RC#57: Byways and Highways, Part 1

published in Eastern Economist #444, August 6, 2002

For those who are still contemplating a summer car trip in Ukraine, I have a couple of tales to tell. They are both disappointing and heartening. But the message is, be prepared – and go for it!

            I still remember travelling to Ensenada, Mexico, from San Diego, California, with a couple of friends. The roadway was a narrow, unmarked thing creeping up and down steep, uninhabited hills. Sign after sign saying “Curva pelligrosa” – dangerous curve. There was at least one dead dog every couple of miles. There were no gas stations. We were all very glad to get back to the land of 8-lane freeways.

            I’ve seen a lot more since. I’ve even learned to drive in it. Not only that, I have my own car. So I have all the pleasures of driving, along with all the headaches of owning the darned thing.

            On my way back to Kyiv not long ago, I thought my car was making too much noise on the passenger side. My passenger at the time was a nice young lady from Mohyla University, not a Rottweiler, so I knew the noise wasn’t inside. It sounded suspiciously like the front right tire.

            Now, the tire in that spot had blown out on me just six weeks earlier. Then, too, there had been a warning rumble. About 20 kilometers out of L’viv, my nerves got the better of me and I decided to check the noise out.

            We were just coming up on a bright yellow gas station, so I pulled in. “You guys know anything about tires? I’d like mine checked out,” I said to the guy inside. “No, we don’t, but there’s a guy back in the shop that does.”

            He called out and in a minute a young man came out wiping his hands. “My tires are making noise, rumbling,” I said. “Would you mind driving around with me to see what it might be?” “No problem.”

            Katya got out and Slavko took her place. I turned the car down the highway, drove a few kilometers at various speeds and U-turned back. When we got out, Slavko got down and checked out the two front tires.

            “I think your bearing could be gone on this right front tire. See here? It’s pretty hot, whereas this one…” – he got up and went to the left tire – “…is fairly cool. There’s a shop back up the road towards L’viv that I’m pretty sure can do it for you.” “Thanks,” I said and we made our way back about 15 kilometers to where we had come from.

            Sure enough, just past a truck area, there was a huge complex and in back an impressive shop with 6 bays. Better yet, it was open and working at nearly 20:00 on a Tuesday night.

            “Can you check my tires out? I hear a lot of noise and I’m wondering if I have a blow-out brewing,” I said. “No problem. Drive it on over here,” the man said, pointing out to a bay with a lift.

            When the car was up in the air, an authoritative-looking man in an overall and cap uniform began looking at the underneath carefully. “It’s definitely not your bearings,” he said. “See how your wheel turns smoothly and easily? It wouldn’t do that if the bearings were going.”

            I felt relief. Bearings sounded expensive to me.

            He carefully looked over the tires and eventually took the right front one off. “Look at this,” he said. “These are cheap Slovak tires. Touch the sidewalls.” I could feel some bumps and it worried me. “Nah, they won’t blow out on you. But they aren’t great. Your back tires are originals and they’re better made.”

            He then looked at the engine and other parts from below, checking for leaks and such. “Everything seems pretty good from here,” he said. “There’s a bit of oil around this seal, but it’s par for the course.”

            After fishing around a little more, he told one of the other guys to balance my front tires and see if that made a difference. The lift came down and the guy went to work. Twenty minutes later, I did a short test drive down the highway again. The noise was less, but it was still there, even at low speeds.

            “Try rotating the front tires to the back,” said the main mechanic. “That way, if one of those tires does blow, it won’t be as dangerous.”

            The tire guy went to work, starting with the front right tire. He took each one off, balanced it and moved it to the next position. When he got to the last tire, the right rear one, he suddenly said “Hah!”

            Rolling the tire to me he said, “Here you are!” Sure enough, there was a bulge in the treads, a nasty bump that he said would probably have resulted in a blow-out eventually. “Do you have a spare tire?” I did. The left front tire that was taken off when the right one blew.

            He balanced the last tire, screwed it on, and said, “Take it for a spin and see how it goes.”

            The car drove as smooth as a shot of Bailey’s.

            I drove back into the bay. The tire man tightened all the screws and put the hub caps back on. By now it was 22:30. “I’ve put the other tire in your spare well, but I wouldn’t use it,” he said as he closed the trunk.

            I thanked him, paid him the Hr 36 he requested – less than US $6 – and we drove off, happy as larks. •

–from the extensive notes of Pan O.

Part 2 continues the saga of Ukrainian byways and highways.

