27 June 2011

Bank of England Governor speaks the truth

Interesting article in the Daily Telegraph.
Bank of England Governor, Mervyn King points out that the situation in Greece is beyond rescue.
Pointing out that it is an insolvency problem and not just liquidity.
Its just a matter of when Greece will default not if...

However, the situation in the United Kingdom looks no better.

See: http://www.telegraph.co.uk/finance/comment/liamhalligan/8598797/Profligate-Britain-risks-suffering-its-own-Greek-tragedy.html

Plus one of the readers comments is excellent:

Dear Mr King,

So we finally have an admission from you that the banks are insolvent. Thankyou. What normally happens when a business is insolvent Mervyn?

So the situation boils down to taxpayers providing liquidity to insolvent banks who in turn are providing liquidity to an insolvent Greece. Do you think this will end well Mervyn?

Furthermore the US, which you haven't mentioned yet, is on the hook for billions in credit default swaps to the European banks so we are in the extraordinary position of a clusterfock of funny money (debt to you and me), magicked into earth's orbit from TARP in the US, to European banks and onto Greece and Portugal and finally landing on the shoulders of taxpayers in Europe and the US Thanks for that.

As you probably know the time will come when taxpayers cannot pay any more tax if they are to survive. For your next speech perhaps you will tell us what the master plan is. Will it be a slow motion 'buying time' suicide where we're still waiting for the elusive 2pc inflation even as the hearse pulls up, or do you think the banking syndicate will pick a convenient moment to pull the plug and bring the entire ponzi fraud to an armaggedon type finale?

It would be nice to know your thoughts.

25 June 2011

Yulia Tymoshenko on trial in Ukraine

Yesterday saw the start of a 'pre-trial' in Kyiv.
Former Prime Minister and leader of the main opposition party in Ukraine, Yulia Tymoshenko attended her pre-trial hearing in the centre of Kyiv.

The whole 'event' is being broadcast on Ukraine Channel 5 and also from Tymoshenkos own web site. Unfortunately, the proceedings have quickly deteriorated into a farce. Looks like something from a comedy drama. The court room is about the same size as my office and is overcrowded with media people.

The case paints a bad public image for Ukraine.

Ukraine is shrinking

Interesting article in the Kyiv Post.
Ukraine is now just approx 45 million people and the decline in population is continuing.

See: http://www.kyivpost.com/news/opinion/op_ed/detail/107372/

20 June 2011

Customer Service in Ukraine - Who cares?

I am currently discussing with many people about the possibility of offering FREE training to restaurants and cafes/bars in Kyiv concerning helping them to improve their 'service to customers'.

BUT.......I wonder if its just foreign people who notice the level of bad service in Ukraine.
People who travel in and out of Ukraine many times will certainly see the big difference in how a customer is treated in other countries compared to Ukraine.

It would appear to me that local people..Ukrainians, just don't give a dam about customer service.
Why do I say this? Well they never seem to complain about anything when they are HERE in Ukraine.

I know it's not part of Ukrainian/Slavic culture to complain. So....all this talk lately about improving customer service is for who exactly? Just we foreigners who are visitors and a few who are residents? Does it matter to the vast majority of Ukrainians who live here?

Perhaps it is we foreigners who see the potential for great improvements in customer service in Ukraine and see how much better it could be for tourists coming here now and in the future.
Perhaps it is we foreigners who fear Ukraine will get a bad image during Euro 2012?

So, the big question is: Is it really worth it? Who cares if the level of customer service in restaurants/cafes/bars is terrible in Ukraine when compared to the rest of Europe.
Many here will claim that Ukraine already provides good customer service through its 5 Star hotels.

Ukraine is Ukraine. It's their country. Their culture. If they want to continue with the current level of service in restaurants/cafes/bars it's up to them to decide or change as they think appropriate.

Why change things just for a small group of foreigners and a few tourists?
Would appreciate any feedback from Ukrainians on this topic.

