Leading Ukrainian economist Oleksandr Paskhaver said the authorities would rather have small businessmen work in factories.
Leading Ukrainian economist Oleksandr Paskhaver said President Viktor Yanukovych’s administration will have a hard time changing the Soviet mentality of top officials, as well as rampant conflicts of interest between the president’s oligarch backers and government.
Paskhaver, a former adviser to ex-President Leonid Kuchma, said that in order to understand the authorities’ motives, it’s important to remember that they are “representatives of Soviet management in an industrial region.” Many top officials come from the industrial Donetsk Oblast, he added.
“They genuinely believe that whoever has power has ownership, that administrative pressure is better than economic stimuli, monopoly is more efficient than competition and informal pressure is more effective than the law,” Paskhaver said speaking at a roundtable organized by Frishberg & Partners law firm.
They genuinely believe that whoever has power has ownership, that administrative pressure is better than economic stimuli, monopoly is more efficient than competition and informal pressure is more effective than the law.”
– Oleksandr Paskhaver, leading Ukrainian economist.
He also said the authorities, who adopted legislation last year that increased the tax burden on small businesses while cutting rates for big enterprises, were not inclined to help small businesses. While large protests held late last year by small businesses temporarily rattled Yanukovych’s administration, cornering them into temporary compromises, don’t expect their mentality to change in the future, according to Paskhaver.
Those in power treat small businesses as “an uncontrollable mass, self-sufficient and independent,” Paskhaver said. From the authorities’ point of view, “it would be much better for them to work in factories” that the oligarchs control, he added.
While the new government is energetic, has launched reforms and has shown itself ready to take unpopular measures, such as raising household gas prices, Paskhaver said it was completely focused on economic rather than social tasks.
He said the authorities’ greatest shortcoming is they don’t just represent big business, but that they themselves are big business and are using political power to boost personal profits. This, he said, leads to massive conflicts between their personal interests and that of the nation.
Paskhaver described the country’s ruling Party of Regions as split into two camps: Some want “to fatten the calf and then eat it, while the others say, ‘Are you mad, they’ll kick us out soon’” and want to take what they can while in power.
As for Ukraine’s most pressing problem – corruption – Paskhaver suggested it couldn’t be stopped at the top of government. He proposed following Georgia’s example and concentrating on eliminating corruption among state officials at the middle and lower levels, as this will ease conditions for 95 percent of investors.
Kyiv Post staff writer Kateryna Panova can be reached at [email protected].
