War prevents the Ukrainian economy, but exports to Russia growing

Alexander Paskhaver, Ukrainian scientist, honored economist of Ukraine, member-correspondent of the Academy of technological Sciences and freelance adviser to the President, said in an interview with “Apostrophe” than Ukraine useful open land market, why care reformers from the government — desertion and will it have the state to get rid of economic dependence on Russia.

— The Cabinet of Ministers in late may downgraded the forecast of GDP growth in 2017 from 3% to 1.8%, and the forecast of inflation from 8.1% to 12.9%. How realistic fresh prediction?

— I don’t appreciate how he is realistic, can only say that this is the result of the deterioration of relations with the companies located in the occupied territories. Unable to work and factors associated with the dynamics of prices for main products of our exports.

— What is your assessment of the situation with the blockade. How it worsened the economic situation in Ukraine?

— In life the economy is not the root cause of many actions, especially when we are fighting. The embargo is a policy, this means war, if you’re talking about something as a means of war, the purely economic impacts are not the priority. All military action, any, not just shooters — is the cost, the destruction, and in this sense, actions related to the war, judged from the standpoint of economic effect weird.

— What should the authorities do in the first place, the economy has begun to grow by 1-2%, and at least 3% per year?

— Focus on business climate. We need to give entrepreneurs an opportunity to show their initiative, it is the only way sustainable economic growth of the country. We definitely needed two things: support people who are mentally compromised innovation and support people who are increasing our exports.

— The economy has stopped falling and slowly started to grow in 2016. But in the first quarter of 2017, the situation has become somewhat worse. Lee now continues the negative trend?

— There are several encouraging factors, I would say that the economy is improving qualitatively. For example, growing exports to the European Union. Qualitative indicators are no less important than quantitative. And by the way, what’s amazing — growing exports to Russia. Of course, war is very disturbing to us, but I was just surprised that in the conditions of the war economy in General is growing. It speaks about what a healthy body is our country.

— You said about the growth of exports to Russia. From a political point of view, not economic to rate this growth, given the difficult relations between the two countries?

— We are talking about hybrid war, where the Parallels of the war with Hitler is totally inappropriate. We trade and fight at the same time. And it’s very strange for us, but we must remember that we came out of the Soviet Union, and when we came out, the share of exports with Russia has been dominant. More than 70% of exports went to Russia. We have very sharply reduced trade with Russia, but if, for example, come to some radical, and said, “So this day no trade”, it would be a devastating blow for Ukraine, for its development, reforms and stability.

— What model of economic development for Ukraine a priority, given that the commodity economy is not too promising, and the level of development of modern technologies we are still not a leader?

The model is this — freedom, freedom and freedom. God forbid, some kind of model to adopt, which would enthusiastically would be perceived by the bureaucracy and used for its enrichment. I especially love when they talk about the development priorities of… Bureaucrats love to tell entrepreneurs where to develop. Give freedom, and it will be the best it can be.

— How do you assess the pension and land reform? What are the advantages and disadvantages of these reforms?

— Now go reform, defining the future social parameters of our society and pension reform, and healthcare reform, and education, and land reform… If you are inside the process, there will always be a sea of comments.

For example, pension reform. It’s clear that we are sorely late with the introduction of a funded form of pension provision. It is obvious that this system works poorly without the trust of citizens in the state, and far from it. And in the current solidarity system made the necessary steps for balancing income and expenses, but it can hardly be called reform. In addition, these changes will be able to work at least a few years if the projected drop in the number of employees will be offset by sustainable growth in their income and, accordingly, the increase in pension contributions.

I always remember the words of the prematurely deceased, an outstanding reformer Kakha Bendukidze, who said that it is better to err and be corrected later than to do nothing. It was his principle. And we will, undoubtedly, more than once to fix our mistakes, our reforms. But we decided the humane educational reform and, I would say, rational health care reform.

With regard to land reform, then we are poor precisely because they are not carried out land reform, because we do not sell the land. Land excluded from the legal circulation of capital, forcibly cheap for major tenants. Their interests are kept in poverty not only millions of owners of shares, but also the country as a whole. A significant portion of the national wealth squandered, used ugly.

— If I go back to the topic of pension reform, in your opinion, will the following years in Ukraine to rise the retirement age and is it necessary?

— We have, as elsewhere in the world, the administrative age limit of retirement is replaced by a set of economic incentives that guide man on a certain age. Man is free to choose, but the incentives indicate the optimal age to cease operations, and this age is bound to grow (PAYG), the aging population and increasing life expectancy.

— How do you assess the increase of insurance?

Just need the money to pay. If the insurance period is increased, then you will have longer to pay until the moment when you start to receive a pension, but the pension will be more. Pension money is not taken out of nowhere.

You are in one of the columns I wrote about that in Ukraine is not improving the business climate, in our conversation you remembered. And what factors, in your opinion, affect the deterioration?

We improve their performance in all indices related to economic freedom, but I don’t feel in conversations with entrepreneurs, that it somehow reflected on them. The business climate is a very General concept, I’d say the concept of freedom, freedom from bureaucracy, from corruption, and yet we have such significant achievements. But on the other hand, I want to emphasize that we, in a country at war, began to grow the economy — we have had economic decline, and now it grows very slowly, within the accuracy of the calculations, but still growing. But people notice bigger changes, more widespread, and statistics records and initial motion.

