NGO community, commercial and state sectors, and political parties. Sound knowledge of reform dilemmas facing Ukraine was common. Many experts shared the view that regardless of who wins the next presidential elections reforms will take place in Ukraine, given external political/commercial pressures as well as the local demand. Experts expressed desire for reform experience from Slovakia and other central European countries, eager to make Ukraine a rich and successful country.

Voters at large are predominantly hungry for higher living standards, including better social benefits (as opposed to more abstract goods such as transparency and freedom). Fighting poverty has clearly the strongest appeal to voters, as also seen in election manifestos of the candidates and media focus. Desire of gradual progress (not revolution) was expressed several times.

Meetings and activities:

Monday, Sept 13

9.45 meeting with ICPS director Vira Nanivska and project staff Andrew Blinov, Andrei Zelnytskiy , Pyotr Udovenko

Discussion on the project goals and current economic and political situation in Ukraine

11.45. ICPS expert team (A.Blinov, T.Shcherbakova , A.Zelnytskiy)

Preparing methodology for selecting topics for policy briefs – we will choose the importance of topics by gathering views of economic experts (INEKO, ICPS and other Ukrainian experts), economic sections from presidential programs , voters and media.

14.00 ICPS legal team (I.Sokolova)

Finalizing TOR and budget

15.00 ICPS economic team (A.Blinov, T.Shcherbakova)

Discussing current economic reforms in Ukraine and prospects for new one after the elections
Studying economic reform sections of election programs of the main candidates summarized by ICPS: they include big goals (e.g. 5 mil new jobs, increase in social expenditures) but almost no strategy how to obtain those goals

Tuesday, Sept 14

10.00 interviews with “ordinary” voters of main presidential candidates (Tatyana – Yushchenko, Oksana, Tatyana – Yanukovych)

Yanukovych supporters emphasized continuity, gradual change, not revolution, successful fight against poverty (raised pensions, stipends and some social benefits) under Yan, pledge to pull troops from Iraq, common fight against terrorism with Moscow as the main reasons of their trust in their candidate

Yushchenko supporter claimed all the good economic trends were started under Yush when he was a premier (99-01), paying back wage arrears, abolishing numerous abused social privileges, that the candidate is a good economist a has good team of experts around him, on the other hand Yan has a criminal record (Yan voters retort that so does the Timoshenko, politician close to Yush)

potential voters had a rather good understanding of current economic trends (low inflation, high unemployment, difference between official and unofficial rates)

Debate focused on material achievements of both candidates’ economic policies ( social assistance, pensions, although not so much jobs), complaints about pensions loud – impossible to live on (P.S. 14 out of 47 mil Ukrainians are pensioners)

What are the sources of Ukraine’s poverty relative to Central or Western Europe?
Yan: the communist past, people forgot to work hard, bad government so far, lack of experts to lead the economy, many factories idle, need to find them work, although some inefficient mines need to closed,
Yush: lacking rule of law (our constitution as good as the American one, but it’s not being followed/honored in Ukr), lots of corruption, need to bring rich people’s money from illegal offshore accounts into Ukr, legalize their wealth to let them invest at home

14.00. Andrei Zelnitsky, sociologist, Institute of operation of process efficiency

According to polls, Ukr has a relatively low level of “democrat” voters (against strong leader, return of communism) when compared to level of democratic institutions in Ukr – problematic numbers explain part of the finding but still: need to focus on minds of Ukrainians in promoting democracy and market reforms (role of culture?)

2/3 positive attitudes toward Communism (older, poorer, less educated, without jobs) but only 1/5 wants to get back overall

Main problems of Ukrainians (Jan 2004 poll):

  • 89% living standards
  • 16% corruption
  • 14% lack of better perspective
  • 13% rule of law
  • 11% unemployment
  • 10% own health
  • 5% crime

Profile of wanted president:
man of up to 50 years old, competent, leader, economist/lawyer, honest, experienced with government, believer in God
likes of Putin, Thatcher, De Gaulle

