INTERVIEW: Bohdan Hawrylyshyn, a major player in the Ukrainian renaissance (12/17/95)

INTERVIEW: Bohdan Hawrylyshyn, a major player in the Ukrainian renaissance

by Roman Woronowycz

Noted scholar Dr. Bohdan Hawrylyshyn, one of the true movers and shakers in contemporary Ukraine, is a member of the American-Ukrainian Advisory Committee, a prestigious body of statesmen, politicians and international experts chaired by President Jimmy Carter's national security advisor, Zbigniew Brzezinski.

The distinguished, although informal, advisory body, established in 1993 by the Center for Strategic and International Studies, a public policy research institution in Washington, recently met in New York for its third plenary session and issued a communiqué on U.S. policy towards Ukraine (see last week's issue of The Weekly).

Dr. Hawrylyshyn is also the chairman of the Ukrainian Renaissance Foundation, a branch of the Soros Foundations, and chairman of the Council of Advisors to the Presidium of the Ukrainian Parliament.

Dr. Hawrylyshyn was born in 1926 in Koropets, a village on the Dnister River in the Ternopil region of western Ukraine. After living under the Polish and the Soviet regimes, in 1944 he ended up in a refugee camp in Germany.

After emigrating to Canada he was awarded bachelor's and master's degrees in mechanical engineering at the University of Toronto. Subsequently he earned a degree in industrial management from the International Management Institute in Geneva, Switzerland, and a Ph.D. in economics from the University of Geneva. Since 1960 he has lived in Switzerland and has been at IMI-Geneva as faculty member, director of studies and director (1968-1986) and finally as scholar-in-residence (1986-1989).

He is the author of two books and more than 180 articles on management, management education, and the economic and political environment. He holds many distinctions, including recipient of the Gold Medal of the President of Italy and member of the Engineering Hall of Distinction of the University of Toronto. He is also a member of the executive board of the Club of Rome and the Ukrainian Academy of Arts and Sciences and is a fellow of the World Academy of Art and Science and the International Academy of Management.

He is in constant transit between Kyiv and Geneva. As he told The Weekly: "My home is in Geneva, but I live in Ukraine."

PART I

Q: Could you comment on the recent meeting of the American-Ukrainian Advisory Committee (held the weekend of November 17-18 in New York) and the communiqué that was drawn up (see last week's issue of The Weekly) as a result of it, which makes very specific recommendations as to how U.S. policy should develop vis a vis Ukraine. Specifically, was there any dissension in approving this communiqué?

A: There were some pretty hot debates. This was the third meeting of that group, and, I think, in everybody's judgment, particularly that of our American colleagues, it was the best, precisely because there were some pretty hot discussions.

It was not Americans as a bloc and Ukrainians as a bloc. There was integration. We (Ukrainians) would have arguments among ourselves: "You should not be insisting on that point, it is not vital, this is more important," or "Why don't we join these two propositions," etc.

I worried that there would be asymmetry between the American side and the Ukrainian side because on the American side there are former statesmen not occupying an official position, but still active and listened to. People will still listen to what (Henry) Kissinger, (Zbigniew) Brzezinski or (Frank) Carlucci have to say. The head of the Westinghouse Corp. (Michael Jordan) was there too. So it is a powerful group from the United States.

It is difficult for us to present as powerful a group from Ukraine. But it is interesting how mutual respect and understanding has developed. It was nice to see this crossing of the line to reach agreements on things that were clearly perceived to be in the interest of Ukraine, primarily, but also of the United States. It was an exciting meeting because of that and also the best so far.

A previous meeting in Kyiv included more seasoned people from Ukraine. This time, for example we had three younger people, (Borys) Sobolev, deputy minister of finance, (Svitlana) Oharkova, a businesswoman, and (Serhiy) Oksanych, the president of a financial house. We needed them because we wanted to discuss conditions for investment in Ukraine. They happen to know these fields.

Q: Is there ever a threat that businesspeople on the Advisory Committee, the chairman of Westinghouse for example, could be pursuing a separate agenda to forward their own corporate goals as far as investment and profit-making in Ukraine?

A: We very much hope that such a "threat" could be realized. We badly need foreign investment because along with it comes know-how and access to foreign markets. That's what the multinationals bring. They bring some foreign capital, some new technology, but most importantly they bring their knowledge of world markets and how to access them.

If we had been overrun with investments by these huge corporations, which immediately assumed a dominant position and squeezed out the Ukrainians, that would've been a threat, but as things stand we view the prospective investments as a great opportunity.

Q: You are also chairman of the Council of Advisors of the Presidium of the Parliament of Ukraine. As I understand the function of the Council of Advisors, it is to give advice on economic issues, banking and credit regulation, foreign economic affairs, state government, political reform. Given that, what do you consider the council's achievements thus far?

