The Smith Fellowship, one of the hallmark programs of Atlas Network’s Leadership Academy, brings up-and-coming leaders from around the world to Washington, D.C., where they receive varied training in marketing, fundraising, management, and other relevant skills needed for getting nascent think tanks off the ground.
A recent alumnus of Atlas Network’s Smith Fellowship, Andriy Shpakov, is executive director of EasyBusiness, a partner organization in Kyiv, Ukraine. Atlas Network’s associate director of training, Tarun Vats, recently caught up with Andriy to discuss the challenges in Ukraine, how EasyBusiness hopes to make a difference, and how the Smith Fellowship has created new opportunities to help Andriy in his work.
Tarun Vats: What is it like to do business in Ukraine?
Andriy Shpakov: Ukrainian businesses still struggle to navigate inefficient regulatory acts that exist in Ukrainian systems. For example, it still is hard to get connected to the electricity network – within the World Bank’s Doing Business Report, Ukraine ranks 128th out of 190 in “Getting Electricity” indicator. And apart from getting electricity, there are still other problems of inefficient regulatory barriers. For example, according to the USAID survey, around 50 percent of Ukrainian small and medium-sized enterprise representatives associate current regulatory procedures with the problems that undermine the growth of their businesses, and they demand more efficient regulations that will take less time and money.
EasyBusiness has only been established for three years but we have achieved a lot of success as a young think tank. For example, we decreased the number of days needed to start a business from 14 days to just 2 days and improved Ukraine’s Doing Business ranking by 16 positions. We additionally improved minority investor rights by introducing derivative actions for them. And also, last year we helped to abolish the requirement for paper seals used for daily business operations, an example of Soviet era instruments still marring the business landscape in Ukraine. Further, we helped promote the decrease of the so-called “city shared tax” from 10 to 2 percent. Previously, if you are developer and you want to build new shopping malls or new residential properties, you’d have to pay 10 percent of the property value to the local budget; that often wasn't the case - most of the payments had a corruption component, thus, government funds hadn't been topping up.
All the above reforms led to Ukraine’s improvement in the Doing Business Report by 36 positions, and we are ambitious to continue improving. For example, our goal is to break Ukraine into the top 40 countries in the next three years, and this upcoming year we aim to launch a “2X Business Improvement Toolkit,” which is comprised of measures that would double Ukraine’s position in Doing Business Report and Index of Economic Freedom and thus improve its environment for doing business if implemented by the government.
Tell me about Ukraine’s moratorium on the sale of agricultural land.
EasyBusiness is still working on our long-term project to lift the moratorium on the sale of farmland. The constitutional property rights of 7 million landowners are being violated. These Ukrainians cannot sell their own assets, they cannot use it for banking collaterals and exchange with other landowners who want to relocate, et cetera.
In terms of the moratorium, we conducted two comprehensive policy research programs that described the ideas of best practices of proposed reforms in 60 countries and highlighted basic property rights in contrast of the moratorium issue. We are mostly done in the policy research area, and our goal now is to continue promotion of these reforms, communication outreach campaigns, as well as educational campaigns, and to change the perceptions of Ukrainian citizens who are against the agricultural land market because they think that once the market is open, they are obligated to sell it immediately. But that’s not the case, we have to change their perceptions and increase their understanding of the issue.
Our interest in increasing public demand on the reform itself has come from our prior experience in only working from a top-down level by working with government. We are changing our approach to increase public demand from bottom-up level because support from civil society provides a great push for reforms and adds a sense of urgency for Parliament to act.
There was an official constitutional complaint filed in 2017 over the moratorium, and I hear that made a splash in the media – can you tell me more about that?
Last year, we supported a file of a formal complaint with the Ukrainian constitutional court arguing that the ban on the sale of agricultural land is unconstitutional. My colleague and the chairman of EasyBusiness, Dan Pasko, joined the public submission of the complaint together with other think tanks and like-minded members of Parliament who are aiming to support lifting of the moratorium on farmland sales.
