As the article below in the Kyiv Post illustrates, the biggest companies find a way around Ukraine’s onerous tax laws. Suffice to say, that much needed tax revenue disappears into foreign banks while the Ukrainian government goes begging to the IMF for loans.

While the culture of corruption is going to be hard to break, Ukraine’s government could give incentives to companies to change their tax avoidance and evasion schemes. Instead, the government in Kyiv piles on new regulations and tax increases, which only increases the amount that will go offshore, while tamping down business activity, and the wealth and job creation that goes with it.

As Ukraine’s richest businessmen rise up local and international rich lists, their companies, strangely, appear to be heading in the opposite direction.

The nation’s flagship metallurgy sector, for example – which accounts for nearly half of the nation’s exports – is still financially in the red, official figures show.

Although higher prices on Russian natural gas imports have hit margins sharply, critics say the losses are largely a grand deception. Many companies underreport their income in Ukraine in order to pay less tax, transferring profits offshore in often complicated ways that deprive the country’s budget of much-needed revenues. Many of the practices may be legal, while others appear dodgy, to say the least.

The State Statistics Committee estimates that only 63 percent of the nation’s companies declared profits in 2010, totalling $7.9 billion.

An aerial view of the Azovstal steel plant in Mariupol in 2006. (UNIAN)

Most enterprises downplay their income in Ukraine.”

- Oleksiy Blinov, head of research at Astrum Investment Management.

Small- and medium-sized businesses, meanwhile, struggle with a heavy tax burden, complex and ever-changing regulations and no ability to take advantage of these offshore schemes.

“Most enterprises downplay their income in Ukraine,” said Oleksiy Blinov, head of research at Astrum Investment Management. “The largest companies move their profits offshore through transfer pricing and other schemes so the figures they disclose don’t show the whole picture and the true financial health of their companies.”

In disclosing their 2010 financial figures, one big Ukrainian company after another posted weaker-than-expected financial results in sector after sector, including chemical makers, electric power distributors, machine builders and oil and gas companies.

Several of the companies named in this story were contacted for response, but had no immediate comment or their officials required written requests for information.

Kryvorizhstal plant on March 21, 2007. (Natalia Kravchuk)

At a briefing with journalists on March 17, Serhiy Lyovochkin, chief of staff to Ukrainian President Viktor Yanukovych, admitted to owning an offshore company of his own, but insisted it was legal.

Lyovochkin also brushed aside suspicions that the nation’s largest business groups and companies were showing little profit onshore in order to siphon it abroad and away from tax officials.

“I know the owners of many of these companies. They are patriots,” Lyovochkin said, noting that much of the business world uses offshore companies.

Azovstal and Yenakievo, Metinvests’s flagship mills, were hit hardest by transfer pricing practices.”
- BG Capital report.

In Ukraine, a good place to start examining the practice is with the metallurgy sector, which provides the nation’s top currency earnings.

As global steel demand and prices recovered in 2010, Ukraine’s metallurgical sector still managed to post an aggregate loss of almost $480 million compared to $1 billion in 2009.

A recent Ukraine steel industry report by BG Capital, an investment bank, named transfer pricing – the allocation of profits for tax and other purposes within a multinational corporate group – a factor that “outweighs all others” in harming the companies’ reported performance.

The report, which covered Alchevsk Metallurgical Plant, Azovstal and Yenakievo Metallurgical Plant, stated that the mills’ earnings before interest, taxes, depreciation and amortization were well behind the 18-24 percent margin range for Russian peers.

“Azovstal and Yenakievo, Metinvests’s flagship mills, were hit hardest by transfer pricing practices,” the BG Capital report said.

The Metinvest, the steel holding owned by billionaire Rinat Akhmetov, said that it paid Hr 11 billion in taxes in 2010.

The international financial watchdog Global Financial Integrity estimates that the financial system leaks $10.75 billion a year through the deliberate under-pricing of exports, overpricing of imports and the purchase of non-existent services – assisted through offshore tax havens in Cyprus, the Seychelles and the Cayman Islands.

Martin Raiser, head of World Bank in Ukraine and Moldova. (UNIAN)

All are designed to ensure that profits are held offshore and out of reach of the Ukrainian tax system.

There are many perfectly legal deductions that can reduce a company’s tax liability but this is certainly not the same as tax evasion, which is illegal, or tax avoidance through loopholes in the legislation regarding double taxation for instance, or transfer pricing.”

