Outside Austrian Ambassador Hermine Poppeller’s window on April 20, the spring sun shone brightly on her fresh tulips as she enjoyed the spectacular view of St. Volodymyr’s Cathedral directly across the street from the embassy.
Life’s good, but it could be better. That sums up the relationship between Ukraine and Austria at the moment.
Austria ranks high on the list of investors in Ukraine – some $2.5 billion in all and 5th place among nations, with 150 companies represented, including some very notable firms.
But, and there’s always a “but” when it comes to Ukraine’s investment climate, prospective Austrian investors are sitting on the sidelines. While the ambassador wouldn’t name the Austrian firms avoiding Ukraine, one of them could easily boost the nation’s chances of becoming energy independent, she said.
“There are not many new investments,” Poppeller told the Kyiv Post in an interview. “The investments are from companies already here that are enlarging their businesses. But new investors, it’s difficult to attract them. A lot of them are very interested in investing in Ukraine. Ukraine is close to Austria, close to European Union markets, you still have fairly cheap production costs here. You have well-educated people. There are a lot of things on the positive side for investors.”
But…
“There’s still a problem with the courts,” Poppeller said. “The reform of the court system should be done at a different speed — at a higher speed. This is one of the really crucial things for companies. If you cannot be sure to get your rights guaranteed by the courts, it’s difficult.
The investment climate needs to be improved and continuing reforms at a higher speed would be one of the most important things to do.”
At this stage, the ambassador said, “I think more potential investors are afraid of the situation with the courts than afraid of the conflict in the east,” referring to Russia’s three-year war against Ukraine.
Like a lot of her fellow ambassadors, she spends an inordinate amount of time intervening with government ministers on behalf of her nation’s companies. “It would be much easier for all of us if we wouldn’t have to spend so much time with helping those companies get their rights and get treated fairly,” she said.
She cited police and health care reform as among the bright spots and said that Ukraine is generally moving in the right direction.
“We often tend to criticize the country and ask for more reforms,” she said. “On the other hand, if you see the conditions under which these reforms have taken place, it is a great amount of reform which has already been done.”
Money laundering
Austria is among the countries singled out for a bad reputation in laundering ill-gotten money through its banks and other financial institutions.
For example, Austrian Meinl bank is under investigation in Austria and in Ukraine on suspicion of participating in a scam to siphon up to $2 billion out of 17 now mostly failed banks in Ukraine.
“There is a case against Meinl bank,” she said. “This case is still an open case which is why I do not want to comment on it.”
Aside from this case, however, Poppeller said Austria is no longer a dirty money haven after adopting strict European Union-endorsed laws at the start of the year. The Financial Action Task Force, set up by the world’s G7 largest industrial nations, also has given the financial sector a substantially cleaner bill of health, she said.
“They found quite a progress in terms of fighting money laundering,” she said. “But they also had some recommendations for Austria, so the government decided to put together a package of measures.”
She said that Austria’s political leaders “understand if you want to keep your reputation as a sound and serious country, and as a sound financial place, one has to strengthen the laws. I think it’s a good work in progress.”
The legal changes close the gaps so that international institutions can better “follow the money. If you want to follow suspicious money, you have to follow it from the start to the end,” she said. “If you open a bank account in Austria, now the bank is obliged to know the customer: who is this person? Where does this money come from? What is your profession? Is this clean money?”
But, in the end, she said that “you have to have cooperation on a worldwide basis” to fight money laundering effectively.
The topic was the focus of a March 24 conference by the Austrian Business Association, which attracts investment to Austria.
Remnants of empire
The Austro-Hungarian Empire, which collapsed in 1918 after defeat in World War I, included significant parts of today’s western Ukraine, including the major cities of Lviv, Uzhgorod and Chernivsti. It still lives on — at least in creating a bond between Austrians and western Ukrainians.
“Lviv has always been a place close to Austria,” she said, citing the longstanding Austrian honorary consulate in the city and the work of Austria’s Special Office for Cooperation there, which is active in student and professional exchanges, among other programs.
Lviv is one of “those places where a lot of people come and try to support and help businesses and companies to settle there.”
Austria also has honorary consulates in Chernivsti, Kharkiv, Dnipro and Odesa. Soon it will add one in Zaporyzhia.
Since Austrians aren’t required to register with their embassy, it’s hard to get a head count.
But Poppeller thinks the expatriate community numbers no more than 200 people. On the flip side, Austria granted 28,000 visas to Ukrainians in 2016, she said, and expects even more visitors once visa-free travel is granted to Ukrainians this summer.
Notable firms
Banking, finance and insurance firms dot the Austrian business landscape in Ukraine. But more exotic firms are doing business in Ukraine as well. One of them is the Fischer Sports factory in Mukachevo, which employs 1,500 workers who produce skis, hockey sticks and carbon-fiber auto parts.
Another is EuroGold in Zhytomir, which makes ironing boards, laundry dryers, steps and ladders and ironing board covers, among other industries.
But perhaps the most famous Austrian brands are Raiffeisen Bank Aval, Fischer Sports in Mukachevo, Billa and Frey Wille.
Film festival
The Austrian Film Festival opened its five-day run in Kyiv Cinema on April 19. Poppeller attended the opening film, “Egon Schiele: Death and the Maiden.” Its director, Dieter Berner, was on hand to give a talk after the screening.
Other films of particular interest to Ukrainians include “The Dreamed Ones,” shown on April 20, which focuses on poet Paul Celan, who was from Chernivtsi, and “one of the great writers,” Ingeborg Bachmann (1926-1973).
Some of the films touch on “our common cultural heritage” between Ukrainians and Austrians, Poppeller said.
