29 December 2013

Ukraine 2013 - The Hopes for 2014

To say that this year has been difficult for business in Ukraine would be a great understatement. There are many people who would gladly sell up their businesses tomorrow and leave the country. But as Ukraine is not a member of the EU, leaving the country is still difficult. Those who remember the days of the ‘iron curtain’ where people living in the Soviet Union were not allowed to mix or meet with ‘westerners’, when people were shot trying to cross the Berlin Wall from east to west, will appreciate the freedom of movement that EU citizens enjoy today. Many of these EU countries are former Soviet states.

Ukrainians still need visas to visit EU countries. Many young professional Ukrainians have made visits to countries like Germany, France, UK, Austria, Spain and even many new member countries like Poland, Cyprus, Czech Republic, Hungary etc. They have witnessed a different and better way of life in these countries compared to life in Ukraine. Travelling along a road in Poland for example reminds people just how very bad the roads are back home in Ukraine. Poland was able to break away from the grip of the ‘soviet empire’ around the same time as Ukraine gained independence in 1991. The GNI per capita (2012) in Poland is $12660 compared to just $3500 in Ukraine. The big question is why? (Admittedly it is estimated that as much as 50% of the Ukraine economy is in the ‘black economy’.)

Why do these former soviet countries have a much better lifestyle and higher levels of freedom than Ukraine?  Maybe because Ukraine has never broke its close links with Russia. Maybe because the country has never had any real democratic leadership. Maybe because…..the list can go on.

The year 2013 just might be the year that ignited the flame of the people in Ukraine to finally say ‘’Enough, we are tired of living like this, we demand changes.’’ It could be the start of what takes the country away from the influence of the Russian Federation once and for all and the country becomes more aligned with European countries where freedom of speech and the rule of law are respected.

During 2013 the country was due to sign an Association Agreement and Deep and Comprehensive Free Trade Agreement with the EU. This agreement would have paved the way to Ukraine becoming a more ‘European style’ nation which one day could have led towards EU membership. Just a few days before an important ‘summit meeting’ was due to be held in Vilnius, Lithuania where the President of Ukraine was expected to sign this agreement on behalf of the nation, he changed his mind. He claimed along with his government that Ukraine would suffer economic losses if they went ahead with this agreement. Moreover, the Russian Federation had already made known the consequences Ukraine would face if it went ahead and signed the agreement with the EU.  The Russians had already started to block the imports of Ukrainian goods and were generally making life difficult for businesses that have Russian customers. The Russians still wanted Ukraine to join its own ‘Customs Union’ together with Belarus.

A great sense of disappointment and betrayal was felt amongst millions of Ukrainians as President Yanukovych had taken away their hopes of becoming closer to Europe. What happened next was a surprise to many.

Ukrainian people decided to come out and protest against what they saw as a gross injustice. They were sick and tired already of this President and a government who clearly showed no concern towards the everyday life of Ukrainians. The so called leadership were more interested in their own business interests and their own family fortunes than the interests of the nation and its people. Government corruption, lies, theft and the use of state assets for personal gain were just a few of the reasons why people decided they had had enough of being held back in the 21st century by those in power and they decided to come out on to the streets of Kyiv and form what is now known as ‘Euromaidan’.

For the past month the centre of Kyiv has been taken over by ‘The People’. Initially there was no leadership from the official political opposition and due to the fact that there are three separate parties now involved the situation of opposition leadership is still unclear. However, one clear favourite has emerged from the opposition as former heavy weight boxing world champion Vitali Klitschko, already a member of parliament declared his intentions to run as a candidate in the Presidential elections in 2015.

The huge amount of people who turned out in the city centre of Kyiv to show their concerns surprised many. The crowds were even bigger than during the Orange Revolution in 2004. The people demanded change. They demanded the resignation of President Yanukovych and his Prime Minister Mykola Azarov.

Many students were active from the very start of ‘Euromaidan’, as young people they know only too well the changes that are required in Ukraine.  Unfortunately the police in Ukraine (there are many different forms of police in the country) are notorious for violence and total disregard for human rights. The riot police, Berkut, clearly demonstrated how they are out of control and caused many many injuries to peaceful demonstrators. Those injured included journalists and cameramen from other countries. This led to further outrage not only among demonstrators but throughout Ukraine and the rest of the world who were watching events unfold on television.  ‘Euromaidan’ gained strength and support and it became clear that this was not something that was going to blow over after a few weeks. It would appear that this time the Ukrainian people were going to see it all the way through until their demands was met.

