Oligarchs should think about where they are taking Ukraine

Author : Olexandr Honcharov

Source : 112 Ukraine

Unfortunately, our own business leaders and corrupt officials defend only their own selfish interests, and the pauperized population stands aside
11:10, 20 April 2018

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In early April, the US Treasury Department has imposed sanctions against a number of Russian oligarchs, and in fact, it was a kind of ultimatum from the West, as all their assets within American jurisdiction are frozen and Americans are forbidden to make any deals with them. The reaction of the capital markets was immediate, and, according to Bloomberg, on April 6, the wealth of 27 billionaires from the Russian Federation fell by 16 billion dollars. The UK is also thinking about the sanctions against Russian business leaders. American and European elites show that they do not consider Russian oligarchs to be equal; at least because their value systems are completely different. Looking at all this, it is high time to think seriously about the role of the Ukrainian oligarchs in the economic development of the country and the formation of a worthy reputation.

Related: Is Ukraine ready to impose sanctions against Russian oligarchs?

Unfortunately, our own business leaders and corrupt officials defend only their own selfish interests, and the pauperized population stands aside. But everybody knows what this might lead to the sharp impoverishment of the majority of the population and the rapid enrichment of the politicians and businessmen close to the authorities. Western elites were deeply convinced that the Ukrainians stood for the elimination of this shameful gap between the poor and the rich during the Maidan. However, our economy has been reformed, and the financial situation of ordinary people continues to deteriorate. We have the market, but there is no competition, as a number of financial and industrial groups are still using an administrative resource.

West begins to realize that the Ukrainian business elite in its present form is basically unable to cope with this deep economic crisis. It is not able to get the state out of the systemic debt impasse, caused by the internal contradictions and persistent efforts of the ruling oligarchic groups in Ukraine to influence power. Therefore, it was not accidental that the International Monetary Fund has stated: "At present, it is important for the Ukrainian authorities to ensure that the draft law on the Anticorruption Court is immediately examined, following the parliamentary procedures." The deadline for the Fund's agreements with the Ukrainian authorities is July 2018, and at least $ 2 billion might come from the IMF, and another $ 800 million from the World Bank. PM Groysman has a very optimistic forecast about expected GDP growth in Ukraine in 2018 (5-7%), while the IMF is more restrained, and its forecast for the growth of our GDP is 3.2% (but worsened it for 2019 - 3.3%).

Related: U.S. imposes sanctions against Russian oligarchs close to Putin

Ukraine’s key challenge now is creating a system, in which the society would trust the authorities, and the rich would not despise the poor population.

Our western partners and sponsors suffer from insurmountable obstacles in the face of deoligarhization and struggle with the offshore "aristocracy". New top officials in conjunction with businessmen have weakened Ukrainian economy; they earn money here but use to live with families in the West. Politicians from Washington and Brussels already see their mistakes and will never reconcile themselves to a temporary defeat with Ukrainian oligarchs.

I have no doubt that our oligarchs and the authorities understand it. March 30 this year, the management of "PrivatBank" PJSC filed a lawsuit in the Nicosia District Court (Cyprus) against PricewaterhouseCoopers (Cyprus) and the audit company PwC (Ukraine) in order to recover 3 billion US dollars in compensation losses incurred as a result of violations and omissions during the audit of the bank's financial statements for 2013-2015. “The filing of a lawsuit against PwC is a logical and necessary step, given PwC's great responsibility for verifying the financial statements of the bank. Henceforth, the Cypriot court will decide on PwC in the prescribed manner.” Yes, local courts are not trusted anymore.

Related: Termination of economic cooperation with Russia makes Ukraine stronger, - Groysman

It is obvious that without a cardinal change in the value system of political leaders and representatives of big business, there can be no question of any economic breakthrough and improvement of social standards of the Ukrainians. But still, what is the solution here? Analyzing the actions of the United States, I can assume that they can easily use a proven and effective way: a tough but effective method to prevent the Ukrainian economy from turning into such a great offshore for selected oligarchs and to prevent default.

Another thing is that some oligarchs will try to convince top officials and people's deputies in the advisability of declaring a default, they say, the situation of Ukraine’s bankruptcy might be profitable in certain circumstances. To whom it might be profitable? First of all, a default will play into the hands of hapless big businessmen, allowing to shift their own corporate debts to the shoulders of the state and, accordingly, to us – the taxpayers. So what should we do?

Related: What better says about Ukraine's economy: dollar rate or inflation?

Two points are important here. First, after the elections, strong Ukrainian government will intensify the fight against corruption, will put the perpetrators behind the bars, the real corrupt political leaders. Second, a clear and itemized audit of the state budget will begin; we have more obligations than money. And third, with the support of the Western partners, the most favorable conditions will be created for small and medium-sized businesses, the development of Ukrainian entrepreneurship, without which we will not build a rich and healthy society.

This column does not necessarily reflect the opinion of the editorial board or 112.International and its owners.

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