(Un)expected coincidences and parallelisms in Kiev

by Federico N. Fernández*

When you’re from Argentina and happen to be in Kiev (Ukraine), it’s hard to imagine that you’ll feel close to home. However, appearances can be deceiving.

Both Ukraine and Argentina are countries whose economies are heavily linked to the agricultural sector. And both, of course, have missed the great opportunity commodity prices provided since 2001. In the case of Argentina, the reason was the populism of the Kirchner government. As the good Peronists that they are, they did not miss the chance to make Argentina miss a chance. The Ukrainian context isn’t as familiar for me. However, corruption, political instability, and Russia made sure Ukraine couldn’t make use of the commodity boom. And corruption, by the way, is something that relates both countries.

The same can be said of people. I had fascinating talks with people there. Human resources seem not to be an issue. Again, like in Argentina. Unfortunately, the two countries also share the impossibility of developing stable and modern social and political institutions. On the individual level, they do quite alright. On the social level, they’re a total mess.

I gave a talk in Kiev highlighting these parallelisms — which hopefully won’t end here…

Last year Argentina changed her government. For the first time since the Populist wave started in Latin America, the populists were defeated in elections and had to go home. The new government, which of course is far from perfection, is dismantling the interventionist system inherited from the previous administration. The export taxes (yes, export taxes) have been reduced or eliminated. The ones that still remain will be completely gone soon.

The same with the rampant financial repression which prevented my fellow countrymen to buy dollars or send money abroad. After fifteen years, Argentina finally paid her debts with the so-called “hold outs” and isn’t in default anymore. All these steps mark an attempt to come back to basic reason.

And what about Ukraine?

Click here to know more about these guys.

Well, they have a great think tank now, our partners, the Bendukidze Free Market Center. Comprised of young, talented, and committed individuals, these guys definitely have the ideas and solutions their country needs.

The Ukrainians too had a change of government a couple of months ago. Their new finance minister, for instance, defines himself as a Libertarian. He used to be part of the Bendukidze Center. His name is Oleksandr Danylyuk and he gave a very interesting talk at the FMRS event.

What I’d like to highlight were his instincts. He seemed very much in favor of markets, private property, and private initiative. One can’t expect a “flawless” or “ultrapure” speech by any politician or public official. But, like Christopher Lingle said, “we have to know where the instincts of the politicians are.” In the case, of Mr. Danylyuk, they seem to point in the right direction.

For example, he said that he saw as one of his biggest obligations to try to save public money. I know this is obvious for every normal human being. But we have to remember that politicians across the globe suffer from an illness named “spendaholism.”

The finance minister in action.

Although he’s the minister of finance, he didn’t hesitate in saying that the reform of the judiciary system was “the most important reform.” Strengthening the rule of law and fighting corruption are key for Ukraine, indeed. And it’s good to have people in charge who know that.

Incidentally, in Argentina there’s a process similar to the Italian “mani pulite” which may very well send to jail most of the top members of the previous administration — including former president Cristina Kirchner.

The coincidences between Ukraine and Argentina don’t stop here. The finance minister heard my presentation and spoke immediately after me. He started his talk not in Ukrainian but in English telling that he’d been to Argentina. He said that a friend of his, of Greek origin, married an Argentinean girl. And because of the wedding, he went to the South American country in 2008. He also said that he used to teas the couple telling them: “One Greek and one Argentinean… what a lovely couple!” Obviously, this was referred to the economic problems Greece and Argentina regularly go through. He nonetheless told us that now it was Ukraine the one in deep trouble…

Perhaps, it is now time for Argentina and Ukraine to do the economic and judiciary reforms they have to and finally get out of the mess in which they both are.

* Federico N. Fernández is senior fellow of the Austrian Economics Center (Vienna, Austria), and vice president of Fundación Bases (Rosario, Argentina).

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