Prutnik: Ukrainian business must be actively involved into development of civil society

From 9 through 12 September 2009 the Polish resort of Krynica became the venue of the 19th Economic Forum. Alongside with hundreds of participants from Europe, Central Asia, the U.S. and the Middle East the event was also attended by the delegation of “United World” International Charitable Foundation.

The Foundation chaired by Mr Eduard Prutnik was the organizer of panel “Ukraine’s Place in Global Community in Contemporary Context” and the first Ukrainian lunch in the history of Krynica economic forums.

According to many participants, the panel organized by “United World” became one of the key events of the forum. The panelists stressed that the discussion clearly demonstrated Ukraine’s aspirations to play an instrumental role on the global arena, use the experience of its foreign partners to build up civil society, and seek ways of speeding up its European integration.

The keynote address of Mr Eduard Prutnik, the Chairman of “United World” Charitable Foundation garnered most attention of the audience and became the subject of lively follow-up debates.

Dear Ladies and Gentlemen,

I would like to touch upon a complicated subject – Ukraine’s place in the contemporary global context – and the associated issues related to interaction of the government, the society, the corporate sector and the non-governmental organizations in Ukraine,

The current situation in Ukraine is nothing but simple. The Ukrainian political system is suffering from stress caused by the ongoing election campaign. While the economy is trying hard to overcome the financial crisis, the social service sector is also taking collateral damage. Therefore, I would like to dedicate my presentation to the problems of building the civil society, which is of paramount importance today and will always remain among the most topical issues for Ukraine.

Before we look at the current state of civil society in Ukraine, let us take a brief look at the theory. Ideally, the civil society institutes should be the mouthpieces of social groups and upholders of their interests. These institutes should protect these groups from infringements of their rights by the government, big businesses and external subjects. Unfortunately, the real state of things is tremendously falling short of this theory.

If we look at the history of the independent Ukraine, its corporate sector and civil society evolved side by side while the initial conditions for doing business in Ukraine were quite similar to those in other post-communist states. The businesses went through all the stages – from legal mayhem to its contemporary state.

However, at some point in the evolution the local business owners realized that further progress would be impossible without the rule of law and an equal political playing field.

It was not overnight that the Ukrainian businesses realized their social responsibility. Ironically, they had to agree with Karl Marx known for claiming that living in the society being free from society is impossible.

Efficient and successful business can only exist in a well-developed state, which, among other things, has advanced in building civil society. The partnership of corporate sector and civil society stands on three pillars: patriotism, economic self-sufficiency of citizens and common understanding of tasks faced by the country.

As for patriotism, the independent Ukraine inherited not only the monstrous Soviet propaganda machine, but also the numerous positive effects it caused – first and foremost the desire of being the subject, not the object of internal and foreign policy, the aspiration of joining efforts in making Ukraine prosperous and successful. Isn’t this the idea that should cement the relationship between the government, the civil society and the corporate citizens?

Speaking about economic self-sufficiency, what is the indispensable condition for functioning of a full-fledged civil society? In my opinion, the prerequisite for that is self-sufficiency of its citizens based on private property. It is the business that can provide a long-lasting and sustainable solution. Figuratively, instead of the fish which in our case is occasional financial support, the people should be given the fishing rod and access to the river so that they could have their own fish every day. Therefore, my like-minded colleagues and I are focusing our efforts on developing economic models for this to come true.

Businesses and the civil society are united by common understanding that the people is not an abstract notion, but all of them as one. It is the people who is the source of authority according to the Constitution – the statement of state identity.

The corporate sector and the civil society should both control the government’s exercise of authority in order to transform it from a self-sustainable caste into an efficient body of managers hired by the people. All of us – the business owners and the citizens of civil society – should set the tasks for authorities and approve on their action plans. And the last, but not the least, we must develop criteria and indices for assessing their results in order to follow the true spirit of democracy.

Of course, those efforts should be made in consideration of the current state of play in the Ukrainian corporate sector. It is not uncommon that local businesses attempt to gain competitive advantage through lobbying on the governmental level – often using illegal schemes both in the past and in the present. Such practices which for many have become the rule of the day are threatening the future of our country although being condemned by good corporate citizens and the civil society.

The truth is that Ukrainian business is dependent on and subordinated to the authorities. The corporate sector is forced to finance election campaigns, invest in politicians, sponsor their media budgets only to start paying all over again after each elections as if nothing happened. Moreover, the dialog of businesses and authorities always involves begging and pleading – not only for reasonable preferences, but also for letting them be.

Such relationship of the corporate sector and government is doomed. This evil circle must be broken, and the only way to do it is through building a healthy and sustainable civil society.

The conclusion is quite clear: the Ukrainian corporate sector should invest into building civil society. In other words, it should assume the role of customer drafting the orders on behalf of the society. The corporate sector should actively participate in building the institutes of civil society. It should support and finance their activities in order to let the “third sector” function in the interests of the nation, its citizens and the corporate sector itself since it lays economic foundations for social development.

