Yanukovych identifies 10 high priority national projects
The president has selected 10 national projects that have a high level of importance for Ukraine’s immediate future. These include projects such as “New Energy,” which involves the construction of a terminal for receiving liquefied gas and "Energy of Nature," which requires the harvesting of two thousand megawatts of solar and wind energy, equal to two billion cubic meters of gas. Many of the national projects are tied together in the “New Quality of Life” program that provides for affordable housing and new waste processing plants.
Specifically, the project “Water Quality” includes the construction of 23,000 new water provision systems in kindergartens and schools. For the development of social information, the “Open World” program aims to create a national information and communication system based on 4G (Fourth Generation) technology. Other projects include the formation of strategic development plans for Ukraine’s largest cities, focused on improving social services and infrastructure in different regions of Ukraine.
People First comment: At last, we seem to have a president that is planning further ahead than lunchtime. If these projects come to reality it will be a very positive step in the right direction of technological development and a motivator for Ukrainian scientific brains to stay at home. While these ideas are visionary, we have to ask if these 10 new national projects are in addition to the essential civic projects of: computerizing the schools and universities, rebuilding Ukraine’s stretched health service, giving the nation a modern sewage and clean water system, repairing the national road infrastructure, upgrading and redeveloping the airports, railways and seaports… or are they in place of them?
Who is going to pay for these great ideas? How much public discussion will there be over the priorities? For instance, at present, the whole political system is plagued by opacity. There are many questions left unanswered, which may drive some to conclude that this is just a case of the grandiose planning that virtually bankrupted the Soviet Union.
The Ukrainian government attempts to appease Russia
With the signing of agreements between the Ukrainian and Russian presidents in Kharkiv, Yanukovych has demonstrated a will to reverse his predecessor’s foreign policy. In doing so, he has called into question the path of Ukraine’s development, counter to the ideals held since the gaining of independence in 1991.
The opposition is currently unwilling to mobilize a unified concerted protest regarding governmental policy. Ukrainian society itself seems to have returned to the post-Soviet ethos of cynicism, apathy, distrust and loss of interest in anything outside the family. The new gas agreement with Russia has not only led to a significant increase in gas prices for the Ukrainian population, but also places Kyiv in a relationship of political dependence with Moscow. The proposed merger of Naftogaz and Gazprom, the possible Russian takeover of the Ukrainian gas transportation system, Russia’s purchase of key assets of Ukrainian industry, as well as the confirmation of international commitments of Ukraine to Russia is a price that Yanukovych and his government pays Moscow for their support.
People First comment: Feed a bear today and he’ll come back for more tomorrow. Unfortunately, what the presidential advisers have recommended will only make the Kremlin more strident toward Ukraine, exactly the opposite of what was probably intended. Russian policy is blatantly clear: to take control of Ukraine, not from a political perspective as that is far too chaotic, but from an economic one. Sadly, successive Ukrainian governments have played straight into Russian hands through their policy of support for a limited number of large Russian corporations.
The government has few options. One option might be to unleash the full creative and business potential of Ukraine by radically reducing the bureaucracy, taxation and financial constraints on small-to-medium size enterprises to create an explosion of new companies. In most balanced and successful economies, the small-to-medium sector accounts for between 50 and 60 percent of gross domestic product, while in Ukraine it currently musters a mere 7 percent and remains an object of continuous open and hidden pressure from state bureaucrats and tax officers.
Shadow economy covers Ukraine once again
The level of shadow economy in Ukraine continues to grow. Although the authorities publicly recognize the problem, in reality they do nothing to restore budget revenues. In developed countries, the shadow economy makes up around 5-10 percent of gross domestic product, a particularly high example in recent years being the United States with 9 percent. In contrast however, most domestic and foreign experts estimate the shadow economy of Ukraine to take up around 40-60 percent of gross domestic product, a figure that stifles national development. Official sources state significantly lower rates – State Statistics Committee at 15-18 percent of gross domestic product, Ministry of Economy – 28-35 percent of gross domestic product. In the study “Shadow economies all around the world,” fulfilled by the World Bank it is estimated that in the annual revenue of the shadow sector of Ukraine’s economy amounts to Hr 400 billion hryvna or $50 billion.
As the shadow economy is synonymous with corruption, the Ukrainian authorities urgently need to tackle both when facing up to this phenomenon, otherwise Ukraine can expect yet lower purchasing power for the majority as well as poor funding for its science, health and social programs. The largest barriers standing in the way of business is the extraordinarily high tax burden coupled with the excessive regulations and the system of permits, which slow business efforts to a snail pace, and carry a hefty administrative cost. Unless the Ukrainian authorities successfully overcome these problems, Ukraine will see growth, rather than reduction within the shadow sector.
People First Comment: One of the greatest assets of the Ukrainian nation is its creativity in the face of adversity. For something like 350 years, Ukrainians have fought against oppression in one form or another. In some cases their creativity was their sole means of survival therefore it is little wonder that they now seek to use the same creativity to offset the rapacious demands of the Ukrainian tax office. We have countless examples of this creativity in the form of: the value-added tax scams on fake exports that have cost the state budget and many companies billions, the laws on business cash that force thousands to resort to semi-official money launderers, the most complex customs legislation in the world that quietly grinds business to halt whilst ensuring that every kopek is collected irrespective of the cost of collection and finally the tax laws that are designed to facilitate corruption.
The government of Ukraine has little right to complain about a grey or black economy when it appears to condone such dark creativity. If the government wants to increase the volume of taxation they collect, then perhaps it should look at how other countries have achieved it. For example, when Margaret Thatcher first came to power in the United Kingdom, she found that the country was virtually bankrupt and personal taxation ranged between 35 and 99 percent, depending upon your income. Thatcher cut the personal tax rate to a flat rate of 27 percent and increased value-added tax by 2.5 percent. Government revenues increased by 28 percent in the first year, investment went through the roof and the national economy started its largest rise in post-war British history.
The principle reason why people avoid paying taxes anywhere in the world is not greed or a desire to cheat the government. It’s because either the taxes are unreasonable or the public can see little or no social benefit. In Ukraine, we have both.
American institutes and international media criticize Ukrainian authorities regarding the new law on local elections
The American organizations, National Democratic Institute and International Republican Institute, criticized the anti-democratic features of the new law on local elections. Both institutions said the law limited the participation of new parties – impeding the development of democracy in Ukraine. The changes to election law, which occurred only 100 days before the election, were in violation of the principles of the Venice Commission and had been widely condemned in the international media. Political experts regarded this move as an attempt by the authorities to undermine the position of Yulia Tymoshenko’s Batkivshchina Party during the local elections. The new changes placed the new political forces led by Sergiy Tigipko, Arseniy Yatsenyuk and Anatoly Grytsenko outside of the electoral process, forcing them to seek alliances with the older party structures.
Yanukovych, spurred by domestic and international criticism, proposed changes to the law at a session of Parliament on Aug. 30. He recommended the abolition of the restrictions that cut out parties registered less than one year ago. As a result, parliament accepted the President’s changes and voted to return the right of participation to all parties without connection to the date of registration.
People First Comment: Thank you NDI, IRI and the international media. It is disheartening to think that Regions Party politicians believed that they could pass this legislation without anybody noticing. Democracy is not a game to be played for their benefit. It is a worldwide movement practiced by billions.
Viktor Tkachuk is chief executive officer of the People First Foundation, which seeks to strengthen Ukrainian democracy. The organization’s website is: www.peoplefirst.org.ua and the e-mail address is: [email protected]
