Ukrainian industry is falling off cliff: who is to blame and what to do?

Apostrof ^ | December 27, 2019 | Viktor Avdeenko

[NorseViking]

Ukrainian industries are in decline. In November recorded a decline of industrial output by 7%, and this trend has continued for the past six months. "Apostrophe" understood what happens, who is to blame for the crisis, and what to do in this situation.

The government has no coherent development policy

[NorseViking]

Industrial production in Ukraine in November, has fallen from 7.5% in comparison with November of 2018. This was reported by the State statistics service, specifying that the real decline in industrial production adjusted for the effect of calendar days was 6.9%. That too is a lot.

The reduction of industrial production has become a total collapse, but in October also fell by as much as 5%, while a decrease is observed since June. In just 11 months of this year, industrial production declined compared to the same period of 2018 1.2%. In 2018, we will remind, the industrial production grew by 1.1% but that after a stiff decline too.

Still not a disaster, but...

"The manufacturing is, to put it mildly, not in the best shape," — says the expert of the International centre for policy studies (ICPS) Egor Kiyan. In conversation with "an Apostrophe" he noted that the current decline, if you look at the trend throughout the year is noticeable, but not yet critical, "But in the long term, we feel the pain".

According to the expert of the Institute GROWFORD Alexei Kusch, the Ukrainian authorities are trying to present the collapse of industrial output in the country as an element of global trends. Indeed, the growth of industrial production in the world in 2019 has slowed significantly. The expert believes that the main reason for this deceleration has become a global transition to a new technological order, which naturally is accompanied by the breaking of old production chains.

The industry remains extremely important, as is stabilizing link, a kind of "starter" of the economy. "But in the case of Ukraine, global causes (fall of industrial production — approx. "Apostrophes") was not crucial, — says Alexei Kusch. — The main reason — anti-economic policies of the state."

In particular, according to him, the Ministry of Finance launched the pyramid of government bonds of internal state loan (government bonds): "the higher interest rates on government securities, the more capital is flushed out of the small and medium-sized businesses, because these rates de-motivate investors to invest in the real sector of the economy."

Thus, the Ministry of Finance, in fact, turned into a giant vacuum of money supply in the domestic capital market, including the so-called portfolio investments, as nonresidents could instead of government bonds to buy corporate bonds. But companies can't compete with the government for the proposed interest rates.

In addition, this policy of the Ministry of Finance has led to the artificial strengthening of the hryvnia, "is that for a commodity — based economy lethal injection. As the level of added value is very low in the structure of the finished product, the strengthening of the hryvnia eats almost all the profitability of exporters."

Strategic vision is missing

The current deplorable situation in the industry largely due to the fact that the businesses did not carry out the modernization of production, therefore they lose in competition with similar businesses in other countries. And every year the gap increases. But the government did not seek to improve the situation.

"The main focus of the state remains in the agricultural sector. About the manufacturing no one thinks, and it is now perceived as a milking cow only as a way to fill the budget by taxing it, and not always the most effective way," said Yegor Kiyan.

"The Ukrainian economy is not growing and one of the reasons — lack of strategy of development of the country, the lack of understanding of the role that Ukraine should play in the European and, more broadly, the world economic map — said "Apostrophe" the Director of economic programs of the analytical center "Ukrainian Institute for the future," Anatoly Amelin. — This is the task of government, because such a strategy allows to use these or other incentives for economic development. When so-called libertarians screaming that the state should not give any incentives they introduce themselves (and others) misleading, because, as history shows, all developed economies of the world become established due to protectionism and pragmatic national policy." Another key element of economic strategy, according to the specialist, is the program for industrial policy, as in the industrial sector, a high added value. The lack of industrial policy in Ukraine we have seen in the automotive industry. Ukraine could develop the production of electric vehicles, and specialized companies are willing to do it, but the government lifted the VAT (which is 20% — approx. "Apostrophes") on imports of electric cars. "Thus, the Ukrainian electric cars already lose on the VAT amount electrocore, which is imported," — said Anatoly Amelin.

