INTERVIEW: Bohdan Hawrylyshyn on "new Ukraine's" economic system
Dr. Bohdan Hawrylyshyn recently presented a survey of changes in Ukraine's economic system and structure over 1991-1996 at the conference "Towards a New Ukraine" hosted by the Chair of Ukrainian Studies at the University of Ottawa.
Dr. Hawrylyshyn has chaired the Council of Advisors to the Presidium of the Ukrainian Parliament since it was established in January 1990 at his request and is also the chairman of the Ukrainian Renaissance Foundation, a branch of the Soros Foundations. He also chairs the International Center for Policy Studies, and the International Management Institute-Kyiv.
He is a member of the American-Ukrainian Advisory Committee, a prestigious body of statesmen, politicians and international experts chaired by President Jimmy Carter's former national security advisor, Dr. Zbigniew Brzezinski.
Dr. Hawrylyshyn was born in 1926 in Koropets, a village on the Dnister River in the Ternopil region of western Ukraine. After having lived under Polish, German and Soviet regimes, in 1944 he ended up in a displaced persons camp in Germany.
He emigrated to Canada where he received bachelor's and master's degrees in mechanical engineering from the University of Toronto. Subsequently he earned a degree in industrial management from the International Management Institute in Geneva, Switzerland, and a Ph.D. in economics from the University of Geneva.
Since 1960 he has lived in Switzerland. At the IMI-Geneva he has served as a faculty member, director of studies and director (1968-1986) and finally as scholar-in-residence (1986-1989). During his tenure, Dr. Hawrylyshyn taught courses on the governance of countries, on the world business environment and on economic growth.
He is the author of two books (including "Road Maps to the Future - Toward More Effective Societies," 1980) and more than 180 articles on management, management education, and the economic and political environment. His many distinctions include the Gold Medal of the President of Italy and membership in the Engineering Hall of Distinction of the University of Toronto.
Dr. Hawrylyshyn serves on the Club of Rome's executive board, is a member of the Ukrainian Academy of Arts and Sciences and is a fellow of the World Academy of Art and Science and the International Academy of Management.
Andrij Kudla Wynnyckyj conducted the following interview with Dr. Hawrylyshyn on March 22 in Ottawa.
PART I
Q: In your talk at the "Towards a New Ukraine" conference, you suggested that the non-payment of salaries was one of the prices the country had to pay to achieve stability of the hryvnia and inflation control.
A: If you have a tight monetary policy, credits become more difficult to obtain, the cost of credit is high and the volume of money in circulation is kept low. This has the inevitable effect of depressing many activities.
So there is a connection between such a policy and non-payment of wages, but it's not direct. The National Bank doesn't pay salaries, but if the bank had been willing to print more money, and the government more willing to continue subsidies, that would have allowed more enterprises to pay more salaries. But would that have been a smart policy? Clearly, no.
Increasing the money in circulation only makes sense if it leads to an increase in supply of goods and services.
Q: Can Ukraine bring down its dependency on Russia for fossil fuels without resorting to deals with rogue Middle Eastern countries that anger the U.S.?
A: It is a bit delicate. America is important to Ukraine, because the U.S. is pivotal in determining the country's dealings with the International Monetary Fund and the World Bank. It also carries important clout vis-à-vis Russia.
So we have to do some things that we don't like to do, in order not to displease the Americans too much. Ukraine has two bears on either side, although one of them has a softer embrace. The U.S. won't choke or claw you in the same way, but it will squeeze you pretty tight.
Multiple sourcing is the only solution, and not making one grand deal, for instance, to build a pipeline to Iran. There is certainly sufficient understanding in the U.S. that Ukraine has to diversify its energy sources. You're dealing a little bit with the devil, but it would be crazy to remain solely reliant on Russia.
Besides, Ukraine also makes a lot of money transporting Russian oil and gas to Europe, and there would be little use for the 700 kilometers of pipeline passing through the country if it didn't.
Q: Are the prospects of Russia building an alternate pipeline through Belarus to Poland still alive, or have the Poles nixed the deal in deference to Ukraine?
A: It's certainly in the Polish interest to maintain good relations with Ukraine, and Warsaw is showing every sign that it intends to do so. But let's face it, they have to attend to their own interests first.
If they can't get connected to European pipelines, as the Czechs just managed to recently, then it might be safer for them to get their supplies through Belarus.
Q: So is Ukraine in trouble?
A: Yes, Ukraine is in trouble. The Czechs abandoned their connection to Russia for that very reason, and they're now getting their oil from Norway via the western pipeline.
Q: On the other hand, Russia appears to have eased its campaign to destabilize Ukraine by cutting off energy shipments. Was this due to external pressure from the U.S. or Germany?
A: For the most part, internal considerations played the most important role. Since Ukraine could cut off all movement of fuels to Europe, Russia is not yet in a position to completely choke off Ukraine's supplies. It is, for the moment, a stalemate of blackmails.
U.S. influence certainly did play a part in this situation, in urging the Russians to relax, but it definitely remains something Ukraine and Russia have to sort out.
Q: Please expand on a comment you made during the conference about the discrepancy between levels of education in the Ukrainian population and the seemingly widespread incompetence in many fields.
A: Education gives you knowledge, but knowledge cannot be equated with skill. For example, in the Soviet Union there was a gap between science and technology. Innovation in technology occurs most quickly when being applied to the needs of the population, but this obviously wasn't happening - innovation and knowledge were distorted by the accent on military applications, for example.
When something that hadn't existed before in your society is suddenly introduced, such as banking or investment finance, it doesn't matter that you are strong in math if you don't have any idea how it is applied.
On the other hand, in natural sciences, and in certain fields of heavy industry, Ukraine continues to be in the avant-garde. Take welding for example. When Dnipropetrovske's plants were producing these huge rockets, local technicians acquired skills and precision unmatched almost anywhere in the world.
Another example - a Dutchman recently bought Ukrainian technology from the [Kyiv-based] Paton Institute for the ceramic coating of turbine and compressor blades in jet engines, and then set up a very profitable operation in the U.S.
And another - the technology for the creation of artificial diamonds was patented in Ukraine. General Electric claimed it, but lost. A Japanese company didn't fight reality, paid for the technology, imported it and it's taking off.
That's the paradox of Ukraine. You can't just simply speak of incompetence. Of course, there is a lack of knowledge and skills in areas such as management, to which people had absolutely no exposure, but in my experience, the learning curve for people in Ukraine is incredibly steep. I find that people in Ukraine acquire competence at an amazing speed when given the opportunity do so.
Copyright © The Ukrainian Weekly, May 18, 1997, No. 20, Vol. LXV
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