Financial resources must be concentrated in Eastern Ukraine

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The former Minister of Finance believes that “the Donbas region must be the face of reforms

Ukraine wants to launch an international plan for the economic recovery of the eastern territories that are controlled by Kiev and that are close to the front line with the secessionists supported by Russia. Since 2014, after the Russian annexation of Crimea, the country has been mired in uncertainty with war spots in the East. Olexandr Danyliuk, secretary of the National Security and Defense Council (CSND) of Ukraine explains, in an interview with THE COUNTRY, the challenges for this area. “The Donbas region should not be seen as problematic, but as the starting point of the reforms that Ukraine must make. It’s very difficult to do them, but you have to do them, ”explains Danyliuk, a 44-year-old engineer, financier and economist.

Advisor to President Víctor Yanukóvich, representative of President Petró Poroshenko in the Council of Ministers, Minister of Finance (from April 2016 to June 2018), as well as international financial advisor are some of the positions that Danyliuk has gone through, which today He is one of the most powerful characters in the new administration of President Volodomir Zelenski. The CSND is the coordinating body in its field and among its members are the President of the State, the Head of Parliament, the Prime Minister and those responsible for Security and Defense.

“You have to concentrate financial resources in Eastern Ukraine and the most important thing is to create a critical mass, because without critical mass it will not take effect,” he says. The city of Mariúpol has been chosen to launch the plan for Eastern Ukraine, where an investor forum will be held next October, he says. Mariúpol, in the province of Donetsk, is close to the front line, in a territory “where many internally displaced people reside and there are small and medium-sized businesses that are underdeveloped, because people have little money,” says the official. In that area “the prospects of opening business are risky in case the front line suddenly changes, which generates the desire to leave as far as possible,” he explains.

Both the Ukrainian and international financial and political media are unanimous in that in order to attract foreign investment in Ukraine, it is necessary to create an atmosphere of trust, which largely involves the fight against corruption and counteracting the oligarchs. Danylyuk’s presence in Zelensky’s team is interpreted as the desire for independence from Igor Kolomoisky, an oligarch with whom President Zelensky has special relations. Cooperation with Kolomoisky is one of the biggest problems for Zelensky’s authority. Danylyuk was Minister of Finance of Ukraine in 2016, when the state nationalized PrivatBank, the largest commercial bank of Ukraine, whose main shareholder was the oligarch, because of its financial violations. Today, Kolomoisky is making a public appearance and, according to experts, will try to recover the lost.
Danylyuk’s presence in Zelensky’s team is interpreted as the desire for independence from Igor Kolomoisky, an oligarch with whom President Zelensky has special relations

As if that were not enough “the Army gives a special atmosphere to the place, because of its presence and because the military equipment destroys the roads and there is no stimulus to fix them if the war continues. “In addition, there is the influence of Russia that produces the constant feeling of being threatened,” he adds. Supporter of “turning all this completely”, Danyliuk proposes a “new conception” for the development of the eastern regions. In the East, he says, there must be “new hospitals” and “new schools”, so that “Donbas is the face of reform” in medicine and education. “We also have to create conditions for business to develop and develop a package of measures to stimulate small and medium-sized businesses, create infrastructure and roads, maybe move some call centers there, as part of the solution.” The senior official relies on the participation of international organizations, such as the World Bank and its structures, such as the International Finance Corporation, as well as the European Bank for Reconstruction and Development (EBRD), and also on local budgets. “We have to do it now. I have delivered the conception to the council of ministers, ”he says. Among the projects recently mentioned by President Zelenski are irrigation plans for southern Ukraine and a high-tech center in Kharkiv. In July, the head of state said that 10,000 million euros are needed to recover the Donbas area. Danyliuk doesn’t want to give figures. “You have to calculate,” he says elusively. Will there be Russian money? We ask. “We don’t need Russian money. That they keep it to pay for the territory when it is reinstated, because there has been a lot of damage, ”he says, referring to the fragments of the Donetsk and Lugansk provinces controlled by the secessionists. How to proceed in the so-called “popular republics” is something that “we will see after reintegration,” he says.

“The war is very expensive, but we do not start it,” says the senior official, who, not wanting to give a global estimate on the costs of the contest, mentions some concepts of the bill. “We spend 5.4% of our GDP on defense and security, pay pensions, including those living in the occupied territories, and serve the displaced, which are 1.3 million people,” he explains. In addition to the costs of the conflict, there are also the losses that it has brought. “We have stopped receiving taxes from companies that have been left elsewhere and that were contributors to our GDP. And as a result of the war, trade with Russia was reduced, which also uses its levers as a transit country to hinder our trade with other post-Soviet countries such as Kazakhstan. ” However, he clarifies, “Ukrainian companies find new alternative markets in Europe, so losses on the one hand become advantages on the other.”

Danyliuk warns that ending the war will not end security costs. “Would a totally peaceful scenario mean that we spend less on Army and Security? Flatly no. We have to create a strong army, fully retrofit and modernize our security services, because if we don’t do it, we will pay it dearly, ”he says.

One of the most controversial points for an agreement in the East is the so-called “special status of Donbas.” On this concept there are different interpretations between the parties to the conflict that negotiate in Minsk, the capital of Belarus, under the aegis of the Organization for Security and Cooperation in Europe (OSCE). In pro-independence and Russian media, “special status” is considered equivalent to autonomy or de facto federalization and should be embodied in the constitution. In the Ukrainian administration media, it is interpreted as “a decentralization” that does not imply constitutional amendments.

“Ukraine is a sovereign and unitary country. We will not accept that through “special status” someone from outside can influence our decisions as a sovereign country, influence our political direction and our alliances. These are decisions of our people and we do not want the “special status” to become a lever to exert pressure on internal decisions, “he says. The senior official believes that Russia promotes the federalization of Ukraine as “a way to destabilize and tear the country into parts.” “Our answer to that is a resounding no. They will not pass, ”he says.

In both Ukrainian and international financial and political media there is a coincidence: for foreign investment in Ukraine, a climate of trust must be created, which largely involves containing corruption and putting the oligarchs at bay. Danyliuk’s presence in the Zelenski administration is interpreted as an indication of the desire for independence from Ihor Kolomoyskyi, the oligarch with which Zelenski has a special relationship. Maintaining distance from Kolomoyskyi is one of the biggest challenges for the credibility of Zelenski. Daniliuk was the finance minister of Ukraine in 2016, when, due to its financial irregularities, PrivatBank, the largest commercial bank in Ukraine, of which the oligarch was the main shareholder, was nationalized. Now Kolomoyskyi appears demonstratively in public and returns, according to experts, to compensate for the losses.


Post Author: Intercourier

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