— Can you talk about the deterioration of the investment business climate, when being searched, for example, recently at Dragon Capital, many IT companies…

— You see, the bureaucracy is still there, the bureaucrats did not fly away into space, the bureaucracy is the flesh of us all. We all, unfortunately, ill the twentieth century, we are all the children of those who survived the terrible upheavals in the twentieth century, we lost a number of useful properties, which are needed in order to be a successful country, in particular, I am concerned about the attitude to work… you Know, for millennia people sacral attitude to work, how to rite, this sacredness has been lost for three generations the Soviet Union because it was not supported by competition, and competition is a powerful negative stimulus that forces people to take responsibility for the work. And when we discuss all the consequences of the Soviet economic system, we’re not talking about it. We lost sacred attitude to work, and that means we have lost the responsibility to work, and it is very hard to overcome. Maybe we will have to overcome generations.

At school, in the early 60’s, I was an Intern for labour the worker has transferred from the factory to the workshops of the Institute — and for that: he was not able to work badly, he worked faster and better and all was disturbing to live in peace. I remember a similar episode with a graduate of the commercial College. It fired on the second day of admission to work in a small shop where she paralyzed his honesty Brigadier habitual theft.

Summarizing your questions, could you repeat the question my friend, the famous Polish reformer: “we Have in Poland a mess as you are, why can’t we do, and you somehow skosobochennoy?” The answer is simple, but it is not on the surface — they returned to their home in Europe. Their reforms are based on social values which profess most: freedom and responsibility for life, respect for self and others, trust as the basis of relations in society.

We have a long way to go. Centuries of life in foreign countries, especially the bloody twentieth century forged in most people the strategy of survival: do not trust anyone except his hide, could not — deceive, failed to pay. There is no place for freedom and respect for the individual, including his.

Another example. Ramps at the entrances need millions, not only the disabled but also the elderly and mothers with babies. Take a walk and be surprised by this new-fangled ramps that cannot be overcome due to their steepness. For me it is a mockery — revealing characteristic contempt for the individual, any, and hence to himself. That’s why West is persistent tips to change quickly, unproductive.

Values come in conflict with creating new institutions. Decades will be needed for their mutual adaptation.

— Brain drain and skilled hands can affect the economy life of the country as a whole? How to stop or at least slow down this process?

— You know, brain drain is a natural state. To counter this Stalinist — just close the country, but not necessary. It is a natural condition and overflow of labor from a poor country to a rich. All countries that have successfully modernized, experienced a brain drain. This did not prevent them to develop.

— What can you say about the anti-corruption activities of our state? Created many anti-corruption structures: NABOO, NACP, SAP, how effective are they? How long do you think it would take to actual results of planting, the cleansing power?

We are all riddled with corruption: it blooms wherever it is possible “to hold and not let go.” Some get corrupt rents, others pay it, thus protecting their rights. Corruption is one of the key elements of survival strategies, which we possess in perfection. Corruption will be slow and dramatic to retreat in the rate of change of our values.

— In one interview you said that the oligarchic monopoly makes Ukraine is poor, it is the basis of our poverty. President Petro Poroshenko announced just after the process of deoligarchization. Do you think he is?

— Hundreds of thousands of people are feeding from the monopolies that they created artificially, where there should be some kind of procedure choice, they create a monopoly and earn. Our country is organized monopoly, where monopoly inhibited the development, as monopoly is an antagonist of development. Where there is no development, there is poverty. So monopoly and poverty are next-of-kin.

Is there a “historic event”? I would say this: no one was arrested from the oligarchs, no one revealing is not punished. But what the major oligarchs weakened, no doubt.

— If you can call the government of Vladimir Groisman reform? How do you assess the efforts of officials to reform in different sectors?

— He supports this process. I quite often go to meetings where the Prime Minister Groysman talking with reformers, and watch enough. They are not alienated from each other.

— Why, then, one by one their positions have left the so-called reformers in the government? Aivaras Abromavicius is gone, many of the Deputy managers? Could not stand the pressure of the system or they just do not give the reforms?

— This flight, desertion. People have to fight, and they were offended, if they came not to reform, if reformism is not a war but a walk. Resistance to reform in government and outside of it increases as they deepen. It’s natural. The true reformers need to use the data them to the end.

— How do you see the further development of relations with Russia? Someone, mostly right-wing radicals that want to secede from Russia almost a wall, someone says that all the same sooner or later we will have to deal with. What do you think?

— Our radical party, no relation to the revolutionary radicalism does not have. This is a parody of revolutionary radicalism, it is rather radical populism, therefore, to discuss them as equal participants in the revolutionary process simply indecent. Unfortunately, the revolutionary party, which would have had significance for the population, was not created. I can’t name a party that would in any significant and grew out of the Maidan.

And about Russia… Russia is an Empire, and we leave from the Empire, our movement is not only related to the modernization of the country and freedom from Soviet economic system, it is also a departure from the Empire. Unfortunately, Russia does not take into account the experience of other European empires that refused Imperial policy. I can only say that they go against historical trends. In this case, no matter how you get the balance of forces does not play a significant role. I will give an example France, which lost to Algeria in a war. It’s just a mistake of Putin as leader of the country, which draws her into the past, and this error can lead to the collapse of the country.

We won’t soon friends with Russia. Russia is our test run, maybe for decades. But this test creates our country again, making upgrades inevitable.

— And will the Ukraine in the future to become completely economically independent from Russia?

I just responded positively to this question.