RC#56: Flights of financing

published in Eastern Economist #442, July 23, 2002

Two weeks ago, another promising Ukrainian athlete went missing in action.

            Olena Zubrylova, Ukraine’s top biathlete, declared that she would not extend her contract here. Instead, she would be joining Team Belarus.

            Ukraine has had a long history of losing its talent abroad. World champion jumper Inessa Kravets complained in the mid-nineties about the Olympic Stadium in Kyiv. It was so hard to find a free dumbell, she said, that if you want to train you had to take your trainer piggyback and carry him around.

            Since independence, the disease seems to be spreading as facilities rust and oligarchs spend the country’s assets on themselves and their relatives.

            When a sledder left in the middle of the Salt Lake City Winter Olympics, the reasons were the same: lack of training facilities and resources—and lousy pay.

            Like most divorces, money seemed to be the biggest sore point.

            A one-time World Champion, Ms. Zubrylova is coached by her husband Roman and says she self-finances most of her own training. She put in a very disappointing performance at Salt Lake City. Apparently she was running a fever at the time.

            Ms. Zubrylova’s reasons are understandable: harsh official criticism, miserable pay, the Federation’s tendency to put its efforts into younger athletes. Meanwhile, Belarus has promised for starters to pay her a monthly stipend of US $1,500.

            It wasn’t easy to get a word out sideways from any of the people involved in this headline. Nor was there any damage control on anyone’s part [see RC#55]. The best DerzhKomSport, the State Sports Committee, could come up with was “Well, we have a very promising team of male biathletes.”

            As a PR opportunity, this whole thing was a bust.

            The deputy chair of DerzhKomSport wasn’t taking calls. Nor would the Biathlon Association or the Olympic Committee comment.

            On July 12, two sports officials agreed to answer some questions.

            DerzhKomSport Chair Maria Bulatova said that she “didn’t know anything.” That she first read about Ms. Zubrylova’s decision in the newspapers. Well, “anything” is a bit of a stretch.

            “We talked about this three times and the last time Olena said: ‘OK, I’ll stay but I need some time to think.’ She didn’t say she would leave for Belarus and switch citizenship.”

            How many times does a top athlete need to tell her bosses she’s not happy for them to get the message?

            “Ms. Zubrylova’s not well,” Ms. Bulatova went on, “and we planned a whole rehabilitation program for this summer, somewhere abroad.” The Committee had recommended cutting back Ms. Zubrylova’s training schedule to give her some time to improve her health.

            OK. What about the money angle?

            The president of the Biathlon Federation, Volodymyr Brynzak, said he hadn’t heard any complaints from Ms. Zubrylova and thought the Federation had done “everything possible” for her.

            “We had no conflicts,” said Mr. Brynzak. “She was my personal guest a number times and one of my friends sponsored her for her Gold Medal with US $5,000.”

            Not to be outdone, Ms. Bulatova responded, “Our Committee spent more than a quarter million hryvnia [under US $50,000] to prepare Olena for Salt Lake City. Her salary here was Hr 1,000. At the Dynamo Society, she was paid about Hr 1,600 as a Security Service Major, and the Federation gave her Hr 500.”

            That comes to Hr 3,100 or under US $600. It’s may be well above the official national average, but nowadays secretaries at rich companies make that much in Kyiv. Slim pickin’s for a sports star.

            “People don’t think about the fact that all our money goes towards our training. No professional international coach will even look at you for less than US $5,000 a week,” said Natasha Medvedeva, the sister of tennis star Andriy Medvedev, on a Gravis sports marathon July 13. Ms. Medvedeva is herself a tennis player who was sidelined in 1998 after an injury.

            Mr. Brynzak also challenged Ms. Bulatova on this point. “Your committee hasn’t financed any Federation activities,” he said angrily. “Ms. Zubrylova won the world championship thanks to us. DerzhKomSport owes the Federation about US $32,000.”

            “Officially, the Belarus NOC has not addressed us at all over this,” Ukraine’s National Olympic Committee spokesman Ivan Bondarchuk told uaSport. “These decisions were made without consulting us.”

            Olena Zybrulova herself, in an interview on Studio 1+1, looked on the verge of tears. “Ukraine doesn’t appreciate what it has,” she said. “Other countries try to make their teams stronger by buying ready-made stars.”

