When Russia responded to Ukrainians' overthrow of Viktor Yanukovych as president with military intervention in February, companies in Ukraine faced a choice: either buckle down and wait out the uncertainty and falling profit or leave the country altogether. (Read: Why 10 American Companies Are Rooting The End Of The Ukrainian Crisis.)
Ukraine's new government will likely need considerable help to pay off debt to Russia, and tensions between Russian and Western nations have been increasing. As the uncertainty continues, the IBTimes asked the president and CEO of the U.S.-Ukraine Business Council, Morgan Williams, to weigh in on the economic picture of Ukraine. Williams is also the director of government affairs at the private equity firm SigmaBleyzer.
What has Ukraine's business climate been like in the last few months? Can you describe the business climate over the past few years and/or decades to give context?
The business climate over the past few months has been especially stressful because the previous government did not sign an association agreement with the European Union, and they did agree to a new financial package with the IMF. This has caused considerable unrest in the civil society and in the financial markets. The instability has forced businesses to just go about their daily business and not make future plans for investment, expansion and hiring more employees. Business plans have been at a standstill, and the volume of sales for many companies has been declining. Business has wanted Ukraine to sign the EU Association Agreement, approve a new package with the IMF, open the energy sector, fix the corrupt legal system run by corrupt judges, and make the business climate business friendly so there can be major economic growth here ... for the benefit of the people of Ukraine.
Do you think the U.S. and Europe will impose sanctions on Russia? How would that affect business in Ukraine? Do you support sanctions on Russia for occupying the Crimea?
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Yes, the U.S. and Europe will impose some sanctions on Russia ... the question will be if they will impose enough sanctions in key areas to really make a difference. That would be a positive influence on Ukraine as that would cause Russia to stop their invasion and would help bring stability. I personally do support sanctions on Russia for their invasion of Crimea.
There is no justification for Russian invasion of Crimea.
The media has focused a lot on the energy industry's crossroads with Ukraine, but what companies are the most valuable or contributing the most money to Ukraine's economy? Are the majority in agriculture? Information technology?
Ukraine has not improved their energy system in the past 20 years like they could have. They are still far too dependent on Russia. Only recently have major international companies been allowed to begin operations in Ukraine. The state-run energy system in Ukraine has been the center of major corruption. The new prime minister says he wants to privatize the state-owned energy companies, which would make them much more efficient and considerably cut corruption. The potential here for agriculture/agribusiness is amazing ... production here could double. The world needs the food Ukraine could produce in the future. Ukraine's agriculture could be a real gold mine. The IT sector is strong here but could be much stronger.
If you were president of Ukraine, what is one thing you would change for businesses? What if you were president of the U.S.?
There are many aspects of the business climate that need to be changed. The major item would center around getting the government out of business, set fair and transparent rules, an honest legal system and drastically reduce opportunities for bribes and corruption ... improve the business climate ... make it easier and better to do business here ... which could be a great emerging market. The president of the USA needs to get more interested in Ukraine, more active, more aggressive and use more of the tools the USA has to stop Russian aggression, support the new government and help Ukraine to be independent and prosperous ... what the U.S. has said for a long time their goals are here in Ukraine.
As much as you can tell, do most Ukrainians see Russia as a friend or foe?
A large majority of Ukrainians now see Russia as a foe. For many Ukrainians, Russia has been a foe for several hundred years. Russia has been an historic oppressor of Ukraine for over 300 years. They want to dominate and rule and have been power hungry … a bad, bloody history here. Russian and Soviet governments have been responsible for the deaths of millions of Ukrainian over the years.
Is there anything about the way the media is portraying the crisis that frustrates you or distorts the conflict in your opinion? What is one thing you wish Westerners knew about the crisis and Ukraine?
Many of the media are not well informed about Ukrainian history, have never focused on it, and do not accurately tell the story. What has happened here during the last four months is the people of Ukraine have risen up, used what little power they have and have effectively thrown out an incompetent, corrupt government. It has been the people versus the government, period.
Westerners know very little about Ukraine ... they need to know only that the people of Ukraine have risen up and thrown out a corrupt government, plain and simple.