17 June 2011

Still no Understanding of the 'Customer is King concept'

People who know me will support the fact that I always try to be positive about Ukraine.
But try as I must, it is getting more difficult.
We all know the stories about bad customer service from 'former soviet union countries' and many of us still share the experiences concerning the almost complete lack of any awareness towards 'customer service' in the service industry in Ukraine.

Many of my friends are ready to offer examples of bad customer service, but I thought I would share with you some experiences from today both good and bad.

Some of the more expensive restaurants in Kyiv provide VERY good service. But they tend to be the VERY expensive restaurants also. Like

Restaurant "Richelieu"

Always provides excellent service from all the staff and food and drink is served very quickly.
However, it is one of the more expensive restaurants in kyiv. A meal for two people including wine came to UAH 1700 ( USD 214) (GBP 135)

After this I visited the Golden Gate Pub in Kyiv city centre. After waiting at the bar for approximately 10 minutes without any sign of any staff wanting to serve me I decide to walk out and find another place. I then walk down the street to the famous 'Chateau Bar' in Kreshatik Street. Where the 'girl' asks me 'do you have a reservation?'. To which I reply NO.
Sorry she says...all tables are fully booked. After giving her a very big 'спасибо', I walk off down the street to Arena City. Now please understand that I know this place very well, as I live across the road. But they still don't give a dam if you are a regular customer or not.
After sitting for approx 5 minutes Iam presented with a menu. Knowing the situation I order a beer very quickly and worry about any further requests until later. After 12 minutes (I timed it as per my mobile phone), no drink appeared. I then got up and walked out.
Went to the local super market and purchased beer and snacks and returned home.

I will NEVER get use to the bad customer service in Ukraine. I think about the situation come next year for UEFA 2012 when many foreign visitors will be in Ukraine. How will they understand that they are kept waiting 5-10 minutes to be served a beer in a bar/restaurant/cafe. In most European countries it is so simple to serve a beer within a few SECONDS of a customers request. They came to that particluar bar/restaurant/cafe to be SERVED and offer their 'custom'.

It is still truely amazing to find that in Ukraine is takes SO LONG for a customer to be served with the most simple of requests. Plus even when you do get served it then takes SO LONG to receive the Bill after you have placed the request.

I appreciate that Ukraine has its own culture and I would never wish Ukraine to become like an Amercian city.But there are many cities like Prague where they discovered long ago how to take care of those important people called 'customers'.

Wake up Ukraine.......UEFA 2012 is a major opportunity to show you are a real European city.

15 June 2011

UK Retail Banks to be 'Ring Fenced'.

George Osbourne is proposing the biggest bank shake up since the 1930's with controversial plans to ring fence retail arms of banks. He is set to face 'formidable opposition' from the banks in what could be one of the most challenging reforms of the banking sector. The Chancellor wants banks to ring fence their retail banking arms to protect the public if their trading and investment arms were to hit serious trouble.

Under the Chancellor's plans, banks will be forced to ring fence their retail operations, with no bank with a retail arm allowed to opt out of this proposals. The Treasury want to protect branches, loans and public savings so that if banks were to get into serious trouble when trading and investing, public money would be safe and huge bail out packages could become a thing of the past.

The plan will centre on the amount of capital banks have to hold. At the moment, banks have to hold around 7% of capital - set out by an international minimum rate. There has been no official figure set out by Chancellor but a Treasury spokesperson said that '10 per cent is in the right
ball park.'

The Chancellor is set for a run in with bank bosses over the new reforms of the banking sector. Banks do not believe that ring fencing public savings and loans would in any way protect against the problems banks face on a day to day. The plans have been met with contempt in the City and
analysts are unclear how these proposals will make the banking sector 'risk free.' Furthermore there is a view that these proposals will actually make it more expensive to bank - with large banks having to put large pots of capital into investment and retail arms.

He is also set to announce the privatisation of Northern Rock and is ready to relinquish control of half of the bank with the other half still owned by the state. George Osbourne has insisted the bank has been split into a 'good bank' and a 'bad bank.' The 'good bank' has savings and over 70 branches whilst the 'bad bank' has toxic loans and will remain under state control.

Oh the joy of living and working in the United Kingdom.

