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Resilience Plan after 1000 Days of War
Ukraine declares a course towards creating a socialist State Planning Agency under the flags of NATO and the EU without any hint of economic growth.
21 November, 2024
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The Internal Stability Plan of Ukraine, presented by President Volodymyr Zelenskyy in the Verkhovna Rada on November 19, supplements the Military Victory Plan, previously presented by the country's leadership to our foreign partners.
Since victory at the front is unlikely without a strong rear, powerful material and resource support, the Stability Plan must respond to at least ten of the most pressing issues in the field of economic policy. Let's analyze and evaluate the answers on a scale from 0 to 100 points (complete, scientifically substantiated, historically confirmed answer).
- Will Ukraine ensure rapid (7-10% per year), long-term (for at least 20 years), inclusive (benefits everyone, not just VIP officials) economic growth?
The plan answers this question with 0 points, i.e., it does not answer at all.
- What conditions should be created to return more than 10 million Ukrainian migrants to the country?
The plan answers this question with 5 points.
- What changes are needed in the business and investment climate to win regional and global competition for modern, breakthrough technologies, investments and advantageous positions in value chains?
The plan answers this question with 0 points.
- How to increase labor productivity?
The plan answers this question with 0 points.
- How to reformat the country's competitive landscape to eliminate monopolistic, discriminatory practices?
The plan answers this question with 0 points.
- How to structure and organize the labor market in light of the challenges of military mobilization, labor immigration, and the most difficult demographic situation?
The plan answers this question with 5 points.
- How to eliminate sources of corruption, discretion (nepotism), conflict of interest and abuses by representatives of the executive and judicial branches in economic processes?
The plan answers this question with 0 points.
- How to save and protect Ukrainians from inflation, financial oligopolies, credit famine and shortage of investment instruments?
The plan answers this question with 0 points.
- How can the country launch a high-quality operation of the "profit-loss" market mechanism and reach a market, i.e. private, capital structure?
The plan answers this question with 0 points.
- How to quickly improve the quality of the public administration system, regulation and production of services in the areas of security, infrastructure, education, healthcare and poverty alleviation?
The plan answers this question with 5 points.
10 items of Zelenskyy's Plan
№ 1. Unity
Polls show that a consensus on joining NATO and the EU has already been reached, but laborious, daily work is needed to explain to Ukrainians what it means to live and work in a European way. This is hard work with millions of people who receive income at the expense of taxpayers, who need to find another place in the labor market.
Attractive slogans are, of course, good, but the processes of joining these organizations require a full-fledged dialogue between business, society and the state on the creation of quality institutions for the implementation of the rule of law, protection of private property and economic freedom. Receiving approval from the Verkhovna Rada on the issue of "let us join NATO/EU" is one thing, but changing the nature and essence of the Ukrainian state-Leviathan, which the Government has been strengthening and expanding in recent years, is quite another thing. This item does not carry a semantic load that would allow us to form reasonable expectations about the readiness for reforms.
№ 2. Front
Here it goes about the management of the Armed Forces of Ukraine, the elimination of bureaucracy in the army, the increase in the technological stability of the army and the entire security system. Formally, a right item from the scope of any program in any country. Neither deputies, nor government officials, nor society have learned how the new foreign and internal security policy called "Front" will differ from what we have already seen before and during the full-scale Russian-Ukrainian war. At least the contours of the new management system should be described in order to have a general idea of the debureaucratization of the army, but here it is evidently not about anything specific.
№ 3. Weapons
Undoubtedly, it is essential to develop the military industrial complex and create modern weapons manufacture. This is much more difficult than opening a cafe, a beauty salon or a barber shop.
The key question of whether the Ukrainian military industrial complex will be private or state-owned has been left unanswered in the “Front” item. Ukrainian weapons are “one of the foundations of independence”. It is this foundation that the Ukrainian authorities had been ignoring until 2023. It is vitally important to “get ahead of Russia in technology”. Doing this in partnership with weapons manufacturers from NATO countries is much faster and more efficient, but it is necessary to let foreign companies into the market, guarantee them protection of property rights, and unhindered movement of money across the border.
This is the competence of the National Bank and the Government to liberalize the balance of payments and radically change the work of customs. There are reasonable doubts that this is exactly what President V. Zelensky meant in the “Weapons” item of the Plan.
№ 4. Money
It is tempting to think that finally the government of the country would seriously tackle inflation, liberalize the financial market, and eliminate the numerous barriers that put Ukraine in last place in the world in Financial openness index. We hoped in vain, we have another set of “good intentions.”