16.00 Yevhen Shulha, ICPS media expert

Discussing promoting project output to Ukrainian media and experts

20.00 Local Slovak and foreign NGO Activists, Journalists

Rastislav Kuzel, MEMO98 director (on OSCE election monitoring mission in Ukraine)
Roman Olearchyk, The Kyiv Post reporter
Ilko Kucheriv, Democratic Initiatives Foundation, director
Vasyl Pawlowsky, Magister & Partners law firm

Background on Ukrainian economic reforms and prospects after elections, media reform coverage

Wednesday, Sept 17

9.00 Sergyi Savluk, Head of Economic Research, Prominvestbank (2nd largest commercial bank in Ukr)

Election cycle politics (raising social expenditures from privatization proceeds) causing fiscal policy problems
Banks looking for investments stimuli, for pensions reform (currently there are strict limits on investment targets), tax reform (real estate, land taxation problems, contributing to shadow economy)
They are looking for academic contacts in Slovakia.

11.00 Oleksandr Oliynyk, Institute of Reforms, director

Election programs of main candidates are very similar, say nothing about strategies to achieve lofty goals.
Ukraine face second generation reforms (healthcare, pensions, education) as the privatization is almost finished. Most elites, economic or political, turned towards EU as the only possible direction for Ukraine and their own personal careers/businesses.

16.00 V.Litvitskiy, advisor to the National Bank of Ukraine (NBU) governor, I.Shumylo, director of Dept on Economic Policy at NBU (expressing their personal, not official NBU views)

Reforms will be carried out no matter which candidate will win, under pressure from local and international elites. Tax and pension reforms are most prepared and will be among the first ones to be tackled most likely.
CEE central banks’ experience on risk management, credit policy welcome at NBU.

Thursday, Sept 16

10.00 V.Yanukovych election local Kyiv office’s head (refused to be named)

Voters use the office as a platform for their complaints. Main voter complaints:

  • unpaid frozen Soviet era savings
  • healthcare (1 in 4 complaints): free in constitution, but need to bring medicines and even equipment for operations, pay bribes
  • privatization: tunneling during bankruptcy proceedings (managers bring the factory to bankruptcy, not paying wages, only to buy it back and not pay wages again); buying apartments in houses
  • land restitution: who gets what part of former kolkhoz property
  • gas infrastructure progress stopped
  • corruption in universities (tuition can be charged for 49% of students enrolling at university, tuition rates at $800-1,000), primary and secondary schools on municipality budgets working well
  • labor market: unemployment (official 10%), yet on the other hand lack of skilled workers, problem of migrant workers going to the West (4-7 mil), they will get only minimum pensions (local Social Insurance Fund promotes info campaign about pension obligations to graduation students)

12.00 Oleksiy Bakun, ICPS economist

main areas of expertise: macroeconomic modeling (quarterly predictions publication), oil and gas sectors, micro reforms

Problems of poverty – successive governments offered too many promises and privileges that nobody is capable of paying
Business environment – problems of overregulation (licensing), lack of competition

7 mil Ukrainians are working abroad – not paying social insurance, though guaranteed minimum levels

Reform topics media mostly likely to cover: poverty reduction, healthcare, SMEs, business and physical infrastructure, shadow economy
macroeconomics not an issue in Ukraine

14.00 Vasil Grivna, Slovak embassador to Ukraine

Background to political and economic situation in Ukraine

15.00 Roundtable on Kyiv Residential Sector Economic Reforms (at ICPS)

Lecture and working groups discussing problems concerning residential services in municipal sector in Ukraine (business environment, utilities)

Friday, Sept 17

11.00 Vira Kovtykha, Den daily (one of the main serious dailies in Ukraine)

We discussed possible cooperation within the project (Den is interested in having our experts available for comments, Eugen Jurzyca also provided an interview on economic reforms in Slovakia as well its EU entry experience.

Check the independence and leaning of Ukr media at http://prostir-monitor.org, media monitoring a la MEMO

14.30 Vira Nanivska, ICPS director

Summing up research trip experience, preparation for upcoming events of the project

ICPS interested in CEE experience of EU accession in terms of institution set-up, public policy making, government administrative reform. Projects with expert twinnings sought after.