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*Please note that the talk was translated, so the summary is an interpretation of meanings, and is not directly quoted.
On July 13th, The Henry Jackson Society was pleased to welcome Sergii Tartuta, along with a delegation of Ukrainian officials, to a conversation on the future of Ukraine’s economy. Mr. Taruta is a Ukrainian MP who left the business world in 2014 to join the politics. He described how in the past he had a good relationship with the banks, but not necessarily with political world; however, after the annexation of Crimea he came to realise the importance of Ukrainian state security, and agreed to leave the world of business and entrepreneurship. As such, he is well-situated to revive the insufficient Ukrainian economy.
Mr. Taruta began his talk by explaining that the Ukraine is important not only to European security, but also to the substantiation of democratic values and economic prosperity within the EU.
After reaffirming the importance of Ukraine’s place in the international system, Mr. Taruta shared his plan for long-term economic reform. Ukraine, he stated, faces a host of issues. Obviously, the conflict with Russia in the East is well-known, but the state also faces severe economic weakness with absolutely no sign of recovery. This is partially because the banks are untrustworthy, which makes outside entrepreneurs and businesses hesitant to invest in Ukraine, and even pushes its domestic businesses to invest in other countries. In response, Mr. Taruta began to approach business oligarchs to think about how to bring new business initiatives into the country. His goal: to regain trust from foreign and domestic investors, and to reorganise Ukraine’s internal investment structure. At a gathering of businesses and industry oligarchs organised in February, many Ukrainian entrepreneurs came together to talk about what a brighter Ukrainian future might look like.
The cohort believes that the best way to achieve economic growth is by promoting a new constitution, which would outline a program to boost the economy within a decade. It took the cohort about four months to prepare this doctrine, which was then presented in France and Germany. It foresees that, within a decade, Ukraine’s economy will boost from $100 billion to $500 billion. It recognises that Ukraine is rich in human capital, logistic and organisational infrastructure, state enterprises, and raw materials. The plan aims to use these resources to their full potential as they provide fertile ground for investments. In fact, Mr. Taruta said, in a 2015 survey of investment bankers, Ukraine ranked as third most attractive country for new investments. However, before any of these investments can be made, Ukraine must regain trust from both its domestic and foreign investors. This trust can come from the implementation of liberal regulation and fiscal policy, judicial honesty, and a forthright banking system. If all of this is delivered, Ukraine will be one of the world’s best countries for investment.
Moving even further into the future, Mr. Taruta stated that if these basics were implemented into Ukraine’s economy, they could even look into possibilities for energy efficiency, agriculture, and space aviation among others. He called this the “industrial-commercial Renaissance in Ukraine”.
The audience as a whole was not convinced. In this time of military conflict, can the funds be found that are necessary for this economic revival? What areas should be prioritised? Mr. Taruta said that the financial capacity of the country is huge—that isn’t the problem. The problem is that this capital is not kept in the banks. If the banks were to be trusted, and the financial capital reintegrated, then Ukraine’s economy could expand and be one of the world’s most fertile patches for investment.
For a full transcript of this event click here