The Ukrainian business should establish local foundations with purpose-driven and differentiated sources of financing. Such foundations would enable creation of multi-faceted grant programs for supporting scientific and cultural development, improvement of environmental protection, development of various forms of efficient local government and much more.

Some might get the impression that I am talking about charitable activities, but please don’t get me wrong: all those financial incentives are in fact indirect investments into own businesses.

Development of civil society may finally help resolve the notorious problem of regionalization which is often exaggerated for political reasons. This is clearly the task for non-governmental organizations which tackle the same issues irrespective of the region of operation: they all contribute to “stitching up” the country by reaching a synergy at the national level.

Success in the aforesaid areas will ultimately serve the interests of the corporate sector since political and social instability discourage serious investors otherwise willing to take up the chances in Ukraine: investing in a socially unstable boiling pot of a country makes no sense at all.

Although I have named quite a few areas which could be improved by interaction of the corporate sector and civil society, the needs are by no means limited to that.

Development of civil society will speed up Ukraine's adoption of common European cultural values, prepare Ukraine for a full-fledged EU membership and facilitate access of Ukrainian businesses to new markets.

Building up the civil society in Ukraine will also require a judiciary reform. The Ukrainian courts, the economic ones in particular, are notoriously inefficient, and the only way to achieve transparency and the rule of law is through civil society.

Civil society is the only “cure” for corruption that has penetrated every aspect of Ukrainian life. Although many still prefer corruption schemes for their immediate advantages, most of the business owners realize that the long-term damage to the country’s economy and reputation overweighs the gains.

Thus, civil society should be perceived as an unbiased and efficient arbiter to resolve disputes arising between the corporate sector and the governmental authorities and reduce the political risks associated with doing business in Ukraine.

Now please let me recapitulate as follows:

1. Creating healthy and legitimate institutes of civil society will require an active involvement of all the parties concerned in their establishment and functioning. Such entities are small- and medium businesses, and, to some extent, large national corporations. It should be perfectly clear that the government authority in its contemporary form does not contribute to resolution of problems, but rather presents a problem itself

2. In order to transform the hot air of discussion into tangible results real efforts should be made to create the institutional setting for civil society. The corporate sector must become the attraction pole for social activity and incentives; it should help unite socially active citizens, professionals and the expert community in order to ensure that the government does serve the people’s needs.

3. The corporate sector should contribute to building civil society by financing its institutes including those responsible for national development. The Ukrainian civil society should provide common framework for various expert communities.

4. The joint efforts of the corporate sector and the civil society will help balance the socio-political structure of Ukraine where the society will in fact hire the government. This way the nation will focus on development and not on political divisions.

All the above will serve as prerequisites of successful positioning of Ukraine in the global context by addressing the topical economic and socio-political issues from the perspective of civil society.

Wrapping up my presentation, I would like to paraphrase Abraham Lincoln’s immortal wisdom as follows: “I don’t know who my grandfather was, but I am much more concerned what will become of my son and my grandson, what life they will live and what their Ukraine will be”.

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Following the success of the 3rd “Europe-Ukraine” Forum held in Kyiv in February 2009, “United World” Charitable Foundation once again teamed up with the Polish Institute of Eastern European studies to organize a world-class event.

Krynica also became the venue of the first meeting of “Europe-Ukraine” programme council participated by Mr Jerzy Buzek, President of European Parliament, Poland, Mr Aleksander Kwasniewski, former President of Poland, Mr Zygmunt Berdychowski, Chairman of “Europe-Ukraine” Forum programme council, Mr Eduard Prutnik, Chairman of "United World" International Charitable Foundation, Mr Volodymyr Polokhalo, member of Supreme Rada of Ukraine and Chairman of SRU Committee on Science and Education, Mr Gert Weiskirchen, Chairman of Germany-Russia Parliamentary Group in the Bundestag, Mr Vitalino Canas, Chairman of the European Affairs Committee in the parliament of Portugal, and Mr Dietmar Studemann, former German ambassador to Ukraine and former advisor of the President of Ukraine.

The participants of the council shared opinions about the initiative of “United World” International Foundation to hold the 2010 “Europe-Ukraine” Forum in Kiev.

This initiative was supported by the majority of the programme council members while Mr Zygmunt Berdychowski, Chairman of the Economic Forum Programme Council admitted that he was still under the influence of the previous 3rd “Europe-Ukraine" Forum.

“I was truly impressed by the organizational effort and the level of support provided by “United World” Charitable Foundation, and really enjoyed working with the professional staff that helped make that event happen. In my opinion, this foundation is one of the best Ukrainian organizations which make a valuable contribution into building and strengthening relations between Ukraine and the European Community”, he added.