MBITA member Bob Edgren, the latest from Ukraine By Bob Edgren, MBITA Member
On March 23, 2006 President Bush signed a bill normalizing trade relations with the country of Ukraine. So what does this mean? What opportunity does this present? It is not the purpose of this article to provide sources or direct links to trade with Ukraine. Most of my trade knowledge comes from other Americans and foreigners, the American Chamber of Commerce in Ukraine, and a few trade consultants and groups who trade with Ukraine. I have been traveling to Ukraine for seven years. Each year I make a list of items, mainly consumer goods that could be brought over. Every year my list gets smaller as entrepreneurs quickly fill gaps. There exists many opportunities both in trade and investment in this dynamic country. However, I think it is equally important before one takes a business venture, to analyze the political and social temperature before making a move, and of course to be constantly vigilant to any changes. What this article offers is a look into the average Ukrainian person's views, outlook, and beliefs.
In order to understand this one must take a short step back into history. Much has happened since perestroika and glasnost. The end of a cold war signaled a new world order, one based on freedom, democracy and peace between the two major superpowers. The early years of the end of the cold war was not what all the experts were anticipating. Here in the US, where the military industrial complex was in high gear for decades, most expected to start manufacturing peacetime products. The dismantling of our military complex was felt no more than here in the San Francisco Bay Area with some 10 base closings, thousands of people left jobless and a dramatic collapse of the real estate market.
In the eastern bloc countries the situation was not even comparable. The collapse of the Soviet Union was a short celebration. Following there was virtual lawlessness Thugs and organized crime groups sprung up all over the ex Soviet countries. It was chaos. Old people were thrown out of their apartments. Scientists fled with dangerous and valuable weapons and technology information to be sold to the highest bidder. Even President Gorbachev was kidnapped for a short time as a military coup tried to take charge of Russia. Approximately 300, 000 young girls were enticed, kidnapped, or dragged off the street, and shipped off to a fast growing prostitute business with buyers around the world. It was virtual anarchy that eventually launched fascists governments in some ex Soviet countries, like Belarus, and could have enveloped many more.
So put your self in the shoes of a former Soviet citizen. Are things better now? I spent almost a year in Ukraine during the Orange Revolution. In preparing for political interviews, especially one with President Yuschenko that never came to fruition, I spent about 6 months interviewing mainly people in the capital of Kiev. To my amazement and my interpreters, young or old interviewees, were relatively split between pro west candidate Yuschenko and pro Russia candidate Yanokovych. The spontaneous Revolution yielded Yuschenko as the final president. However, it left Russian President Putin steaming. In early January Putin showed his punishing hand by mandating to quadruple the gas prices to Ukraine, during one of the coldest winters on record. If the international community did not step in, this would have been a disaster for Yuschenko and his pro west policies. Nevertheless in the most current parliamentary elections, Yuschenko's party followed third behind leading Yanokovych and the flamboyant Hillary Clinton clone Yulia Tymoishenko.
In Ukraine there are basically three countries. One is western Ukraine, which is very open to democracy and joining the west. The other is eastern Ukraine, home of the economic engine of Ukraine of steel and coal, which is pro Russia. The third is a sleeper, and that is a prize in itself, the Crimea region with its famous and important ports to the Black Sea and historic vibrant city of Yalta. Most people in Crimea are pro Russian; indeed, many Russians who vacation there consider it part of Russia. I think it is clear now that most political analysts realize that President Putin is not for a free and open democracy. Where he will stir the country is unclear. Hopefully, at best, it will be towards some sort of hybrid of free enterprise, socialism and some freedoms . It is quite possible, however, he has intentions to stir Russia into old Soviet era structure, in his own words, "perestroika was a disaster." Any move though, must be watched carefully as it will directly impact trade and political relations with all of East Europe. If he has a master plan, he is keeping his ideas very closed. The economic success since the free market arose has created much wealth among many individuals. Probably few westerners know that there are now more declared millionaires in Moscow that in New York city, and there are probably that much more undeclared. Ukraine teeters between Russia's grip and being an independent country. However, bear in mind that at least from this writer's perspective, more people in Ukraine feel a stronger kinship with Russia than the west. As Russia exerts its powerful oil muscle influence over the region, I believe that Ukraine will drift away from the west and into Russia's fold. I hope I am wrong.
So what about trade? What does this new bill mean? Actually it is probably more symbolic than anything. Bush signed it just before the parliamentary elections trying to give Yuschenko a boost. Statistics from the Ukraine Embassy of California web site From the import and export people I have had discussions with, and the westerners who have done business in the Ukraine or live there, one must be ready to go through a myriad of bureaucratic steps, licenses, under the table fees to get anywhere. I don't think this bill will change much of that. Perhaps, the only salvation for Ukraine to stay westernized is for a swarm of deep pocket businesses to invade the country and set up a shop and start conducting business. This is what Yuschenko promoted almost instantly after becoming president. Statistics from the Ukraine Embassy of California web site This is what McDonalds did early on after the Soviet collapse. I think most Americans are amazed at the popularity of MacDonald's in Ukraine. As far as future trade, this well remain in the crystal ball category as the political situation evolves. Perhaps the only hope, as mentioned, is for some
large corporations to extend their recourses and open businesses.
Nevertheless, the actual business climate in Ukraine is very vibrant and exciting. If you go, do not be surprised to
see tall modern office and apartment buildings under construction, Walmart and Home Depot like box stores and state of the art new shopping centers. There is no doubt that free enterprise has a strong foothold
in Ukraine and people are enjoying profits that they never imagined they could under the previous system.
The future, both economically and politically probably may also lie in great part with the youth. The new young
generation, many nouveau rich, who neve reven experienced communism are traveling, marrying westerners,
and enjoyin freedoms their parents and ancestors are baffled at. Ukraine is a country that has been a boon and can be a success to invest in for the westerner. However, just
remember that there are cold north politica winds of Siberia blowing down from the north and there still exists corruption at many levels in Ukraine itself. Statistics from the Ukraine Embassy of California web site One great thing, if you make the trip, do not be afraid to wear American flags or American red, white and blue
garments. They are a trend there. It is probabl one of the few countries one can walk down any main street and
see young girls with the stars and stripes on their t-shirts or embossed on their jeans. These I took plenty of
pictures of because I thought no one would ever believe it. I even bought and used daily a US flag beach towel
while in Yalta. Most of the fears and anxiety of the world's worst atomic power plant catastrophe have subsided
and have become an after thought for many Ukrainians,
Europeans, and the world. However, after 20 years, the hastily constructed shied over the reactor has been,
and is having problems. There have been plans to construct another shield for some time with European
assistance. Chernobyl is about 100 miles north of Kiev, the capital. This is something to maintain a close watch
on. It will probably be resolved. There is a new adult generation that were children when it occurred.
However, for the people who experienced the panic, the fear, the fleeing, these memories remain as if it
As a member of MBITA, we are planning a future conference to highlight potential trade opportunities and provide trade promotion services to companies wishing to explore the Ukranian market. Please keep in touch with the MBITA office or myself for any further information. Bob Edgren Ukraineconnect Tel. 831-402-2111 email: email@example.com