- Martin Raiser, head of World Bank in Ukraine and Moldova.

“There are many perfectly legal deductions that can reduce a company’s tax liability but this is certainly not the same as tax evasion, which is illegal, or tax avoidance through loopholes in the legislation regarding double taxation for instance, or transfer pricing,” said Martin Raiser, head of World Bank in Ukraine and Moldova. “The latter should be prevented both through better legislation and tighter controls.”

“It wouldn’t be frivolous to say that Ukrainian companies are abusing the practice of transfer pricing,” said Vladimir Kotenko, head of Ernst & Young’s tax & law department in Kyiv.

Tax avoidance and minimization isn’t limited to Ukraine’s big steel industry.

Four of Ukraine’s major chemical producers who make key agricultural inputs also posted negative pre-tax profits in the first nine months of 2010, investment bank Phoenix Capital reported.

Stirol, Odesa Portside Plant, Dniproazot and Rivneazot posted a combined $105 million negative bottom line in the first three quarters of 2010. Stirol was $58.2 million in the red after September 2010.

Ukraine’s largest oil and gas company, Ukrnafta, posted weaker than expected 2010 financial results due to transfer pricing, Dragon Capital, another investment bank, reported.

The Privat Group-controlled company posted a $332 million 2010 net income because non-market price dealings with the Ukrtatnafta refinery, a company that’s also in Dnipropetrovsk-based Privat Group’s orbit.

“We … think that there exists a risk of further financial deterioration should Privat continue with its transfer pricing scheme boosting Ukrtatnafta’s profitability at Ukrnafta’s cost,” a recent Dragon Capital note to investors read.

Dragon Capital also reported three electricity generators performed poorly in 2010. Zakhidenergo, the third largest Ukrainian thermal generator and Donbasenergo posted $42 million in losses while Dniproenergo posted a net income of $23.8 million, 21 percent below Dragon’s forecast.

Machine maker Sumy Frunze saw net income sink by four times year-on-year to $12 million. Steelmaker Azovstal posted an unforeseen 2010 net income loss of $23 million while the Yenakievo and Alchevsk Metallurgical Plants were in the red $224 million by the end of September 2010.

And despite solid production last year MMK Illicha, which Metinvest took over in 2010, had a negative $52 million bottom line in 2010.

It wouldn’t be frivolous to say that Ukrainian companies are abusing the practice of transfer pricing.”

- Vladimir Kotenko, head of Ernst & Young’s tax & law department in Kyiv.

“The poor results support our view that MMK Illich’s new owner is likely to position MMK Illich as a cost center with the holding, similar to its other steel mills, by supplying iron ore and coke at above export prices,” a BG Capital note said.

Such schemes to maximize profits are far from Ukraine’s small- and medium-sized business owners, suffocated by regulations, red tape and official and unofficial shakedowns.

“Although Ukrainian small businesses under the simplified tax system pay little tax, both small and medium size businesses face significant administrative burdens,” said the World Bank’s Raiser. “We have argued in the past for a reform of the simplified system to accommodate true small businesses, but only in parallel with simplifying tax administration,” Raiser added.

The goal of such a progressive tax system, according to experts, is to allow Ukraine’s struggling small and medium-sized business to blossom, which would support development of a prosperous middle class that is key having a healthy economy.

Achieving this, economists say, would put Ukraine’s economy on more solid footing.

“What’s needed is a fairer tax code and administration,” said Ihor Burakovsky, director of the Institute of Economic Research and Political Consultations. “Taxes shouldn’t have a universal approach to everyone, plus economic recovery isn’t always related to increased public financing, what matters is how taxes are calculated, collected and it’s also about corruption.”

What’s needed is a fairer tax code and administration. Taxes shouldn’t have a universal approach to everyone, plus economic recovery isn’t always related to increased public financing, what matters is how taxes are calculated, collected and it’s also about corruption.”

- Ihor Burakovsky, director of the Institute of Economic Research and Political Consultations.

But despite the government trumpeting its new tax code, passed into law last year, this hasn’t happened.

According to Ernst & Young’s Kotenko, the new tax code, which went into force Jan. 1, isn’t “conceptually” new at all.

