Home / Economy / “I am going to go back to Georgia” – Previously Unpublished Interview with Kakha Bendukidze

“I am going to go back to Georgia” – Previously Unpublished Interview with Kakha Bendukidze

The Russian edition Snob. Ru  has publishedan interview with Kakha Bendukidze, which  wasrecorded in July, however, due to lack of time,  thetext was not  agreed with Bendukidze , it has not been published so far. Therefore, the journalist says that the interview is published without the consent ofthe respondent. The interview was recorded at the end of July.

With whom in the Ukrainian government do you collaborate?

We work with all members of the government. An advisory group is composed of five persons: except for  me, it’s Daron Acemoglu (MIT, Boston), Anders Aslund (Peterson Institute, Washington) and two Canadians of  Ukrainian origin Oleg Gavrilishyn (Munk Centre, Canada) and Vasily Kalimon (Ivey Business School, Canada ).

In early March you called Ukraine the most unreformed country of all you have seen. Why?

Well, because it is so. I can’t explain briefly. Everywhere I see a perfect madness in terms of social policy, the budget and ministries. Perhaps there are even more oddly arranged countries, but I just did not see them.

What paradoxical example do you remember?
This country is full of paradoxical examples! From small to large. For example, in Ukraine free textbooks are distributed to all students. Well, if it was in Qatar or Kuwait but this is done in Ukraine. Or  by the end of March gas in Kiev was cheaper than gas in Moscow. It is normal, in your opinion? Or Ukraine has a special agricultural agency that controls the crop rotation – what and where to plant. I could not believe when I was told about this, I decided that it was a  joke. Or Ukraine plans the budget on the basis of some monstrous deficit, which simply cannot exist. At a rate of 10% per year … These are all signs of the disease.

What threatens Ukraine? Default?
No, default is a specific term … Just there will be very bad. Now the situation is bad but will be very bad. There will be no budget money for immediate expenses –  there will be problems with pensions, salaries. Ukraine has now a very small not even “a window of opportunity “, but rather “window of impossibilities”, it is necessary to act as soon as possible and very sharply reduce costs.

Many people ask me about Albania, whether  it will  hurt my advisory work in Ukraine (two weeks before the interview Kakha Bendukidze became an adviser to the Prime Minister of Albania. Comm. Aut.). No, Albania certainly does not hurt just because it is not as important for mankind as Ukraine. Albania’s economy, for example, is not growing. And they are very worried about this, invited various people, including me. What will happen in Albania if the economy does not grow? Well, the Albanians will not live as rich as their neighbors, for example. Three years will pass – there will be even worse. But there is no existential problem there. No one attacks them , no one is trying to tear anything, neither  the Crimea, nor Novorossiysk. This differs Albania from Ukraine. Ukraine is now in a special existential state: “To be or not to be, that is the question”. And in this situation, of course, one would expect more consolidation.

If Yatsenyuk makes right laws in the Rada? Is he moving in the right direction of liberal reforms?

I’m not pleased with all the reforms, for example, progressive income tax on personal income or additional tax on wages (the so-called military) was introduced – I think it’s a big mistake. Charges will not increase. Some things are quite reasonable, but I think the main watershed lies not in what will happen  in the Ukraine in the 20th, 30th or 50th year, but  how to stabilize the economy of Ukraine this year, to do so that the decline was minimal. And then we’ll be able to create the conditions for growth. And to make a decline minimal, it is necessary to make three related things: 1) the reduction of the budget (the most important thing now in order  to stabilize the situation); 2) deregulation – reducing all of these regulatory authorities; 3) reducing energy subsidies (both  for individuals and legal entities). All these processes are painful. But now, when there is a war, it is very important to do it. Ukraine must win two wars: one war  in the east, the other – inside. Plus it is a very important blow to corruption because corruption occurs where the citizen comes into contact with the state.

Against whom is the internal war going on in the Ukraine?
It is against this insane policy, which was conducted in recent years.  It is a war against populism, which brought Ukraine to the current state and continues in the new election cycle.

Then why, in your opinion, reforms are not carried out in Ukraine? What’s the problem? Is there lack of political will?