            In an AP report from Sydney back in 1999, Belarus President Alyaksandr Lukashenka was quoted as saying, “Just produce results and you’ll be able to provide for yourself for the rest of your life. I’ll buy you anything you neeed, be it apartments, guns, boats, swimming trunks, even undershirts.”

            His offer has not fallen on deaf ears. Last year, Olympic Champion skier Svetlana Nageikina moved to Minsk from Russia, as did biathletes Yelena Khrustaleva and Yevgenia Kutsepalova. All of them performed at Salt Lake City on the Belarus team. Now, says komanda.com, Russian biathlete Vladimir Drachiov, a many-time World Champion and holder of the World Cup, may follow suit.

            “Without money, you can’t get anywhere in tennis or fencing,” says Serhhiy Holubnytskiy, a fencing champion. “That’s a reality. Everything has to be paid for. The problem here is that the government only responds to results. You have to get to the top before they give you anything, and the minute you don’t have the results, they stop supporting you.”

            A DerzhKomSport insider pooh-poohs this. Olena’s just trying to get a little attention, he says. “There’s an Italian handball player and an American swimmer who want to join Ukraine’s team.” We’ll believe that when we see it. •

–from the notebooks of Pan O., with thanks to Yuriy and Bill.

RC#55: Whistlin’ Dixie

published in Eastern Economist #441, July 16, 2002

A curious new organization made itself visible on Monday July 8. It calls itself Ukraïna vidoma – Ukraine Cognita in English. Leonid “The Fox” Kravchuk, a one-time president and since-then VR deputy, is founder and president of this “Ukrainian public mission.” The main aim of the Mission seems to be PR activities involving Ukraine.

            Its supervisory board and committee contain a passle of other big names. The chair is Ukraine’s first premier, Vitaliy Masol, who was suspected of pilfering from the state in the early nineties.

            There are also some solid workhorses with impeccable credentials. Borys Paton, the hoary president of the National Academy of Sciences. Serhiy Bubka, a clean-cut Olympic pole-vaulting champion from Donetsk. Oleh Pinchuk, a distinguished and wonderfully whimsical sculptor.

            There is no one professionally connected to international media or financial management. Unless you count Mykola Azarov, the current boss of the Tax Administration. He is best known for running the STA as his own fiefdom and ignoring decisions of the Finance Ministry and the judiciary.

            Nor is there anyone representing or having strong professional ties with the international community. Not even a token former ambassador as an honorary member.

            The “activities” of the Mission are exceptionally ambitious and very concrete. The president is responsible to “Form a positive image of the Ukrainian state.” As opposed to “Ukraine” or “the Ukrainian people”? Is his mission, then, to make his buddies in office look good?

            The Board is supposed to tackle strategic directions. “Entry of Ukraine into the EU.” “Increase export potential and foreign investment.” “Develop international business and tourism.” How can the board of a PR organization develop international business? Imagine if the head of the US Internal Revenue Service or the UK’s Inland Revenues – whose names most of their citizens would be hard pressed to tell you, that’s how visible they are – sat on a committee to develop international business and tourism, headed by Jimmy Carter or Edward Heath?

            UC’s first public meeting took place July 8, after one year of intense activity. It had gathered over Hr 5,500,000 in its accounts from 11 businesses listed in its report. Most of them are, strangely, not represented on either its committee or its board. They were undoubtedly thrilled at being given a “Diploma as Honorary Sponsor of Ukraine’s national image.”

            That’s more than a cool million dollars “accumulated and directed towards carrying out program events.”

            For that nifty sum, the Mission so far has: Organized itself June 2, 2001. Held its founding assembly June 14. Signed a rental agreement in August. Decided at the end of its first year to increase staff and begin looking for a permanent location in Kyiv. Held five joint meetings of the Board and Committee.

            It also chose – via tender – two Austrian companies, m.i.p. and Troon Fields, as its international PR specialists. Apparently they have “lots of experience in Ukraine.” This author, who has worked in media and advertising for many years here, had never heard of either prior to last Monday.

            The big push in 2001 was to get some international visibility.

            This involved: Holding a July 19, 2001, press conference in Vienna with 19 international periodicals. Sending press releases on Ukraine’s 10th anniversary to 30 international media. Arranging a 3-month survey and analysis of international media in 19 countries and its perception of Ukraine. (This was done by the Austrian companies and the results presented at Monday’s meeting – in Russian.) Participating in (not organizing, note) Ukrainian Culture Days in Switzerland.

