In “Eurointegrators,” media expert and ex-Deputy Minister for Information Policy of Ukraine Tetiana Popova sits down with diplomats, heads of international organizations, and Ukrainian power brokers to discuss Ukraine’s European integration.
In this episode, the guests are Ambassador of Portugal to Ukraine Maria Cristina Serpa de Almeida and Anatolii Maksiuta, former first deputy Minister of Economic Development and Trade of Ukraine.
The show is produced by a Ukrainian NGO Information Security and Oboz.TV.
See the text version of the interview:
Popova: Hello. I present today a new episode of the program “Eurointegrators.” Our guests today are Maria Cristina Serpa de Almeida – Ambassador of Portugal to Ukraine
and Anatolii Maksiuta – Head of Board of the Institute for Social and Economic Research, former first deputy Minister of Economic Development and Trade of Ukraine.
Popova: You have been working in Ukraine since 2014. What difference have you noticed in Ukraine for the last 5 years? And on which stage are the relations between Ukraine and Portugal now?
Serpa de Almeida: In fact, in these 4-5 years that I’ve been here, I’ve seen a huge change here in Ukraine. I would say that I have seen that it has changed from rather depressed atmosphere. At the same time, we people thinking: “We will do something new”. Now, I see, it has been done, new things are showing up. It is lively, especially in Kyiv. But not only in Kyiv, in big cities of Ukraine, you can feel it. Something has changed. It is more pro-European in the sense of life. It’s very good. We have had a lot of visits of ministers to Portugal. First, it was Minister Klimkin, he went there in 2016. Then Minister Poltorak. And then it’s coming later with a visit of President Poroshenko in December of 2017. It followed that afterwards. Especially in the economic affairs, we had quite a few more visitors to Lisbon. And we have also done the same, the reverse. We had the visit of our Minister of foreign affairs in 2017, and also the Minister of Defense in 2018. And we are waiting for the scheduled visit of our President to Ukraine. Quite a big connection between the two. I would say maybe it’s because there is such a huge community of Ukrainians in Portugal. Many people are working there. Many people started to be more in the field on manual work, but now they do a lot. Many of them are now doctors in our hospitals.
Popova: Does Portugal recognizes our diploma?
Serpa de Almeida: Yes, we do. In teaching, music teaching. So many Ukrainians are in our conservatories in the whole Portugal. Not only in the mainland, but also on the islands. I would say it’s one of the most integrated communities that we have. They are completely mixed into the Portuguese population. They live next door. It’s the third community – we have the Brazilians, we have from Cape Verde, they are two Portuguese language countries. And then it’s Ukrainians. Which is fantastic.
Popova: It’s fantastic for Portugal. I’m not sure about the opinion of Ukrainians about it. What do you think as a former worker on both Ministers – of Economy and of Finance? How does such big emigration from Ukraine influence the Ukraine’s economy? We saw the statistics: about 35,000 Ukrainians in 2014. Or twice as much, or even more are illegal workers. More than 100,000 people. What can you say about it?