14 June 2011

Democracy Watch Report

Here is the latest report from People First Foundation - Democracy Watch

Tuesday 14th June 2011 - Issue 18:

In this Issue:

Article 1: Dark days for the middle class
Article 2:
Tit for tat scandals jeopardise relations between Ukraine and Europe
Article 3:
Ukraine tests the patience of the International capital market
Article 4: Ukrainian parliament – bad in practice, bad in attitude

Dark days for the middle class
Observers of the Ukrainian SME sector warned of total collapse at the recent Ukrainian Investment Summit in London in May. Prominent economist Anders Aslund and Petro Poroshenko, a businessman who has held a number of positions in government, both commented on the disappearance of tens of thousands of small businesses since the beginning of 2011. Poroshenko also illustrated the impact upon the middle class; which could serve to undermine the stability of the political system. Participants of the Summit also noted that the bulk of reforms, intended to raise Ukraine’s investment attractiveness, have been blocked by the office of the President. The impact on infrastructure can already be seen in the nations capital with the closure of shops aimed at regular consumers in favour of VIP boutiques serving the super rich – emphasising the depth of social division. The majority of economic voices are hailing a period of severe economic imbalance in the wake of the new Tax code.

The government’s overt response to the negative trends in the economy has been to announce the creation of a state-owned Ukrainian Development Bank with the purpose of funding strategic initiatives. Vladislav Kaskiv, Head of the State Agency for Investment and National Projects, stated that the new bank will operate with total transparency.

The authorities in Ukraine like to talk about shared burden of risk with investors, but when it comes down to policy its case of the heavy boot of legislation crushing the budding future of business and dark days for the middle class.

People First Comment: In considering this issue there are two possible scenarios. The first, and the one favoured by most conspiracy theorists is that the geriatrics that make up the current ruling elite have hatched a master plan to eradicate the middle class and force the workers back to the factories so that they can control how they vote at the next election…

A more plausible explanation is that few of the current government or the bureaucracy that supports them has ever run a small to medium sized enterprise and so they create laws based on figments of their own imagination and their own profiteering practices. The current tax laws might well generate more revenue for the exchequer and close down many organisations that are operating outside of the current tax system but if they also kill off a whole swath of legitimate business then who is going to pay the taxes next year… When the enterprise owners complain rather than listening and understanding the government digs in its heels and refuses to budge as if the complaints are a personal insult. Unfortunately many of the elite belong to the bygone era where the government knew best…

Small and medium sized enterprises are the bed rock of all national economies. In the EU, an organisation this government seeks to emulate and one day join some 57% of national GDP is generated by this sector of business. In Ukraine the figure is 17% and falling. Similarly an attack on the middle class in this way will cause a drop in the sale of capital items such as cars and apartments which will then further rebound down the line into all aspects of society and that certainly will not be good for the 2012 elections.

Tit for tat scandals jeopardise relations between Ukraine and Europe
In mid-May this year the Ukrainian Ministry of Foreign Affairs delivered a note to the Head of Czech diplomatic service at the request of the security services. The note informed that all Czech military and defence attaches had been declared personae non grata, accusing them of espionage regarding military technology and politics. Czechia has banished two Ukrainian diplomats in response. Unlike traditional “spy scandals” this has all taken place very much in the public realm. Speculations regarding the cause of this scandal include the idea that this action forms Ukraine’s revenge for the Czech government granting political asylum to Ukraine’s ex-Minister of Economy Bogdan Danylyshyn; an opinion held and voiced by the Czech Minister of Foreign Affairs Karel Schwarzenberg.

Another perspective is that this scandal was orchestrated by Ukraine’s “eastern neighbour” in an attempt to put strain on the relations between the EU and Ukraine. This event comes in at a tentative time in the negotiation process over the treaties on Association, Free Trade Zone and liberalisation of visa regulations. This scandal may indeed be designed to steer Ukraine towards a Customs union with Russia.

Regardless of its cause, Ukrainian diplomats and experts agree unanimously that this scandal will cause significant damage to Ukraine’s international image and will impede cooperation with the EU.