In my opinion, such thing as the political will does not actually exist. Day before yesterday I spoke with Dmitri Shimkivym (Deputy Head of the Presidential Administration of Ukraine on administrative, social and economic reforms, the former general director of Microsoft Ukraine. – Note. Aut.) – he says everything  correctly, understands everything, wants reforms. That is, the reforms will be carried out in the end. As a joke: “Well, where will  they disappear from the submarine?” Just because the current budget deficit and a lack of income will lead to de facto costs cutting. But instead of this to happen orderly and consciously, it will occur randomly and unconsciously. And second, as I say to my colleagues in the government, if you do not carry out reforms, then  Putin will implement them in this territory.

Many Ukrainians, with whom I discussed the issue about the lack of reforms, say: Why, we have war – we have no time for it …

It’s time to carry out reforms just because of  war. Life  is often  a lot of challenges at the same time.

Of course, these challenges must be somehow prioritized. And this is also a big problem in Ukraine. I can see how these useless agencies still continue to create needless regulations.

Some Ukrainian businessmen are concerned about the lack of government’s holistic vision of the reforms, strategy…
This is one of the main mistakes. A respected international organization offered me to write a book about the reforms for Ukraine. You know, it’s madness. You should now make reforms rather than to write a beautiful book. This is a mistake, which many people and countries stumbled upon. Reforming  is a struggle; a struggle in which you have opponents (including military) and allies (including military). And you carry out reforms at a time when the aggregate power of your allies is greater than  a  total power of your opponents. Is it right?

Well, is the ideology of the people at the helm of the reforms important?

Currently – no. You see, I’m not a libertarian. I believe that a free economy is the key to success. And the other is not possible. But politics can be of different colors. I now, for example, advise the Government of Albania, and they are  the socialists. But, although they are socialists, they do not want to harm themselves. Therefore, many right things they are willing to do. There are examples where in Bulgaria, for example, the right reforms were made by leftist government. Ukraine is now in such a state that it is forced in any way to carry out right-wing reforms.

Whether the lack of pro-reform team is the problem of the Ukrainian government? As the author of the books about Georgian reforms Larisa Burakova believes.

I do not think that Georgia has some special team. Yes, we often discussed some issues together, but I had  a feeling that most of the ministries were usually not interested in deep reforms. I personally participated in reforming several ministries and saw it. Therefore, some forcing is necessary in all cases. But a special team is hardly needed.

In Ukraine, we do not need to do too much, now we need reforms to bring the country back into a viable state.

And I associate the problem with the elections to the Rada (scheduled for autumn 2014. – Comm. Aut.). It seems to me that a political class of Ukraine is scared primarily. Reforms are not carried out because everyone is waiting for the elections. Everybody waits for a good person ,  all believe that nothing should be done abruptly and postponed until later. That’s my feeling.

Will reforms be implemented after the parliamentary elections?

They will not be carried out because the money will run out and there will be a big crisis.

If the Rada does not pass laws, does not this mean that parliamentary-presidential form of government prevents the reforms?

I think parliamentary form is more convenient for all countries of our region. But it’s a long story … Of course, in a presidential republic with a pro-reform-minded president reforms will be carried out easier. But I’m talking about the long term: parliamentary republics in post-reform societies will always be more effective than presidential.

But can we call Ukraine a parliamentary republic?  It is written in the constitution, but in reality it is not. The current Ukrainian parliament is not entirely the result of the will of the people. Ukraine, Georgia are the countries in the process of becoming. We are just learning how to choose parliaments and someone else. That is, in the form Ukraine is a parliamentary-presidential republic, but in fact contains various groups of interests – I do not like the word “oligarchy”, representative of the interest groups that are fighting for their survival and for some long-term interests of some groups.

There is a popular assertion that the Georgian experience cannot be applied to   Ukraine. Whether there is common between the two countries?

No, Ukraine is not like Georgia. There are no identical countries. What was implemented in Georgia is not associated with any special Georgian characteristics, khinkali or khvanchkara. This is due to the basic functioning of society, and the same can be done in Ukraine.

Can you safely return to Georgia?
Ivanishvili is fighting against me because he  feels that I don’t like the current government very much. Or, perhaps, he thinks that I am financing the opposition. It is said that he spoke about me during the campaign that I prevented him in building a brighter future.

I was abroad, but I am going to return to Georgia. Although, the Prime Minister recently announced that everyone would be arrested in August, but I will be arrested only if there are false witnesses and false documents, etc.