Ukraine’s trade representative Valerii Piatnytsky has been acting economy and trade development minister of Ukraine for almost two months. During this time, as he noted in a conversation with The Day, he did not have time for interviews and TV shows. So, this conversation with The Day is sort of exclusive. The Day managed to talk to Piatnytsky, still deputy minister, at the presentation event “EURObusiness. Entering EU market,” part of the information campaign “Stronger Together.” We talked about the new minister and the problems of Ukrainian industry.
Have you met the new minister yet? What are your impressions? Have you met before?
“Yes, but the meeting was very short. It is understandable that everyone wants to talk to him now. He must yet realize where he is.”
Do you know whether you will keep your office after the change of government?
“I cannot provide such guarantees. The deputy minister’s office became political recently, but I do not belong to any political party.”
Nevertheless, you were entrusted with performing the minister’s duties after Pavlo Sheremeta resigned. What has the ministry accomplished during the two months under your lead? Are the recommendations for the 2015 budget ready?
“We have almost completed everything necessary. We didn’t work in a vacuum. All necessary negotiations with the Ministry of Finance and Mr. Shlapak personally did take place. There were rather fruitful discussions with the International Monetary Fund.
“That is, I think we have done everything that depended on the ministry.”
Could you tell which minimum and maximum GDP and inflation indexes the ministry predicts for the next year?
“I don’t want to. There is a new minister, and it is his job. But I will repeat, we have done our job. If there is a task to submit the draft budget to the parliament by December 15, and nothing is ready, no miracle will happen if the Ministry of Economy and other relevant ministries do not do the necessary work.”
That is, you have yet to instruct the new minister before December 15?
“The Ministry of Economy is a machine. If it is stopped when it is in full motion, its ‘gearbox’ will break down. That is why there are no drastic changes in the ministry’s work. It continues operating as it used to. During these two months we did not participate in TV shows and give interviews, but did our work. It seems that the Ministry of Economic Development is in an absolutely perfect shape today and is able to perform tasks set by the prime minister.
“We have been solving security issues all this time. This is our priority. But we are also engaged in budget preparation and work with international institutions to lay foundations for stabilization of the economy and shift to development and restoration mode. We cannot endlessly operate in decline mode.”
Which branches do you think will be the hardest to restore?
“In my view, from the point of economy restructuring, Ukraine is going through a unique situation today. We have always been extremely dependent on branches which generated raw materials of all sorts, from ore to sunflower seeds. Enterprises of these branches have been operating in subsidy mode and very often they were using outdated technology. And today a lot of them in eastern Ukraine are destroyed. I am not saying that this is a unique chance for Ukraine to start with a clean sheet, but it is a chance to switch to a different developmental model, especially in the industrial sector. And we are gradually doing it. Because of high gas prices, we managed to achieve something we sadly lacked for many years in consumption of energy resources: we started saving them.
“Now we are carrying out extensive work on involvement of European investors. It is very hard to bring business over here. When a country is at war and it is hard to predict the situation, investors will think 10 times before daring to become involved in a project. And again, they understand it is their chance to ‘hit the jackpot’: to invest in Ukraine now, which will become a very successful country in the future.
“I will point out that our agricultural situation is great. I remember the wave of criticism we received for the text of the free trade agreement with the EU regarding the agricultural complex. We allegedly made wrong deals, used incorrect wording, and the rural areas will collapse. And just within five years we have increased agricultural productivity twice, and export three times. Overall 30 percent of our export today is ferrous metallurgy, but the agricultural complex already provides almost 30 percent. And in 2008, it used to be 10 percent of the total export. So, we see how the structure of Ukrainian export is changed.”
The fact that the share of manufactured goods in Ukraine’s export is decreasing is disappointing. International experience shows that agricultural countries are mostly poor.
“If we become an agricultural country that sells raw materials, then yes, it is a way to poverty. But if we intensify the degree of processing, it will not happen. And we have the tendency towards the intensification of processing. Resources, especially when it comes to food, become scarce. That is why we need to think about the most effective ways of using them. The agricultural sector is becoming a sort of alternative source of energy resources.
“But of course, it is up to us to determine how we use our agricultural potential. And for this we finally need to give an answer to those old questions and problems that are still hanging. The issue of selling agricultural lands is raised today again. The first question the new agricultural minister was asked was about his attitude towards the land market in Ukraine. And he could not give a clear answer to it.
“There are various views on this issue. And all of them have a right to exist. The government might not want to slay the goose that lays golden eggs. The agricultural sector is laying golden eggs for Ukraine today. And the moratorium on the sale of agricultural lands ensures a certain element of stability in the agricultural market. Perhaps, now is not the best time to lift it. We are in a state of war anyway. Perhaps, it is better not to flirt with the public opinion, or the farmers could rebel.”
Did you calculate how quickly Ukraine can compensate the loss of the Russian market, and with what means? Can we compensate for those losses only via European markets?
“We should not hope that the European market will become an absolute replacement of the Russian one. It will not happen. The structure of our trade on these markets has always been different. Once we carried out the following research: compared 20 goods we sold on the Russian market the most with 20 of those on the European one. And only three groups overlapped. Those who traded with Russia are already looking for goods that could interest the European market. Of course, our mine equipment, even the best kinds, does not present any interest for the EU, and neither does our coal.”
It presents interest for us today. But likewise, there are goods that will certainly interest the EU provided that we process them in Ukraine. For example, titanium dioxide.
“Of course. We can go even further and manufacture a finished product here. For example, we can look at the practice of cooperation for that. But not according to the standard that was implemented in the CIS countries. We worked according to the old-fashioned way, as the Soviet Union taught us once, but now time has come to master the rules of the new world.”
