History repeats itself. We see it.
Extraordinary times call for extraordinary measures. For Ukraine – a democracy and economy stuck at the crossroads of old and new, of controlled and free – that time is now. The people, who lived through several deep historical traumas, including genocides, are finally attempting to define their own, independent space, are yearning to control their own economic and national destiny.
Twenty-two years after its declaration of independence, which culminated with the collapse of the Soviet Union, the Ukrainian nation finds itself in a relatively analogous situation that the United States faced in its first 100-plus years of independence (the times of Rockefeller, Carnegie, Vanderbilt). Ukraine must decide its future, and the decision may hinge on the maturity (or lack of it) of a conscious and wealthy elite. The “robber barons” of United States’ fame proved their ascension to a state of “maturity” in the late nineteenth century when, in an about-face from business-as-usual, the individuals who comprised this group accepted the anti-monopoly laws that severely disrupted the previously unchallenged growth of their respective empires. They went on to influence, not control, legislation, build social institutions such as schools, universities, and libraries, and make art accessible to the common public. Thus they defined their legacy in the country as the social elite who built America.
The oligarchs who control the vast majority of the Ukrainian economy have the opportunity to be the analogous group of elite who ensures the successful evolution of Ukraine, the country in which they operate. Ukraine is at a difficult crossroads, which is becoming increasingly black and white as the days pass.
Ukraine’s oligarch class has the option to support the status quo: a stagnant Ukrainian economy that has been in recession over the past years. As a result, the oligarchs will continue a zero-sum game, competing with one another for a piece of the shrinking pie while also growing off of small businesses that simply cannot compete in the current economic landscape.
The oligarchs’ second option is to support the “new” (or is it a “back to the future”?) deal with Russia’s ruling president. The deal, which promises lower gas prices, most certainly plays in the favor of industrial businesses, but only in the short term. The plan most likely relegates Ukraine to a path of continued economic regression and means Ukraine will merge with the path of Eurasian economies. In other words, the economy finds no need nor impetus to innovate, to improve, to increase its efficiency. Thus, in the best case scenario, the oligarch community also competes for a piece of the shrinking pie. But, more likely than not, the rules of the game change in Ukraine and this same oligarch “elite” becomes marginalized, or even eliminated, replaced by their neighbor’s political and economic elite. One only need look at the history of the oligarch class of post-Soviet Russia to understand the likely outcomes.
The third option can ensure the individuals in this group their place in history while increasing the pie which feeds their wealth. Ensuring Ukraine’s place in the broader European economy will drive the requisite improvements in each of the businesses owned by the elite. This scenario allows Ukraine and its businesses to enter the European and global markets, while continuing trade with its eastern neighbors. The opportunity is to stop the fight to be the big fish of a shrinking pond and to become a bigger fish, with a much larger space, in a much larger ocean.
The key question is how to implement the third scenario. Funding top universities, building art museums, and contributing a tiny part of one’s net worth to social causes, as the oligarchs do today, is not enough. It is time to step up, to mature as a nation’s elite.
The leading oligarchs must unite to achieve long-term goals of growth of the Ukrainian economy and business. It is crucial to work on joint efforts with the IMF to find an alternative to the Russian move, which comes ripe with unknown, but certainly unfriendly, terms that promise to quash any hope for fundamental economic transformation and growth, and thus for an independent future. Forming a new government of development that will implement difficult reforms and start improving the business climate of Ukraine by increasing the capitalization of the economy, including of one’s own business, should be the primary objective.
This idea is not without precedent. Progress is always preceded by disrupting the status quo. In Ukraine’s case, oligarchs have the opportunity to control the disruption and realize a real return on investment for each individual contributor.
We hope that patriotism is able to break through the thickest layers of financial interest. It is time for the oligarchs to read the history of successful democracies and economies, and repeat it. The world is watching.