Af­ter fir­ing, Borovik flags slug­gish pace of re­forms

Kyiv Post - - News - BY BRIAN BONNER BRI­BON­NER@GMAIL.COM Kyiv Post chief edi­tor Brian Bonner can be reached at bri­bon­

As two pro-West­ern, English-speak­ing lawyers who have Ukraine’s best in­ter­ests at heart, Prime Min­is­ter Arseniy Yat­senyuk and for­mer First Deputy Econ­omy Min­is­ter Sasha Borovik would seem to be nat­u­ral al­lies. But they weren’t. Borovik lasted less than three months on the job and traces his down­fall – and even­tual May 13 fir­ing -- to his only per­sonal meet­ing in­volv­ing Yat­senyuk. It took place on March 21, in the com­pany of his boss, Econ­omy Min­is­ter Ai­varas Abro­mavi­cius, Agri­cul­ture Min­is­ter Olek­siy Pavlenko and a dozen other of­fi­cials.

Among other du­ties, Borovik had been put in charge of plan­ning the April 28 in­ter­na­tional donors’ con­fer­ence. It was not go­ing well. The con­fer­ence had been in the works for al­most a year be­fore Borovik joined the gov­ern­ment. But as the date ap­proached, it be­came clear that nei­ther donors nor top Euro­pean po­lit­i­cans would be com­ing. It was re­branded as the In­ter­na­tional Sup­port for Ukraine Con­fer­ence.

Yat­senyuk called Borovik in to re­port on the progress.

Borovik said that he told the prime min­is­ter that the Euro­pean donors wanted to know how Ukraine had spent mil­lions of eu­ros in pre­vi­ous aid. He said Yat­senyuk ex­ploded in anger. “The prime min­is­ter started yelling at this stage,” Borovik re­called. He said Yat­senyuk told him: “Young man, what are you talk­ing about? The EU didn’t even give us much money. We have peo­ple dy­ing here.”

Yat­senyuk’s press ser­vice re­ferred calls for re­sponse to Danylo Lubkivsky, an ad­viser to the prime min­is­ter. Lubkivsky was still think­ing about a re­sponse by the time this edi­tion of the Kyiv Post went to the printer.

But Yat­senyuk on May 15 held out the pos­si­bil­ity that Borovik could re­turn to gov­ern­ment. “If you want to work in Ukraine, our doors are open. Come. I have a lot of other work,” Yat­senyuk said, cited by In­ter­fax news agency.

Abro­mavi­cius’ spokesman, Oleg Shu­man­sky, re­ferred to the min­istry’s May 14 state­ment say­ing that Borovik didn’t work in a “con­struc­tive man­ner” and that the min­is­ter de­cided to re­place him.

Borovik, 45, is a Har­vard-ed­u­cated lawyer and na­tive of Ukraine who has, spent most of ca­reer living in the West and work­ing in the pri­vate sec­tor with Mi­crosoft and Aka­mai Tech­nolo­gies. He talked with Abro­mavi­cius on Jan. 24, af­ter com­ing to his at­ten­tion through a mem­ber of par­lia­ment, Hanna Hopko, and other re­form­ers.

Af­ter the “strange” meet­ing with Yat­senyuk, he be­gan look­ing for ex­pla­na­tions for such be­hav­ior. He read about the prime min­is­ter’s suc­ces­sion of high gov­ern­ment posts in pre­vi­ous ad­min­is­tra­tions and drew a cou­ple of un­fa­vor­able con­clu­sions.

“It’s not in the cul­ture of that or­ga­ni­za­tion that some­one would de­bate some­thing with the prime min­is­ter,” Borovik said. “He was act­ing like a ma­jor player in a geopo­lit­i­cal game whereas, to me, he was the prime min­is­ter of a bank­rupt coun­try that was be­ing sup­ported by the West and needed to get out of the sit­u­a­tion and is not in a po­si­tion to dic­tate any­thing. The West­ern tax­payer woke up in me and I could not be­lieve this is how the West is be­ing per­ceived by the gov­ern­ment.”

Within weeks of the March 21 meet­ing, Borovik also said that Abro­mavi­cius started freez­ing him out and be­com­ing crit­i­cal of his work. He was told not to talk to the press or meet with for­eign­ers. Some­where along the way, Borovik thinks Abro­mavi­cius stopped push­ing for Yat­senyuk to of­fi­cially ap­prove Borovik’s ap­point­ment. The end came in a text mes­sage sent late on May 13 that he read the next day.

