The price of Euromaidan / News / News agency Inforos
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The price of Euromaidan

Social and economic summary of Poroshenko’s presidency

The price of Euromaidan

On June 7, 2014, Petro Poroshenko came into office as President of Ukraine. He started off with numerous “sweet promises”: declared a policy towards European integration, which was supposed to lead the country to prosperity, promised peace to Donbass and the right to talk their native language and teach it to their children, to Russian speakers, etc. Four and a half years later, Ukrainian commentators point out that the exact opposite of these pledges has been carried out.

As to the development of European cooperation, exports to the EU have, indeed, grown. But Ukraine’s main export items are metals, including ferrous metals (approximately 23% of all exports), plant products (about 18%), ready food products (7%), and fats and oils (10%), i.e. commodities and semi-finished goods with low added value.

As to Ukraine’s industrial products, Europe is reluctant to let them in: the EU members do not need another competitor. Instead, they are willing to sell to Ukraine industrial machines and equipment (over 20%), motor vehicles, aircraft and ships (about 12%), cars and other ground vehicles (8%), household appliances and consumer goods, i.e. products with a high added value. Therefore, it is no wonder that Ukraine’s trade with the EU has an import surplus, which keeps growing.

The country’s economy, according to some local analysts, is “going down the drain”. The GDP, which in 2013 stood at $179.57 billion, plunged by over $60 billion in 2018 to $119.13 billion. Financial experts from the opposition argue that this amount includes $20 billion of foreign debt, net of which the GDP would be around $100 billion. Plants that used to be busy fulfilling orders from Russia are being shut down. Foreign debt, which at the end of 2013 equaled $65.5 billion, grew by $12.2 billion during Poroshenko’s presidency, and amounted to $76.7 billion in 2018, or 64.4% of GDP. With the debt so high, the economy is kept afloat only by means of Western subsidies, which have been sparingly, but nevertheless timely provided to the Ukrainian authorities by the IMF and the EU.

Electricity prices for households have more than tripled; the prices of hot water and gas have soared 3.3- and almost 7-fold, respectively. Housing bills have grown by 250% on average, while retirement pensions have dropped from €86 to €36 per month. Many Ukrainians can hardly make their ends meet, the share of those living below the poverty line gone up from 12% to 60%. The situation is complicated by the government not having enough money to provide financial aid for such people. The deficit of the Pension Fund’s budget now amounts to 5% of the GDP.

So, the social and economic reforms have not yielded any results and modernization a la West has not taken root in Ukraine. Ukraine has been officially declared Europe’s poorest and most corrupt nation. It is also ranked last among the CIS member states for per capita GDP.

Poroshenko has also failed to reform the judicial system and preserved the old model of the government based on clans and concentration of power in the hands of one person. Nazism has been all but legitimized, and Russophobia has turned into a state ideology, all contacts with Russia destroyed. The country has 8 government agencies fighting corruption, but instead of going down, corruption has skyrocketed and the amounts of kickbacks paid now were unimaginable when Yanukovich was in office (up to 30%-40% of the sum allocated from the budget). The healthcare reform in reality has boiled down to reducing the number of patients by letting them die. It took Poroshenko four and a half years to turn Ukraine into a country of mass immigration.

The only promise that has been kept is the abolition of visa regimes with European countries. But Ukrainians do not view it as much of an achievement: saving €35 on a visa, they can come to Europe only as tourists, and only having confirmed their financial solvency: one cannot come to the EU with empty pockets.

The population’s opinions of Poroshenko’s performance as the president of the independent Ukraine are quite telling. At the end of last year, the Rating sociological group conducted a poll of Ukrainians over 18 in all regions of the country from November 16 till December 10, 2018, as part of the Regions’ Portraits project (with over 40,000 respondents). Only 12% gave a positive assessment to Poroshenko’s time in office, while 82% said they were dissatisfied.

So Poroshenko’s achievements at the national level were not impressive, to put it mildly, and the number of failures is much higher than that of successes. But as to his personal affairs during the presidency, he has not only avoided losses, but grown his business assets, proving himself an efficient businessman. The list of his assets now includes 46 companies, most of them in the confectionery and agricultural sectors.

The Roshen chain has been the one growing most actively in recent years. The biggest number of Roshen stores opened in 2014, after Poroshenko won the presidential election: starting from June, the chain opened 14 new stores in Kiev and Kharkov (earlier, in the relatively trouble-free 2012-2013, it expanded by 5-7 stores a year). The president’s tax statement now also shows some foreign stores of the chain: Deluxe Sauda (Kazakhstan), Grand Konditer (Kazakhstan), Roshen Bel (Belarus) and Roshen Georgia (Georgia).

In the agricultural sector, which has been the main beneficiary of European integration, Poroshenko  owns 20 companies, including Ukrprominvest Agro, one of Ukraine’s biggest agricultural producers.

He also controls 4 TV and radio companies, a ship-building yard, a communications company, etc. The president is also the owner of the International Investment Bank and the Kraina insurance company.

According to the Ukrainian News Agency, which cited the Single Registry of Tax Returns, Poroshenko’s declared income in 2018 grew 82-fold to some 3.3 billion roubles (up from 40.9 million roubles in 2017). The bulk of this amount came from Rothschild Trust, which manages his stake in the Roshen confectionery corporation (about 2.76 billion roubles). Another 453.7 million roubles came in dividends from Prime Assets Capital. The Ukrainian president also got about 72.2 million roubles from the Finance Ministry for divestment of securities and corporate rights. Deposits in the International Investment Fund yielded almost 34.5 million roubles and sales of real estate 2 million roubles. Poroshenko also declared an income of 1 million roubles from the operations of the International Investment Bank, an increase of 150% vs. the previous year.

According to varjag2007su, a Ukrainian blogger, the president actively traded in government bonds, which made him richer by almost 34.8 million hryvnas. Serious economists consider Poroshenko’s acute interest in government securities suspicious, to say the least. Viktoria Strakhova, former corporate secretary of Privatbank, says it looks very much like a banal money-laundering scheme. Other experts say that Poroshenko’s operations look more like withdrawal of money from the International Investment Bank he controls.

In the end, as they say in Ukraine now, the president is the only person in the country to grow richer, while its people are becoming ever poorer. Some local opposition commentators say that Poroshenko has remained president of Roshen, but failed to become a true president of Ukraine. This is what the Ukrainian version of the European development vector looks like.

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