Ukraine

Introduction to Ukraine

Work in Ukraine began in Crimea in May, 2002.  Crimea, because it is one of the poorest oblasts in Ukraine.  And, Crimea is geographically isolated with a population of only about 2.2 million people across the entire peninsula.  It is easier to effect and observe change in smaller groups of people versus larger groups.  Successful models, as per the Tomsk strategy in Russia, could then be replicated elsewhere in Ukraine.  Base was Simferopol, Crimea's capital city and political nerve center.

Poverty was widespread, in stark contrast to the natural beauty of Crimea's steppes and seaside areas.  Poverty levels were estimated to be about one-third of the population. However, it was heavily concentrated in one ethnic group, the Tatar community, with roughly 70% of Crimean Tatars living in poverty.  After six months of research -- primarily travel around the peninsula observing conditions and talking to people -- it was evident that if anything was to be done in Crimea, it would have to include particular emphasis on the Crimean Tatar community.

In early December 2002, I met with Ilmi Umerov, Deputy Speaker of Parliament of the Autonomous Republic of Crimea.  Umerov was Crimean Tatar, one of only two or three Tatar representatives in Crimea's or Ukraine's legislature.  I proposed the idea of first and foremost creating a microcredit bank to provide small individual loans to people excluded from existing financing -- notwithstanding UNDP's and EBRD's token efforts to date along those lines.  Both of those programs effectively excluded people in poverty, which in turn made the programs useless for poverty relief they were supposed to address.  The most consistent need and request that had emerged during six months of research amounted to small loans, about $4000 at most.  Most of the people who needed them were Crimean Tatars.  They had and have innate business sense such that every business idea Tatars discussed with me were already complete.  They knew their market, their competition, their prospects for profit, exactly what to do and how to do.  Solid, instinctive market research, in other words, along with what amounted to precise business plans.  They knew exactly what they needed and how to put financing to use.  But financing was not available without property collateral, assets most did not have.  This is all detailed in Crimea development proposal.  Mr. Umerov agreed to the idea and asked if we should make a project out of developing the proposal.  I replied that I wasn't sure, because I'd not yet written up a proposal.  I figured it would take about six weeks to put it together, at which time I would deliver a preliminary version for discussion.  Then we would decide what needed to be done from there.

The proposal was delivered as scheduled during the last week of January 2003.  Copies in English and Russian were delivered to Mr. Umerov, and to Mustafa Jemilov in Kyiv.  Jemilov was the head of the Crimean Tatar community, a former political prisoner in the Soviet Union.  At that point, I reminded Mr. Umerov that the proposal was preliminary, for discussion among me, Umerov, Jemilov, and interested members of the Crimean Tatar community.  They had a democratic system in place, the only real indication of democratic development visible anywhere in Ukraine at that time.  Given that commitment to democratic development and the obvious innate understanding of market economy among the Tatar community, it should be a fairly straightforward matter to establish a real microcredit program to help them in particular and the Crimean community at large.  I estimated that it would take another year beyond my scheduled departure date in mid-May, and that would be appropriate for the "project to develop the project" that Umerov had proposed.  Departure date was set according to current financing I had on hand, which was for one year ending that May.  To continue beyond that and see the project through launch, Umerov's side would take me and my staff on in a consulting capacity for the same amount I had invested in year one -- about $15,000.  Mr. Umerov agreed to talk everything over with his people and let me know their decision.

I heard nothing directly from Umerov during the next eight weeks.  The president of a Tatar business consortium explained that they were all interested, but weren't 100% sure that if they paid my side for a consultancy that they would get anything for the money.  I reminded him that I was not, and should not be, in position to guarantee anything at all.  Those decisions would be up to people in US government who would decide themselves if the project was worthwhile or not.  During the first week of April, I was unexpectedly called into a meeting with Crimea's new Economy Minister, V. Kulish.  He explained to me that a representative from US Embassy's economic section had paid him a visit the week before to open negotiations to go forward with the project.  On the surface, that sounded fine and was the response I had expected.  However, I had only released a confidential preliminary proposal that was not authorized for release to US Embassy or anyone else prior to meeting with Deputy Speaker Umerov and getting an official response from him as had been agreed.  The embassy was, in short, working with a leaked, unauthorized document.  

I decided to overlook that for the moment.  It wasn't difficult to understand that either or both Umerov and Jemilov wanted an indication from US embassy before deciding if they wanted to proceed.  Over the course of two meetings, Kulish made clear that everyone was on board and wanted to move forward, invited me to work with his office, and asked what to do next.  I told him what to do next was arrange the consultancy because I was scheduled to depart in six weeks otherwise.  I explained that I had to be there for two reasons.  First, to see the project through to launch to be sure it went in cleanly -- that is, without corruption that was endemic across Ukraine and Crimea, and which was the primary factor undermining economic development to begin with.  Second, I had to be sure the new microcredit program went in as designed, requiring no material collateral, else there was no point in doing it.  If arrangements were not made for me and my staff to continue, I would not agree to go forward with the project.  Kulish tentatively agreed, stating only that he would have to find the money from budget.  Based on the parking lots outside Crimea's parliament and ministry buildings being filled with new, often luxurious, automobiles, it was patently obvious that finding $15,000 would be a simple matter.