President Yanukovych had been having meetings with the Russian President – Vladimir Putin.  It was strongly suspected by many that Putin would convince Yanukovych to join the customs union. It was also suspected that Putin was using threats that Yanukovych would find difficult to overcome. On 17th December, Yanukovych met with Putin in Moscow and during the next few days it was announced that the Russian Federation would buy $15 billion of Ukraine bonds plus a one third reduction in the price of gas supplied to the country. It was feared by many that Yanukovych had agreed to many things which he was not disclosing to the people. Yanukovych had sold out the country to the Russians.  Putin declared this was all ‘brotherly’ help towards a nation which shared its values. To the people of Ukraine it showed that they were still under the influence of the evil empire. All negotiations with the EU were halted.

Hopes for 2014
The 2014/5 period will be a clearly defining time for the future of Ukraine. If ‘Euromaidan’ continues the President and his government will be in for a hard time. During 2014 Ukraine will experience many more hardships and uncertainty. Yanukovych will not want to give up his Presidency before 2015 and he will not agree to early elections.

This period will allow the political opposition to get its act together. Vitali Klitschko will have a whole year to prepare for his presidential bid. At the same time the people will have an opportunity to try and clearly decide what kind of future they want for Ukraine.

Foreign direct investment in Ukraine will probably cease completely apart from some joint activities with Russia. Why would anyone want to invest in a country with such a high level of political uncertainty? If Yanukovych decides not to run for a second term this could be equally as threatening to the economy as ‘government connected people’ and the oligarchs connected to him would rape the country of any remaining assets and bribery and corruption would be even more rampant during the final days.

So far this all sounds very negative for the future of Ukraine. Well 2014 will be very negative, but at the same time positive. The negative aspects will be the continual conflict between the people who have joined ‘Euromaidan’ and the President and his government. The positive aspects will be the growth in the number of Ukrainian people who join the fight after they see that the only way forward is for Ukraine to become a free and democratic country. The main hope for 2014 is that by 2015 the people will have clearly decided who they want as their leader.

Many people will claim that they cannot wait until 2015. They want Yanukovych and his government to go now. Unfortunately the law (used loosely in Ukraine) is on the side of the current regime. There is no legal reason to hold an election until 2015 and Yanukovych will do all in his power to ensure he stays in office.

Therefore the year 2014 should be used as a great opportunity by the opposition to plan and develop clear strategies so that people can understand ‘The Way Forward’ for Ukraine. 

I wish them the very best of luck.

Business Wish List for 2014

Whilst Ukraine continues to be an Eastern European centre of conflict, the owners and managers of small and medium size enterprises in the country continue to try and survive among the daily conflicts of doing business. So, just as many people write out their list of hopes and intentions for the year ahead, here is my wish list for doing business in Ukraine in 2014.

I wish I could:

1.       Convince the government that all the money circulating in the economy does NOT belong to them.
2.       Go into a bank and do business WITHOUT the State Tax Service being involved.
3.       Send a payment of EUR 100,000+ to another country WITHOUT asking permission from the Ministry of External Affairs and Ministry of Economy.
4.       Persuade all my accounting people that they should be doing more WORK for my company than they do for the State Tax Service.
5.       Receive a service from a government agency WITHOUT them asking for a bribe.
6.       Persuade people to STOP asking me for my PASSPORT. I have told you my name already, just believe that I am telling you the truth.
7.       Provide people with copies of documents and NOT have to keep giving them the ORIGINAL document every time I want to do something.
8.       STOP using those stupid document stamps

Is this all too much to ask? Why not. Because in REAL European countries all of the above already happens. Let’s hope that one day Ukraine can break free from old soviet systems.

19 December 2013

Bank of Cyprus posts loss of EUR 1.94 BILLION for the first nine months of 2013

Bank of Cyprus which recapitalised itself after seizing depositors savings earlier this year, posted a massive EUR 1.94 billion loss for the first nine months of 2013. The bank claims that most of these loses are due to the closer of its operations in Greece and continuing non-performing loans.

It is no joke that the majority of shareholders in the BoC are now Russians and Ukrainians who had their money ‘seized’ by the bank if they had more than EUR 100,000 in the bank.

The banks new CEO, John Hourican said in a statement ‘’Our priority remains to restore investor and customer confidence in the bank.’’ 

Well the best of luck mate.

18 December 2013

Cyprus Tourism

Cyprus still enjoys a high number of tourists arriving on the island each month. The state statistics service reports that in November 2013 – 81,542 tourists visited Cyprus. The biggest increases were from Russia (7.9% increase) with 11,665 arrivals and the British (3.5% increase) but still a whopping 30,413 number of tourists. The island of Cyprus still sees almost 2.5 million tourists each year.

