Archive for March 18th, 2017


Ukraine acceeds to (parts of) COSME

March 18, 2017

Long has the blog opined that the “deoligarchisation” of the Ukrainian economy will not manifest by the removal of the oligarchs (for that won’t happen), but by their oversized role within it being reduced by a transformation of the economy.

In short, conditions should be created to see the parts of the Ukrainian economy without outsized oligarch interest grow as rapidly, but as prudently, as is practicable.

There are obvious sectors in which there is no oligarchical monopoly/hidden barriers to entry.  The first industry sphere with no serious and dominating oligarchy interest, and where Ukraine is already strong with regard to internationally qualified personnel, is IT.  It ranks fourth globally for Apple and Microsoft certified programmers for example.

The second by its very nature is the economic sphere of the small and medium sized enterprises (SMEs).

The accepted wisdom is that SMEs create competition, and competition creates better goods and services thus driving the economy ever onward across a plethora of business sectors.

Clearly such economic shifts will not happen over night – or even in a year or two.  This is especially so when Ukrainian SMEs still struggle with unnecessary, outdated, pointless, and no small amount Soviet legacy regulation and statute at every turn.

To be entirely fair to the current authorities they have canceled and/or repealed hundreds of irksome, discombobulated and/or Acts that were simply more than a little fractious with other existing laws and regulations.

(On 23rd November 2016 Gov UA claims to have axed 367 bureaucratic abnormalities – and occasionally lists can be found regarding some of that which has been cast asunder.)

Another 100 statutory nonsense filled acts are slated to head to the bureaucratic waste bin very soon – with yet another 400 under examination.

To be clear, this is still the tip of a very large statutory/regulatory iceberg much of which never had any economic benefit other than to impose another method of extracting bribes from businesses that when adhering to one statute, were immediately were at odds with another.  (Undoubtedly some of the most lucrative legislative flapdoodle will remain simply because it is so nefariously lucrative.)

Nevertheless it cannot be said that nothing has been done, even if it can be said not enough has been done thus far – even when allowing some mitigation for parasitic bureaucrats deliberately slowing (or stopping) the reordering of their corrupt administrative fiefdoms.

On 22 February the Verkhovna Rada paved the way for Ukrainian accession to specific parts of the EU’s Competitiveness of Small Medium Enterprises (COSME) scheme.  The specific parts being improving access of small and medium-sized enterprises (SMEs) to markets, improving the regulatory environment for SMEs functioning, and creating a culture of doing business.  The 18th March witnessed President Poroshenko complete the process.

It remains to be seen whether Ukrainian SME associations/business NGOs/civil society will form solid partnerships with EU counterparts, and whether that in turn can be used to encourage the Ukrainian leadership not only to expedite the removal of unnecessarily hindering rules, but also approximate any new legislation/regulation with any relevant European normative.

Just how much remains to be done is difficult to assess, however measurable (somehow) it must be, for it is surely achievable.

There is then the question of timeliness – both for the SMEs and by extension the reduction of an oligarchy (almost captured) economy.

(The SME demographic will also be a key battleground constituency for elections upon the distant (or not so distant) horizon.)

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