Democracy Look at, 2011 - Challenge 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 some of the most stringent social and economic reforms inside the country?s history, yet as well sees fit to raise the annual maintenance allowance for each and every Deputy to 700,000 UAH ? with the Ukrainian citizens expense.

Ukraineis characterised by one of the highest international debts in Europe, an instant increase of inflation with an unrelenting decline of 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 grown its allowance for travel expenses (from 7 to 9.5 million UAH) along with the vacation budget, with 9 thousand UAH allotted to each Deputy for health resort treatment ? very similar to six months bills for up to 50% of Ukrainians.

It may be worth noting that whilst their official salary is defined at 17 thousand UAH (the average salary in Ukraine is under 2,500 UAH) Deputies receive at least that amount again, monthly, for ?working expenses? with no requirement to declare what sort of money was spent. One might question whether Deputies actually need such a 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, or to behave as an oligarchical proxy. For example Ukrainian Deputies Akhmetov, Zhevago and Verevskyi are named among the richest people on earth by Forbes Magazine, with fortunes making up 16, 2.4 and 1.1 billion US dollars respectively. Whilst Ukraine is constantly on the suffer some in the worst social and economic performance in Europe, Deputies show no desire to stick to the example with the European Parliament, which froze expenses really in sympathy for the population experiencing financial meltdown. However, in March the European Parliament increased legislators' expenses for assistants by 17,800 Euro for every Deputy, which brought ordinary Europeans out on the streets. For how much time will Ukrainians be willing to fund the whims of these elected representatives?

People First Comment:

Forbes magazine has named three Ukrainian deputies being between the richest people on this planet having a combined personal fortune in excess of $19.5 billion. One of these three may be conspicuous by his absence from your Rada for most of the current convocation. Therefore you've got to question firstly why such wealthy individuals should be paid a great deal relative to the national salary level for their services and secondly what value they deliver to the country to warrant a real salary. In the Soviet era there was always confusion over price and value. In the Russian language a similar word is used for both as it was assumed that you just got what you covered. Warren Buffet?s description is a bit more applicable ?costs are whatever you pay whilst value is that which you get?. In this example it can be fair to say the people are paying excessive and getting too little.

The profligacy with the current government belies an underlying contempt for your nation. They cut budget allocations for state salaries, social protection, healthcare and education just by enough to generate sure that this people don't rebel whilst simultaneously they increase shelling out for aspects of personal enrichment and aggrandisement. This shows that they've got no morality, no concern for that public good no aim of expanding the whole wealth from the nation unless they've got a direct interest. Ukraine has evolved over the past twenty years not in to a functioning democracy but from the fledgling democracy in to a classic Oligarchy if it remains unchecked it could only deteriorate as the protagonists challenge each other for ultimate control.

Is Euro-2012 more costly than it will probably be worth?

Expenses for your organisation of European football championship Euro-2012 may exacerbate overall economy in Ukraine. Experts report 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, by way of example, spent 11 billion USD on preparations to the Olympics but received only 2 billion USD inturn. Outset estimates pitched the mandatory developments for Euro-2012 at 280 million USD using the Ukrainian people expected to front 12%. The low investment attractiveness of Ukraine, misallocation of public funds and the deficiency of experience might turn Euro-2012 from the celebration of football into a national economic disaster.

After going to the partially constructed central football stadium in Kyiv, Vice-Minister Borys Kolesnikov noted how the 550 million USD already spent was quite reasonable and sits at 20% under the price to the Warsaw stadium. President Yanukovych also visited the Kyiv stadium and promised that this construction can be completed in accordance with UEFA requirements by autumn with the latest. This year Ukraine faces the enormous pressure of handing over back its multi-billion international debt, however the new budget provides 18 billion UAH for your preparations for Euro-2012. To put the figures into perspective 9 and 18.5 billion UAH will probably be allocated to health 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 and the economic context available the solution to whether Ukraine can afford hosting Euro-2012 becomes quite obvious.

People First Comment:

When will government entities of Ukraine understand that you just can?t spend your way debt free. The government?s debt mountain is one of many largest international debts with regards to GDP in the world and ultimately somebody is going to have to pay for the bucks back. The expense of Euro 2012 is entirely uncontrollable. How can Ukraine spend approximately $10 billion on half in the Euro 2012 , Greece only spent $11 billion dollars generally of 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 from the window and on the excuse how the previous government messed things up?