In dan­ger of be­ing lost in all the public noise of Borovik’s dis­missal in the last week, how­ever, is his larger as­sess­ment that Ukraine’s gov­ern­ment is mov­ing too slowly and hap­haz­ardly on re­forms be­cause it lacks a strat­egy.

“The coun­try doesn’t have an eco­nomic strat­egy, at least one that has not been ar­tic­u­lated to me. Will this be a wel­fare state. Will this be a Ger­man full-em­ploy­ment ap­proach? Will this be a lib­eral econ­omy? Will we take the U.S. ap­proach?” Borovik said. “I main­tain that we have to first re­form gov­ern­ment. We have to make it smaller and more pro­fes­sional.”

As an ex­am­ple of the slow pace, Borovik cited the process un­der way for sell­ing more than 3,000 state-owned en­ter­prises – more than half of them los­ing money. He said the state has no abil­ity to man­age the com­pa­nies prop­erly or hire good man­agers and should, there­fore, sell them fast.

“The best we can do is pull out as soon as pos­si­ble. Let’s not think about the price,” Borovik said. “We’re not go­ing to get much money for this stuff.”

Borovik said that, on a worst-to-best scale of 1 to 5, Ukraini­ans and some in the West want full-scale re­forms – a 5 – to cre­ate a “nor­mal coun­try.” The cur­rent cov­ern­ment is start­ing at 1.7 and mov­ing up to 2 and thinks it’s enough, he said. But too many in the gov­ern­ment are tied to oli­garchs and oth­ers in­ter­ested in no re­form.

“They can­not pos­si­bly cut their ties, they are so in­te­grated. That’s why re­forms are go­ing slow,” Borovik said, cit­ing the gov­ern­ment’s fail­ure to come up with new cor­po­rate gov­er­ance laws de­spite mil­lions of dol­lars in as­sis­tance and in­de­ci­sion over the tax code.

He be­lieves that Ukraine should stop ar­gu­ing about the “bit­ter pills” that the In­ter­na­tional Mon­e­tary Fund is re­quir­ing in ex­change for $17 bil­lion in loans. Rather, it should un­der­take rad­i­cal lib­er­al­iza­tion the way that Latvia, Slo­vakia and Ge­or­gia did.

“You build a sys­tem where it’s ef­fi­cient for them (work­ers) to go to small and medium busi­nesses,” he said. “You change the whole dy­namic of the econ­omy. There has to be a deputy prime min­is­ter re­spon­si­ble for re­forms and eco­nomic law. That per­son should be a re­former-in-chief with ad­min­is­tra­tive pow­ers. You an­nounce three ma­jor changes this year and three ma­jor ones next year and ex­plain why we are do­ing it and what will change on the mar­ket.”

Pres­i­dent Petro Poroshenko has an­nounced a plan called the “4Ds” – de-oli­garchiza­tion, de­cen­tral­iza­tion, de-bu­reau­cra­ti­za­tion and de-mo­nop­o­liza­tion. Borovik has a sim­pler con­cept: “Get rid of the 4Ds and re­place it with 1L” – mean­ing lib­er­al­iza­tion, he said.

De­spite his un­happy foray in gov­ern­ment, Borovik – who said he never got paid for his gov­ern­ment ser­vice – would be will­ing to go back into the public sec­tor.

Since his fir­ing, he’s stayed in regular con­tact with some peo­ple at the min­istry, mem­bers of par­lia­ment and for­mer Ge­or­gian Pres­i­dent Mikheil Saakashvili, who ad­vises Poroshenko on re­forms.

“I lost my be­lief in the abil­ity of the old sys­tem to change un­less a crit­i­cal mass of new blood comes in,” Borovik said. He’d like to be among the “new blood,” he said, be­cause “the only way you can change the bu­reau­cracy is from within.”

For­mer First Deputy Eco­nomic Min­is­ter Sasha Borovik speaks dur­ing a CEO break­fast hosted by the Kyiv Post and DHL Ex­press Ukraine on April 24 in Kyiv. (Volodymyr Petrov)

Econ­omy Min­is­ter Ai­varas Abro­mavi­cius

Prime Min­is­ter Arseniy Yat­senyuk

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