Kyiv, June 15. Capitalism cannot exist in vacuum and should be effectively administered by the state. In this regard, former Soviet countries were unprepared for capitalism. They lacked political resources to introduce a necessary system of checks and balances. This is the statement of Natalia Izosimova, Managing Director of the Foundation for Effective Governance, expressed at the public debate “Free market economy has failed the former Soviet states”. The event was organized by the FEG in partnership with Intelligence Squared.
“However, capitalism like democracy can only be learnt by doing. The process of building free market capitalism should be responsible and smart”, she said.

The Director of the FEG added that the post-Soviet economic and political transitions were not simply a matter of creating something new from scratch. «It was necessary to erase outdated habits, perceptions, organization and governance styles that were inimical to the development of free market capitalism and still prevent the fulfillment of the capitalist economic model in the former Soviet states”, emphasized Ms. Izosimova.
Supporters of the motion during the debate noted that capitalism over the post-Soviet space has failed to live up to the society’s expectations because these expectations were overrated.

“Liberal elites believed that because of the absence of democratic experience the developed capitalism could be rapidly built without considering people’s interests, and the West would help with it. Having come out of the age of suppression and equality in poverty, people thought that capitalism would bring freedom and parity in wealth”, stated Irina Khakamada, economist and former Russian presidential candidate, during her speech at the debate.

In her opinion, people were psychologically unprepared to face economic inequality and absence of state paternalism, but they cannot carry historic responsibility. “Only the chosen post-Soviet elite should carry this burden, because they irresponsibly built bureaucratic capitalism with enormous level of corruption”, she explained. Ms. Khakamada added that positive changes can only be expected after a change of generations in authority and elite.

David Aarоnovitch, journalist and BBC broadcaster, stated during his debate presentation that the former countries of the Soviet Union chose “the worst variety of capitalism” – no wonder it has failed their expectations.

“It has led to a gigantic theft of national assets, gangsterism and lack of social provision”, he emphasized.
In the meantime, Mr. Aarоnovitch is certain that there is no alternative to capitalism, and “state socialism is a bureaucratic and a democratic nightmare”.

On the other hand, opponents of the motion during the debate maintained that those countries and sectors of the Soviet bloc where quick, true market reforms were implemented have achieved immediate and impressive results and witnessed sustainable economic growth, increased salaries and pensions, better standards of living and greater opportunities.

“Those distortions that some blame on capitalism were actually caused by departure from market principles. Economic growth did not reach its full potential because of delays and distortions in economic reforms caused by politicians, state enterprise directors, commodity traders, oligarchs and bureaucrats in pursue of their personal interests”, stated Katerina Yushchenko, Chairman of the Ukraine 3000 International Charity Foundation.
Furthermore, she called “condescending” an argument that people of the former Soviet Union were “not ready” for capitalism and democracy. In her opinion, these citizens longed freedom and economic prosperity, and were quite successful when they were given opportunities to be productive either at home or abroad.

Ms. Yushchenko emphasized that in 1991 and today there was and is no alternative to free market economy.
“It has been proven worldwide that free markets provide the greatest economic growth and standards of living”, she explained.
For Andriy Shevchenko, Verkhovna Rada MP and journalist, the success of capitalism lies in the transformation of popular mentality.
“We can judge successes and failures of capitalism by people. Today’s Ukrainians, Georgians or Russians have much higher demands than their parents. This refers both to material comfort and freedom. This is an irreversible process, which is the main result of market changes”, he said.

About the debates
The debate “Free market economy has failed the former Soviet states” which was held on June 15 in Kyiv is already the ninth public debate in Ukraine carried out in the Oxford Union style. On July 4, 2010 this event will be broadcast by BBC World News in 225 countries for an estimated audience of 76 million people.
The event was organized by the Foundation for Effective Governance in partnership with Britain-based Intelligence Squared.
“We hope that this public debate will be a true revelation of Ukraine and Ukrainians for our audience all over the world. Thanks to this discussion format, which is entirely new on the post-Soviet space, Ukraine will be viewed through different eyes”, said Nick Pisani, partner of the Intelligence Squared.
In 2009, the Foundation held a series of debates (debaty.org) on reforming Ukraine’s economy during the economic crisis. For future debates such important topics as administrative reform, regional economic development, the role of science and education in economic development, and innovation and technologies have been chosen.

Profile of FEG
The Foundation for Effective Governance (FEG) www.feg.org.ua was established in 2007 by Rinat Akhmetov with a mission to develop and implement long-term projects and programs which encourage the long-term economic development of Ukraine. FEG is committed to help reach public and political consensus on the key areas of the economic transformation programs.
To reach its objectives, the Foundation attracts leading Ukrainian and international experts with impeccable reputation. An Advisory Board, which includes famous public and political figures from different countries, ensures the Foundation’s independence. Among the board members are former Canadian Prime Minister Kim Campbell, former U.S. Senator Lincoln Chafee, former president of the National Bank of Hungary György Surányi, and General Director of the Ukrainian office of the International Investment Bank Morgan Stanley Igor Mityukov. The International Advisory Board takes an active part in building the Foundation’s strategy, selecting the priority projects and representing FEG both inside and outside Ukraine.

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