In the us government?s new budget the allocation for Euro 2012 is $2.4 billion, that?s double the amount allocated for health care simply a fraction under that allocated for education in 2011. But the complete bill might be around $10 billion, in case the revenues are on target and the budget funds are real the us government is going to have to discover an additional $7.2 billion and this will likely be on top with the two tranches of about $25 billion each needed to cover international debts that will fall due concurrently. The chances of the nation being able to get $57.2 billion in time are unlikely specially when we percieve such profligate spending; therefore the folks ought to start planning now to the austerity measures which will undoubtedly follow.

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

Absolute opacity within the Ukrainian "market economy"

Whichever market a firm runs using in Ukraine non-transparency is definitely an everyday norm. This dilemma is enshrined in the recent open letter to 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 concerned with state price administration about the grain market, which among variables is stifling competition. "Khlib Investbud" is now establishing a monopoly on the grain market of Ukraine after being allocated large grain export quotas as well as other privileges. The Mass media has reported that local businessmen and Russian capital close on the President stand behind this potential monopolist. "Ukrtelekom", a state owned advertising group that held a powerful monopoly, was sold-off which observers noted as indicative in the deficiency of 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 to the undeniable fact that there were no competition, with only 1 potential buyer entered for the tender, and with the buyers non-transparent financial assets, oppositional politicians as well as the mass media have pointed fingers at ties involving the company along with the President.

Olexandr Ryabchenko, head in the State Property Fund of Ukraine, commented recently for the privatisation plans for 2010-2014, which are required to attract about 10 billion UAH annually. His remarks reflected concern over having less transparency inside privatisation process and suggested which he fears state assets could be sold at reduced prices to the people close to Ukrainian government. Monopolization inside the Ukrainian economy, the introduction of non-transparent "game rules" with pro-government businesses having all 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 one company to comply using the terms with the tender to get Ukrtelecom? Only in the event the tender was specifically written in order that this became the one company which could comply. The only thing that is certainly transparent concerning the sale of Ukrtelecom could be the blatancy with which the government have sought deceive the population. This is exactly the same scenario 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 a transparent auction. No doubt the same cycle could happen again?

What is more confusing concerning this auction is always that the coming year this government is going to have to locate billions to national debts. These assets were a ready method to obtain real income that they can now appear to have been squandered. This is not going to go unnoticed by the IMF from whom this government is trying to borrow billions or the syndicates of banks who anticipate to be repaid the coming year. Perhaps the federal government is basing their hopes on negotiating a roll 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 to 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 his awesome brother Sergiy Klyuev are on 25th place with 900.8 million USD - a 100% increase since the Focus rating this season. 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 with the Ukrainian Security Services, (42nd place) has grown from 357 to 430 million US dollars whilst Vice Prime Minister Borys Kolesnikov has appeared for the 59th place with 293 million US dollars.

"Focus" also reports that this amount of Ukrainian multi-millionaires almost tripled - from 8 in 2010 to 21 people this year. The total private capital included in this accounts for 58 billion US dollars. Vadym Novynskyi (US$2.63 billion) and Kostyantyn Grygoryshyn (US$2.169 billion) are becoming 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 while using majority from the population existing on the salary of below 200 US dollars each month. It seems that this combination of politics and business, prohibited inside the European Union along with other democracies, continues to be the most profitable activity in Ukraine.

People First Comment:

The average growth of the superior 50 oligarchs in Ukraine is in excess of 25% yearly which can be extraordinary bearing the top degrees of growth experienced by western banks that have some of the finest economic brains within the world is around 8% over exactly the same period. Are these oligarchs such brilliant business people or will they perhaps possess some alternative reasons for profit football news scores transfers that they're not admitting to?

According to your recent report by the respected investment house Sigma Bleyzer the Ukrainian economy could be expanding but only in direct proportion to the expanding world interest in unprocessed trash. The whole Ukrainian economy isn't just predicated on the fact how the world needs more but also it's focused for the business interests of an elite few. Future economic stability with the nation is totally dependent around the whim of the steel, chemicals and coal barons? the truth is they now literally control Ukraine and with it the future of everybody living here. Is it any wonder therefore that 34% of the nation really wants to leave and 39% of the employees already has?

The President could imagine he is charge in fact he to is equally as much a hostage as some other citizen as if the barons opt in another direction there is nothing he is able to do over it. If they want to they are able to control the courts, the legislature, the militia and the security services mainly because with this environment just about everything is made for sale for the highest bidder. However we can take comfort in the idea that all Empires eventually implode through their own greed and Ukrainian oligarchies aren't any different.

Quote in the week:

We can have democracy in this country, or we could have great wealth concentrated within the hands of a couple of, but we can't have both.

Louis D. Brandeis

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

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