Democracy Check out, 2011 - Issue ten

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

National Deputy of Ukraine: cost effective?

The parliament of Ukraine is implementing some of the most stringent social and economic reforms inside country?s history, yet simultaneously sees fit to raise the annual maintenance allowance for every Deputy to 700,000 UAH ? at the Ukrainian citizens expense.

Ukraineis characterised by one of the highest international debts in Europe, a rapid development of inflation and an unrelenting decline in 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) plus the vacation budget, with 9 thousand UAH allotted to each Deputy for health resort treatment ? the same as few months living expenses for nearly 50% of Ukrainians.

It will probably be worth noting that whilst their official salary is scheduled at 17 thousand UAH (the normal salary in Ukraine is under 2,500 UAH) Deputies receive at least that amount again, every month, for ?working expenses? without any requirement to declare how the money was spent. One might question whether Deputies require this kind of comparatively large salary. It is no secret that this primary appeal of becoming a people?s Deputy in Ukraine is either to protect personal business interests, or to act as an oligarchical proxy. For example Ukrainian Deputies Akhmetov, Zhevago and Verevskyi are named among the richest people on the planet by Forbes Magazine, with fortunes accounting for 16, 2.4 and 1.1 billion US dollars respectively. Whilst Ukraine continues to suffer some in the worst social and economic performance in Europe, Deputies show no wish to stick to the example from the European Parliament, which froze expenses this season in sympathy to the population suffering from overall economy. However, in March the European Parliament increased legislators' expenses for assistants by 17,800 Euro for each Deputy, which brought ordinary Europeans out to the streets. For how long will Ukrainians be ready to invest in the whims of these elected representatives?

People First Comment:

Forbes magazine has named three Ukrainian deputies to between the richest people on this planet which has a combined personal fortune well over $19.5 billion. One of these three has been conspicuous by his absence from the Rada for some of the current convocation. Therefore you've got must firstly why such wealthy individuals needs to be paid a lot relative to the national salary level for their services and secondly what value they deliver to the united states to warrant such a salary. In the Soviet era there was always confusion over price and value. In the Russian language exactly the same word is utilized for both since it was assumed that you just got what you purchased. Warren Buffet?s description is much more applicable ?cost is whatever you pay whilst value is what you get?. In this situation it really is fair to convey how the people are paying a lot of and having weak hands.

The profligacy from the current government belies a basic contempt for the nation. They cut budget allocations for state salaries, social protection, healthcare and education by simply enough to generate sure the people tend not to rebel whilst concurrently they increase spending on areas of personal enrichment and aggrandisement. This points too they've no morality, no concern for the public good no intention of expanding the complete wealth with the nation unless they have a direct interest. Ukraine has developed during the last two decades not right into a functioning democracy but from the fledgling democracy in to a classic Oligarchy if it remains unchecked it can only deteriorate because protagonists challenge each other for ultimate control.

Is Euro-2012 higher priced than it may be worth?

Expenses for the organisation of European football championship Euro-2012 may exacerbate economic crisis in Ukraine. Experts claim that Euro-2012 should generate between 200 and 400 million USD profit (about 650,000 tourists are required to find Ukraine), however gross expenses may exceed 10 billion USD. Greece, for instance, spent 11 billion USD on preparations to the Olympics but received only 2 billion USD inturn. Outset estimates pitched the required developments for Euro-2012 at 280 million USD with the Ukrainian people expected to front 12%. The low investment attractiveness of Ukraine, misallocation of public funds along with the insufficient experience could turn Euro-2012 from the celebration of football in to a national economic disaster.

After seeing the partially constructed central football stadium in Kyiv, Vice-Minister Borys Kolesnikov noted the 550 million USD already spent was quite reasonable and sits at 20% lower than the price for that Warsaw stadium. President Yanukovych also visited the Kyiv stadium and promised that this construction could be completed in accordance with UEFA requirements by autumn on the latest. This year Ukraine faces the enormous pressure of coughing up back its multi-billion international debt, the new budget provides 18 billion UAH for the preparations for Euro-2012. To put the figures into perspective 9 and 18.5 billion UAH will probably be used on medical care and education in Ukraine this season respectively. A more covert issue is the overvaluation and non-transparency of championship expenditures. With the numbers at hand as well as the economic context available the solution to whether Ukraine can afford hosting Euro-2012 becomes quite obvious.

People First Comment:

When will the government of Ukraine understand that you can?t spend the right path debt free. The government?s debt mountain is one of many largest international debts in terms of GDP within the world and at some point somebody is going to have to pay the amount of money back. The price of Euro 2012 is very out of hand. How can Ukraine spend an estimated $10 billion on half in the Euro 2012 , Greece only spent $11 billion dollars on the whole of the Olympic Games whilst South Africa spent just $4.5 billion around the World Cup both of which are appreciably larger competitions. Financial control has simply been trashed with the window and on the excuse that the previous government messed things up?