Then came a proposed rider to the project.  USAID had championed 'one-stop shops', offices where a person could go and register a new business in one location.  Business registration was notoriously difficult, requiring visits to multiple offices in a specific order during limited hours and days per week when each was open.  One-stop shops streamlined the process, making business registrations and thus creating new businesses far easier.  One 'shop' requires a small office area, a staff of half dozen people, office equipment and operating overhead for utilities and office supplies.  I estimated that would cost no more than a hundred thousand dollars to ensure first year operations.  During that time, the business would easily become self-sustaining from income for services.  Kulish requested about half a million dollars to set one up, which in turn made clear how government officials on paltry salaries typically drove automobiles parked out front of the ministry and parliament.  Government officials ran government as a business monopoly, and typically would not agree to anything happening through their offices unless things happened just the way they wanted them to happen.  That included the equivalent of having to pay them five dollars for a kilo of tomatoes rather than the usual price of about a dollar per kilo.  Otherwise, they simply wouldn't allow anything to happen through their office unless they got paid first.  That was the only reason they held public office to start with.  Estimated cost of top government position in Crimea at that time -- key ministry posts, for example -- was minimum one million dollars.  Cash, of course.  I agreed to include a recommendation to enable his office to open a new one-stop shop, but without the large price-tag.  He wanted the recommendation for the larger cost, and encouraged me to write up a final proposal with that rider included just that way.  Otherwise, he assured me, there was just no money to be found in budget to pay $15,000 for a consultancy despite his strenuous efforts.  In which case, since he already had the proposal and US embassy was moving forward with it, he didn't need me on board otherwise.  I gently reminded him of how the document got to the embassy to start with, and further explained that it was my work and I held copyright.  In which case, it couldn't be used without my approval and permission, and I had already made clear that would happen only if I and my staff were on board the see things through.  In light of Kulish's business proposal, it was obvious that was the right and only course of action as looting attempts were underway before the project was even signed.  There was no way the project would go forward without my crew.  Kulish scoffed at copyright, stating it was useless in Ukraine.  I asked the US embassy to cease and desist for the time being, reminded them of copyright, and the project was halted.  I fired off an op-ed piece in Kyiv Post, characterizing government officials as gatekeepers holding the welfare of citizens hostage unless said officials were paid in advance.  That is the definition of corruption.  It was so common in Ukraine that few people even noticed it any more than a fish notices water.  It remains common now, but has decreased significantly since citizens took to the streets in 2004 to begin to flush out the system.  I pressed a bit here and there, as the revolution went right over Crimea's head, and Crimea was flushed out in April, 2005 courtesy of Yulia Tymoshenko and Viktor Yushchenko.  It might have been the only thing they agreed on during that year.

I departed on schedule in May, 2003, as there was nothing else to be done in a system that was 100% corrupt, top to bottom.  After spending time back in the US, then over to London, Prague, and a short exploratory to eastern Serbia, I returned to Ukraine, Kharkiv in September 2004 in anticipation of the upcoming election.  I thought there was potential for a revolution similar to Georgia's Rose Revolution a year before.  I wasn't disappointed.  The Orange Revolution began in late November following massive electoral fraud aimed at putting Kremlin in control of Kyiv.  That would have ended any possibility of anti-corruption in Ukraine, and cemented the status quo in place indefinitely.  In which case, reform efforts aimed at helping Ukraine's poor and disenfranchised would only come to the same point as the Crimea effort the year before.  I hoped to at least resurrect the Crimea project, but that could not happen without a strong movement toward anti-corruption at the hands of Ukrainian citizens all over Ukraine.  I was permitted inside Kharkiv's tent camp during the revolution and had opportunity to simply observe.  I saw, more than anything else, hope and determination, people smiling, daring to believe they could escape the oppressive control of a brutally corrupt regime.  The dam broke in late November, as one television station after another broke ranks with the regime, broadcast the growing street protests, and openly discussed what was going on.  Media freedom in Ukraine was born at that time, later Novemeber and early December 2004.  That is the fundamental basis of democratic development.  That in turn led to open discussions of corruption, leading to focused anti-corruption measures.  Market economy became firmly established, although tax police remain a significant problem and barrier.  Those factors -- democratic development, media freedom, and market economy -- stand to release Ukraine's potential that was all but crushed before.  On that basis, it became apparent that rather than only trying to resurrect the Crimea project it was more appropriate to expand the project nationwide.

I compiled and wrote a microeconomic development blueprint for Ukraine nationally.  The English version was completed in October 2006, at which time I discussed the project with Ukrainian officials in Kharkiv.  Central to the project was a center for social enterprise, the purpose of which was to provide education on principles of developing enterprises whose aims were to be self-sustaining and to address specific social problems systemically.  That was and is the only way to even begin to address and resolve the widespread problems left in the wake of Ukraine's prior government.  The entire nation, the whole system, was badly damaged.  Repair and relief in any one area, such as childcare reform -- a horrific mess -- could only happen by dealing with the entire social, economic and political system as a whole. Dealing only with the various discrete elements would not work.  There had to be a wide-scale reformation of the whole system in order to fix any one part of it.