L"It goes about building a new economic policy, which will be based on supporting Ukrainian entrepreneurship, de-shadowing business, its security, as well as reducing pressure from all state institutions."L
Since the President's Plan has been worked on by those who consider it reasonable to develop the Ukrainian entrepreneurship through the Income Strategy, the "5-7-9%" credit regime, the regulatory regime of "white" business, national cashback, "investment nannies", e-work, the manual regime of unblocking VAT invoices, the transformation of tax, customs, and currency legislation into a solid sieve, then, probably, the new economic policy is what we already have in the documents of the IMF, the EU, the budgets of Ukraine, tax proposals, and those projects that have been voiced by government officials at numerous investment forums.
If it were a question of a truly new economic policy, President V. Zelensky would certainly react somehow to the presence of Marxist D. Hetmantsev in his team, to the Government's gross disregard for the opinion of business and the expert community on the most important aspects of the business climate.
He would remember that he promised economic freedom to Ukrainian business, and would point to Ukraine's 150th lowest place in history in Economic Freedom Index - 2024 and would dismiss the whole Cabinet of Ministers.
In addition, he would announce an initiative similar to Donald Trump's to radically reduce the size and functions of the state in the economy. Unfortunately, nothing like this happened, not a word was said. Therefore, the new is likely to be by no means forgotten by the old, which de facto kills Ukrainian entrepreneurship, contributes to the shadowing of economic activity, and increases pressure on entrepreneurs from hundreds of control, law enforcement, and regulatory bodies.
№ 5. Power Industry
In order to protect power industry facilities, no special plan is needed. This is part of the basic functional responsibilities of every manager in the power industry sector. In times of war, this is also the responsibility of our air defense forces. To make the power industry sector effective, it is necessary to carry out power engineering reform in accordance with the basic provisions of the EU Energy Charter. Competition of producers, consumer choice, efficient operation of the power industry network, decentralization, division of responsibility between the state regulator and private companies, creation of a full-fledged single energy market without regional barriers, central dictates and tariff stranglehold.
Power industry reform in Ukraine requires commercialization of those natural resources that have been out of use for more than 30 years. Therefore, clarity is needed regarding who will be involved in this, officials and old “power industry barons” or those private owners, including foreign ones, who will acquire assets through the procedure of fair, transparent auctions. If VIP disposers and consumers of other people’s property manage the Ukrainian power industry sector in the same way as before the war, Ukraine will never become an energy hub, because this is exactly the goal that the president voiced in his Plan.
Yes, in this item, as in the items about weapons, the front, there are classified, secret additions, but the main provisions of the power industry sector reform must be public so that potential investors, producers of goods and services form adequate expectations, make accurate decisions regarding their economic activities.
№ 6. Security
It goes about internal security. The introduction of a new system at the national level has been announced: a safe region, a safe city, a safe community. Again, strengthening the state border does not require any special plans. This is a must-have for everyone involved in this area. Ukrainian taxpayers pay for border security, for the fight against criminals, fraudsters, and rapists. Is it appropriate to include an item on the need to build shelters in the Internal Resilience Plan, which should respond to the main economic challenges and problems?
Over the course of more than 1,000 days of the full-scale war of the aggressor country Russia against Ukraine, Ukrainians have already acquired the skills of appropriate behavior during air attacks and shelling. Ukrainians are learning military skills without state programs. The key question they are asking is: “Will the country have the right to private production and possession of weapons?”
A full-fledged arms market is the most important part of transforming Ukrainian society into an invincible, stable frontier, no matter what enemy attacks us. There is no answer to this key question in Zelensky's Plan, and Ukrainians have no trust in law enforcement bodies. People see that, unfortunately, they are much more willing to deal with economic issues, monitor business, than with the order and the safety of people.
№ 7. Communities
The plan envisages the creation of "a system of maximum efficiency in managing communities, especially those that have received displaced persons and relocated businesses."
Undoubtedly, Ukraine is in acute need of a full-fledged local self-government, decentralization of the economic decision-making system, including the liberation of communities and cities from the dictates of national ministries and departments. The development of a full-fledged self-government and the launch of healthy competition would definitely be helped by such measures as the election of the chief judge, police officer and prosecutor by the people of the community. The decentralization and development of communities are facilitated by granting local government bodies the authority to determine the parameters of economic activity, access to land, natural resources, energy, and transport infrastructure.
