Nver MKHITARIAN, people’s deputy and president of the Pozniakyzhytlobud building corporation:
Under the Soviets, people were divided into those dissatisfied with the way they lived (they were closely watched by the KGB) and those that were content (the OBKhSS Division against Theft of Socialist Property kept an eye on them). The history of business in the USSR started considerably earlier than the perestroika campaign. During the period of stagnation (under Brezhnev — Ed.) business was done by people known as the tsekhoviks [from tsekh, workshop, in this sense a small illicitly operating private factory]. They worked under perilous conditions, actually underground, patching up holes in the Soviet economy crippled by the heavy emphasis on the military industrial complex and ineffective management, unable to supply sufficient consumer goods.
Another phase in the evolution of domestic business began at the turn of the 1990s, marked by the accumulation of primary capital. It was a period of quick money, when everybody started in business, in most cases lacking professional and life experience. There is a joke serving as an apt illustration. Two businessmen meet and one says, “I’ve got a carload of fruit jellies worth six million. You interested?” The other says sure, so they strike hands and part company, the first to look for a carload of fruit jellies and the other for six million. Those were hard times but those who made it could survive all subsequent crises. Henry Ford said he could account for every million he earned except the first one. Now the initial accumulation phase is over and business is evolving, yet many still refuse to see that there will be no more easy money, they have to work hard to earn every cent.
I see limited and inaccessible credit resources as the greatest impediment to Ukrainian business. The existing credit rates are grossly overstated, so a law-abiding manufacturer cannot accept them without sustaining losses. Pension and insurance funds are a powerful investment catalyst in the developed countries. In Ukraine pension reform is halting and domestic capital accumulation is too low for a country this size. Accordingly, the inner investment resource cannot make up for an acute shortage of investment in the economy. After solving this problem a new qualitative stage in the development of domestic business will begin, bringing us closer to civilized European standards. Another problem stopping us from making a qualitative leap is inadequate management. So far we have a handful of truly effective managers and administrators capable of keeping a complex business ticking. It is high time the state changed its attitude toward domestic business and finally provide them most favored treatment.
Try to picture a situation in which the top Ukrainian businessmen suddenly vanish. I think that a couple of days later the whole national economy would collapse. Our public opinion must finally accept the idea that domestic businessmen are the driving force of the nation’s social welfare.