“The old rules and norms have mostly just been shuffled around. The old bureaucratic system is still preserved, the document as a whole is still archaic, the parameters are still extensive though,” Kotenko said, adding that only larger companies are better equipped to cope with the extensive tax compliance burden.

He said Ukraine’s largest companies can still “enjoy some historically available tax optimization schemes” leaving the government little to tax.

The bad news is that this scheme of hiding profits from the tax inspector seems to be accelerating, according to figures from Ukraine’s State Tax Administration. In the first half of 2010, exports to offshore companies increased by 54 percent to $1.6 billion.

The figures would suggest that companies are purposefully shying away from complying with tax rules and regulations and thus aren’t paying their fair share of taxes.

The Kyiv Post article below gets it right. Most of these rich Ukrainians did not get that way creating new industry or business, but by cannibalizing old Soviet industries.  Moreover, they insulate themselves from any competition-domestic and foreign-by taking advantage of laws they help create, ineffective enforcement of regulations, and corruption.

Welcome back to the Age of Feudalism. The wealthy below are the Knights of the Round Table,

Read more: http://www.kyivpost.com/news/nation/detail/93082/#ixzz1GwKeJ000

The government of Ukraine is back to the waiting game for another tranche from the IMF. Part of the expected deal, is pension reform, which translates into increasing Soviet era retirement ages.

Raising the retirement age in most nations is sound economics , especially with people are living longer. However, life expectancy has declined in Ukraine since the fall of the Soviet Union, especially among Ukrainian males, many of whom will die before reaching retirement age. Of course, this was how retirement and pensions systems were initially configured. In the United States, the retirement age for Social Security eligibility, was for many decades, higher than average life expectancy of Americans. It was one of the reasons the system worked so well for so long.

IMF May Decide on Tranche to Ukraine in April, Tigipko Says

Ukraine has made great strides in the last 5 years, but still lag in terms of income growth.  Average salaries and income…reportable income that is…do not go very far, especially when inflation is factored…for providing for basic needs in the life of most Ukrainians.

21.4% of Ukrainians live below UAH 700 a month

10-03-2011 09:21

In Ukraine, 9.5 million people live below a minimum subsistence income - UAH 700 per month (USD 1 - UAH 7.94), according to a report released by the State Statistics Service.

At the same time, over the past ten years the number of Ukrainians living on income below the subsistence minimum decreased 39.2 million to 9.5 million. In the early 2000s, the number of Ukrainians living on a scanty income was a majority of the population. In 2000, 80% of the population in Ukraine lived for UAH 270 per month [minimum subsistence that time]. And in subsequent years, until 2003, this percentage had been only growing. Since 2003, Ukraine’s population has begun to rapidly grow rich, and in 2006 only half of Ukrainians were living on income corresponding to UAH 427 [minimum subsistence that time]. The statistics office recorded that last year for the first time since 2003 that the percentage of Ukrainians who are on the brink of survival has again started to increase in Ukraine. If in the pre-crisis 2008 only 18.1% of Ukrainians were living below a minimum subsistence income [UAH 626 that time], so last year this figure rose to 21.4%. In other words, 9.5 million Ukrainians live on incomes below UAH 700. President Viktor Yanukovych last June presented an economic program, according to which in Ukraine the share of population living below the poverty line should not exceed 7% by the end of 2014.

One of the mainstays of a romantic evening here in Ukraine, is the ubiquitous Odessa Champagne. Tasty (at least the dry version is to my liking) and inexpensive, it is popular, even with those whom can afford the more expensive bubbly from the “Champagne” region of France.

They say that “imitation is the highest form of flattery,” though it seems the EU…the French in particular…have a hard on for regulations on food items. We had heard about the desire of European bureaucracy to standardize what was acceptable, even the shapes and sizes of bananas allowed to be imported into the EU (sexual connotations permitted!), and while most can understand the degree of national pride that a place like “Champagne” or “Cognac” can invoke, the names themselves have transcended national boundaries. If the French were to make borscht or pelmeni, or even hamburgers…and call them such, there would be few objections, only comparisons with the “original.” This is already the case with vodka, which is claimed by Russians, Ukrainians, Poles and others, but made in dozens of countries…and still referred to as vodka.