In government entities?s new budget the allocation for Euro 2012 is $2.4 billion, that?s double the allocated for medical and just a fraction under that allocated for education next year. But the whole bill may very well be around $10 billion, therefore if the revenues are on target and the budget total funds are real government entities is going to have to get yet another $7.2 billion and this will probably be on top of the two tranches of around $25 billion each needed to pay international debts that will fall due simultaneously. The chances from the nation being able to locate $57.2 billion over time are unlikely specially when we percieve such profligate spending; therefore the people had better start planning now for the austerity measures that will undoubtedly follow.

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

Absolute opacity in the Ukrainian "market economy"

Whichever market a business is run on in Ukraine non-transparency is an everyday norm. This concern is enshrined in the recent open letter on the President and Prime-Minister in the Ukrainian Union of Industrialists and Entrepreneurs, the Ukrainian Agrarian Confederation along with the Ukrainian Grain Association. Entrepreneurs are particularly interested in state price administration around the grain market, which among other factors is stifling competition. "Khlib Investbud" is now establishing a monopoly around the grain market of Ukraine after being allocated large grain export quotas along with other privileges. The Mass media has reported that local businessmen and Russian capital close towards the President stand behind this potential monopolist. "Ukrtelekom", a state owned media group that held an effective monopoly, was sold-off which observers noted as indicative from the not enough transparency inside 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 towards the fact that there were no competition, with only 1 potential buyer entered for that tender, and considering the buyers non-transparent financial assets, oppositional politicians along with the advertising have pointed fingers at ties between your company along with the President.

Olexandr Ryabchenko, head with the State Property Fund of Ukraine, commented recently around the privatisation plans for 2010-2014, which are anticipated to lure about 10 billion UAH each and every year. His remarks reflected concern over deficiency of transparency from the privatisation process and suggested he fears state assets may be sold at reduced prices to people near Ukrainian government. Monopolization inside the Ukrainian economy, the introduction of non-transparent "game rules" with pro-government businesses having every one of the advantages might ultimately jeopardise a purchase attractiveness of Ukraine leaving the modernisation of Ukrainian economy utterly unviable.

People First Comment:

How can a European Investment company located in Austria be the only company to comply using the terms in the tender to buy Ukrtelecom? Only if the tender was specifically written in order that it was the one company that may comply. The only thing that is transparent in regards to the sale of Ukrtelecom will be the blatancy that government entities have sought deceive the general public. This is exactly exactly the same scenario that we saw on the initial sale of Krivorozhstal. It was sold off to ?friends?, only to be repossessed from the following government and sold to legitimate bidders inside a transparent auction. No doubt a similar cycle may happen again?

What is a lot more confusing relating to this auction is next season this government is going to have to get billions to pay back national debts. These assets were a ready source of real income they will now appear to have been squandered. This won't go unnoticed from the IMF from whom this government is seeking to borrow billions or syndicates of banks who expect to be repaid pick up. Perhaps the government is basing their hopes on negotiating a carry over of the debts but this will probably be dependent on them proving their economic management credentials. Privatisations of the sort do little to inspire confidence along with the financial world has a extended memory.

Power means personal enrichment in Ukraine

According on the "Focus" magazine rating from the wealthiest people in Ukraine for 2011, personal fortunes advance concurrently with political careers. Currently, Deputy Prime-Minister Andriy Klyuev and his awesome brother Sergiy Klyuev are stored on 25th place with 900.8 million USD - a 100% increase since the Focus rating in 2010. 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 from 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 the number of Ukrainian multi-millionaires almost tripled - from 8 this year to 21 people in 2011. The total private capital included in this makes up about 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 from 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 with all the majority of the population existing with a salary of under 200 US dollars per month. It seems the combination of politics and business, prohibited inside the European Union and other democracies, continues to be the most profitable activity in Ukraine.

People First Comment:

The average development of the most notable 50 oligarchs in Ukraine is in excess of 25% each year which is extraordinary bearing the most notable numbers of growth felt by western banks that have some in the finest economic brains inside world is only around 8% over exactly the same period. Are these oligarchs such brilliant corporate executives or will they perhaps involve some alternative options for profit that they are 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 garbage. The whole Ukrainian economy is not just predicated about the fact the world needs more and also it is focused around the business interests of an elite few. Future economic stability with the nation is now totally dependent around the whim in the steel, chemicals and coal barons? in fact they now literally control Ukraine sufficient reason for it not able to everybody living here. Is it any wonder therefore that 34% of the nation wishes to leave and 39% in the employees already has?

The President might think he is charge in fact he to is just as much a hostage as almost every other citizen as when the barons decide to go in another direction you'll find nothing he can do about it. If they want to they can control the courts, the legislature, the militia and the security check here services simply because with this environment pretty much everything is good for sale on the highest bidder. However we can take comfort from the fact that all Empires eventually implode through their unique greed and Ukrainian oligarchies aren't different.

Quote from the week:

We may have democracy within this country, or we are able to have great wealth concentrated within the hands of a few, but we can't have both.

Louis D. Brandeis

Associate Justice for the Supreme Court in the United States (1916-1939)

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