Democracy Check out, 2011 - Issue ten

With Euro-2012 expenses threatening the already burdened economy, trade unions lobby for greater transparency in the markets. With the link between political authority and wealth clearly illustrated, Verkovna Rada raises allowances for Deputies.

National Deputy of Ukraine: cost effective?

The parliament of Ukraine is implementing probably the most stringent social and economic reforms within the country?s history, yet concurrently sees fit to boost the annual maintenance allowance for every Deputy to 700,000 UAH ? in the Ukrainian citizens expense.

Ukraineis characterised by one of the highest international debts in Europe, a rapid increase of inflation plus an unrelenting decline with the population's well-being and social-security. Nevertheless, the general budget of Verkhovna Rada was recently set at 980 million UAH - a 170 million UAH increase from 2010. The government has increased its allowance for travel expenses (from 7 to 9.5 million UAH) and also the vacation budget, with 9 thousand UAH allotted to each Deputy for health resort treatment ? the equivalent of few months bills for nearly 50% of Ukrainians.

It is worth noting that whilst their official salary is defined at 17 thousand UAH (the typical salary in Ukraine is under 2,500 UAH) Deputies receive at the very least that amount again, on a monthly basis, for ?working expenses? with no requirement to declare what sort of money was spent. One might question whether Deputies actually need a real comparatively large salary. It is no secret how the primary appeal of transforming into a people?s Deputy in Ukraine is either to protect personal business interests, in order to become an oligarchical proxy. For example Ukrainian Deputies Akhmetov, Zhevago and Verevskyi are named on the list of richest people in the world by Forbes Magazine, with fortunes comprising 16, 2.4 and 1.1 billion US dollars respectively. Whilst Ukraine is constantly suffer some of the worst social and economic performance in Europe, Deputies show no want to follow the example from the European Parliament, which froze expenses really in sympathy for the population experiencing economic crisis. However, in March the European Parliament increased legislators' expenses for assistants by 17,800 Euro for every Deputy, which brought ordinary Europeans out on top of the streets. For how long will Ukrainians be willing to finance the whims of these elected representatives?

People First Comment:

Forbes magazine has named three Ukrainian deputies being amongst the richest people in the world using a combined personal fortune over $19.5 billion. One of these three has become conspicuous by his absence through the Rada for most from the current convocation. Therefore you've to ask firstly why such wealthy individuals ought to be paid a lot in accordance with the national salary level because of their services and secondly what value they deliver to the united states to warrant a real salary. In the Soviet era there was always confusion over price and value. In the Russian language the same word is used for both as it was assumed that you got whatever you purchased. Warren Buffet?s description is a bit more applicable ?cost is whatever you pay whilst value is what you get?. In this case it is fair to convey that this folks are paying excessive and getting not enough.

The profligacy of the current government belies an actual contempt to the nation. They cut budget allocations for state salaries, social protection, healthcare and education by only enough to create sure that this people usually do not rebel whilst simultaneously they increase spending on regions of personal enrichment and aggrandisement. This points too they have got no morality, no concern to the public good and no aim of expanding the complete wealth with the nation unless they have got a direct interest. Ukraine is rolling out within the last 20 years not into a functioning democracy but coming from a fledgling democracy into a classic Oligarchy and if it remains unchecked it can only worsen as the protagonists challenge each other for ultimate control.

Is Euro-2012 higher priced than it will probably be worth?

Expenses for the organisation of European football championship Euro-2012 may exacerbate financial meltdown in Ukraine. Experts report that Euro-2012 should bring in between 200 and 400 million USD profit (about 650,000 tourists are required arrive at Ukraine), however gross expenses may exceed 10 billion USD. Greece, by way of example, spent 11 billion USD on preparations for that Olympics but received only 2 billion USD in exchange. Outset estimates pitched the specified developments for Euro-2012 at 280 million USD with the Ukrainian people anticipated to front 12%. The low investment attractiveness of Ukraine, misallocation of public funds and the insufficient experience may potentially turn Euro-2012 from the celebration of football in a national economic disaster.