I recall a tasting  I once attended  years ago in Yerevan, Armenia. The hostess for this event-at Ararat, a former Armenian and then Soviet enterprise that still produces some of the best “Cognac” in the world, informed us that the French company Pernod, had just purchased this company. She explained that when executives recently came from France to taste the some of the 20 year old vintage quietly aging in oak casks, several of them mentioned that this was better than anything they had in the Cognac region of France, and reaffirmed their decision to buy the company. Interestingly, Ararat had won the right to call their brandy, “cognac style wine,” 100 years earlier when their drink impressed judges in a Paris Exhibition.

Perhaps the French and others should be happy that quality products produced elsewhere, use the current names. As the article below notes, renaming products could make them equally if not more famous when they are judged by quality, and could wind up supplanting the original in the hearts and on the tables of consumers. For me, that is certainly the case. 10 year old Ararat is my favorite drink, and I would not even think of paying all that extra money for the stuff produced in France.

The bubble bursts for Ukraine’s “Champagne”

By Shaun Walker in Kiev

The author of this article asks a very good question: why are there so few “mom & pop” businesses in Ukraine? Contrast this with almost every growing economy in the developing world where they are the norm.

By the way, the food and service are both very good at this restaurant in Kyiv.

A friend recently told me that she was sitting in Oliva and thinking why there are so few small and cozy restaurants in Kyiv.

You know, the places where you can get risotto porcini for Hr 50. Even if the serving doesn’t make you feel miraculously transported to Italy, at least it’s not like in Puzata Khata, where chewing on a sandwich with mayo makes you feel awfully sorry for yourself.

So why is this type of eatery such a rare find in Kyiv?

First, there’s a lack of a “family dining out” culture. Everybody that I know stateside has their favorite family restaurant – where everybody goes for birthdays, Barmitzvas or Sunday brunches. Not so in Ukraine. If we speak about our population in general, then the tradition is to celebrate holidays and anniversaries at home. Restaurants are usually a big affair either for a wedding or for a 50th birthday. Of course, the younger and wealthier generation is changing this, but slowly. That elusive middle class suddenly appeared when banks started lending money for cars and flats. But then it went belly-up when the recession hit, and now it seems as elusive as ever in Ukraine.

Oliva chain of restaurants is a rare gem in Kyiv’s shallow selection of cozy, family-like eateries. (Joseph Sywenkyj)

Second, there’s no glamour for Ukraine’s “elite” in going to a family restaurant. Now let’s think about those whose regular evening entertainment includes oysters and running people over in their Maybachs. Would they go to a small family restaurant? Highly unlikely. There is no glamour in that. The Maybach owner will be depressed over the fact that he can order neither a salad for Hr 3,200 (it actually exists in one Kyiv restaurant) nor a wine for the cost of a small car.

Third, there’s no support for small business. OK, so we all know that life for an entrepreneur has always been hard here, but now it’s getting ridiculous. I should know, as I am a small business owner. It’s as if the government is having a large-scale experiment on when small- and mid-sized businesses will start dropping dead like flies in winter – after the new tax code or before the new labor code?

Restaurants, with their relatively low margins, high entry barriers (find premises, get lease permit, create architectural, engineering and technical projects approved by city, get to know fire department, electricians and gas inspectors really well, apply for trade patent, get license for production and selling of food and don’t forget the permits for alcohol and tobacco sale, and then start working on ventilation, kitchen planning and so on), high employee turnover, seasonality and theft issues, are definitely not a good option.

Fourth, there’s no glamour in it for the owner and employees. Somehow, this culture thinks of people who are in the service business as serfs. Unlike other countries where there is a mindset of pride and consideration for the industry, brewing a cup of coffee and serving it to a guest here is considered a low-level job. Most waiters have no respect for their profession, and most owners wouldn’t be caught dead in the dining room talking to patrons.
Fifth, there’s a lack of managerial skills. A lot of small restaurants that opened last year have bankrupted due to simple mismanagement. The majority of cafe owners have no clue about basic human resources principles or marketing strategy or cash flow forecasting.

So is there no hope? Where there’s a will, there’s a way. Let’s just pray for that ethereal middle class that will drive both ownership and clientele for family restaurants.

Antonina Armashula is a marketing director at Mark Tapley Ltd., a consultancy in Kyiv. A culinary devotee, Armashula blogs about fine dining and cooking at www.edok.in.ua.

(from the Kyiv Post)

Will Ukrainian-Russian cooperation finally allow extracting hydrocarbons from our sea shelf?