            There was a slew of PR activities to increase the Mission’s profile at home, too. A brochure. A website. Helping the Philharmonic participate in Bern. Sponsoring a roundtable on economic transformation organized by the Bleyzer Foundation (no date). Holding a “Ukraine in Focus” competition to select the 100 best photos of contemporary Ukraine.

            And finally, the Mission worked to bring to the government’s attention “the importance of working in the direction of formulating [sic] an international image for Ukraine.”

            This involved: Getting the president to sign a decree Oct. 4 to support UC. Getting a line item in the draft 2003 Budget to “finance the formulation of Ukraine’s international image.” (They failed to get into the 2002 Budget, alas. Note: this is in addition to the Hr 5,500,000 sitting in UC’s accounts already!) Preparing a draft law on activities aimed at formulating said image. Trying to get Mission members included in the coordinating council of a state program called “Ukraine’s Investment Image.”

            The Mission believes that its first year was very positive and effective. Surely they don’t imagine that a single press conference in Vienna and Ukrainian Days in Bern have had a serious impact… do they?

            Also, the Mission’s “Principles and methods” include “openness, transparency.” The report did not include any financial statement about the first year. And they’re trying to get taxpayers’ money.

            The next day, July 9, there was a news flash in Ukraine that the country’s top biathlete, Olena Zubrylova, was moving to Belarus. This single story had more impact than an entire year of hot air on the part of Ukraine Cognita.

            Why is a top athlete changing citizenship to play for a no-name country like Belarus? Why was Ukraine Cognita’s committee member, Olympic star Serhiy Bubka, not on every channel explaining what’s going on and working to get her back? Or provide a compelling reason for letting Ms. Zubrylova – one of the few athletes in the world who could compete in 1997 as an equal against the legendary Magdalena Fossberg, according to champion.com.ua – go? When we called UC July 11, they refused to comment.

            Incidentally, DerzhKomSport isn’t worried. “We have a very promising team of male biathletes.” Now, there’s an organization that understands about PR. •

–from the notebooks of Pan O.

RC#54: A harmony of history

published in Eastern Economist #440, July 9, 2002

Back in January, Vladimir Putin declared 2002 “The Year of Ukraine” in Russia. Actually, it’s the Year of the Horse, according to the Chinese calendar that’s popular among Ukrainians and Russians.

            Maybe the Russians want to start their own zodiac, using the names of the 12 republics that remain within their sphere of influence. Imagine some of the characteristics associated with the various “signs.”

            The Year of Ukraine: Those born under this sign can never make up their minds whether to go ahead and make that big change in their lives, or to go on cheating a little here and there as long as no one catches them. Lesson: Grow up and get a life.

            The Year of Kazakhstan: Those born under this sign have lots of natural talents but they keep thinking they have to make it in Moscow. Lesson: Sell some oil and take a vacation in Hawaii this year.

            The Year of Russia: Those born under this sign have everything on their side – money, history and the bomb – but they’re still not happy. Lesson: Find yourselves a better sign… maybe Tadjikistan?

            In any case, most Ukrainians saw this “Year of Ukraine” as a sop, not a threat. Predictably, this friendly declaration involved setting up an intergovernmental commission to “improve relations.” A little hand-holding went on, but nothing that the press of either country paid much attention to.

            Then in May 24, a working group led by the two countries’ vice premiers was set up to “jointly prepare new Ukrainian and Russian history textbooks.” Russia’s Matviyenko said the reason was “the need to review the contemporary interpretation of history textbooks in the light of the changes of recent years.”

            When this became public knowledge, it caused an immediate stir. “What do you mean, a joint history written with Russians?” a lot of Ukrainians asked aloud.

            There were demonstrations and protests in Kyiv. On Constitution Day, the Administration responded by lining the streets with soldiers and policemen.

            “These officials are not professional historians,” read an open letter to Ukraine’s leaders from historians, academics and civic leaders, signed by historian Yaroslav Dashkevych, “so they have no moral right to be sitting judgment on Ukrainian history books.”

            “Ukraine has just managed to move away from politically driven interpretations of its history during this period,” the letter went on. In other words, its history was no longer being written in Moscow.

            Even so, the country’s leaders cannot face up to all of its history. “Justice has not been fully achieved,” the letter went on. “Ukraine’s leaders still have not been able to acknowledge the OUN-UPA as a Ukrainian liberation movement that was also a warring side in World War II.”

            Ukrainians across the big pond also responded. “Given what I have seen in Russian textbooks on the history of Rus’ over the past decade,” wrote Robert De Lossa of the Harvard Ukrainian Studies program, “I doubt that the influence of the ‘harmonization’ will flow northward and eastward.”