The blueprint underwent a series of six translations into Ukrainian, first to translate concepts, then to refine the language to acceptable academic standards.  University professors and certified translators disagreed with some language of any given translation, thus the refinement process.  After six translations and seeming endless discussion over a three month period, the final paper was delivered to Kharkiv National University on February 20, 2007, for immediate release to government officials as they saw fit.  Two weeks later, Kyiv announced agreement on the central point and metric of the paper: modern rehabilitation treatment facilities for Ukraine's most vulnerable people.  Those were, and are, children diagnosed as psychoneurologically disabled and hidden away in isolated, remote rural locations to live or die.  Death was common and an accepted norm due to neglect arising from almost incomprehensible medical ignorance, corruption and misappropriation of millions of dollars in funding channels that were supposed to assist the children, and entrenched protection of that money stream for benefit of what some judges characterized to me as Ukrainian mafia.  The point was not the welfare of the kids as much as siphoning off millions of dollars budgeted to protect and assist them.  

 

Opening up the reality of that situation resulted in threats against me and anyone else interfering with that system.  I came under direct assault by tax police, government's primary enforcement arm if anyone steps out of line.  This is not a research activity where many, if any, other people dared to participate.  UNICEF was willfully blind to the matter because it was just too dangerous to bother to intercede  Powerful interests remained entrenched with enforcers to make it dangerous.  Jurists were correct, in my view.  It was more a mafia operation than anything else, aimed at misappropriation and laundering of large money.  That was perfectly congruent with how Ukraine operated before the revolution.  USAID wanted nothing to do with it, nor would they fund any organizations or activists who might try.  Some things could be done and some things could not be done.  Helping these children was something that could not be done.  So, I exposed it and made it the central focus and metric of Ukraine's microeconomic development blueprint.  In that context, it was far more difficult to ignore, dismiss, or argue about.  For about six months, I really did not expect to survive.  Nevertheless, Ukraine's government finally conceded the point and announced the opening of more than four hundred new treatment centers for children who were theretofore invisible under tight and deadly enforcement.

As the 60th anniversary of the Marshall Plan came around in June 2007, noise was emerging within Ukraine of a certain political boss preparing a Marshall Plan for Ukraine.  This person was a reputed mob boss -- exactly the sort of entity that the original Marshall Plan meant to oppose.  It seemed most likely that whatever he came up with would be self-serving, hijacking the label 'Marshall Plan' and turning the whole notion on its head.  I reviewed the original Marshall Plan and realized that what I had written was, in fact, the definition and spirit of the original Marshall Plan.  Thus, in June 2007, I appended the original title with "A Marshall Plan for Ukraine."  After some discussion among trusted colleagues over timing, I published an abbreviated version of the paper in two parts in August 2007 in the 'analytics' section of the Ukrainian news journal for-ua.com.  The abbreviated version removed the rollout sequence over five years, which was more a technical matter and probably of little interest to general readership.  It also removed the names of the organizations I had strongly recommended to manage various components, insofar as there was any organization to recommend.  There were two, one for childcare reform for children in orphanages, one for childcare reform of children in Ukraine's theretofore invisible gulag archipelago for disabled children.  Both of those organizations had already been approved by 'others' by August 2007.  Bringing them to light at that juncture might have been counterproductive to their efforts, particularly because of the extreme sensitivity surrounding the matter of disabled children.  I opted to just let things proceed quietly, and was convinced beyond doubt for once that sincere and committed efforts to help these children were finally underway.  There remain approximately 90,000 children in orphanages, 10,000 in the 'gulags'.  Another 200,000 children live on the streets because state-care options have been less tolerable than street life.  Because street children are most visible and therefore obvious, other organizations notice them and are making at least token efforts to help them.  Nevertheless, the overall problems are systemic.  It is not enough to help these kids without dealing with the causes -- primarily corruption and displacement of Ukraine's cash and resources -- that put children in such conditions to begin with.  This systemic recognition is at least beginning to be understood.  The 'Marshall Plan' details it, and provides comprehensive solutions with a financial net-cost to government over seven years of: zero.

That's about as well as it can be done.  It will work, and it must be done if Ukraine wants to become a member of civilized nations.  US and Europe can and should help, but only after first conditions are met unilaterally by Ukraine -- the sole condition on which I released the 'Marshall Plan for Ukraine.'  Those conditions are simple: take care of your children, all of them, close the orphanages and gulags, open the truth of the matter, and never try to hide any of it again.  That is underway.  Ukraine's government took the initiative.  It is now appropriate and necessary for the US and Europe to provide interim assistance, guidance, and models to bring the core metric -- child care -- to modern, civilized standards from the barbarism that has heretofore prevailed.  Even despite Kyiv's ongoing political convulsions stemming from democratic development -- the worst possible form of government except all the others that have been tried, as Churchill put it -- Ukraine is now on track to become a member of the club of civilized nations of the world, realize its potential, grow up, and be adult rather than petulant hooligans fighting in a playground sandbox.

T. Hallman
Kharkiv, Ukraine
July 3, 2008