Photo by Yurii MALININ taken from the website LIVEJOURNAL.COM NORWAY IS THE WORLD’S PREMIER OFFSHORE OIL AND GAS PRODUCER. EXPERTS SAY THAT TO HAVE SIMILAR OIL PLATFORMS, UKRAINE NEEDS EFFECTIVE INVESTORS WITH HUNDREDS OF MILLIONS OF DOLLARS AND FIVE TO SEVEN YEARS

Ukraine’s Cabinet of Ministers has permitted the Chornomornaftogaz state-run corporation and Lukoil plc to sign a contract on joint prospecting for and extraction of oil and gas from the Black Sea shelf. Cabinet instruction No. 2361 of December 20, 2010, says that the Ukrainian state-run company will have at least a 50-percent stake. The Ukrainian and Russian companies are expected to jointly develop the Odesa, Bezimenne and Subotyn deposits. Chornomornaftogaz’s contribution will be an economic evaluation of the reserves of oil, natural gas and concomitant components in the abovementioned deposits. The Russian company must in turn provide financial resources, technologies, and equipment to prospect for and extract oil and natural gas.

Active development of the Black Sea shelf has been a point of heated debate since 2005. Top officials believe that deep-sea hydrocarbons could relieve this country from having to import gas and supply industry and the populace with national energy resources. However, real offshore oil and gas production still remains on the drawing board.

Meanwhile, the demand for gas and oil in this country increases with every passing year. In 2010 Ukraine cut the extraction of oil with gas condensate by 10.3 percent to 3.546 million tons in comparison to 2009. Ukraine’s Prime Minister Mykola Azarov, too, recently noted this negative trend. He sharply criticized the performance of the coalmining and power-generation sectors and suggested dismissing inefficient managers.

So what are the chances that, thanks to the Russian company’s support, Ukraine will be able to procure oil and gas from the seabed? The Dayasked some experts in this field to comment.

Volodymyr Omelchenko, a leading energy expert at the Razumkov Center, does not approve of this contract because the state will not benefit from it strategically. “Ukraine depends on Russian supplies — 60 percent for oil and 70 percent for gas. Developing the shelf with the help of a company from a country on which we are already dependent in terms of fuel supplies can only worsen the situation,” he says.

“On the one hand, signing this contract will produce a positive result because a high-profile investor is coming to this country. There is a chance that Ukraine will at last begin a more active search for and development of oil and gas deposits in the Black Sea,” says Oleksandr Todiichuk, president of the Kyiv-based international Q-Club that deals with energy issues. He estimates it will take five to seven years after the signing of a contract on joint development of the shelf to begin extraction. Yet the expert doubts whether oil and gas will be successfully produced. “I have never heard that Lukoil has much experience with offshore technologies, especially deep-sea hydrocarbon extraction,” he explains.

According to Bohdan Sokolovsky, ex-advisor to the president of Ukraine in international energy security, the Russian side is not interested in shelf development, for this will create additional competition for Russian gas and oil. So he forecasts that, in all probability, these deposits will be put on hold, while Ukraine will continue to import Russian oil and gas.

It is also possible, in the view of Sokolovsky, that the Naftogaz Ukrainy national joint-stock company will soon be reformed and streamed for the production and transportation of oil and gas. “In this case Russia is already making steps to get into the new organizations. If I was them, I would do the same,” Sokolovsky says.

“If it really comes to developing the shelf, this cooperation should also include Western service companies,” says Mykhailo Honchar, energy program manager at the Nomos center. In his words, even the powerful and efficient Gazprom is unable to develop the Shtokhman deposit on its own. So it has to invite foreign (French and Norwegian) companies that work in this field.

In the opinion of Todiichuk, the Ukrainian government should openly invite bids for shelf development, choose an experienced company with a big name, and develop the Black Sea deposits. He thinks there are more than enough contenders for this, including such giants as Shell and Chevron. “They will come with pleasure to the Black Sea shelf, all the more so that geologists forecast large oil and gas pools there,” he sums up.

To win the trust of foreign investors, we should guarantee that they will regain the invested money and receive profits after the development of these deposits, Omelchenko believes. It is due to inadequate laws in this field that many foreign investors are dragging their feet, he says in conclusion.