A: The accomplishments have varied over time. The Council was created because (Leonid) Kravchuk, when he was chairman of the Parliament, had asked me if I would not be his advisor. That was in January 1990. I refused and suggested instead to create a group of advisors, not for him but to the Presidium of Parliament, in which there were representatives of Rukh and other movements and not just the Communist Party. He agreed immediately.

Then, I got some distinguished personalities from around the world, including at that time a person from Japan, who had legislative and executive experience at the national level and broad international experience. From the United Kingdom it was Geoffrey Howe, who had been deputy prime minister and minister of foreign affairs and is now in the House of Lords - a tremendously respected person agreed to join, as did Shirley Williams, member of the House of Lords and former head of the Social Democratic Party. From the United States both Zbigniew Brzezinski and George Soros joined the Council.

The first thing we did was to run a seminar in the Parliament's Assembly hall on May 20-21, 1990, comparing the positives and negatives of various western parliamentary systems. People who lectured had been in parliaments and in cabinets, including the former president of Switzerland, Dr. Kurt Furgler, Minister Kurt Beidenkopf, who talked on Germany, Baroness Williams on the U.K., the Honorable Hugh Faulkner on Canada and others. I lead the seminar. This was four days after the first session of the Parliament convened.

I think it was a unique event, not repeated anywhere, anytime in the world, when a parliamentary assembly was transformed into a seminar. That was a high point for the Council.

Something that was done reasonably quietly but was useful was sending various members of Parliament on study trips to different countries; for example to Switzerland to see how a highly decentralized system, a direct democracy, functions. Then to countries where there is representative democracy.

We selected people like (Ihor) Yukhnovsky from one party, and (Oleksander) Moroz from another, as well as others, and put them in the same group. We selected eight, nine people from different parts of the political spectrum and had them learn together how the different systems function abroad.

Afterwards, the focus shifted to parliamentary commissions, where more detailed work takes place and today seems more important. Starting this year we have provided 35 assistants to parliamentary commissions. The assistants were chosen from among 200 candidates who had to be graduates of law or economics and have good knowledge of a foreign language.

Q: Are they from Ukraine?

A: They are all from Ukraine and from different regions. By the way, they all had to know Ukrainian and of course one foreign language. I myself checked how good their French, German or English was, but some also knew Chinese or Japanese, so we had to take it on faith that they knew the language.

In parliamentary commissions, like (Deputy Oleh) Taranov's Economics Commission or (Deputy Viktor) Suslov's Banking Commission, these assistants are helpful because they can quickly access foreign legislation if necessary, do the translation, be in contact with foreign sources, etc. They have both the right educational backgrounds and the linguistic capabilities, and one does not often find that combined in Ukraine. Most members of Parliament do not know any foreign languages, except for Russian.

We also have two or three members of the Council who come to Kyiv and have sessions with various commissions and ministers, like Prof. Burenstam-Linder, who is chairman of the National Bank of Sweden, and also rector of the Stockholm School of Economics, former minister of foreign trade and newly elected to the European Parliament who led a seminar on what should be the foreign trade regime [in Ukraine]. So the parliamentarians have access to people not only with legislative and executive expertise but also with tremendous international experience.

As a very specific example, Suslov's Banking Commission very badly needed to get a guide reaction on a proposed law for insuring banks. So they asked if we could get them an expert opinion. We sent the request to Prof. Burenstam-Linder of the Swedish National Bank, who replied that he was not a great expert on the subject but that a colleague of his at the Stockholm School of Economics was one of the world's best experts. In a matter of a few days, a number of faxes with comment were sent back to Kyiv.

We are connected mostly by e-mail and certainly by fax with our Council members and can access people we know, who know the subject. They work free of charge; we could not get such people to do it on a consulting basis. This is a key strength of the Council.

Q: So you're saying that a strength of the council is the informal network amongst members that allows them to get information to Ukrainian leaders.

A: That's right, but there are other things as well. For example, Lord Geoffrey Howe spoke about his experiences in Ukraine at the Council of Europe assembly in Strasbourg before Ukraine became independent because he was on the Council of Advisors. A Russian scholar was scheduled to speak after him. I saw his written speech, which was horrible vis a vis Ukraine. But Lord Howe was the first speaker and after he spoke from his own experiences about how things were moving towards both independence and democracy in Ukraine, the speech given by the Russian departed greatly from the written version.

These were also the first openings, let's say, into the Council of Europe. People like Geoffrey Howe or Shirley Williams have great influence in those circles because of their reputations, but also because they are not Ukrainian, so they are not suspected of grinding the national interest, if you will, but they are highly respected authorities who happen to know well the situation in Ukraine.

They are credible to the outside because they can be objective, and they know the reality in Ukraine, unlike some people who go there for a couple of days with no experience, come out and make judgments about Ukraine.

Q: How involved has the Council of Advisors been in the drawing up of the Ukrainian Constitution, and when do you foresee a final draft appearing?

