Ukraine’s new economy minister addresses business community in Washington
By Askold Krushelnycky, Kyiv Post,
Kyiv, Ukraine, Sun, Oct. 20, 2019
WASHINGTON — Tymofiy Mylovanov, Ukraine’s new Minister of Economic Development, Trade and Agriculture, visited the U.S. capital this week to meet with American officials, the World Bank and business people.
In the picture left to right: Martha Scott Poindexter, Bunge; Minister Mylovanov; Robert Joyse, Koch Industries;
Mylovanov addressed a packed U.S.-Ukraine Business Council (USUBC) meeting on Oct. 17 at the offices of council member Barbour, Griffith and Rogers, a PR and lobbying firm based near the White House in central Washington.
It was Mylovanov’s first official visit to the U.S. since he was approved as minister by parliament on Aug. 29.
Mylovanov is no stranger to the U.S. After studies at the Kyiv Polytechnic Institute and Kyiv-Mohyla Academy, where he gained a master’s degree in economics in 1999, he went to study in America. He obtained a Ph.D at the University of Wisconsin-Madison in 2004. After a spell at the University of Bonn in Germany, he returned to the U.S. where he taught at the University of Pennsylvania and later became an associate professor at the University of Pittsburgh.
Mylovanov said he was astonished when he was asked to join the new Ukrainian government and initially found it difficult to take the offer seriously.
He eventually agreed to fly to Ukraine from Pittsburgh, where he had been teaching at a math camp. He arrived on a Sunday, and after talks with the prime minister and Zelensky, was appointed minister the same week.
The EuroMaidan Revolution in 2014 was a pivotal moment for Mylovanov.
Living in the U.S., he watched the protests – and the violence against demonstrators – that led to the overthrow of authoritarian, pro-Kremlin President Viktor Yanukovych on online livestreams. More than 100 protesters were killed defending their country from dictatorship.
“The moving moment for me was the Maidan in 2014 when I saw on You Tube in real time as Ukrainians were being killed five blocks from where I grew up in Kyiv… when doctors were performing triage on people who were shot and selecting who could be saved,” Mylovanov said.
He said the images prompted him to think about his own connection to the dramatic events and the responsibility to help.
“Conflict, in the end, is conflict over resources, and this is exactly what economic studies are about — the allocation of scarce resources,” he told an audience of 50 or so people, mostly American businesspeople with interests in Ukraine.
In 2016, the post-revolution parliament elected Mylovanov to the Council of the National Bank of Ukraine (NBU), and, that same year he was appointed Honorary President of the Kyiv School of Economics.
Since becoming minister six weeks ago, he said he has been busy drafting legislation and listing 800 state enterprises – out of a rough total of 10,000 in the country – for privatization.
“There are 61 central authorities running state-owned companies with no accountability whatsoever, and these guys are messing up the competition in every market you can think of,” he said. “We have to get them under control.”
Apart from responsibility over state-owned enterprises and most state-owned property, the Ministry of Economic Development, Trade and Agriculture oversees some 387 other functions, including trade sanctions and intellectual property rights.
Mylovanov said that his ministry has also taken responsibility for half of the work formerly done by the Ministry of Social Policy: dealing with labor issues including unemployment benefits, professional training of the labor force and monitoring of labor codes.
At the Oct. 17 meeting Mylovanov also talked about the government’s decision to merge the Agriculture Ministry with the Ministry of Economic Development and Trade. The agriculture-related responsibilities, he said, consisted of four functions: land market reform, food safety, food security and rural development.
Much of the Agriculture Ministry’s archives and records of financial transactions had gone missing, and “the amount of corruption in that ministry is beyond comprehension – it’s surreal,” he said.
Mylovanov said the Agriculture Ministry had been “nothing but a vehicle for the appointments of state-owned companies which command unbelievable amounts of state land and yet somehow generated huge losses for the government. Of 500 state-owned companies under that ministry, only 90 are operational. The remainder just own land and are… I’m not sure what they are doing.”
He described how one senior agriculture ministry official owned seven Mercedes automobiles and had at least $1 million in his bank account, all purportedly as a result of his salary as a modestly-paid Ukrainian civil servant.
Mylovanov also said that land market reform to privatize farmland was a priority. “We are pushing hard on it to demonstrate that on something that seemed impossible… we can make some real progress.”
