Sasha Borovik: Long Journey Back Home
Ukraine must embrace a bold, liberal, economic agenda. Speaking the truth about economic reforms shows respect for our nation
Ukraine must embrace a bold, liberal, economic agenda. Speaking the truth about economic reforms shows respect for our nation. Speaking boldly and honestly about hardships and how to achieve a better future also increases the odds of political and economic success, provided those reforms are designed to provide opportunities for the current population and the next generation.
I recently returned to Ukraine in the hope of contributing to the country’s post-revolutionary drive towards change. Born in Lviv, I left the country of my birth 25 years ago and seldom looked back. Each time I did, there was almost always something less than pleasing to greet me.
From the Soviet Union, Ukraine inherited a bankrupt welfare state. It was deeply vested in the Soviet mentality, which translated into extreme inefficiencies. In the post-Soviet years, the country did little to dismantle this failing welfare state and it never whole-heartedly embraced economic reforms. Against the backdrop of a rising national pride and identity among the Ukrainian population, the nation’s economy steadily declined, creating space for scheming, rent seeking, and ultimately cementing an oligarchy and erecting state capitalism. As a result, the newly born nation lost faith in its government. That is why I never seriously considered returning. I knew there was no place for me in such an economic system.
So I started my professional career in Prague, working for a major law firm that assisted the Czech Government in adopting EU laws and in its move toward the European Union. It was an amazing dynamic for a nation rising quickly from the ruins of communism. I witnessed dramatic changes in Czech society and the impressive speed of reforms led by the country’s Prime Minister, Vaclav Klaus. Every Saturday, he appeared in public to discuss the reforms and the new direction of the country. Times were hard: the average salary was only $100 per month. But there was the promise of a better future. Back then, I also wanted my fellow Ukrainians to experience this promise.
After graduating from Harvard Law School, I moved to Silicon Valley. The Internet was still new then and it never felt as amazing as it did in those early years. First, I worked as a lawyer. Then, together with an old friend and confidant, who is a leading brain scientist and professor at New York University’s Center for Neural Science, we founded a start-up company pioneering an advanced wireless, multi-channel, portable digital system designed to record the human brain’s transmittable bioelectric signals for purposes of medical diagnostics. In short, we digitalized the brain’s signals and built a medical device company around this technology. This was exciting stuff. I then joined Microsoft and, in 2014, left the U.S. software giant after serving as its head lawyer for the Worldwide Public Sector division in Microsoft’s corporate headquarters. In this role, I conducted negotiations with national governments and international organizations—from the UN, to the EU, and to NATO. I then joined Akamai Technologies as its General Counsel for Europe, Middle East and Africa. Some call Akamai the backbone of the Internet. A huge share of the world’s Internet traffic goes through its servers located around the globe. As I said, this was all very exciting stuff.
Still, I was never so thrilled as when I returned to Ukraine to join the new government this year. By that time I had lived, at various times in my life, in Prague, Munich, Palo Alto, Seattle, Washington D.C., Barcelona, and London. I had seen the world and been integrated into it. It was now time for me to return to where it all began and to give something back to Ukraine.
In January 2015, I was approached by Minister Abromavicius of the Ministry of Economic Development with an offer to join his team. I left London and in early February 2015 hit the ground running.
After 20 years of working on the cutting edges of technology, I felt I had been given a chance to contribute my knowledge and experience to the country that gave me my start. Adjusting was hard. But I drew inspiration from my fellow volunteers who also were giving freely of their time and expertise. It was there that I met Ivan Miklos, a prominent reformer from Slovakia. He gave me a book he has co-written “The Great Rebirth” and advised me to look at examples of reforms from several other post-communist countries. It was also then that Mr. Miklos told me that a risky plan is better than a hopeless one. I became determined to make our risky attempt at reforms succeed, rather than stick to the hopeless economic path we had inherited.
