FACES AND PLACES: Beating your bodhran: reflections on Lazarenkoism (06/11/00)

FACES AND PLACES

by Myron B. Kuropas

Beating your bodhran: reflections on Lazarenkoism

What do you call the only capital city in all of Europe with not even one four-star hotel? Try Kyiv.

What do you call the European capital city with one of the highest average daily hotel room rates ($200) in Eastern Europe? Kyiv wins again. With that price, of course, comes indifferent or surly service, rock-hard beds, room keys that are big enough for a small carry-on, and hotel managers who laugh when you ask for the presidential suite. Small wonder that few visiting heads of state, let alone President Bill Clinton during his stop last week, spend the night in Kyiv.

Nine years after independence, Ukraine remains in the burly, clawed clutches of the newly hatched, self-serving "democratic nomenklatura." The poster boy for these economic bloodsuckers is Pavlo Lazarenko, Ukraine's former prime minister, who was recently indicted in the United States for attempting to launder $114 million that he extorted from people anxious to do business in Ukraine.

Ukrainian government representatives have told me that this kind of exploitation is not unusual in emerging nations. Even the United States, they argue, had its "robber barons" during its industrial growth period. How can one expect more from a nation that has suffered so much?

Both arguments are weak. The so-called "robber barons" in the United States - Andrew Carnegie, John Rockefeller, Cornelius Vanderbilt, Henry Ford - while often ruthless in their pursuit of financial advantage, created wealth and employment for millions. They also donated their fortunes in their later years to establish foundations, universities, libraries and hospitals. They can in no way be compared to Mr. Lazarenko, who has produced neither wealth nor jobs.

The argument that Ukraine's unique history resulted in a culture and mind-set that makes financial growth difficult has some merit, but fails to convince once we contrast Ukraine to other nations with a similar history.

Take Ireland. Ireland and Ukraine both suffered centuries under the heel of vast empires that attempted to dilute the local population with foreign émigres, the Scots in Northern Ireland, the Russians in eastern Ukraine. Both nations fought to preserve their native tongues. Irish and Ukrainian peasants suffered famines which decimated the population, Ireland because of fungal blight, British misrule and exploitation by brutish, absentee landlords; Ukraine because of Soviet Russian economic terror and ethnic cleansing.

Irish monks preserved Western culture when the rest of Europe was reeling from barbarian invasions. Ukrainian monks from the Mohyla Academy saved and later renewed Eastern Orthodoxy. Irish resistance to foreign rule included the Irish Republican Army (IRA). Ukrainians established the Organization of Ukrainian Nationalists (OUN). Both the IRA and OUN adopted terrorism as a modus operandi, all outside their respective mainstream societies. Finally most Irish and Ukrainian music is written in a minor key, a melancholy reflection of past troubles.

Today Ireland and Ukraine have an educated population willing to work. It is here, however, that the similarities end. Ireland is thriving. Ukraine is barely breathing.

According to a recent article by Susan Clark in the airline magazine Continental, Ireland is no longer the impoverished wasteland described in Frank McCourt's best-selling memoir "Angela's Ashes." "Prompted by a highly educated and youthful population, a pro-business government, and low operating costs and corporate taxes, almost 600 U.S. companies has set up offices and plants in Ireland by the end of 1999, 40 percent of them arriving in the past decade. Their ranks include Microsoft, IBM, Dell, Hewlett-Packard, Compaq, Motorola, Intel, Oracle, Apple, Xerox, 3 Com, Pfizer, Johnson and Johnson, SmithKlineBeecham, Citibank, Merrill Lynch" and others.

At a time when Ukrainian government officials demand Lazarenko-like bribes and outrageously exorbitant taxes from companies naive enough to believe they can establish an honest business in Ukraine, Ireland is wooing the private sector.

Today, Ireland is the fastest growing nation in Europe with a 1997 gross domestic product (GDP), after inflation, of 10.7 percent. To put this in perspective, consider this: all during the bullish 1990s the America's GDP never exceeded 4.7 percent.

Much of Ireland's dynamic growth is a recent phenomenon. "When independence finally came to the southern 26 counties in 1921 after eight centuries of domination," write Ms. Clark, "the early government understandably threw up thick walls against the outside world." Eamon de Valera who served as prime minister from 1932 to 1948 and through the 1950s (Ireland was formally declared a republic only in 1949) attempted to create an economically independent state in which the people "were satisfied with frugal comfort." Enacting some of the world's highest trade barriers, De Valera only succeeded in stifling growth and reducing the GDP. The Irish lived frugally, but not very comfortably.

During the 1960s a new government headed by Sean Lemass started to phase out protectionism and tariffs and set tax rates on manufacturing and services at a modest 10 percent. But, writes Ms. Clark, "Ireland did not sit quietly by, waiting to be discovered; it went out and beat its bodhran." The government established the Industrial Development Authority (IDA) in 1969, which had carte-blanche privileges to negotiate. According to Finn Gallen, IDA manager of media and VIP relations, "We could do everything: discuss a deal if you were interested, negotiate, present a proposal, get approval, get you a factory site, do the whole thing from beginning to end without going to any other government body. We sold ourselves as a one-stop shop."

At the same time the Irish invested in their school system, then considered the worst in Europe. "Today Ireland's schools produce more people per capita with college degrees than any other Western nation," writes Ms. Clark. An amazing 57 percent of all university students major in engineering, science or business - more than twice the rate of the United States.

Ukraine can learn from the Irish. Given the dinosaurs who inhabit the government, especially the Ministry of Education, however, this will not be an easy task. Now that the United States has promised to assist Ukraine with Chornobyl and other problems, President Leonid Kuchma has no more excuses. It's time to clean house for the new millennium.

Myron Kuropas' e-mail address is: mbkuropas@compuserve.com

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