The key issue of community development is a clear definition of sources of financing for local authorities and the distribution of powers and responsibilities of the Center and the Community. Each Ukrainian community can present to the Government of the country claims regarding the low quality of monetary policy, inflation, and the presence of strict restrictions on capital movements that will stifle investment activity. Each community has the right to demand from the Center the fulfillment of the basic requirement for the tax system - its universality and neutrality. Instead, Zelenskyy’s Plan envisages “…creating special tax conditions for communities in border regions.”
Knowing the reflexes and habits of Ukrainian business to neutralize the stifling tax and regulatory burden, it is easy to predict a rapid increase in the number of commercial organizations and individual entrepreneurs that will register in these same communities in order to obtain these “special tax conditions.” The risks of the leadership of these communities being captured by neo-feudals, powerful resource groups, are very high.
№ 8. Human Capital
The plan promises a new Ukrainian policy in the field of housing reconstruction, national standards for barrier-free accessibility, a new approach to the education of children abroad, modernization of social policy, in particular the health care system, cooperation between the state and the church. It promises the introduction of the institution of multiple citizenship, free meals for all schoolchildren, as well as the creation of a special body - the Ministry of Unification of Ukrainians. It will deal with the affairs of the global Ukrainian community.
L"We must create all conditions so that Ukrainians – no matter where they are – can truly feel Ukrainians, work in Ukraine, with Ukraine, for Ukraine."L
It is undoubtedly important to create such conditions.- Is there a new labor code, a market, not a Soviet labor market regime behind these words?
- Is "creating conditions for Ukrainians" a guarantee of economic freedom for them?
- Does taking care of human capital involve protecting the Human from the Official, implementing the principle of the presumption of innocence, the principle of the integrity of the entrepreneur?
- In order that every Ukrainian feels part of global Ukraine, does the Plan guarantee the protection of private property rights?
- Will millions of Ukrainians return to their country if it remains the kingdom of the oligarchy, a schemer who uses all the tricky tools of Leviathan's torture?
- Will Ukrainians be competitive in the common market with manufacturers from the EU, the USA, and the G-20 countries with the current tax, regulatory, and legal systems?
Instead of creating all the conditions for a free choice of Ukrainians, they are offered another ministry, state construction programs and the preservation of the place and role of the State in rendering services in the field of health care and education. Such a policy is aimed at the harmonious development of the human capital of 3% of the VIP bureaucracy at the expense of the remaining 97% of Ukrainians.
№ 9. Cultural Sovereignty
The plan envisages "the creation of a large cultural coalition", a "cultural Ramstein" to promote Ukrainian narratives in all regions of the world. Modern cultural spaces will be created, cultural infrastructure will be updated. The course is taken towards creating such Ukrainian content that could completely replace Russian content. If the military Ramstein and NATO as a whole have turned into the infamous NATO club "No Action - Talk Only", then it is easy to imagine what the cultural Ramstein will be like. Ukraine is a victim of European and American leftism even without it.
If additional organizations and platforms are created to introduce mainstream Western cultural codes in Ukraine, we can get a whole bunch of everything that led this very West to a cultural crisis:
- DEI (diversity, equity, inclusion) - diversity, equality/justice and inclusiveness - is neo-Marxism and collectivism in the system of state governance.
- Woke culture (waukeeism) is a new class theory, which is actively promoted by Big State enthusiasts.
- The strategy of "sustainable development" with its 17 goals is powerful tools for the nationalization of human activity.
- Climate change, global warming, is a notorious feeder for international and national VIP-disposers of other people's properties to fight against... the sun, the ocean, ocean currents, which have been affecting climate change for millennia.
The Western mainstream today is pseudo-scientific economics instead of a full-fledged economic science, a culture of cancellation (cancel culture) instead of a culture of critical thinking and polite dialogue, a hostile attitude towards private property (stakeholders capitalism) and entrepreneurship, a denial of the culture of achievements and heroes, praising the cult of guilt, infantilism, fatalism, mysticism and collective, class irresponsibility.
What are the chances that such a cultural Ramstein will help Ukraine? What are the chances that such a cultural Ramstein will help to quickly carry out the “desovietization”, “demarxization” of the Ukrainian education system?
