Eric Hontz: Welcome to post-, post- Soviet Ukraine

05.03.2019 | CIPE in News | Eric Hontz, Caroline Elkin

This article originally appeared in the Kyiv Post. 

 

Comedian actor Volodymyr Zelenskiy who is running for president voted in the presidential election in Kyiv on April 21. Photo by Volodymyr Petrov

 

The election of Volodomyr Zelenskiy marks a generational change in power in Ukraine. It is now a post-post-Soviet world. At age 41, President-elect Zelenskiy spent the majority of his school years in an independent Ukraine. His worldview was shaped by the privatization schemes of the 1990s and the ruthlessness of oligarchs as they consolidated their power over the state, but the president-elect also benefited from the opportunities presented by a market that values innovation and individuality. Rather than scooping up the remains of some Soviet industry, Ukraine’s future president created a business in the new creative economy.

The Center for International Private Enterprise has seen this generational change in the Ukrainian business community as well, accelerating in the years after the EuroMaidan Revolution drove President Viktor Yanukovych from power on Feb. 22, 2014.

There are fewer big-bellied bosses who exercise excessive control over their firms, holding meetings where direct reports submissively present information. More business people run their companies collaboratively, applying expertise from all over the world – including from other successful Ukrainian firms and start-ups. The shift in business culture is such that the president-elect displayed a less formal style during the election cycle. Although he was criticized for that, to an American who has sat through endless bureaucratic meetings (with both business and government) in the past, it was refreshing to see a candidate ask questions and exhibit a desire to learn from others. If Zelenskiy can encourage a collaborative style of doing business within government bodies too, it will be another success for the post-post-Soviet generation in Ukraine.

As this new generation emerges, it is pushing Ukrainian business out of the shadows. The first generation to found firms is starting to age out of day-to-day involvement and consider retirement. Founders planning exits want to ensure their businesses operate fully in the clear, and younger generations of business leaders, understanding that equity investors demand transparency, prioritize the same values. It is therefore little surprise that in recent years, the top service of many consulting and auditing firms in Kyiv has been detenizatsiya (unshadowing) of businesses. As tax receipts from business rise, some in the Ukrainian government realize that emerging middle-market firms and the middle-class jobs they support expect the state to provide something in exchange for their tax hryvnias. Moreover, as companies come out of the shadows, they can publicize their success stories and advocate a better business enabling environment, furthering the generational shift.

As President-elect Zelenskiy takes office and parliamentary candidates launch their campaigns, they should recognize that business and government can work together to build a post-post-Soviet Ukraine. If reforms are stepped up, particularly to create a more trustworthy judiciary and reassign investigation of economic crimes, more businesses will come out of the shadows and realize their full value. That will drive higher tax revenues as well as an exchange of cultural norms between forward-thinking business leaders and government officials. Both politically, with free and fair elections, and economically, with growing Western-oriented businesses, Ukraine has become a post-post-Soviet nation.

 

Eric Hontz is a Senior Program Officer for the Center for International Private Enterprise.

Caroline Elkin, Associate Program Officer at Center for International Private Enterprise, contributed to this opinion piece.