mill, I have just one thing to say to them: Welcome to Ukraine.
Mittal, which paid $4.8 billion for Ukraine’s top industrial property in the Oct. 24 tender, should be proud of its win. Kryvorizhstal became a symbol of the corruption of Ukraine’s old regime after it was sold last year in a flawed tender to Ukrainian tycoons with close ties to the government of then-President Leonid Kuchma. Viktor Yushchenko and other speakers made the lucrative steel mill a talking point of the Orange Revolution, promising to right the injustice. Now Kryvorizhstal can be a gleaming symbol of the benefits of reform and of foreign direct investment into a new Ukraine.
Mittal is poised to be the leading company in Ukraine, and its presence here should provide impetus for further economic reform that, in turn, will attract even more overseas money. As far as FDI goes, this week’s sale might be the turning point for Ukraine that people have been waiting for. I hope that Mittal is to Ukraine what General Electric was to Hungary back in 1989. GE infused a massive amount of cash into the struggling Hungarian economy. Just as important, GE was in Hungary to stay, establishing relationships with the government and the scientific and business community that have helped develop that country’s economy. By now GE employs more than 15,000 people in Hungary, and has invested more than $1.1 billion. I hope Mittal will have the same type of rich long-term relationship with Ukraine.
The Oct. 24 tender, which included other respected foreign steel interests besides Mittal, was carried out under transparent conditions, which will reassure other foreign investors who feared that reprivatization was just a word for a new type of cronyism. The sum that Mittal paid amounts to more than three times the sum of foreign investment that entered Ukraine in 2004. That’s a remarkable achievement.
All sides have been saying the right things in the wake of the sale. President Viktor Yushchenko underlined that “the Ukrainian government is convinced that only a private owner can be an effective proprietor” of the mill. That’s an important message to send at this point, after a year in which it has sometimes seemed that property rights weren’t secure in Ukraine.
For his part, Mittal chairman Lakshmi Mittal noted that the auction was also a victory for Ukraine’s authorities, who showed they were up to the task of carrying out a transparent tender that could achieve the highest results. Mittal said his company’s first step now would be to optimize Kryvorizhstal’s competitive advantages.
On Oct. 24, Ukraine’s great potential came a lot closer to being realized, and the future got brighter. After all the controversy over reprivatization this year, the government showed that it has the right values – transparency, honesty, and private enterprise – and that it knows how to do things correctly. Congratulations to Mittal and to the government.
Jed Sunden is the Kyiv Post’s publisher.