The truth is that the chances are close to zero. The experience of the last 25 years has convincingly shown that copying the programs of Western mainstream universities in the field of humanities in general and economics in particular has only strengthened the vicious practices of the state management in the country, and has not created a strong demand for the theory and practice of freedom. Therefore the Ukrainian content in these areas is secondary, boring and disconnected from reality, from living Ukrainians. Placing Ukraine instead of USA or Germany into the homo economicus equation formulas is definitely not about promoting real science, meanings and narratives of the Ukrainian society and business.
№ 10. Policy of Heroes
The glory and heroism of Ukrainians, defenders of their country, the freedom of Europe, and Western civilization, must be immortalized. The world must know tens of thousands of cases of how Ukrainians heroically fought against the enemy. Their names must be known not only in Ukraine, but also in schools, universities, and media around the world. We need a book in 100+ languages of the world, “The Truth and Victories of Modern Ukraine.”
Yes, we definitely need a special approach to our veterans. Yes, every soldier, the family of everyone who gave their life, health in the war must receive individual monetary compensation (and exemption of this amount from taxes) from the reparations of Russia, from the Marshall Plan (Trump/Vance?) after our victory. Yes, we need a network of psychological support, training in new specialties, support with integration into peaceful life. The main thing is that economic and social support must not be centralized, so that officials, and not Ukrainian veterans themselves, decide what to do with the money, what and where to build housing for them, how and where to receive rehabilitation and medical services. However, there is no such personification, individualization in the Plan.
During the war, the Ukrainian society has been demonstrating a unique cordiality, spiritual generosity and charity. Today, we observe an obvious course towards the nationalization of social, charitable activities. For the implementation of the policy of heroes, this will have a very negative effect. Ukrainians respect, admire, and support real heroes. Then what are officials and millions of disposers of other people's property for?
V. Zelenskyy called the Internal Stability Plan the first Ukrainian doctrine that is supposed to lead the state from war to peace. The doctrine is about the philosophical, political, legal and economic theory of the worldview and vision of the country's development.
The Stability Plan rejects human-centricity, promoting state-centricity.Share
The person responsible for making economic decisions is the official, not the private owner.
Value, importance, prospects, expediency - these crucial concepts will be dealt with by the Official, not the Investor. In essence, the doctrine is a bid for the revival of the socialist, highly centralized state economy of Ukraine, but under the flags of NATO and the European Union.
Conclusions from the Resilience Plan for Ukraine
After 1,000+ days of a full-scale war by the aggressor country Russia against Ukraine, almost 4,000 days of the Russian-Ukrainian war, we state the following:
- Ukraine does not have a scientifically based strategy for ensuring long-term rapid economic growth and development, which takes into account the real condition of the country's institutions, business and society. It remains an institutionally weak economy without a market capital structure and with the State dominance in almost all areas of economic activity.
- The Ukrainian Government has relied on the State Model of general interventionism, in which the main economic subject is VIP managers and consumers of someone else's, and not on economic freedom, private property, open competition and a small state.
- The Zelenskyy Government's resilience plan is a set of declarations, slogans, and promises that can be used to cover up any economic policy. Since we already know the documents that have been developed by the Government in the field of economic policy (Revenue Strategy, Ukraine Facility 2024-2027 program, program for cooperation with IMF, Strategy for the development of small and medium-sized businesses until 2027, amendments to the Tax Code, annual budgets of Ukraine), then with a high degree of probability the announced Plan is another document that will be enjoyed by the beneficiaries of the Oligarchy/Scheme model.
- The Resilience Plan is not able to create trust in Ukraine either of potential investors or of millions of Ukrainians who are forced to stay abroad.
- The Resilience Plan sharply reduces Ukraine's chances of winning in the global, regional competition for resources, money, technologies, and profitable niches in global value chains. It is an example of nomenclature, political procrastination, inability to make adequate, responsible decisions in difficult circumstances. It is beneficial to 3% of Ukrainians, mostly VIP-disposers of other people's properties from the state budget, who live and successfully implement their life plans and commercial projects at the expense of 97% of the remaining Ukrainians and foreign aid.
- The Resilience Plan is not focused on the real strengthening of national competitiveness, the emancipation of entrepreneurial capital or the return of millions of Ukrainians after victory to their home country. Moreover, after the war, if the current system of governance is maintained, the risks of civil conflicts and crises will significantly increase, with the likely outflow of millions of Ukrainians abroad.
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Теми
1000 days of war
eDopomoga 1000 uah
Yaroslav Romanchuk
A well-known Ukrainian and Belarusian economist, popularizer of the Austrian economic school in the post-Soviet space. He specializes in reforms in transitional economies in the post-socialist space.
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