Electing the next leader of Ukraine is indeed no easy choice. Quite simply, the current crop of presidential candidates lacks a dynamic leader that can be trusted to take the steps that, in our view, need to be taken to pull the country out of its economic funk.
But we're not going to talk about the many drawbacks of President Leonid Kuchma and his competitors. One could run a laundry list of negatives on each candidate that would far extend the bounds of this column.
Instead, we will talk about the numerous steps that need to be taken. For brevity's sake, we'll stick to the most important.
Our overriding demand is that the next president pursues the market-liberalization steps needed to lure foreign investment into Ukraine. We are not just saying that because our very existence relies on that foreign investment. We are saying that for the benefit of average Ukrainian voters. Want to see what we mean? Pay a visit to Hungary, which, for debt reasons, sold its large-scale enterprises off to foreigners soon after the iron curtain dropped and is now thriving because of it.
The new president should begin by breaking down all barriers to trade, both into and out of the country. Protection of inefficient domestic companies – a rampant practice in Ukraine – should be abandoned. Senseless taxes like the 23 percent export tax on sunseeds signed into law by President Kuchma earlier this month should be scrapped. Foreign goods should be allowed to enter the country free of Ukraine's ruthless certification laws, and free of import taxes. Loss-making enterprises should be left to rot into the ground, as they would in any normal-working, free-market economy. Or they should be sold off – cheaply – to strategic investors.
The new president should immediately rethink the country's privatization plan. Crony privatization – whereby potentially lucrative enterprises go right into the hands of business groups linked directly to the government – must end. Sale prices of company stakes in strategic industries must be slashed. The process must be made more transparent. And it must be actively pitched to the West.
The new president should drastically and swiftly overhaul Ukraine's tax system. Despite recent improvements, companies' overall taxes still end up being close to 50 percent of profit. And the tax authorities retain their traditional vigor – one of the most popular complaints of all those doing business in Ukraine.
Lastly, the new president should put an end to the corruption that infuses all the processes mentioned above. Justified or not, all of Ukraine's so-called strategic industries – the energy, metallurgy, oil and gas, telecoms, media and banking industries among them – have reputations of being run by businessmen – or entire organized clans – close to the government. That reputation is the single biggest impediment to foreign investment rolling into Ukraine. The right leader will move to alleviate that reputation immediately privatizing a gem within one of those 'corrupt' industries. That will establish for investors that it is safe to enter Ukraine's waters.
What do all of our 'prescriptions' have in common? They all take political will and courage. So the question becomes, who of the crop of candidates would likely possess the political will to get some of these things done?
Incumbent Leonid Kuchma is saying he's ready to finally usher in market reforms. The obvious question is, why didn't he do it the first time around? Investment has remained at a trickle during Kuchma's first term. Not coincidentally, Ukraine's economy has continued to contract, and average Ukrainians are living in poverty. Many promote Kuchma as the least of the evils running and point to his various 'successes' – balanced foreign policy, holding down ethnic strife and stabilizing the currency. While Kuchma does deserve some credit for those successes, none of them took much political will. When it came time to the tough decisions that would help the economy, Kuchma waffled.
Many dub Oleksandr Moroz as their man, precisely because he does have the best record on corruption. But Moroz stands against privatization of land and strategic industries, and said earlier this week that he was courting a leftist set of voters. There remains a significant risk that Moroz, despite his appealing rhetoric on fighting corruption, will drift too far left or succumb to the forces of corruption after all.
Which brings us to Yury Kostenko. Kostenko's program proudly embraces the West and virtually every free-market reform measure we describe above. And he has stuck by that platform, even as it has drawn little support from Ukraine's communist-tainted electorate. There is every indication that he would have the political will to hammer through his ideas.
Unfortunately, Kostenko stands little chance of winning. That is partly because he has run a poor campaign, and partly because the wonders of his program are lost on the electorate. But we argue that a vote for Kostenko in the first round, which is unlikely to decide the final victor, will make a difference even if Kostenko himself doesn't make it. A better showing by Kostenko will establish him as a more serious player. And it will sound a message to the liberal in the second round – most likely Kuchma – that Kostenko's ideals have political viability. A strong showing might also land the young reformer in the next government.
We say vote with your conscious. We say vote Yury Kostenko in the first round.