People First Comment: This kind of tit-for-tat diplomacy is really reminiscent of the Soviet Era when Moscow would expel US or British diplomats just to make a political point. It really is rather childish particularly when you consider that successive governments have so badly underfunded the Ukrainian military it is a wonder that they have any secrets left to spy on and as for the state of Ukrainian politics, nobody in their right mind would want to emulate such misguided confusion.

Perhaps it has something to do with Olga Kurilenko starring in the last James Bond epic but more likely it is yet another attempt by Ukraine’s eastern ‘friends’ to put a spanner in the works of Ukraine signing the Free Trade Agreement or attaining visa free travel with the EU. If Ukraine’s neighbour really wants the world to take them seriously they should fire the architects of this type of cold war policy and look to how they can make themselves more attractive to potential suitors.

Ukraine tests the patience of the International capital market
Ukraine’s attitude the lending conditions set out by the World Bank and the International Monetary Fund has led Max Alier, IMF Resident Representative in Ukraine, to publicly reaffirm that until Ukraine meets four requirements it will receive no new tranches of credit. These conditions cover: pension reform, increase of gas prices, a guarantee that the budget deficit of “Nafotogas” will not exceed 3.5% of GDP and that the law obliging the National Bank of Ukraine (NBU) to purchase domestic government bonds be annulled. International Experts have also called on the government to further increase the prices for public utilities for the population. The international funding bodies show no sign of lessening their conditions, as negotiations with the IMF have been deferred and the World Bank has declared that it is withholding the 500 and 350 million dollar loans for the development of Ukraine’s national finance sector until conditions are met.

It is highly unlikely that the government will fulfil all requirements in the near future – fearing major social upheaval within the country. Thus the government will inevitably seek a compromise between the IMF and the demands of the Ukrainian people. Despite the complexity and high-pressure of the situation Ukrainian officials have been relentlessly optimistic claiming that the next tranche will be received before the end of summer 2011. NBU Head Serhiy Arbuzov mentioned that there is high probability of Ukraine receiving 3 billion dollars by the end of the first half of the year. According to observers a partial fulfilment of the IMF requirements this year will improve the economic situation in the long term.

At this time it remains unclear whether the government possesses the grit to implement all the changes required by IMF in order to received the tranches and preserve a relative investment attractiveness of Ukraine.

People First Comment: Ukraine is not only losing access to capital markets it is losing all shred of financial credibility. The international money markets are not stupid; they fully understand the games that are played in Kyiv. For one; international financial bodies rarely accept any government figures preferring to use their own sources. Of course there are inevitably discrepancies but if the figures are similar then they know the country is on the right track, if they are totally different it implies that somebody is being economic with the truth.

At a recent investment conference in London the general consensus was that Ukraine is very definitely on the wrong track and serious questions need to be asked. This concern is reflected in the fact that the World Bank are holding back on what is for them extremely small loans whilst the IMF is happy to lend over $100 billion each to Ireland and Portugal yet they are holding back on $3 billion for Ukraine. This says everything as successive Ukrainian government policies now come back to haunt the financial sector.

Money markets operate totally on trust. At present Greece is going through very painful financial reforms that are hitting just about every sector of society but unless they go through the pain nobody is going to lend them a cent. Portugal and Ireland have been somewhat more successful as they have delivered on their promises and in return they have received support. As for Ukraine it is generally understood that the exchequer of almost every government since independence has leaked like a sieve, that the current economic policies are equally short term, that the objective of most politicians is to plunder state assets and that the rule of law can be bent in favour of he who pays. Is it therefore any wonder that the international financial markets are growing bored with and even hostile toward Kyiv?

Ukrainian parliament – bad in practice, bad in attitude
Verkovna Rada’s response to the global shock at the depravity of Ukraine’s legislative body, which was exposed when visiting Polish dignitaries filmed Ukrainian deputies fraudulently voting on the behalf of absent members, was to do nothing. In April 2011 an average of 90-100 out of 450 deputies were absent from plenary sessions, yet somehow the system records show that the vast majority of these supposed absentees successfully entered their cards and voted. It is worth noting that this trend is common amongst all parties including: the Party of Regions, Yulia Tymoshenko Bloc and Nasha Ukraina - Narodna Samooborona. Although this practice highlights a certain camaraderie and trust amongst the ruling elite – it has quite the opposite effect on the relationship between the rulers and the people and demonstrates either profound ignorance of democratic duty of a flagrant disregard of it.