            A hot and heavy debate pulled together by the TV Press Club on July 4 reflected the key problems. History professors and department heads showed up from the NAS Institute of History, the University of Kyiv Mohyla-Academy, Kyiv State University, and Kyiv International University.

            Mohyla’s Dean of History, Yuriy Mytsyk noted that the Council of Europe has declared history a mandatory subject for secondary schools. “That’s why the Russians are so involved in the process of rewriting,” he said. “Otherwise, our children will know the truth about relations between these two countries.”

            “The commission aims to settle conflicting points in the history of Ukraine and Russia,” declared NAS-IH’s Deputy Chair Stanislav Kulchytskiy. “No one’s going to rewrite history.”

            They don’t have to. According to Prof. Mytsyk, the Russian Embassy has already started negotiations to present Russian textbooks to Ukrainian schools free of charge.

            “The Russian side most definitely has some spots that they want to rewrite,” added KSU’s History professor, Viktor Korol. “First of these is Hetman Ivan Mazepa. Russians consider him a traitor, although from Ukraine’s point of view, he was fighting for national independence. Second, the Russians don’t want the famine of 1931-3 to be mentioned at all. And thirdly, they don’t want to say anything about the forced exile of millions of Ukrainians to Siberia.”

            Imagine if Germans demanded a say in the writing of Jewish history in the 20th century and refused to include the Holocaust or the Stern Gang?

            In fact, the first contemporary history text used in independent Ukraine was “A History of Ukraine,” written by Canadian historian Orest Subtelny. It was a big hit.

            “Subtelny’s History of Ukraine was published very quickly, on time, and had a huge circulation,” explained KIU’s Prof. Raïsa Ivanchenko. “But the secret of its popularity was that Subtelny was the first author who offered a point of view on Ukrainian history that differed from the official versions.”

            Prof. Kulchytskiy clearly didn’t like this. “The history of a country should be written by citizens of that country, by those who were born here, who have the national mentality and way of thinking. A foreign citizen can’t describe the history of a country he wasn’t born in.”

            So much for a big chunk of great writing on the history of the world, including Paul Johnson, Barbara Tuchman and Livy.

            “I have long thought of adding a history dimension to the USA/Ukraine Program,” Bohdan Oryshkevich wrote June 16. “With anywhere from 3.5 to 4.5 students from the Russian Federation to 1.0 students from Ukraine at any one time studying in the US, Russians are still dominating the social sciences in American universities… And there are probably more students from Ukraine studying history in Russia, according to old methods, than in the West.

            “Only by educating highly qualified and ethical historians are Ukrainians likely to succeed in persuading the world – and the Ukrainian population – of the character of Ukrainian history.”

            Harmony works best when two voices of equal power sing different notes. •

–from the notebooks of Pan O.

RC#53: Summer evenings on the Uzviz

published in Eastern Economist #439, July 2, 2002

For the last year, almost, an ongoing series of classical concerts has been playing at Andriïvska Tserkva, St. Andrew’s Church, at the top of Andriïvskiy uzviz. I decided to go to hear the Renaissance Chamber Orchestra one Sunday night. One English paper said they were going to perform a Tchaikovsky program. Another one said they were doing Handel.

            As it turned out, they were doing neither.

            But I’m getting ahead of myself. When I got to the church, it was only about half past six. I decided that, with the sun shining brightly on the cobbled street and low-rise baroque buildings, I would take the spare 25 minutes to mosey partway down the Uzviz and see what new goodies were available.

            Unlike winter time, when everyone rolls up their stalls and goes home at or before six o’clock, the historic hill was buzzing with buskers and buyers, artists and artlovers.

            Now, Andriïvskiy uzviz is mostly really an open air arts and crafts market, not a professional gallery. But for that, most of what you see is genuine. It’s locally made, more often than not hand made, of natural materials, and generally quite original – even if a little kitschy.

            I’ve been to Montmartre in Paris. Believe me, the paintings they sell there are every bit as kitschy. That seems to be the nature of popular tourist spots.

            What surprised me lately, though, is that prices on the Uzviz have come down over the last few years. And in some cases, the quality has gone up. Maybe there’s more real competition.

            A collection of hand-made traditional embroidered linen shirts were displayed on the wall below the church. I stopped to admire them. Just as I was fingering one of the shirts to buy for my sister – I’ve been promising her one for years –, a woman dressed in traditional costume asked me pleasantly if I was looking for something particular.