According to Alexei Kusch, according to the UN, more than 100 countries generating 90% of world GDP are attracting investment on the basis of sovereign national industrial policy "Industrial policy is like a road map for the investor, which he compares, what industries are in this country to develop. Without an industrial policy, it is impossible to develop a good investment policy."

"The lack of policy, lack of industrial policy, lack of resource to upgrade — we have very expensive loans, and appreciation of the hryvnia against the dollar led to the fact that we are losing even more rapidly our industry. And if the situation does not change, 2020-2021 years can be critical for the Ukrainian industry", — says Anatoly Amelin.

Such a government we don't need

But are we ready for such steps with the current Ukrainian government? This is highly questionable. So, the Deputy Minister of economy Sergey Nikolaichuk, commenting on the decline, asked the rhetorical question: does Ukraine need, in principle, manufacturing policy?

"This is the Nikolaichuk, about which the Minister Milovanov wrote that he managed to poach from the national Bank very large salary — recalled Alex Kush. But not far removed from it and the Minister, which sets no less than the perennial question: do we need entrepreneurs? Because of this we have such a result."

Amelin is also skeptical. According to him, the government team did not consider it necessary to develop a strategy, arguing that in a rapidly changing world in which we live today, it is impossible to engage in long-term forecasting.

"But the strategy is not a prediction. It is programming of the future. But because they (the government) are only solving tactical problems, they in process create strategic problems that have no solutions. And until we change the mentality of our government, we are, unfortunately, likely do not have the future", — concluded the expert.

We will add that a month ago "Apostrophe" wrote that President Vladimir Zelensky extremely dissatisfied with the work of the government and personally Prime Minister Alexey Goncharuk. The sources did not rule out that the resignation of the government or, rather, some Ministers will be held before the new year. Lately it has been more and more evidence, although at the official level did not yet been reported. So, perhaps soon we will witness high-profile resignations of the representatives of the "government of technocrats". But nobody knows who will replace them, and we will see if the replacement have a strategic vision of development of the country.

[Mark17]

Ukrainian industries are in decline

I wonder if Pelosi will try to make that another impeachable offense? Her other articles of impeachment, are just as stupid.

[Liz]

The Ukrainian government has no coherent development policy.

Wrong......Ukraine has a dedicated development policy: ripoff US taxpayers for billions in foreign aid
they recycle hundreds of millions back to connected US politician and their bagmen to get MORE aid.

[NorseViking]

Well, her son is part of it.
Ukrainian manufacturing might be falling apart but Democrats are still making billions robbing it.

[Mark17]

I know it sucks. I like what Greg Gutfeld said. https://youtu.be/q2QicaOtp3w
I agree with him.

[Liz]

THE SALIVATING HILLARY GOT TO THE UKRAINE GOLDMINE FIRST

THEN PRES BILL GREASED THE SKIDS Ukraine entered into the "Treaty Between the United States of America and Ukraine on Mutual Legal Assistance in Criminal Matters," negotiated then- by President William Clinton and ratified by the U.S. Senate in 2000.

Pres Trump is being impeached for following US law initiated by then-Pres Clinton.
The US chief law enforcement officer requested that Ukraine assist our AG in investigating possible criminal activity 2014-16.

Looks like the Clintons do not want their activities with Ukraine exposed?

<><> A 2015 WSJ report includes a chart of “foreign donors” to the Clinton Foundation showing “Ukraine” as a top donor among a list of large donors including “foreign individuals and their foundations and companies" while Clinton was secretary of state from Jan. 21, 2009 to Feb. 1, 2013.

<><> Ukrainian oligarch Pinchuk donated from $10-25 million to the Clinton Foundation between 1994-2005.
<><> Pinchuk hired Clinton pollster Doug Schoen @$40,000 per month in 2000. In 2004, Schoen introduced Pinchuk to Hillary.
<><> Schoen set-up nearly a dozen meetings between Pinchuk and senior State Dept officials between Sept 2011 and Nov 2012.
<><> FOIA Emails show billionaire oligarch Pinchuk invited to dine at Secy of State Hillary's home despite denials they met.

<><> Victor Pinchuk, a former Ukrainian parliamentarian and businessman whose father-in-law is a former president of Ukraine is a connected Ukrainian who served two terms as an elected member of the Ukrainian Parliament and is a proponent of closer ties between Ukraine and the European Union.