Adding insult to injury, Parliamentarians overturned a proposition on March 12 to revise the law on personal voting, ensuring the continuation of the current practice unabated. Commenting on the refusal of reforms Oleksandr Yefremov, Leader of the Party of Regions, mentioned that in his opinion the remand of deputies’ ability to multiple vote would result in the whole of the Ukrainian legislature grinding to a halt.

In summary the discredit earned by Verkovna Rada’s practice is exceeded only by its attitude towards it, since the political elite have no apparent interest in reforming any aspect of the system that serves them so well is it any wonder so many Ukrainians see no point in participating in it.

People First Comment: The solution to this dilemma is simple… abolish Verkhovna Rada after all today it serves no real function beyond legitimising the decisions of the President and the parliamentary majority. There is no tangible link between the Rada and the people, few deputies ever attend parliamentary sessions or visit their so called ‘Constituencies preferring to run their corporate empires, all the decisions are made in Bankova Street and the Cabinet of Ministers and the voting system is nothing more than a rubber stamp. Therefore Verkhovna Rada serves no political purpose and provides nothing of benefit to the nation.

Lets end the farce by saving the tax payer millions in salaries and operating costs and let the President and his Regionaires run the whole thing. It would mean admitting that Ukraine is no longer a democracy but then we have all known that since the last elections. But on the positive side there would be no need to harass the opposition as there wouldn’t be an opposition to harass…

What is really needed is a total redesign of the entire political system from the ground up that removes immunity from prosecution thereby taking away the need to mix business and politics, re-establishes the morality and primacy of the law, creates a truly accountable system in both public and financial terms, that has checks and balances to prevent the current abuses of power and takes corruption by the horns. All that is needed is the political will, the desire to see Ukraine truly excel and a team of new and much younger politicians who can visualise the future as opposed to idealising the past. Until then we’ll just have to put up with the farce and pretend to be a democracy.

13 June 2011

UK Universities and Tuition Fees

The UK Government and universities have been accused of keeping parents and students in the dark over the 2012 tuition fee increases.
From 2012, universities will have the power to charge a maximum of £9,000 for academic courses - a treble in fee increases. When the legislation was passed by parliament last year, students were told they would receive clear information over the rises but the coalition government has been found wanting. One in three teenagers admits knowing little or nothing about how the changes will work.

Parents have also claimed that they too have been left in the dark in relation to the fee's their children will have to pay. Tuition fees are set to soar in 2012 but can universities really justify the dramatic rises if one in three teenagers are left clueless about how the changes will work and how they will affect their learning. Universities have to take the lead in making sure parents and students have the facts in front of them when they are deciding to apply for university. The institutions can't take for granted the record number of applications that are expected in 2012.

Gaining a place at one of England's premier Universities is becoming harder and harder. 200,000 pupils are expected to miss out on university places this summer because of increased competition with universities having to look at GCSE grades when deciding a candidate's suitability for a place.

Parents have called on the government to publish what universities will be charging the full £9,000 a year and what ones have opted for a small increase. It is damning of our education system when pupils are having to look past a top university that they have the grades to get into but are unable to afford it.

The university system needed changing. Universities have called for extra funding for years and the standard of some institutions has dropped because of it. The fact of the matter is that there are simply too many universities in England. The Labour Party's belief that every pupil should have the opportunity to go to university was admirable but was it was never practical. Our academic institutions should be backed up by standards. If England had fewer universities but those institutions were given extra funding, more places would be available and standards would increase.

The fact is there are too many sub-standard English universities that have lowered standards across the board. With more people going to university than ever before, the choice may be vast but the standards are poor.
Parents are mindful of this and students are being discouraged from entering University all together. There are no guarantees over employment at the end of any course, plus the huge amount of personal debt twenty something's are in in England it hardly seems worthwhile for some parents.