Everything was new and it took me several weeks to understand the dynamic. But it soon became clear that the state’s involvement in the Ukrainian economy was huge, expensive, and pervasive. What was worse, the country lacked a unified economic reform strategy. There was a collection of approaches and proposed measures designed to facilitate doing business in the country. However, it was not yet clear what type of economy we are building in Ukraine.
Ideally, to get anywhere first public sector personnel policies would be dramatically reformed. We still have many old functions inherited from the days of State Planning. In many ways, our old system of governance remains intact—absorbing and swallowing energetic volunteers and making them attend old-style meetings or spend hours chasing numerous signatures for approvals, and perpetuating the routines of an outdated administrative machine. Bringing in new blood is still harder than it should be.
Moreover, it is my strong belief that at this time Ukraine must embrace a bold, liberal, economic agenda. The state should unleash the power of the private sector and withdraw from its dominant role in the economy. This withdrawal will not always be smooth. But it is vital to our success. Our current financial situation simply is not sustainable. This gives us a rare opportunity to embrace economic reforms that are quick, bold, inspirational, ambitious, and that seriously combat corruption. The state should withdraw from the economy as soon as possible in terms of ownership, burdensome regulations, and protectionism. Privatization of the Ukrainian economy should be based on minimizing costs, rather than maximizing revenues. Moreover, the goal of privatization should be to increase the efficiency of the economy as a whole, not of particular firms.
Ukraine also should unleash the creative energy of its entrepreneurs, small businesses, young people, and expats by making it as easy as possible for them to contribute their ideas, ideals, and energy to the country. This also includes easing the entry of volunteers into the government. Against the backdrop of fierce competition for private investment among other countries, we must make Ukraine a world-class destination for private investors, without favouring any particular group. Moreover, we must inspire confidence in our economic vision of the future by promoting a liberalized economic environment with tax and investment regimes that are among the easiest to understand and follow in Europe.
We must systematically cut into oligarchy and corruption and reform our premature welfare state. This can only be achieved through quick, decisive reforms and liberalization of markets. I note here that liberalization is not the same as deregulation-the word I hear often in the government. Liberalization is an economic doctrine, whereas deregulation is merely a tool that may be used to build an economic system. As a nation, we should embrace ambitious policies to fully privatize current government institutions and assets that belong more appropriately in the private sector. We also should provide greater labor market flexibility; land market; fewer and lower tax rates; minimal restrictions on both domestic and foreign capital; and open markets, to name a few important measures. Finally, and critically, to transform Ukraine into a modern, 21st century digital economy, all infrastructure that can be digitalized, should be digitalized.
Some argue that adopting these measures now would move Ukraine faster than the country is ready to go. They point to the war in the East and argue that populists could use hardships associated with these bold reforms to undermine the position of coalition parties in local elections. My response is that our country’s economic situation is critical and we simply cannot sustain the path we are on. Our international partners also are urging us to move faster. Doing nothing, or doing little very slowly, will only make matters worse, both economically and politically. Some may still insist this pace is too fast for the Ukrainian people. But I don’t believe it. In many ways, Ukrainian society is developing faster than its political system. The nation is ready to move towards fundamental economic reforms at a faster pace, provided these reforms are accompanied by deoligarchisation and serious efforts to combat corruption.
Speaking the truth about economic reforms shows respect for our nation. Speaking boldly and honestly about hardships and how to achieve a better future also increases the odds of political and economic success, provided those reforms are designed to provide opportunities for the current population and the next generation. If these goals are communicated honestly, this message could provide a rallying point for those, inside and outside of Ukraine, who want to roll up their sleeves and help us create a nation with a bright and sustainable economic future.
I view these economic reforms the same way I once viewed the digitalization of the human brain or any other complex project: with optimism, faith in our ability to solve our problems, and a refusal to fear the unknown. I returned to Ukraine to be of service to the country and I stand ready to contribute, whenever the country is ready. I believe the country of my birth was ready yesterday.
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