After coming to the partially constructed central football stadium in Kyiv, Vice-Minister Borys Kolesnikov noted that the 550 million USD already spent was quite reasonable and sits at 20% below the price for your Warsaw stadium. President Yanukovych also visited the Kyiv stadium and promised how the construction will be carried out accordance with UEFA requirements by autumn on the latest. This year Ukraine faces the enormous pressure to pay back its multi-billion international debt, however the new budget provides 18 billion UAH for that preparations for Euro-2012. To put the figures into perspective 9 and 18.5 billion UAH will be spent on medical care and education in Ukraine in 2010 respectively. A more covert problem is the overvaluation and non-transparency of championship expenditures. With the numbers at hand along with the economic context available the answer to whether Ukraine can afford hosting Euro-2012 becomes quite obvious.

People First Comment:

When will the federal government of Ukraine understand that you simply can?t spend the right path out of debt. The government?s debt mountain is one of several largest international debts regarding GDP inside the world and eventually somebody is going to have to pay the bucks back. The tariff of Euro 2012 is very unmanageable. How can Ukraine spend an estimated $10 billion on half in the Euro 2012 , Greece only spent $11 billion dollars generally from the Olympic Games whilst South Africa spent just $4.5 billion on the World Cup because both versions are appreciably larger competitions. Financial control has simply been dumped of the window and for the excuse how the previous government messed things up?

In the government?s new budget the allocation for Euro 2012 is $2.4 billion, that?s quantity allocated for healthcare simply a fraction under that allocated for education next year. But the entire bill might be around $10 billion, if the revenues are stored on target and also the budget settlement is real the federal government is going to have to discover an additional $7.2 billion and this is going to be on top in the two tranches of around $25 billion each needed to pay for international debts that may fall due at the same time. The chances from the nation being able click here to discover $57.2 billion soon enough are unlikely particularly if we see such profligate spending; therefore the folks ought to start planning now for that austerity measures that may undoubtedly follow.

In addition the government are predicting 650,000 tourists but Kyiv has only just been able to meet the minimum UEFA dependence on 7,500 hotel beds for your competition and few with the new hotels will likely be operational soon enough. Does this implies even more government expenditure to make enough accommodation available in time or will they envisage another tent town of type planned for Eurovision?

Absolute opacity within the Ukrainian "market economy"

Whichever market a business runs using in Ukraine non-transparency is definitely an everyday norm. This concern is enshrined inside a recent open letter towards the President and Prime-Minister from the Ukrainian Union of Industrialists and Entrepreneurs, the Ukrainian Agrarian Confederation and the Ukrainian Grain Association. Entrepreneurs are particularly concerned with state price administration on the grain market, which among other factors is stifling competition. "Khlib Investbud" is establishing a monopoly for the grain market of Ukraine after being allocated large grain export quotas and other privileges. The Mass media has reported that local businessmen and Russian capital close to the President stand behind this potential monopolist. "Ukrtelekom", a state owned mass media group that held an efficient monopoly, was sold-off which observers noted as indicative with the insufficient transparency in the country. The new owner ESU - a subsidiary company of "EPIC" the Austrian investment and financial syndicate - bought "Ukrtelecom" for 10.575 billion UAH. Due on the undeniable fact that there is no competition, with merely one potential buyer entered for your tender, and thinking about the buyers non-transparent financial assets, oppositional politicians and the advertising have pointed fingers at ties between the company along with the President.

Olexandr Ryabchenko, head from the State Property Fund of Ukraine, commented recently for the privatisation plans for 2010-2014, which are required to lure about 10 billion UAH annually. His remarks reflected concern over the lack of transparency inside the privatisation process and suggested that they fears state assets may be sold at reduced prices to folks near to Ukrainian government. Monopolization from the Ukrainian economy, the development of non-transparent "game rules" with pro-government businesses having each of the advantages might ultimately jeopardise the investment attractiveness of Ukraine leaving the modernisation of Ukrainian economy utterly unviable.

