MBS Blog

Julia Pilyavskaya, a Ukrainian on the MBS team provides a perspective of current events:

I read many discussions about Ukraine and how different it is from the

rest of the world. People ask me how it is to live in Ukraine. Well,
certainly it is different, it cannot be the same. We grew up having
different realities, different mentality and conditions of life.

Being isolated from the rest of the world for many years, some things unusual
for foreigners are “normal” for Ukrainians, because they have never
seen different.  And many years will pass before things will change.

Government doesn’t really care about people and not many believe this
will change with new elections. People don’t know where taxes go and
prefer not to pay them. People don’t trust banks and that is why cash
everywhere.

With our “free medicine” one would think twice before going to a hospital without money.  And so on… Most people wonder why change if it’s not going to change.

And now the most popular word is “crisis”. Whenever you go, you hear
it, in the streets, transport, restaurants, homes, television…  90 %
of conversations are only about it, and also prices that go up
constantly and are higher than in Europe, exchange rate, business that
is down, unemployment and certainly government that people can’t trust
anymore.

It will definitely take time for people to understand how to do things
properly, how to work in customers’ service, how to change attitude
and make our country more attractive to live in for ourselves first of
all.

“We must be a non-aligned state. We have to learn to live independently,” he said at a meeting with citizens of the town of Hadiach in Poltava region on Tuesday.

According to the head of the parliament, the question of whether Ukraine should join NATO or not NATO could be a source of conflict in the country.

The position of the people must be taken into account, and most of them oppose Ukraine’s joining NATO, Lytvyn added.

At the same time, he noted that the question on Ukraine’s joining the North Atlantic alliance is not a primary issue now.

(from Interfax)

The World Bank has also revised their economic outlook for Ukraine…and it is not very positive.

“Ukraine’s faltering economy will plunge into a deep recession and shrink by 9 percent this year, far worse than previously expected, according to the World Bank”

After nearly a decade of robust growth, the economy is being hit hard by the deterioration of the global economy and the national government’s failure to implement anti-crisis measures, the Bank said in a statement.

Inflation will hit 16.4 percent this year, better than last year’s 22.3 percent but still very high.

In December, the Bank had forecast that Ukraine’s economy would shrink by 4 percent and projected inflation at 13.6 percent. The International Monetary Fund expects the economy to contract by at least 6 percent this year.

Those estimates contradict sharply with government expectations of 0.4 percent growth and 9.5 inflation this year, which many analysts dismiss as unrealistic.

Ukraine’s economic crisis is one of the worst in Europe. Industrial output slumped by 32 percent in January and February compared with a year ago, and output in the construction industry dropped by 57 percent during that period, according to the World Bank.

The national currency, the hryvna, has lost about 40 percent of its value to the dollar since the crisis hit last fall.

Furthermore, constant political turmoil has worsened the effect of the global crisis on Ukraine by stalling the implementation of key anti-crisis policies.

The IMF withheld the second tranche of an emergency $16.4 billion loan this year after the government failed to trim spending and adopt other stabilization measures.

(from AP)

from businessneweurope.eu

Moldova: Protestors storm parliament, demand new elections

April 7, 2009

A crowd of around 20,000 people has stormed the Moldovan parliament, demanding an end to the Communist Party’s rule.

Moldovan opposition leaders say the Sunday April 5 parliamentary elections which returned the Communists to power were rigged.

Angry protestors have entered the Moldovan parliament building in central Chisinau and set fire to furniture, documents and equipment from the parliament. Computers and other equipment were hurled from the building.

Other demonstrators have thrown eggs, stones and bottles at the presidency, Interfax reports.

At least 20 people are reported to be injured in clashes between police and demonstrators, and one protestor is feared to be dead. Police are now using tear gas to try and disperse the crowd.

The demonstration started peacefully with around 10,000 mainly young people calling for the end of the Communist government, and for closer ties with the EU and Romania.

As the crowd swelled, protestors carrying Moldovan, EU and Romanian flags breached the police cordon around the parliament and attacked the building

Opposition activists are demanding a repeat of Sunday’s election, which they say was rigged.

Liberal Democratic Party leader Vlad Filat told Interfax, “We have information about abuses and falsifications. Thee are many cases that citizens who are dead and Moldovan national’s who are abroad “took part” in the election.”

