Evaluating Dmytro Firtash's Plan to Save Ukraine

Evaluating Dmytro Firtash's Plan to Save Ukraine
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A-list European politicians have teamed up with polarizing Ukrainian businessman Dmytro Firtash in a last-ditch attempt to keep Ukraine even-keeled as it navigates the rough waters of economic downturn, war and corruption. Through the Agency for the Modernization of Ukraine (AMU), announced earlier in March after a conference in Vienna, Firtash promised to come up with a master plan to attract a whopping $300 billion for the beleaguered country in the next 200 days. The self-styled "Marshall Plan for Ukraine" seeks to address the structural deficiencies in the Ukrainian society, restart growth and lift Ukraine from its status as the former soviet bloc's worst performing economy.

Firtash's announcement was met with raised eyebrows both at home and in the West and has even been dismissed as a PR operation meant to whitewash his reputation. Indeed, Firtash is currently based in Vienna where he is fighting extradition to the United States on charges of bribery of an Indian official. He has pleaded not guilty and has received a first favorable decision in March that deemed the prosecution failed to provide enough evidence to substantiate its claims.

The AMU is the result of months of behind the scene talks with politicians from Germany, France and the UK and has even attracted the support of Ukrainian President Petro Poroshenko. German former minister of finance Peer Steinbruck is in charge of finance and tax reform, France's head of the employers union Laurence Parisot will present policies to reform the economy while former South African President and Nobel Prize winner F.W. de Klerk is tasked with the reconciliation programme. At the same time, Conservative peer Lord Risby has agreed to lend his name to the AMU and to participate in the policymaking process.

In September, at the end of the 200 days, the AMU will present a master plan containing policy recommendations and investment projects worth $300 billion. Firtash has suggested that Europe and Russia should equally share the responsibility of providing the funds for Ukraine's reconstruction - an idea that was criticised as a policy of appeasement towards Moscow.

But nothing could be further from the truth. As things stand now, the West and Russia have become so entrenched and ossified in their siege mentality that there is little likelihood for a peaceful or otherwise enduring negotiated outcome. The implementation of the Minsk II Agreement, despite being hailed as a major step forward in achieving peace in Ukraine, has run into trouble as the separatist rebels and Kiev fail to agree on the specifics. Meanwhile, the ceasefire is routinely breached, with four Ukrainian soldiers killed in the most recent separatist shelling of April 5.

The interesting point in Firtash's AMU comes precisely from this proposal of locking the two warring parties - Europe and Russia - in a win-win scheme. Often called "building the golden bridge" in management and negotiation theory, the method argues that when parties are increasingly dissatisfied and unsure of a conflict's solution, the best way of solving the impasse is finding the mutually satisfactory solution and building a bridge to agreement. The solution - in this case, Ukraine's economic reconstruction - should therefore look like a solid victory for both.

If the EU's interest in stabilizing Ukraine is beyond a shadow of a doubt, Russia's interest has rarely been mentioned, as pundits rush to find the most evocative epithet for Putin.

However, what use would Russia possibly derive from a Ukraine unable to buy its imports (read, natural gas) or, even worse, a collapsed Ukrainian state, bereft of a functioning government and beset by rebel militias a mere 400 kilometres away from Moscow? No country, however animated by imperialistic designs, would tolerate a failed state on its borders. Ukraine's economic reconstruction becomes therefore paramount for both Brussels and Moscow and should be used as bridgehead.

Furthermore, excluding either party from the reconstruction process would have an alienating effect and would escalate tensions even more. Knowing that Moscow is largely responsible for Ukraine's disastrous economic outlook, any involvement by the Russian government in a process of economic reconstruction would virtually amount to unofficial reparations of war. Bringing the two sides at the same table, enticed by the prospect of the hefty returns on their investments a resurgent Ukrainian economic would offer, and locking both East and West over a common project to reform the country could arguably amount to a silver bullet.

Ukraine's government has recently announced plans to put 1,200 state-owned firms up for grabs in an effort to stamp out graft and raise funds to prop up the country's economy. A privatisation wave of such magnitude is bound to increase the appetite of oligarchs, old and new, and increase the risks for Ukrainian democracy. In a separate development, on March 24, Moody's downgraded Ukrainian bonds and estimated that "the likelihood of a distressed exchange, and hence a default on government debt taking place, is virtually 100 percent".

Such being the case, any coherent plan meant to shore up Ukraine's economy is more than welcome. With European heavyweights in charge of Firtash's AMU, Poroshenko's plans of de-shadowing and de-oligarchisation of Ukraine might very well find a long overdue solution. Upholding the principles of the Euromaidan revolution requires above all a retrenchment in the power of a corrupt elite and the emergence of a new Ukrainian republic.

With the AMU, Firtash has therefore emerged as a pleasant surprise and has positioned itself as part of the solution for Ukraine. Calling the initiative a "PR operation" would obscure the real benefits that could come from the proper implementation of the September master plan. It would be a shame to dismiss it merely because some in the West frown at the mention of Firtash's name, at least until Brussels, Moscow, Washington or Kyiv come up with a better solution.