            “Just a shirt for my sister. How much are these?”

            “The shorter ones are around Hr 80-150, the longer ones go up to about Hr 250,” she said. Then she began to point out the regional characteristics.

            The high end was still under $50. It used to be the regular-length vyshyvanky started at $50 and went up from there. Long shirts were generally well over the $120 mark.

            I made up my mind. I picked a beautiful, somewhat untraditional blue and green embroidered blouse that matched my sister’s eyes.

            A few steps down from there, I saw some great little ceramic pendants. Cats of all shapes and sizes, including one that looked like it was walking around a green grassy square as you turned the cube-shaped piece. I have at least three friends with pre-teen daughters who would go mad for them, I knew.

            “How much?” I asked. “Not much,” said the stall keeper, a forty-ish Ukrainian with grey hair. “Hr 8.” That’s about a buck fifty. Definitely “not much.”

            I picked through his selection, noticing that each one was slightly different. I chose a black cat, a ginger, and one with spots.

            “You make these?”

            “Sure do,” said the proud artist. “My wife and I do ’em together. Do you want a string with that?”

            “Yes.” He pulled out some suede strings and swiftly looped one through each pendant and tied it off. He put the three into a small plastic bag and handed it to me as I gave him the money.

            “Na zdorovia.” Your health.

            The sun bounced off the cobbles at the first intersection below the church. A pair of musicians were playing violin and dulcimer, known as tsymbaly in Ukrainian. The pleasing tinny sound of the mountain instrument was perfect for the snippets of jazz and bluesy tunes they played. People had stopped to listen on both sides of the street and clapped when they were done.

            Suddenly I heard someone yell, “Hey!” I turned to find an old friend from my early project days, with his wife and a small dark-eyed boy. He’s from Arizona. We shook hands, then embraced.

            “You’re looking good, dude,” I said, pointing at the slight paunch he was developing. “Whatcha up to?”

            “Just got a new gig with a new SME project. This is my wife, Tanya. And my son, Sam. We call him Sasha among Ukrainians. Why don’t we go have a beer someplace and catch up?”

            “I’d like to,” I said, “but I have a concert starting in about 7 minutes flat.” We exchanged numbers and I wandered back up the street.

            At the entry to the church steps, a uniformed guard checked my ticket. I climbed up the stairs, along with an older couple and an English family. We nodded at each other without saying anything.

            Inside, it was cool and dim. I found my seat and leaned back in it to look around. The orchestra was set up in front of a three-story red and gold iconostas. It was filled with more than 20 baroque paintings. Some were portraits of saints, some were scenes. A beam of sunlight was just touching the outer edge of the leftmost painting halfway up the iconostas.

            Two gilded teenage angels sat just above the door to the altar area, which was closed. At the very top were two statues of female saints, woodcarved and painted in the 18th-century style. Everywhere, there was gold and ornate framework resembling leaves and antlers.

            The genius behind this gem of a church was an Italian architect by the name of Rastrelli.

            When I looked out the windows to either side of the nave, I could see fat white clouds scuttling along in a bright blue sky.

            Just then, the conductor came out. Everybody applauded.

            The music started. It was Bach’s concerto for two violins.

            As I sat there, I thought to myself, this is why I’m still here in Kyiv. •

–from the notebooks of Pan O.

RC#52: Fawlty Forbes

published in Eastern Economist #438, June 25, 2002
A famous American came to town June 19 to tell Ukraine how it can attract investment. Steve Forbes also urged Ukrainians to speed up integration into Europe.

            Mr. Forbes is a publishing magnate who ran unsuccessfully for President of the US. For some reason, President Kuchma invited him to Ukraine to discuss Ukraine’s economic situation and its investment climate. Forbes also delivered a lecture to students at the Institute of International Relations.

            This is the man who openly stated, during his presidential election campaign, “My father once spent $5 million on a birthday party for himself in Tangiers. Why can’t I spend a few more running for President?”

            Lest anyone doubt Mr. Forbes’ seriousness, he also said, “In their late 40s, Forbes men’s hormones seem to change. Pop started riding motorcycles. I would say running for president qualifies.”

            To crown the gentleman’s visit to Kyiv, Foreign Minister Anatoliy Zlenko named Mr. Forbes a “Ukrainian business ambassador” for his “significant contribution to the development of Ukrainian-American business contacts.”

            Just how has Steve Forbes contributed?