Chelsea Clinton and Viktor Pinchuk in Kiev, Ukraine 8/21/16.

<><> The Clinton Foundation publicly reports, and its foundation spokesman confirmed, that other foreign entities have given more than the Pinchuk Foundation (which is listed as having given between $10 million and $25 million).

<><> Between 2009 and 2013, including when Mrs. Clinton was secretary of state, the Clinton Foundation received at least $8.6 million from the Victor Pinchuk Foundation based in Kiev, Ukraine, the Journal reported.

<><> In 2008, “Mr. Pinchuk made a five-year, $29 million commitment to the Clinton Global Initiative (a wing of the foundation that coordinates charitable projects) "to train future Ukrainian leaders and professionals to modernize Ukraine," according to the Clinton Foundation.
<><> Several alumni of the Clinton program are current members of the Ukrainian Parliament.

<><> Ukranian Pinchuk was especially generous---not only blanketing the Clinton Foundation with money, he hired Hillary for a $300,00 speech to help him boost Ukraine's creds; even Chelsea got into the act.

CIRCA 2013----Ukranian billionaire Viktor Pinchuk hires Hillary to give a speech at a Ukraine forum discussing regime change, exiting Russia....and hitting up the US for more foreign aid.

[NorseViking]

That’s some good research.

[Jonty30]

Consequence of a corrupt society.

[cuban leaf]

I wonder what would happen to Chicago if at the snap of a finger all the corruption stopped. I think that may be what is happening here. It’s a transition period.

[silverleaf]

This

[Envisioning]

Seize the assets of all of the corrupt politicians and pay off the national debt and our tax rate would go to 0.3% where it should be. The original American Revolution was started over much less......

I don’t know who I am madder at, the corrupt politicians, the media or the ignorant voting public......

People need to be hanged and their wealth confiscated.

[Track9]

I doubt the interior ministry set up their monetary policy without specific direction from our globalist Dems who sucked the country dry for personal gain.

[wastedyears]

Looks like the country may collapse due to the unveiling of all the corruption there.

I don’t care what happens to them. Let it all fall and burn, so that the world may see what goes on.

[Jonty30]

In the end, it will be good for the Ukranian. Painful, but good.

[zeestephen]

Ukraine’s economy crashed in 2008.

As far as I know - after 12 years - their inflation adjusted GDP is still below what it was in 2007.

[dfwgator]

The Ukraine is Weak!

[NorseViking]

We can only hope. Their ‘European choice’ is first to blame. As for five years ago they were largely a manufacturing economy geared around heavy industries like shipbuilding, aircraft, automobile and arms manufacturing.
The problem is they were stuck in the 1970s in terms of regulations and due to extremely low energy prices subsidized by Russia which was the consumer of most the stuff they produced.
With ‘European choice’ they got Byzantine EU regulations and moving from the Russian customs union made their energy regularly priced and on top of that Russia lifted ‘free trade’ status exposing their exports to regular fariffs.
Needless to say that they can’t sell any of their manufactured goods outside the Russian market unless we are talking about highly sensitive dual use or straight military technology they are offering to China, North Korea and Iran just to stay afloat.

[Liz]

THIS JUST IN: Dems add new impeachment charges against Trump;
Hunter’s Ukraine salary at all-time high; Biden corruption deemed Trump’s fault

Court Filing: Hunter Biden earned $156M from Ukraine corruption
One America News ^ | 12/25/19 | OAN News
FR Posted on 12/26/2019, 9:52:00 PM by Blood of Tyrants

Hunter Biden is facing new accusations of money laundering from Ukraine in the ongoing court case against an alleged mother of his child. One America’s Kristian Rouz looks into the matter. Video at link. (Excerpt) Read more at oann.com ...

[McGavin999]

Oh, maybe it’s because they aren’t paying democrat lawmakers kids enough.

I know I’m not being fair by blaming all Ukrainians for corruption, but my President was just impeached because of them. Every time I hear the word Ukrain my stomach turns.

[READINABLUESTATE]

Too much heat right now. The Democrat “subsidies” have dried up.