“Hryvna will get weaker”: Vice chairman of the committee on economic policy of Ukraine’s Supreme Rada

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The key component of the economic policy of the new Ukrainian government will be the support of the export-oriented industries, Vice Chairman of the Committee on Economic Policy of the Supreme Rada, member of the Party of Regions parliamentary group, professor, doctor of economic sciences Alexey Plotnikov says in an interview to REGNUM. He welcomes the initiative of Finance Minister Nikolai Azarov to restore free economic zones in Ukraine and expects improvement in the country’s trade relations with Russia.

REGNUM: The finance minister of the new government has said that new free economy zones will be created in Ukraine. Many experts have said that this is a quite ineffective and even harmful method of attracting investments in economy. What is the goal of this initiative?

I approve of the idea to restore free economy zones, to create technopoleis. Indeed, in the “old format” there were ineffective and even absolutely inoperative zones. However, provided that we calculate everything correctly and preserve only those zones that were operative and useful, I think this form should be restored, even though I know that our western advisors disprove of this idea.

REGNUM: Many associate the Viktor Yanukovich government with the strong lobbying of financial-industrial groups, who, particularly, control the biggest metallurgic companies. The main thing for metallurgy is to strengthen its positions on the foreign market. One of the effective ways to support Ukrainian exporters might be to stop keeping hryvna high. Can hryvna collapse?

We should take this realistically. I don’t think that negative foreign balance is helpful in supporting exporters. $2bl negative balance is the “achievement” of the Timoshenko and Yekhanurov governments. In fact, Timoshenko’s decision to lift restrictions from the import – something that is destroying the export — is not normal for a country seeking to integrate into the world economy and to support its national exporters. That’s why I think: yes – the export will be supported. As regards hryvna, nobody will throw it down. They may well put it down a bit, at least, they will not put it up. Hryvna may go down for some 10 copecks, but this is normal, in principle, as even before the formation of the new government, many people called for putting it down a bit.

REGNUM: The leaders of the ruling coalition have repeatedly said they seek to improve relations with Russia. What may the first real economic consequence of this policy be?

This will, at least, result in improved political situation. And, naturally, political relations with Russia are directly related with economic ties. I don’t expect some immediate economic results, but, at least, we will stop the “cold war” we have had so far.

REGNUM: Will this help the new Cabinet to lift the trade sanctions already applied by Russia against Ukrainian producers?

In principle, those restrictions can be lifted, all problems can be solved and the “trade war” may be stopped. However, first of all, we need a political settlement because the “war” that has lasted throughout 2005 and the first half of 2006 is not a normal occurrence.