A: In this phase, this redrafting, there was marginal involvement. The involvement was very significant with the first drafting of the Constitution. At that time a number of people, the best experts on Constitutional law, a professor from McGill University [in Montreal] and a professor from Harvard University, were brought in by Council member Shirley Williams, and they spent a number of days with constitutional lawyers and worked in expert groups. Some good experience and knowledge was passed on. The former president of Switzerland, who himself is a constitutional lawyer, wrote 15 pages of suggestions. Marc Lalonde (former Canadian minister of justice) wrote some very useful comments.

That sort of knowledge was disseminated [in Ukraine]. At this stage I do not think we should be playing too direct a role because it could be conceived as political. But I believe that in the earlier stages we brought quite a bit of useful knowledge to that process.

Q: And do you foresee when the final document will come out of committee?

A: Predictions such as these are too risky. There was the wild idea or hope that it would come out by the end of this year, which certainly will not happen, but by next summer it is quite possible.

Q: President Leonid Kuchma was quoted recently by UNIAN as putting the blame on Prime Minister Yevhen Marchuk for the slowdown in economic reforms. Because you have contacts with the higher echelons of the Ukrainian government, please tell us what has slowed down the reform process?

A: Certainly Parliament has to a certain extent slowed it down. The complexity of the privatization process, choosing the very best formula, overcoming the opposition to it by a significant part of the Parliament before proceeding with its implementation, made the privatization process slow down. But when you launch economic transformation three things have to go in parallel: monetary stabilization, which actually began to work very well with IMF help in the summertime; price liberalization, which is proceeding despite the pains involved; and privatization, which must come because otherwise things get out of kilter.

Q: Then, has Marchuk hindered the process?

A: I do not think that he has hindered the process. One has to accept the fact that these processes are very painful. We get a lot of good advice from the outside, but we also get a lot of shabby advice. Also, we get many promises but not that much cash.

There is some incompetence, and there is some corruption, and there is some opposition since it is not in everybody's interest to see privatization succeed. It thus becomes a very delicate political issue: how hard do you push it so as not to get to the breaking point, hence some speeches about "correction of the process." We haven't gotten to that point in Ukraine, yet; people haven't been shooting at the Parliament as they did elsewhere.

You have to push it with sufficient determination but only up to the point where it could evoke real social upheavals.

Q: Could you see that happening in Ukraine?

A: Yes, I could see it happening, for instance, if, for instance, all the coal miners went on a prolonged strike. Look at France these days - trains do not run, the electricity is being reduced here and there, the postal service is not functioning. The country has come to a standstill. Well, France can afford it, it can recover from it. If it happened in Ukraine... we would be drained. So, let's assume that the coal miners stop working for a few weeks, we would then be on our knees because most people couldn't survive the winter without heating. We are in a tougher situation than France.

I am not trying to explain it all away. There is incompetence, but I do not think that Marchuk is consciously working against reforms.

Certainly there is no doubt about the fact that Kuchma understood that economic transformation is inevitable, and that Marchuk was less concerned with it. It is not that there is a fight between the two or direct opposition. But Marchuk has his Cabinet and one minister runs with this and the other says, "Look, we have a terrible crisis here," another says, "We have a terrible crisis there." Hence, talks start about doing some adjustments.

We also have to take into account that one can go too far with privatization. There are countries in which state enterprises function well. I cite Singapore because it is one of the "economic miracle" countries. It has 500 state enterprises and it isn't the ownership, it is actually who manages the enterprises and whether they function under free market laws and not merely by directives from the owners. Privatization is important but total privatization in Ukraine is not possible.

I would not accuse Kuchma nor Marchuk of purposely slowing reforms, of sabotaging. They just somehow have to cope with a very difficult situation.

Q: The other part of this reform effort are the "young Turks," as they have been dubbed: Viktor Pynzenyk, Roman Shpek, Viktor Yushchenko. Yushchenko in particular was recently criticized by Kuchma for running the National Bank of Ukraine as his personal fiefdom. To speak of them in general, do you see them as having been pushed to the sideline now as Marchuk has solidified his position.

A: It is a simplification to think this because Yushchenko is still there. He may be accused of being too independent because it is hard for Kuchma or Moroz to have this man acting very independently. But the head of the central bank must act independently, otherwise monetary stabilization would not have progressed at all. I admire that man's courage, and his capacity to survive; it is some kind of miracle. Normally there is a board running a national bank. The pressure should not be on a single person, not on the chairman, but on the board, like you have in any good central bank system.

Pynzenyk was brought back into the government by Kuchma, but the intention was not that he would be implementing things. Pynzenyk is a very good economist, particularly when it comes to financial matters. He is not a manager, he is a great man at creating concepts, ideas. He was brought back more as an idea man, rather than the hatchet man, who would chop the old system up. And here is where complementarity occurs. Shpek knows something about management, he is the one who pursues implementation and has not been pushed aside.

Of course, occasionally, Marchuk or President Kuchma will get irritated because the pressures on them are enormous, and here are these people (the young Turks) who are trying to stick to their guns. One must give credit to Kuchma because he is the one who brought them into the Cabinet.

CONCLUSION

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