If it quacks like a duck

When I read enthusiastic analyses about Ukraine’s improving business environment, I wonder if I must be missing something.

They must be right. After all, the hryvnia is strengthening at a time when most emerging markets are suffering from the prospect of tighter U.S. monetary policy, which is dampening demand for emerging-market assets. The Financial Times reported that foreign investors bought only $300 million of emerging market bonds in April versus $39 billion for the first quarter. However, Ukraine seems to be casually brushing off this turbulence.

I must admit that I struggle to reconcile the above with my conversations with CEOs and businesspeople who work in Ukraine. Their perspective seems to be in stark contrast. One alcohol producer recently told me that the black market in his industry had reached 70 percent of the total market and government policy was simply adding fuel to the fire. 

From the food-manufacturing sector, I heard that the government is completely ignoring calls to clamp down on blatant gray imports. You only have to visit your local supermarket to see that foreign intellectual property is democratically shared with local producers.

I accept that, as someone who practices dispute resolution, my reported conversations may suffer from sampling bias. However, when I encounter significant issues that disrupt business and are easily resolvable through sound policy, I cannot help but feel something far worse than “a lack of political will” is afoot. In fact, I would say there is an abundance of political will; just the wrong sort!

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