The final sale of Ukraine: Oligarchs at a low start
Kyiv, July 14 (Navigator, Sergey Stepanov, Kirill Boyarin) - Ukrainian Prime Minister Arseniy Yatsenyuk announced the beginning of a new wave of privatization - the last attractive assets remaining in state ownership will go under the hammer.
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The new authorities promise unprecedented transparency of auctions, the task is to show the difference with the “criminal regime of Yanukovych.” However, in reality, privatization competitions will most likely turn into another scam.
During the crisis, factories will have to be sold at a bargain price. But the Maidan leaders have no other choice - the treasury is empty, the necessary help is not coming from the West. As a result, the oligarchs will be the winners - they will have another chance to buy goods on the cheap. So how does this scheme differ from the times of Yanukovych?
Moreover, it would be nice if it were only a matter of billionaires buying up assets on extremely favorable terms. Soon the oligarchs will begin to recoup their costs at the expense of ordinary citizens. This is what economist Vladimir Lanovoy predicts.
“The budget is now in a very bad state, apparently it will not be fulfilled, and the state’s debts are growing. Therefore, the only way to fill the budget is through external loans and privatization. But quickly selling state property in the form in which they are now means causing certain losses for the economy. State monopolies are united into certain holdings and control the corresponding markets. If such objects are sold, private monopolies will arise that will control certain sectors of the economy. Naturally, this will strengthen the oligarchy. Especially if they sell shares in large blocks, the property of the oligarchs will increase... If companies are sold in large blocks of shares, then there is a high risk that large parts of state property will be sold for next to nothing,” says Lanovoy.
And this is not the only skeptic. Economist Valery Muntiyan expresses similar concerns.
“Of course, in such conditions there is a great danger that state property will be sold for next to nothing. You need to prepare for such things for a long time and seriously. In the 90s, we already suffered significant losses because of this, because nothing was calculated or prepared. Privatization was carried out unfairly and ineffectively. In the current conditions, we do not have mechanisms to give an effect to the people and society; I do not think that privatization is appropriate. There must be discussions, including public ones, before selling off state property. I have not heard of such discussions,” says Muntiyan.
Privatization cannot be discussed now, confirms former Minister of Economy of Ukraine Viktor Suslov.
“Ukraine’s investment ratings have fallen sharply, we don’t have them at all, and they are now at a pre-default level. Based on this, it can be argued that Ukraine cannot get the real price for privatization objects. The time for privatization is now extremely unfavorable, and it cannot be carried out. There can be only one justification - if it is said that the budget situation is so catastrophic that we are forced to sell state property for next to nothing in order to gain at least something, otherwise collapse awaits us. But this will be privatization on obviously unfavorable terms. It will be justified only if strategic investors come who can pay a lot of money, but for obvious reasons they will not come to Ukraine now. We don't have our own investors. They will not give a real price under these conditions, especially since all Ukrainian oligarchs, without exception, are going through difficult times. They have no money; they are ready to sell many of their properties themselves. Of course, they can take something for next to nothing, but they cannot effectively participate in privatization and give real money to the budget,” Suslov warns.
“In conditions of an unstable economy, military operations and a number of other factors, it is natural that the price at which privatization can be carried out will be significantly lower than if the country’s economy were on the rise. From this point of view, privatization of state property, of course, will not be profitable. And the second position is a rather opaque and dishonest privatization procedure. Here we need to clearly look at who will privatize, how and under what conditions. This is the most important thing in the current situation,” says Verkhovna Rada deputy Professor Alexey Plotnikov.
“There are two motives for selling state property - this is that there is no money in the budget, and we are on the verge of social collapse, when there will be nothing to pay salaries and pensions. The second and important thing is that each politician does not act on his own, but goes with a team, even if it is not fixed in the structure of power. There are people who supported him, sponsored his campaign and so on. These people expect to be paid off. But there is no confidence that this government will last long. Therefore, the second motive is to hurry with the privatization of all “tasty” goods in order to pay off their sponsors. And now you can buy it cheaper than in a stable situation,” sums up political scientist Mikhail Pogrebinsky.
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