The Day’s FACT FILE

The Chornomornaftogaz state-run corporation is part of the Naftogaz Ukrainy national joint-stock company and specializes in prospecting for and extraction of oil and gas in the Black Sea and the Sea of Azov. The corporation is now in charge of 17 deposits, including eleven gas, four gas condensate, and two oil fields. The overall reserves of all the deposits are 58.56 billion cubic m. of natural gas, 1,231 thousand tons of gas condensate, and 2,530 thousand tons of oil. Lukoil plc is a Russian oil company that owns six oils refineries in Russia, Ukraine, Bulgaria, and Romania. Their overall capacity is 14 million tons of oil a year.

(from www.day.kiev.ua)

Ukraine: corruption festers

It is no surprise that governments and investment funds are lining up to take advantage of a natural wonders: Ukrainian farmland. The best soil in the world and a totally underdeveloped agricultural sector could mean huge revenues for Ukraine as well as food for hungry mouths in the developing world. Given the current food shortages, and the expected growth in demand, Ukraine could leverage this into a windfall similar to what oil has become for Norway. If only they could manage as well….

Asia, Middle East Target Ukraine Farms to Secure Supplies, Raiffeisen Says

Asian and Middle East buyers want to buy agriculture companies in Ukraine to secure supply of grains and oilseeds, Vienna-based Raiffeisen Investment AG said.

In the spirit of the 10th annual Best of Kyiv awards, Kyiv Post staff members offer our opinions about what we love and don’t love in this ancient capital, home to more than three million people.

The Kyiv Post’s Best of Kyiv awards is a tradition that annually honors the outstanding people and places that make Kyiv such a great place to live. But exactly what is so great about it?

There are sharp divisions on the newspaper’s staff. I am among those who wouldn’t want to live anywhere else. I get disbelieving reactions from many Ukrainians when I say this.

But, as an American, I have been to many of my nation’s big cities and lived in its capital, Washington, D.C., only 10 blocks from the White House. I found it charming, but also boring, self-important, sterile and expensive. I also once turned down a job in Moscow, where I’ve spent a lot of time. I like its grandeur, but it’s just too cold, too big and too impersonal.

The world has almost 200 national capitals, and I have been to less than 10 percent of them. So, somewhere in the world, there may be a capital that feels more like home than Kyiv. But after getting a taste of Minsk, Almaty, Colombo, New Delhi, Vienna, London, Paris, Budapest, Prague, Vientiane, Bangkok, Amsterdam and Brussels, I can say that they don’t measure up to Kyiv, despite all those “quality-of-life” indexes that put Kyiv closer to the bottom.

Of course, my view is not shared by many Ukrainians on the Kyiv Post staff, some of whom are longing to live abroad. “I would prefer loving Kyiv from some faraway place,” said staff writer Svitlana Tuchynska.

But all of us found plenty to love and also not to love (hate is such a strong word) about this place.

A complete list of the 10 best and 10 worst things about Kyiv from Kyiv Post staff members you can find here. To make your own list of 10 best/10 worst things, e-mail news@kyivpost.com and please put “Best & Worst of Kyiv” in the subject line. We will publish excerpts.

HERE ARE SOME THINGS WE LOVE ABOUT KYIV:

Architecture

Kyiv, founded in 862 A.D., is renowned for its beautiful – but crumbling and neglected – buildings and streets. We love the House with Chimeras, St. Andrew’s Descent, Khreshchatyk, Yaroslaviv Val, Prorizna, cobblestone pavements, St. Volodymyr’s Cathedral, St. Sophia and St. Michael squares, Reytarska Street, Volodymyrsky Park near the Foreign Ministry, Park Slavy… and more.

Dnipro River ambience

Everything about the city seems to be laid out perfectly for a nice walk – a compact, historic center; a great world river coursing through the center; hills and valleys. Having the Dnipro River splitting the city helps create an incomparably pleasant ambience.

Staff writer Maria Shamota finds the Dnipro hills wonderful to climb and a good place to enjoy wine. I like the view from the River Station and the street cafes along the banks in the summer. Others like the islands. The city is still green and not overdeveloped. It has chestnut and fruit trees, charming parks, abundant flowers and hidden corners to enjoy and explore. Even when your feet fail you, you can get to any corner of the city on cheap public transport.