People First Comment:

How can a European Investment company based in Austria be the sole company to comply with the terms from the tender to acquire Ukrtelecom? Only if the tender was specifically written to make sure that this is the one company that could comply. The only thing that's transparent in regards to the sale of Ukrtelecom is the blatancy that the us government have sought deceive the population. This is exactly the same scenario that we saw within the initial sale of Krivorozhstal. It was sold off to ?friends?, simply to be repossessed through the following government and sold to legitimate bidders in the transparent auction. No doubt the identical cycle can happen again?

What is more confusing about it auction is pick up this government is going to have to get billions to national debts. These assets were a ready method to obtain real income they will now appear to have been squandered. This won't go unnoticed through the IMF from whom this government is wanting to borrow billions or syndicates of banks who anticipate to be repaid pick up. Perhaps the us government is basing their hopes on negotiating a carry over from the debts but this is going to be reliant on them proving their economic management credentials. Privatisations on this sort do little to inspire confidence as well as the financial world includes a very long memory.

Power means personal enrichment in Ukraine

According on the "Focus" magazine rating with the wealthiest people in Ukraine for 2011, personal fortunes advance concurrently with political careers. Currently, Deputy Prime-Minister Andriy Klyuev and the brother Sergiy Klyuev are on 25th place with 900.8 million USD - a 100% increase since Focus rating this year. Sergiy Tigipko, Minister of Social Policy of Ukraine, takes 30th place with assets increasing from 572 to 796 million USD.

The fortune of Valeriy Khoroshkovskyi, head of the Ukrainian Security Services, (42nd place) has grown from 357 to 430 million US dollars whilst Vice Prime Minister Borys Kolesnikov has appeared around the 59th place with 293 million US dollars.

"Focus" also reports that this quantity of Ukrainian multi-millionaires almost tripled - from 8 in 2010 to 21 people this year. The total private capital among them is the reason for 58 billion US dollars. Vadym Novynskyi (US$2.63 billion) and Kostyantyn Grygoryshyn (US$2.169 billion) have grown to be the wealthiest foreign citizens resident in Ukraine. Their fortunes are dwarfed however by those in the wealthiest locals, Rinat Akhmetov (US$15.59 billion), Igor Kolomoiskyi (US$ 5.323 billion) and Gennadiy Bogolyubov (US$4.975 billion). Ukraine remains crippled by major social problems and huge external debts using the majority in the population existing on the salary of below 200 US dollars each month. It seems that the combination of politics and business, prohibited within the European Union and also other democracies, continues to be the most profitable activity in Ukraine.

People First Comment:

The average development of the superior 50 oligarchs in Ukraine is in excess of 25% per year that's extraordinary bearing the top amounts of growth seen by western banks who have some from the finest economic brains within the world is merely around 8% over a similar period. Are these oligarchs such brilliant business executives or will they perhaps involve some alternative options for profit actually not admitting to?

According to a recent report through the respected investment house Sigma Bleyzer the Ukrainian economy might be expanding but only in direct proportion for the expanding world need for unprocessed trash. The whole Ukrainian economy is not just predicated for the fact that this world needs more but also it is focused on the business interests of an elite few. Future economic stability of the nation is now totally dependent around the whim with the steel, chemicals and coal barons? in reality they now literally control Ukraine along with it the way forward for everybody living here. Is it any wonder therefore that 34% from the nation desires to leave and 39% in the workforce already has?

The President could imagine he is at charge but actually he to is equally as much a hostage as every other citizen as if your barons opt to go in another direction you'll find nothing he is able to do about it. If they need to they could control the courts, the legislature, the militia and also the security services simply because with this environment almost everything is perfect for sale on the highest bidder. However we could take comfort from the idea that all Empires eventually implode through their very own greed and Ukrainian oligarchies aren't different.

Quote with the week:

We can have democracy on this country, or we can have great wealth concentrated inside the hands of a few, but we could't have both.

Louis D. Brandeis

Associate Justice on the Supreme Court with the United States (1916-1939)

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