Some people will claim ‘The Russians have taken over Cyprus’. Well there are a fair number who stay here. Many have homes here and leave ‘The wife and kids’ here usually together with the ‘wife’s mother’ to enjoy the warm weather and safe environment. The good thing is that the Russians appear to behave themselves in Cyprus. I actually saw a young Russian man finish drinking a can of beer and walk a few metres off the beach to place the empty can in a waste bin. No way would he have done that back home, it would have been thrown to the ground immediately.

The British are everywhere in Cyprus. Some of the ‘British Pubs’ in Cyprus are so much better than any British Pub you will find in the UK. The Brits can enjoy ‘English style food’ here. Many Cypriots have spent time living in England and they know the score. There are a few nice places in Limassol which I can recommend. One such place is ‘The Woodman’ a sports bar/restaurant where they have over nine (9) TV screens inside and six(6) screens outside. The place is always packed when English and/or European league games are being played. Another ‘British Pub’ is the ‘Shakespeare’ where they serve some excellent meals. Unfortunately the owner is a Chelsea supporter but his wife is an Arsenal supporter. But there are also many other places providing a great service in Limassol.

Most restaurants/cafes have menus in Greek, English and Russian. The Greek Cypriots know what service is all about. You will not be kept waiting long for anything.

The streets are clean. The pavements are clean and easy to walk along but the main benefit is that there is NO SNOW (apart from up in the mountains). Cyprus is a great place to escape the European winter.

15 December 2013

Limassol, Cyprus

I’m spending some time in Cyprus. Usually the island of Cyprus is warm all year around. But not this year. 

The people of Cyprus are still recovering from the economic/banking problems that set the country back. 
So the recent spell of cold weather has been treated like a natural disaster for long suffering Cypriots. 
It’s also not too funny for us foreigners. It even snowed in Cario, Eqypt for the first time since 1901.

For a few days this week Cyprus experienced the kind of weather they have in Northern Europe during winter and which usually lasts for three to four months. I have not seen any snow here in Limassol but have watched the TV reports of the small villages that have had a downfall of snow. Some villages had been left without electricity and many roads could not be used as the authorities in Cyprus just do not have the snow clearing equipment that we have in Northern Europe. Why should they? It should only snow in the Troodos national park where people can go to ski. It should never snow in other parts of the island.

The Cypriots handled the situation very well. The roads were cleared, electricity supply was restored to villages and people could visit the shops again. I was seriously thinking about booking a flight to escape to a warmer climate as I normally go to Sri Lanka about this time of year. But the weather has come back to normal and I was sat outside having breakfast this morning. We will see.

09 December 2013

Being English - The Shipping Forecast Ritual

Having spent some time in England recently, I have just finished reading a book ‘Watching the English – The Hidden Rules of English Behaviour’.  A strange bunch we English, I always like to try and find out what makes us tick. But the man or woman who finally claims to understand the English would deserve a Nobel Prize.

A good example is the shipping forecast. Which could be described as a quintessentially English national institution?  Broadcast immediately after the late evening news on BBC Radio 4 the shipping forecast is an offshore weather forecast with additional information about wind strength and visibility, for the fishing vessels, pleasure craft and cargo ships in the sea areas around the whole of the British Isles.

I remember listening to the shipping forecast as a child with my mother. She always insisted on listening. God only knows why as we lived in Nottinghamshire probably the most land locked county in England.

I am brave enough to say that none of the information in the forecast is of the slightest use or relevance to the millions of land locked non seafarers who listen to it, but listen they do, religiously, mesmerized no doubt by the list of names of sea areas, followed by wind information, then weather, then visibility – but with the qualifying words (wind, weather, visibility) left out, so it sounds something like this: ‘Viking, North Utsire, South Utsire, Fisher, Dogger, German Bight.  Westerly or south westerly three or four. Rain later. Good becoming moderate, occasionally poor. And so on and on the radio announcer would cover all of the thirty one sea areas with an unemotional tone.

Millions of English people still listen to the shipping forecast, most of whom probably have no idea where any of these places are, or what the words and numbers mean. But having listened to the forecast they can then sleep sound in their beds at night. In the book it was described as the ‘cold poetry of information’.

Listening to the shipping forecast, for the English, is like hearing a ritual prayer – somehow profoundly reassuring, even for non-believers. Like with most things the English can always turn it into humour and some people will talk back to the radio. e.g ‘Thundery showers good’. ‘’I don’t think so.’’ Would be the reply.
If anyone would like to take on the task of explaining all this to foreign visitors to the UK, please feel free, be my guest. The best of luck.