Cost of living

Living in a poor nation means millions are on the edge of survival as poverty brings its own special misery. But Ukrainians know how to survive and to be frugal – and those are skills worth emulating. If you avoid living like a wasteful Westerner, you can get by remarkably cheap here by knowing where to go and what to pay.

When you think about it, the government policy of cheap vodka, cheap bread and cheap utilities makes sense in a way. This isn’t India, after all, where millions live on the streets. It’s just too cold for that, and the basics simply don’t cost much.

Women

Most of the foreign men I’ve met here since 1996 have either been in love, are in love or hope to be in love with a Slavic femme.

Beauty comes in all forms and is found everywhere. Beauty also varies with taste. But much of the male world has weighed in decisively that the Slavic Ukrainian variant of feminine beauty is exceptional.

It is why men vacation here. It’s also why others put up with the corruption, rot, lower living standards and lower wages than they might be able to make elsewhere. You can be rich and buy a big house and a big car somewhere else, perhaps, but what does that matter if you don’t have a happy personal life?

The downside to all this male attention is the ugly advent of the sex tourist, or “sexpat,” which made it on to the list of worst aspects of Kyiv from some staff members. “Foreigners who think they can pay any girl to have sex with them” is one of the worst 10 things about Kyiv, said Nataliia Protasova, the Kyiv Post’s subscription manager.

The choices are so good here that, in my view, men have to have a lot wrong with them to be alone in this city and in this nation.
The beauty is not just skin deep. While there are people of horrendously bad character in both sexes, and while women share blame with men for all that’s wrong with the world, many men will find that – if they pay attention – Ukrainian women can teach them a lot about the meaning of life, proper values and being happy even when life is stacked against you.

“The women aren’t afraid to be themselves,” said staff writer Mark Rachkevych, a Ukrainian-American. “They can still compete with men, yet retain their feminine allure.”

Women on the staff also recognize their gender’s strengths.

“Many women are beautiful, and some of them are quite intelligent at the same time,” said Tuchynska.

“Girls wearing spiked heels and short shirts even while walking in a snowstorm,” said staff writer Kateryna Panova, in praise of women..

One women’s group – Femen – even uses its femininity to challenge the authorities. They may have their critics, but by whipping their clothes off they certainly draw attention to their causes.

Better food

We would need more scientific studies to back us up. But it seems to us that America and other places have shot their food full of hormones, chemicals and artificial additives. Maybe that’s one reason why America is fast becoming a nation of obese blimps. By contrast, Ukraine’s black earth yields up tasty and organic vegetables, fruit and meat that make us all healthier.

Rebel spirit

Although it manifests itself in the ugliest of ways, Kyivans have created a culture (or are victims of one?), in which no one knows for sure what’s going to happen from day to day. Everything is so unpredictable. Even when there are rules, they seem made to be broken.

There are more downsides than upsides in this sort of environment: Who will go to jail today? How many people will get run over and killed by speeding motorists? Will the hryvnia collapse? Will I lose my job? But not everything that happens is bad. For adrenaline junkies, and those who thrive on chaos, spontaneity and reading tea leaves, this is the place to be. It’s also a good news town, which is why many journalists from other parts like working here. It helps if you pretend there is no tomorrow.

HERE ARE THINGS WE DON’T LOVE ABOUT KYIV:

We could go on and on about what and whom we love in Kyiv. But for the sake of balance, let’s run down what we don’t like. These may be on everyone’s list. But here’s ours:

Verkhovna Rada

This is our shorthand reference for the corrupt and primitive culture that pervades Ukraine. These (mostly) guys are above the law – amazing in its contradiction and insolence alone. They fight. They steal. They evade. They are, in the eyes of many Ukrainians, the single largest club of unpunished criminals. Is it any wonder that corruption spreads out from parliament to infect all other elements of society? Add pandemic bureaucracy to this formula and you will feel our pain.

Ukrainians say that government puts up Olympic hurdles in order to register a business or just get a birth certificate. Foreigners for their part are so overwhelmed with registration permits and the like they often want to run back soon after passing immigration at Boryspil.

No law and order

While police aren’t as vile as during the era of ex-President Leonid Kuchma, when officers would routinely patrol the streets looking for anyone of non-Slavic appearance, foreigners and defenseless people to shake down, they are still by and large not here to serve and protect the public. They behave more like a private police force protecting the rich, powerful and politically connected. Justice almost never happens, keeping Ukraine a half-step above the law of the jungle.