Maksiuta: In my opinion, migration or labor migration is a generally negative thing. The tendency is that Ukrainians can’t find work at home and have to look for it in other countries. First of all in Europe, and then in Russia which has also a significant wave of migration. Of course, there is a positive aspect that the transfer of immigrants’ money to Ukraine has reached 11-12 billion, according to the assessment of the National Bank. It has a positive effect on the maintenance of the payment balance. Even the IMF doesn’t give us as so much money as our immigrants do. But today, it has already become a threat to the growth of economics. And today, the Ukrainian economy is practically not growing. 2-3% that we have nowadays – that is a very little amount, and is simply return to the level that we had before the crisis. Today there is a task that this level should increase by 5%-7% percent. But such growth can’t be achieved without workers and there are no workers in many cities and villages today. We have examples when our entrepreneurs should raise salaries because of this labor migration. It is definitely good, but the other competitive conditions that they have are worse than their European counterparts have. I mean the conditions of lending and conditions for access to state support. There is practically no support from the country here, so that’s why they lose in this competition. Here’s an example: one of my acquaintances had to sell his small factory in western Ukraine, because his workers went to work abroad. He had to increase salaries to find people, and even with a salary of 18-20 thousand, he couldn’t recruit people to permanent work. Therefore, I think this is a result of little attention paid to eco-policy, to the issue of job creation in Ukraine, and to the issue of investment attraction. The deferral rate is too high. We see that inflation didn’t reach 10 percent last year, and the discount rate is 17.5%. Our financiers and bankers always explain that the interest rate is connected with inflation. There is a big imbalance. We will never stop migration unless there is a policy of creating enterprises in Ukraine. This requires foreign investments, and then we will be able to export goods, not people. And then we will be able to raise salaries not just by raising the subsistence minimum and pulling it. We will be able to raise it because Ukraine will be able to produce competitive products with high added value. Today we see statistics that the industry doesn’t actually grow in Ukraine. Last year it was less than 1% in the first quarter. It is a completely negative thing. It seems to me that there is a key to returning our labor migrants to Ukraine; I am not touching the humanitarian social dimension of this problem. So, for investors it is definitely important that the reforms that started in Ukraine eventually should show the result and work. Because, in my opinion, we risk losing the desire to reform at all because of the lack of results. We are talking about the fact that if reforms are successful, then they should be shown in the form of eco-technological growth. If there is no economy, salaries, then the reforms are carried out for the sake of themselves, but not for anything else. Not for the sake of people living in Ukraine. People need salaries, they need a prospect of development, youth needs social lifts, they must understand that they can achieve business success, social success in their country; they can work in public administration. This is not only a group of people who can work there, it has to be open. In my opinion, the problem is already so serious that it can’t be solved soon. And we don’t see the directions of this solution so far, because there are no direct investments. Investors don’t invest in Ukraine.
Popova: What do you think about the help international financial institutions, when they helped Portugal during the crisis time? How can you compare this help with their help for Ukraine?
Maksiuta: Ukraine has a long history of cooperation with international financial organizations. In fact since 1996, as far as I remember, we had intensive work. They certainly help us to stay afloat, not to drown. They give us money. They give us technical advices. They send experts to us for a help. But it seems to me that the problem with Ukraine is that the Ukrainian side should be more willing to accept this help and use it for the benefits. This also applies to financial assistance and technical assistance, because we have many projects that are being prepared to be financed by the European Bank of Reconstruction and Development and by the World Bank. But the money is not used because Ukraine cannot offer such projects. Concerning the IMF, they are ready to give us another tranche, but there are problems that haven’t been resolved to date. In general, I emphasize again, we don’t see economic growth yet. This is also why the IMF is worried about. In the latest memorandum, they pointed out that reforms do not provide economic growth in Ukraine. Ukraine needs the emphasis not only on economy, but also on development. Therefore, it is necessary to soften monetary policy and to see if we are taking money. Keeping the budget deficit within the limits of 1% or 2% is not enough for development. And once again, I would sit at the negotiating table with international financial organizations and would make such a seamless economic program that would make it possible now to soften fiscal and monetary policies in order to lay the foundations for future growth and make structural changes in the economy. Because today’s economy is actually driven by agriculture. Agriculture never made a lot of added value and never created a lot of jobs. There is a negative tendency in general, as modern technologies are coming in agriculture; the number of employed people is decreasing. People in villages are unemployed today. It could balance the development of the processing industry, food industry, which is developing quite rapidly today. But also the hard work that has been traditional for Ukraine, this is a complex machine building that needs an intellectual contribution and it still exists in Ukraine. We have also an educational potential that prepares IT people for western countries. If to combine all these factors – we have to establish and joint the program with international financial organizations while they will support us not only with money. But it will be a good signal for private investors that Ukraine works with these organizations, and we understand each other. It seems to me that we are using a little of this potential of cooperation with international financial organizations. We are trying to get some money for a short period to pay off our debts, to do something temporarily. But in fact, if we come up to this cooperation rightly, then we should talk less about what kind of harm they bring and make it more useful for us.
Popova: How do you see the current situation in the European Union with the last European Parliament election? At the same time, there are euro-sceptics, I believe in all European countries. Some of them are ultra-right, some of them are ultra-left. What is going on in Portugal?