With almost 99% of votes counted, the Communist Party had 49.96% of the vote, and is expected to pass the 50% threshold which will allow it to form a government and select the president. The Liberal Party had gained 12.78% of the vote, the Liberal Democratic Party 12.26%, and Our Moldova Alliance 9.81%.
 
The protest come after the OSCE declared the elections at the weekend largely “free and fair,” but admitted there were some abuses.

“Yesterday’s parliamentary elections in Moldova met many international standards and commitments, but further improvements are required to ensure an electoral process free from undue administrative interference and to increase public confidence,” the OSCE said in a press release on Monday.   

The tension between Europe and Ukraine is increasing on another front. This article at www.unian.net seems to confirm some of the rumours swirling about; Ukraine is threatening to end the visa free regime that Europeans enjoyed over the last several years.  No word on how or if this will affect citizens of the United States or the U.K.

Several years ago, Ukraine broke with the cumbersome and expensive Soviet visa scheme still practiced in Russia. This has brought a small but measurable wave of investment, new business and tourism into Ukraine.

It has certainly made it easier for entrepreneurs to work and develop new businesses here. The continuation would certainly go a long way towards increasing further investment when the global economic crisis eases, and will facilitate an even greater transfer of wealth from West to East.

Many companies in Europe will relocate their manufacturing in the next decade. A positive atmosphere as evidenced by a visa free regime, would help with this process just as a streamlined visa process did in China during the 1990s. This does not take into account the agricultural sector which will see a flood of Euro investment when laws regarding the sale and leasing of land change.

As expats who look towards the future with optimism and hope for even more business and opportunities, let’s hope that this latest threat is merely a negotiation ploy designed to get the attention of bureaucrats in Brussels.

The Ukrainian government is certainly correct about the lack of reciprocity from the EU in terms of visa issues as well as immigration. The EU continues to treat Ukraine more as a threat than as an asset and until this mentality changes within the councils of Europe, Ukraine will have to swallow some pride, be tough and creative with regards to policy, and walk the “tightrope” between the EU and Ukraine’s powerful neighbor to the East.

Ukraine considers re-introducing visas for Europeans soon - official

Kiev, Apr 04, 2009 (BBC Monitoring via COMTEX) – 

Visa-free travels between Ukraine and Europe will be cancelled soon, maybe even before 7 May, the deputy head of the presidential secretariat, representative of the president [Viktor Yushchenko] in the Supreme Council [parliament], Ihor Popov, said in an interview with the Radio Liberty on Saturday [4 April].

“We will cancel visa-free regime with Europe soon and we will benefit from this. This will happen very soon, maybe even before the summit in Prague on 7 May 2009,” Popov said.

He said that “law-enforcement agencies complain that since Europeans come to Ukraine without visas, every three months police catch some kind of a ‘paedophile’ or a ‘maniac’”.

“Entering Ukraine, a foreigner shows a passport on the border, 10 seconds and off he goes. Later it appears that the man should not have been let in. As a result, he is put on the national wanted list since he entered without a visa and is not registered in the database,” Popov said.

Popov also said that this action can “push Europeans to cancellation of visas for us”.

Source: UNIAN news agency, Kiev, in Ukrainian 1843 gmt 4 Apr 09

As reported this morning in The Financial Times of London (www.ft.com) , the adaptation of the EURO currency by non-EU countries is being advanced as a possible solution to some of aspects of the credit and banking crisis in Eastern Europe.

While it does present a very good alternative to current solutions advanced by the IMF who are grappling with the reticence of governments to adopt additional reforms attached to loan packages, it could force even more drastic reforms on nations like Ukraine if they choose to adapt the European currency.  It could also politically destabilize Ukraine further.

While the adaptation of the EURO could moderate inflation in the intermediate term…depending on the inflationary policy of the ECB…. it could cause price increases for Ukrainians as soon as the EURO were adopted. This would generate social unrest in an already fragile nation, and the central government and the Ukrainian central bank in Kyiv would have little power or recourse to address local conditions. The ECB would in the driver’s seat and Ukrainian sovereignty would be limited.

We are not sure that Ukrainians would welcome the EURO.  While having a hard currency would make loan repayments easier, and smooth out currency disparities related to international trade, it could impoverish many here. Ukrainians recall the experience of Romania which saw huge price increases for food, gas and other products as well as the transitional exchange of local currency to EUROS was reduced.

Essentially, adaptation of the EURO is a mixed bag. Sometimes the cure can be worse than the disease.