Bad service, rudeness

“Were you born in a barn?” is a retort directed at the unwashed and uncouth. It seems, in Kyiv, many people fit this category. Many simply have no idea what good manners are – and many of these are working in a service profession, such as government employee or waitress! Kyiv, at times, resembles a big village rather than a cosmopolitan capital. Why, in the 21st century, must Kyivans stand in line for hours to buy train tickets or make simple banking transactions? “Even some of the biggest Ukrainian banks do not have online banking and, even if they do, they have really lousy customer service,” notes staff writer Olesia Oleshko.

This sort of disrespect extends to people who talk on their cell phones wherever they want, or who push past you without so much as an acknowledgement or apology. Too many also seem to violate a notion of “personal space” that should not be invaded physically without invitation.

General filth

From the garbage on the streets to dog owners who don’t clean up after their pets and people (mostly men) who rarely shower, one of Kyiv’s great downfalls is its general dirtiness and unkempt appearance. Granted, when three million people live on top of each other in high-rise apartments in a concentrated area, it’s hard to stay clean. But too many people aren’t even trying.

It would help if government bought more trash bins, but, of course, it would take much more to instill a culture of civic pride that is clearly absent. As for the lack of personal hygiene by many of its citizens, it is hard to understand how to solve the problem – so keep a bottle of perfume or air freshener handy.

Smoking

It is truly astounding that in the 21st century many workplaces and most bars, nightclubs and restaurants cater their businesses to the minority of clientele who are addicted to a disease that will send them to their graves 10 years earlier than non-smokers. We are still waiting for the non-smoking majority to rise up and demand 100 percent smoke-free air in public places. This is one peaceful revolution we support. We have many smokers on our side in this battle as well.

Gloom

Especially this time of the year, the shades of grey that Kyiv presents are innumerable – from the pavement to the sky and everything in between. It doesn’t help that so many people choose to dress in black and grey either. Battling depressing conditions will be an ongoing struggle from now until May. But even in spring and summer, the bland Soviet-era architecture and monotonous high-rise apartment blocks remain with us.

Animal haters

We know that Kyiv is full of irresponsible dog owners. But it is also clear that tolerance for animal abuse is abnormally high. Just look at the morbidity statistics of your average inhabitant of the Kyiv Municipal Zoo, an international disgrace. But then there are the thousands of vicious, hungry and diseased dogs who roam the city in packs – sometimes taking human life and limb. It is another sign that medieval Kyivan Rus lives on.

Bad drivers

Take your pick, from extortionist taxi drivers to speeding motorists in tinted-window luxury cars or dangerous marshrutka drivers in public transport, the situation is always the same on Kyiv’s mean streets: dangerous. Hostility for the pedestrian is endemic. Still, I’d rather be on foot. I like being able to get from one corner of the neighborhood, city, nation and continent to the other without having a car. To have an automobile culture, you have to have the road and bridge infrastructure to handle the volume. Kyiv doesn’t. Hello, Moscow-style traffic jams.

Expensive basics

While many staples (bread and beer) are cheap, it defies explanation that many other consumer items – a meal in a restaurant, or clothes, or dry cleaning – are priced high while their quality is low. We think the explanation is the lack of a truly competitive free market, created by the nation’s oligarchs and enforced by its government bureaucrats.

More good than bad

Ukraine has, undoubtedly, one of the most traumatic national histories. Even two decades into its existence, many (we’re talking to you, Russian Prime Minister Vladimir Putin) do not think it’s a real nation. Its territory has been carved up and suffered the two biggest despots known to mankind – Hitler and Stalin. Its people have been murdered by the millions, in war and through forced famines.

Six million Ukrainians live abroad, leaving fewer than 46 million to build a nation. You would have to be cold-hearted not to be inspired by the Ukrainian struggle for survival and nationhood. We grieve every day for what was lost and what might have been. And we don’t know why so many, including many of the political leaders, don’t seem to love Ukraine as a nation.

As our lifestyle editor Yuliya Popova put it, it can only get better from here. Let’s hold on to that thought. Kyiv is an ancient capital of three million people from across Ukraine, Europe and, indeed, the world. That mix creates a dynamic and ever-changing atmosphere.

Yes, we may have gripes and complaints, but the good must outweigh the bad, or else we’d be thinking about leaving.

(from the Kyiv Post)