Serpa de Almeida: Not at all. We are still completely out of these euro-sceptics. None.
Popova: You don’t have in your national parliament a euro-sceptic party, do you?
Serpa de Almeida: The parties, which won, are the traditional parties: the socialists’ party, the social democrats, the Christian democrats. There is a new touch that came in was more ecological. This is the party of animals and nature. This is a new point on that came in. Our problem was that we have not done as the other countries have done – the number of voters that didn’t went as we expected. It was a very sunny day, and everybody went to the beach instead of going to vote. That’s the point that needs to be taken care of. And we are thinking of it.
Popova: How does Portugal see Ukraine’s wishes for the EU and Euro-Atlantic integration? What is your position about it? Would you vote for it?
Serpa de Almeida: There is still a lot of homework to do. We know that Ukraine wants to enter the Euro-Atlantic area – in the EU and in NATO. We are aware of that. But as we have done it before, there is a lot of homework to do. In the EU it’s not when you want it – you can enter. There are a lot of things to do. When people hear: “We are doing the reforms for you” – it’s not true. The reforms are done for the Ukrainians. And they need to do it for themselves. You need to have a modern economy, transparent economy, high-tech economy. We went that path before entering the European Union. We waited almost 10 years to enter it. And then, afterwards, we still worked a lot. It’s the way it should be. You have first to do what is it the Association Agreement, you have first to do what is it the Free Trade Agreement. And you have still a lot to do. But we know exactly that you want to enter the European Union. Regarding NATO – it’s the same. We are aware. And we’ve been aware that Ukraine has been in relations with NATO for 25 years. I do remember when NATO-Ukraine conference was done in 1997. But I also know there were a lot of slow-motion, there were a lot of ups and downs in this matter. And I do recall very well when in 2008, in Bucharest the doors were open, but you needed to work, in order to get a map. And then in 2010 you say: “No, we stop. We are now non-aligned”. And it was stopped. You still kept this connection between Ukraine and NATO. But it was only in 2014, when it started again to pick up. And it was important for you, for Ukrainians, to pick up that part. Because you need so much to change, to modernize – the country, the security sector, the defense sector. And we have been working on this. And this is fantastic. The crisis is also more acute here in Ukraine, because of how much you are spending on the army and on the defense sector. You are on 5-6% on GDP, which is enormous. And you have so much to do that you have not done before. And also, we know in NATO, that you want to enter. But there is still work to do.
Popova: How does Portugal help to stand against Russian aggression? Maybe you have some projects. And I know, it happens not only in Ukraine, but also in Portugal. For example, Russians (members of the “Immortal Regiment”) attacked Ukrainians in Lisbon. What has happened there?
Serpa de Almeida: I don’t know that much, because I was here. But I don’t think it was so confrontational. Because over there, nothing can be confrontational. We are a very smooth country, and everybody is the same over there. We are completely in favor of the sovereignty and the territorial integrity of Ukraine. That is the point. We are in NATO. And we are very much on this. We also think that a country has the right to know what it wants for itself, and what kind of external policy it wants. This is your decision, not others’ decision. We don’t accept the annexation of Crimea, because of the territorial integrity. And we have done quite a few declarations towards this and on the Azov sea, when the free boats were attacked. And we have been very much vocal also in NATO and EU for Ukraine’s sovereignty.
Popova: How do you think it is possible to stop Russian aggression, to return Crimea and Donbass, at least to stop the fire?
Maksiuta: I think this is a multifaceted and very complex question. We thank to our friends who supports us in this. I will probably speak as an economist rather than an expert in the military sphere. It seems to me that assistance with economic development can be the best help for Ukraine. So that it could become a good example for Russia, for other countries, how the cooperation with the EU, with western countries affects the economic situation in the country. Because if it is not working well, then inside and outside such a strong vision of Ukraine as a successful country is not formed.
Serpa de Almeida: We only see Minsk and Normandy format as the only solution that is here, in front of us. Nobody wants a military solution. Because it is very costly, and it will go nowhere. So, we have these two ways off, trying to deal with it. The way has been stuck. That is true. But maybe we can go through. It is a possibility that can happen. But for our perspective, the only way to go is political discussion on this matter.