IMF urges eastern EU to adopt euro

By Stefan Wagstyl, Eastern Europe Editor

Published: April 5 2009 22:04 | Last updated: April 5 2009 22:04

Crisis-hit European Union states in central and eastern Europe should consider scrapping their currencies in favour of the euro even without formally joining the eurozone, according to the International Monetary Fund.

The eurozone could relax its entry rules so countries could join as quasi-members, without European Central Bank board seats, says the fund.

 “For countries in the EU, euroisation offers the largest benefits in terms of resolving the foreign currency debt overhang [accumulation], removing uncertainty and restoring confidence.

“Without euroisation, addressing the foreign debt currency overhang would require massive domestic retrenchment in some countries, against growing political resistance.”

Disclosure of the confidential report, prepared about a month ago, could reignite a fierce debate over strategies to assist central and east Europe.

Even though global leaders hailed last week’s G20 summit as a success, eastern Europe’s challenges remain. Amid deepening recession, Ukraine and Latvia, two states already in IMF programmes, have in recent days balked at approving IMF-mandated reforms. A third, Hungary, is struggling to create a government capable of implementing reforms.

The IMF report was compiled to support a campaign by the fund, the World Bank and the European Bank for Reconstruction and Development to persuade the EU and eastern European states to back a region-wide anti-crisis strategy, including a regional rescue fund. The campaign failed amid widespread opposition from both west and east European states.

Eurozone members also oppose easing the eurozone’s entry rules, as does the ECB.

The IMF, which forecasts a 2.5 per cent decline in regional gross domestic product in 2009, estimates that “emerging Europe” – including Turkey – must roll over $413bn in maturing external debt in 2009 and cover $84bn in projected current account deficits.

The report estimates that “the financing gap” – money needed from international financial institutions, the EU and governments – will be $123bn this year and $63bn next, or $186bn in total.

Much could come from the IMF. But the report says “up to $105bn” could be needed from other sources, including the EU.

As an expatriate American living in a developing country, one of the issues that is always a concern is what to do if I have a medical emergency or need to require a medical or dental procedure. Well, there are many viable options here in Ukraine.

While Ukraine as a whole is still behind many countries in terms of overall health care, private health care is modern and efficient. It is also far less expensive than comparative care in the United States, the U.K., Western Europe…and in some cases, Eastern Europe as well. In fact, many procedures can be 80-90% less in Ukraine, but also less than in well known “medical tourism” destinations such as India and Thailand. Unless you live in Asia, Ukraine is closer too.

An example is the surgery I had earlier this week to repair a deviated septum. Similar surgery in the USA can range up to and exceed $8,000 USD and the cost is often not covered by some medical insurance plans.

My operation was done here at VIRTUS (see below for info) here in Odessa. Total cost: $825 USD including hospital stay, follow up doctors visits, and prescription medicine.

As for emergencies and general medicine, Ukraine now has several private hospitals that cater to Ukrainian citizens as well expatriates and their families. One of the more well known is INTO SANA here in Odessa.

Having visited some of these facilities, as well as having gathered information for a specialized market survey, the quality and service is almost at the level of many facilities in Western Europe, though the costs are considerably less.

Dentistry in Ukraine is the real bargain. Almost everyone I know in Ukraine brags about their dentist, the quality and the low cost. I take that as a good sign, especially since I am obsessed with good teeth. Almost every office I have visited has been ultra-modern, sporting the latest in technology. Often the dentists are educated abroad or have been certified by foreign institutes.

My own dentist (see below) has a huge foreign clientele from Germany. Many Europeans come to Ukraine not only for implants and other cosmetic procedures, but for basic dentistry. Having silver amalgam fillings replaced, root canals and teeth whitening are very popular.

One of my business partners brings his teenage sons to Odessa just to get their dentistry done. Even with the travel expenses, he saves a small fortune having the work done here.

Ukraine could in fact, become a center of medical tourism. One of the drawbacks has been the lack of English speaking medical professionals, but that is changing. Moreover, it is very easy to arrange for someone to assist with translation and to help with hospital and accommodation arrangements.

Dentist

GRADIA

Prospekt Shevchenko 8A, Odessa

+38048 711 6998

Cosmetic Surgery

VIRTUS- they have modern clinics in both Kyiv and Odessa (www.virtus.ua)

Emergency and General Medicine

INTO SANA (www.into-sana.com)