The government and the universities must work together to ensure that all students, parents and schools know the changes, know what the extra increase in fees will mean and detail exactly how the money will be spent. A failure to do this could be catastrophic for the university system in England.

06 June 2011

Foreign Nationals in Ukraine - Temporary Residency Permits

News from our friends at PWC.

The Ukrainian immigration authorities have implemented compulsory Interpol checks within the procedure of issuing temporary residence permits (TRP). This increases the duration of the initial procedure to five working days.
At this stage, there is no requirement to perform the same check while prolonging a TRP.
There is currently no official legislation regarding the procedure for obtaining/prolonging Ukrainian temporary residence permits. Therefore, some additional documents might be requested during the application procedure by different immigration authorities (e.g. the procedures and documents are different at the Kyiv and Kyiv Region immigration authorities).
Taking into account the continual changes in the list of required documents, applicants should be prepared to provide additional supporting/confirmation documents and information and allow sufficient time in the process to allow for such additional requests.

NOTE: The Kyiv City immigration authority has been audited by the Prosecutor's office for the last several weeks and we are aware that documents related to the registration of a number of foreign nationals in Ukraine have been seized. The audit has also resulted in some staff changes, including the appointment of the new acting Head of the Kyiv City immigration authority.

05 June 2011

The Great Brain Drain

News has reached me that an increasing number of so called 'middle class' in Ukraine and even more of the 'Oligarch Class' are leaving the country. This is a trend that is seen in the Russian Federation also.
What does this mean. Traditionally many so called 'rich' in Ukraine elected to send their children to school in the United Kingdom. We all know that the UK education system is still seen as the best in the world and the best route to a UK university place and eventual entry to the London 'Club'.
That elite group of people who live and 'work' in London but are not British. But they have the power and wealth to do just about anything they want in the one of the worlds financial capitals.

Many of these 'children' are now being joined by their parents.
Ukrainians see the opportunities of living and 'working' in the UK. e.g. A real legal system that works and provides protection to all people free from political interests/threats. The pure fact that all residents/citizens are treated equally etc.

The UK offers a very simple method for living in the UK. Invest GBP 1 million and hey..Bob's your uncle you are a member of the club. (The former Major of Moscow and his wife can verify this). For many Ukrainians and Russians, the amount of GBP 1 million is like pocket change.

Now, please do not misunderstand me. The BBCU has helped many of these people find the correct 'solution' to living in the UK. We have no problem with helping people through the pure legal process of living and working in the UK. At least these people will never be a drain on the UK for support etc.

These people and their families bring a significant amount of investment to the UK. They purchase property, employ people and spend money in the UK. For example it is common knowledge that Ukraines richest man Rynat Akhmetov recently purchased the most expensive apartment in London.

What does all this mean for Ukraine?
Well firstly, these people keep all this a very big secret. They are all preparing for 'the future'....
what ever the future may hold...it demonstrates they hold very little confidence in the long term future of Ukraine. It doesn't matter which political party they support, the outlook is still the same. Each and every family are preparing a 'bolt hole' in which to escape Ukraine when the time is right. Maybe right now they are enjoying the fruits of their labours or positions of power.
But they all anticipate that ONE DAY it will all come to an end.

The United Kingdom of Great Britain and Northern Ireland - mainly LONDON offers and provides the 'bolt hole' they are seeking.
The British public are complaining so much about the level of 'asylum seekers' coming to the UK, but very little is mentioned about the increasing number of 'Rich - Investment Visa" seekers now entering the UK.

01 June 2011

A Message to ALL Government Employees in Ukraine

Message to All Government Employees in Ukraine

I have been asked to pass on this simple message and hopefully you will also:

To: All State Employees in Ukraine
The SBU (State Security Service) is watching YOU.
If you are involved in bribery and or any form of corruption
YOU WILL be sent to court and punished for your crimes.

Please pass on this message both verbally and in written form (translated) to any government
employees in your network.

Thank you