            His father’s flagship publication, Forbes Magazine, is known for never publishing bad press about any major advertiser*. A cozy relationship that puts the independence of many media in the US in question. And not unlike the relationship between many journalists and their publishers in Ukraine.

            Perhaps Ukraine should have thought to pay Forbes for some advertising in his magazine back in 1993. But it was struggling with thousand-fold inflation and had other things on its mind.

            In the event, Forbes has published at least two headline grabbing articles about the country.

            The first piece was a June 1993 interview with the founder of IntelNews, a Ukrainian-American from Baltimore. The headline read along the lines, “If you thought business was rough, try working in Ukraine, where business rivals can kidnap you at gunpoint.”

            “That was no business rival, it was her alcoholic boyfriend,” explained an American who worked for the company at the time. Ukrainian staff at the agency corroborated his statement. Not understanding the clout of a magazine like Forbes, they just thought the whole thing was funny.

            With a little professional checking, the Forbes interviewer would have found out that the story was bogus. Instead, Forbes left its tens of thousands of business readers with the impression that Ukraine was a cross between 1920s Chicago and the Belgian Congo in the 1960s.

            In September 1996, Forbes published an article by Paul Klebnikov called “Tinderbox.”

            The impression was that it was written sometime in 1991, when the rest of the world thought the August putsch in Moscow would herald dozens of ethnic wars as the Soviet Union broke up. Everyone thought soviet citizens would be starving by winter.

            Given that the region was not very accessible to foreigners in 1991, some misperceptions of this kind might have been forgivable in the early 1990s. But by 1996, dozens of world media groups had correspondents and stringers working in Kyiv. Visiting Ukraine was as straightforward as visiting Italy.

            Mr. Klebnikov’s article portrayed Ukraine as a country where ethnic tensions were at the explosive stage. “Russia is now a democracy,” Mr. Klebnikov wrote, “and the Russian president cannot ignore the pleas of the Russian-speakers in Ukraine if they ask for his help.” The suggestion seemed to be that Russian troops ought to cross the border into Ukraine just as they had done in Chechnya.

            Forbes seemed to be promoting a fairly bizarre definition of “democracy.”

            Mr. Klebnikov went on to compare Ukraine to war-torn Yugoslavia. It was a cheap shot, given that Ukrainian soldiers were risking their lives in Bosnia, serving with international peacekeeping forces.

            The article caused outrage in the Ukrainian communities of the US and Canada. But their many letters to the editor were dismissed. Because these were not subscribers, the Forbes editor said, the publication felt no need to concern itself.

            When word got out, the American Chamber of Commerce in Kyiv prepared a letter to the editor.

            “The board of American Chamber of Commerce in Ukraine has decided that it behooves us, as the main private-sector representatives of American business interests in Ukraine, to go on the record as strongly disapproving of the kind of biased journalism that this article represents, particularly since it concerns the region of the world where we are all engaged in doing business,” read a memo that went out to members on Oct. 18, 1996.

            “We are concerned that your correspondent, Mr. Klebnikov, has done America’s business leaders – your readership – a great disservice. We are concerned, as Americans doing business in Ukraine since 1991, that Mr. Klebnikov appears to have his own agenda and produced a pretty well-executed hatchet job, rather than writing in the best interests of serious American investors who read your publication to find information on which they can base their business and investment decisions.”

            Given Mr. Forbes’ legendary arrogance and aggressiveness, he may be operating on a simple rule. If readers don’t know any better, editors can put whatever spin on things they pretty well want. As long as it sells copy.

            At best, Forbes’ magazine has questionable checks and balances on its journalists. At worst, it has its own hostile agenda towards Ukraine and Ukrainians.

            My question is, What is this country doing giving Steve Forbes an award as “Ukraine’s business ambassador”? •

–from the notebooks of Pan O.

* For those who are interested in a business analysis of Steve Forbes, an article entitled “A Failed Manager With No Real World Experience” is available at www.realchange.org.

RC#51: The Dumpsters

published in Eastern Economist #437, June 18, 2002

Dumping is not a pretty word. Among its many not-too-graceful meanings is the idea of someone eliminating undesirable or ultra-cheap products on unwitting trading partners.

            This meaning has been been around for some time. Most baby-boomers had their first exposure to international “dumping” back in the seventies.

            At the time, the US Food and Drug Administration had declared a well-known infant milk formula unfit for American babies. The big-name manufacturer, Nestlé, turned around and distributed tens of thousands of tons of the now worthless, unhealthy formula in third world countries. No doubt it got a huge tax write-off, while poor Indian and African mothers gratefully fed the stuff to their babies.