He anticipates some delays in opening up the market to foreign investors, because opposition parties will try to stir up public animosity against privatization by claiming Ukrainian land will fall into the hands of foreigners.
“So there will probably be some restrictions (on foreign ownership),” he said. “What they will be is unclear. There probably will be some delay on foreign companies to come in except for those already operating… we are designing the reform in such a way that those who operate businesses right now should not be disrupted.”
As a “longer-term objective,” Mylovanov named fashioning strong antitrust and competition regulations, which he said were vital to countering “vested interests.”
He also listed improving the prospects of blue collar workers in the labor market as a priority. Many of them have been left behind because they were not qualified to operate technologies replacing Soviet-era equipment.
Mylovanov wants to “take those guys with us into a better labor market” and sees training them in new skills as critical.
He also fielded questions from some of the major companies operating in Ukraine, including Shell, CNH Industrial, Cargill, Archer Daniels Midland, GE, Koch Industries and Westinghouse on issues ranging from VAT refunds and tax investigations to the effects of land privatization on farm equipment sales.
Kolomoisky and bad optics
The Kyiv Post asked Mylovanov about notorious Ukrainian oligarch Ihor Kolomoisky, whose apparent closeness to Zelensky has disturbed many Ukrainians and aroused suspicions that the president will allow the country’s richest businessmen to maintain their outsized influence on government.
Kolomoisky owned the TV station that aired Zelensky’s comedy “Servant of the People” and was also co-owner of Ukraine’s largest bank, Privatbank, which the government nationalized after he and his business partner, Gennady Boholyubov, were accused of siphoning $5.5 billion from account holders. The previous government used taxpayer money to replace the $5.5 billion and save Privatbank from bankruptcy.
In 2018, Privatbank took its former owners to the London High Court in an attempt to recover some of the money, and the two oligarchs’ assets were frozen worldwide.
For two years Kolomoisky lived outside Ukraine fearing arrest, but he returned to the country earlier this year after Zelensky’s election. The Kyiv Post published a picture of the two together at a meeting in the president’s office.
Mylovanov said at the outset of the meeting that his ministry is not responsible for issues connected to Kolomoisky and the National Bank of Ukraine but agreed that the “optics” of Zelensky and Kolomoisky hobnobbing looked bad for the Ukrainian government and affected its relationship with the International Monetary Fund and other foreign partners, who questioned whether the government was exerting pressure on the NBU on Kolomoisky’s behalf.
Mylanov said discussions had led to a situation where “our international partners confirmed that the optics on central bank independence have been improved and today there is no issue,” adding, “I don’t want to speak specifically about Kolomoisky, because that’s a bit unfair. There are other powerful tycoons in various industries… like in alcohol, where there are three groups of organized crime who control the industry sometimes or customs,” he added. “So there’s not just one name… We need to resolve the problem in a systemic way.”
Mylovanov said no single gesture will dispel everyone’s suspicions concerning Kolomoisky. “I actually think that the only way to move forward and to demonstrate to everyone that the government, the Office of the President and the parliament are doing the right things is a sort of marathon approach. We have to demonstrate thousands of correct moves and zero incorrect moves.”
So far, he said, there has been “zero action which doesn’t protect the taxpayers of Ukraine or moves in any incorrect direction on the Privatbank issue. But you can see that the battle is ongoing. And I think that we will demonstrate… that the government is independent of people involved in the Privatbank case.”
Mylovanov was seen sending text messages on his smartphone throughout the meeting. That seemed fitting for a government that prides itself on communicating its message using new technology.
Later, he announced that he’d asked some of his fellow ministers in Ukraine about matters raised during the meeting and received answers, some of which he read out.
As the meeting dispersed, it was clear from the comments of attendees that Mylovanov had made a positive impression on most and charmed many.
Morgan Williams, the organization’s president and CEO, called Mylovanov “a major change” from his predecessors, adding that Mylovanov “does not sit in ivory towers writing books, but is a man of action.”
Williams said that despite two revolutions, people with fresh outlooks had never gotten their hands on the levers of power in Ukraine — now though, he speculated, at least in the Ministry of Economic Development, Trade and Agriculture, those levers are in the right hands.