The idea was to submit the suit declaring the violation of constitutional rights of seven million landowners. The constitutional court can review this case and take it as a case for consideration, and push for the Parliament to change it. Populists in the Parliament have argued that it’s not the proper time to open the market because Chinese investors will come to Ukraine and buy our motherland or oligarchs will force Ukrainians to sell their assets at a bed-rock price, and so on. This has impacted public opinion negatively. It is really a challenge for us to fight against such fearmongering.
At the ceremony we had for official submission of the constitutional complaint, one of the populist leaders was delivering a speech against opening up the farmland market. His words echoed past Soviet talking points promoting against free markets and in favor of socialism. At this point Dan Pasko decided to play the national anthem of the Soviet Union on his phone and pro-market MP Oleksii Mushak held a red Soviet-style document folder as news camera crews were filming the anti-market populist delivers his speech. This not-so-subtle move helped illuminate the speaker’s populist appeals as what they were – a callback to the failed socialism of the USSR.
What were the best aspects of being in Washington for your Smith Fellowship?
My number one takeaway from the Smith Fellowship is that it’s really crucial to think strategically and to have a well-structured fundraising and strategic plan, as well as program plans. During the Smith Fellowship, Atlas Network connected me with Ann Fitzgerald, president of A.C. Fitzgerald & Associates, who worked with me and helped me to design a development plan for EasyBusiness for the next two years, including fundraising approaches for the outlined programs. It is ambitious, but we are eager to get to work. The second major takeaway is that it provides an enormous networking opportunity – because for me – Washington, D.C. is the birthplace of the freedom movement. There’s a lot of think tanks, a lot of organizations that are like-minded, and I learned much about a lot of them and their ways of promoting freedom, free markets and limited government. And before the fellowship I lacked a network of American connections. Now I have established a lot of new partnerships, and we will continue discussing other prospects for cooperation or meeting again in Ukraine or here in the United States.
Apart from the think tanks, I also met with a lot of international organizations, and even with representatives of the media. One such meeting came at the International Monetary Fund (IMF) with Vladyslav Rashkovan, alternate executive director for Ukraine and 14 other countries. He is former deputy governor of the National Bank of Ukraine. Vladyslav had been working with us on the currency controls liberalization program, which consisted of a three-stage roadmap with clear prerequisites for implementation. Now, while Mr. Rashkovan is no longer with the National Bank, the regulator is actively continuing its own liberalization program also, taking into account our policy recommendations.
Andriy Shpakov and Vladyslav Rashkovan inside the IMF headquarters in Washington, D.C.
We discussed how the IMF can impact Ukrainian policy, especially when Ukraine is under a current IMF program. And that is a great instrument to help accomplish farmland market reform because the institution has required as part of the program with our country that the agricultural land market should be re-established. The IMF is still asking the president and the government of Ukraine to develop a concrete mechanism establishing how the market should work while also reiterating that the market should be opened as soon as possible. This is an external factor working in our favor as we push for the farmland market’s creation. This was a really interesting and rewarding meeting.
Furthermore, I was also invited to speak at a Voice of America live show, where I shared EasyBusiness’ story, our efforts to build a better business-enabling environment in Ukraine, what we’ve achieved so far, and what the government has achieved so far. It was great opportunity to spread the word, not just verbally when I was meeting with D.C.-based think tanks and other organizations, and but also with this broader audience. Millions of people watch Voice of America all over the world, so this was a great opportunity to raise our profile.
Moreover, during my time with Atlas Network in January 2018, I was privileged to speak at its events in Florida and New York. The events were dedicated to the prospects for economic freedom in Ukraine, where I told the story of Ukraine's development during its 2 decades of independence, provided a background of the Revolution of Dignity and highlighted efforts of our think tank on the way to build a better business climate. Having received a lot of questions from the audience within the Q&A sessions, I can surely state that there is a great interest in Ukraine's future among the American audience, so that was a great chance to pursue my own mission of drawing attention to my country.