            This kind of dumping kept coming up over and over again with US companies. Mostly when one of them wanted to salvage costs on a product that had gone bad. Most dumped products were health-related, from birth control devices (including the lethal Dalkon Shield) to personal care products.

            Whenever it came to light, this raised a hue and cry in America. “What business do we have selling off or giving to poor countries, products we ourselves wouldn’t touch with a 10-foot pole?” people asked themselves.

            Gradually, the brouhaha would die down, however, and most Americans went on with their usual business.

            Over the decades, as a variety of free trade associations were set up and GATT turned into the WTO, the meaning of “dumping” shifted. Now, Americans began accusing second and third world countries of doing it to the US!

            The more the US insisted that its neighbors and partners remove barriers with the US, the more the US itself began to accuse neighbors, partners and underdeveloped countries of “subsidizing” trade in key commodities. Soon countries in Europe and elsewhere were playing copycat.

            It got really bad when the Soviet Union fell apart. Suddenly, the closed circle of soviet industry was opening itself to outside markets. Russians began pumping out oil and gas. Ukrainians began rolling out steel.

            The difference was, countries like Ukraine weren’t dumping a bad product. Judging from the hue and cry, American companies were more than happy and willing to buy the product.

            Of course, Ukrainian steelworkers were lucky if they got $25 a week, let alone $25 an hour. So the Ukrainians were able to sell a standard product at below standard prices.

            That’s what got the American steel lobby’s goat.

            “Foul!” they cried. “Ukrainians are dumping steel on our doorstep.”

            The truth was, the US steel industry was in a mess. It’s been that way since the 1970s when the mini steelmills began taking business from the Bethlehems and the US Steels. The Big Boys refused to see the writing on the wall and were struggling to survive.

            Of course, their extravagantly paid unionized workers were fighting change just as much as management was.

            And elected officials backed them all the way. Back in May 1997, Sonny Callahan, a Republican congressman from Alabama, accused Ukraine of being “the Nº1 violator” of dumping laws in the US market. “This must cease, and cease now.” Of course, his posturing had the support of a great southern politician by the name of Jesse Helms.

            Over the years, hundreds of anti-dumping suits were launched against Ukraine and other countries. Time and again, exhorbitant tarriffs were slapped on steel and other commodities. Essentially, it’s a means of levelling the price – and continuing to pay US subsidies to those same inefficient domestic industries.

            In an era of Free Trade Agreements with every possible combination of regional neighbors, the concept of “dumping” in the sense that it is now being used makes little sense. It’s mostly protectionism in another guise: “Your products undercut ours because you’re not at our standard of living, so we won’t trade with you.”

            Meanwhile, the “anti-dumping” tarriffs the US keeps slapping on cost countries like Ukraine amounts in real lost business similar to what the US claims is lost to pirated CDs every year. Except that Ukraine has a microscopic GDP compared the US. Who should be crying “Foul!” in this instance?

            The Economist has long been very critcal of US protectionism in steel and farming. It wrote in late May, that, since February, the big US steel firms “are returning to profitability with unseemly haste.” Yet the latest customs duty raised in March was “only third or fourth” among factors behind this turnaround.

            In fact, having cut off cheap exports, the US is now facing an apparent shortage of 8.5mn t of steel!

            In the meantime, countries like Malaysia and Peru have begun suing Ukraine, too.

            Imagine what would have happened in the western world had anti-dumping laws been applied to Taiwan, Japan or Korea in the 50s, 60s and 70s?

            There would be no Asian tigers today. (I can just hear Rep. Callahan howling, “Darn tootin’, that’s exactly my point!”)

            Had anti-dumping been a popular trade weapon then, America would not have enjoyed the prosperity of the 1950s and 1960s, which cheaper consumer good spurred. The Asian tigers would never have materialized to spur radical improvements in the electronics and car markets we all benefit from today. Asia would never have become the formidable consumer market that the West benefits from today.

            That’s why today, it’s equally important for things made in Ukraine, Russia and even Turmenistan to be welcomed in rich markets. The US and Europe have nothing to lose – except their badly run, highly protected corporate and union crybabies. •

–from the duty-free notebooks of Pan O.

FYI: A statistical factoid. EE Daily had 3 items on steel from June 2001 to February 2002. Since Mar. 4, it has had 26.