MK: Our next speaker is Mr. Morgan Williams. He is the President of US-Ukraine Business Council. He might be more specific about what’s going on in Ukraine now. Because very recently, we know very well, he went to Ukraine, he took an active part in the Council of Investors under Yuliya Tymoshenko’s Cabinet of Ministers. We saw how persuasively and encouragingly he talked there, and I think that’s a very good sign that things are going in the right direction in Ukraine. Couple of words before Mr. Williams will come to this microphone.

Morgan Williams serves as President/CEO of the U.S.-Ukraine Business Council (USUBC). He was elected Chairman of the USUBC Executive Committee in 2005 and as President in 2007. Under his leadership the USUBC has significantly increased its membership and programs.

Williams is Director, Government Affairs, for the Washington Office of the SigmaBleyzer Emerging Markets Private Equity Fund. This fund is managing around 1 billion dollars of assets in Ukraine, so it is a significant contribution to Ukraine’s development.

Mr. Williams has worked in the field of international economic and business development for almost thirty years. He was born in Kansas, USA, and holds a BA degree from Ottawa University in Kansas and a MA degree in economics from the University of Kansas.

Williams started his work regarding Ukraine in 1992 (very long time ago at those turbulent times) as senior advisor to a major food system development project in Russia and Ukraine working with U.S. agribusinesses that were investing in the former Soviet Union. From 1997 to 1999 Williams was president/CEO of a private agricultural input finance company in Kyiv.

Williams is the founder and publisher of the Action Ukraine Report (AUR), an electronic news and information service that has been distributed worldwide for the past six years. Essentially Mr. Williams was doing what our government should have done during those years.

Williams serves as a member of President Yushchenko's Committee for the 75th Commemoration of the Holodomor 2007-2008 and as chairman of the Exhibition Committee of the Ukrainian World Congress (UWC) International Holodomor Committee.

So I could talk about Morgan Williams more and more, because his achievements are great and his career track is also great. I will just defer all these words to him, and please join me in welcoming Mr. Morgan Williams.

MW: Thank you very much! It’s very much a pleasure to be here today. I am in a very good mood today, because he did mention I went to Kansas University. And of course Kansas University won the basketball game last night and made it into the final eight. Sunday night, it is going to win again and make it into the final four. And that scores for Kansas U as a university that started basketball under Doctor Naismith a long time ago and that deserves its right for play in basketball, of course. We are very pleased about that.

To talk about Ukraine being on the road to Europe, it is a great subject and it’s a great topic. And of course there is some meeting coming up soon about NATO. Regardless of what happens about NATO, Ukraine is still going to be on the road to Europe. For those of us in the United States, we would like to talk about Euro-Atlantic integration, not just the integration into Europe. I would suppose, a broader term is to say – Ukraine’s integration into the world. Into the world economic system, into the world community of nations, where they have discovered how you create wealth, how you build wealth-creation capacity, how you can create jobs, how you can enter into a modern business system, be part of the world community and not be isolated.

It is an exciting time for young people, and for the young people in this room! I can’t think of a more exciting time in the last two-three-four hundred years of Ukraine’s history. I mean you have a chance to be in a free society, you have a chance to be in an emerging democracy. You have a chance to be in an emerging private equity system. The demand for talent in Ukraine today is enormous! And so are opportunities to do what your parents never could have done in Ukraine, only if they left Ukraine. So you now have opportunities in Ukraine that only those people who left Ukraine had for the last two-three hundred years. And you don’t have to leave Ukraine any more to have that kind of opportunities that are there today.

I have just got from the conference in London, a three-day Ukrainian investment conference. Wonderful conference! What I loved about that conference, Chrystia, is that they didn’t want to talk about EU, they didn’t want to talk about NATO, they didn’t want to talk about 2012 except from business point of view. They didn’t want to talk about: do we get in the EU in 2020, 2030, 2040? Or when are we going to get to the NATO? And all that foreign policy stuff to get Ukraine where it wants to go. They wanted to talk about business: how they are going to move ahead, how they are going to create jobs, how they are going to get an IPO, how they are going to use the money out of London, or money out of Warsaw; where they are going to find talent that they need for their businesses. Every law firm, I think, in Kyiv was up there looking for lawyers. If you are going into Law or you are in the Law, no problem of getting a job back in Ukraine. And that’s a good sign that things are good. Every law firm in Ukraine is looking for attorneys. They are stealing them from each other, and they are offering somebody twice what they were getting paid. So salaries are going up, there is a great demand for auditors, accountants, financiers, lawyers – it’s just amazing! And what I liked about London was that most of the people were middle-aged or young, most of them have been trained in Western Europe or in the United States. Most of them have got an idea that you didn’t have to take this box and argue about how we would split the box in half, and maybe if I don’t like it, I’ll shoot you or renegotiate or I’ll take it away from you. They wanted to talk about the box and how you could turn it into the building. Do you want to have half of the building or do you want to have half of a box?

Finally, Ukraine is coming along where they can have some concept of how you create wealth, and how you move a society forward. And, Chrystia, this was sponsored by Adam Smith Institute, and I was telling them they should be still passing out the “Wealth of Nations” in Ukrainian. Because Soviet system, the communist system had no concept of the wealth of nations, they had no concept of what Adam Smith knew was important for a country and for the welfare of its citizens – to create jobs, to move society along, and to have education, have health care. They had no concept of what he knew hundred something years ago and we all learned in Economics 101 (as long as we were not in Soviet Union) about the creation of wealth.

What’s interesting to me – and most people miss it – is that the road to Europe, the road to the world, the road to United States, the road to future is not being driven by the political community much in Ukraine. They are doing about everything they can to mess it up – zigzag, give one signal, give another signal, don’t pass the legislation, now they are in the WTO, but they haven’t even got Rada together since they got a new government in and passed the final little deal they had to pass so that they can be officially the member. There have not been enough reforms in Ukraine over the last few years. You can put them all on one piece of paper. What’s happening is that business community, the people of Ukraine in the business community are driving the road to Europe and drive to integrate Ukraine to the world. The for-profit sector and not-for-profit sector. So the most important thing that is going on in Ukraine is that it’s now a private sector for the first time in a long time and that private sector is being energized, it now has funds, it now has talent.

One thing that you miss about most societies in the world that are modern societies is that they have a huge not-for-profit sector – a huge not-for-profit sector which we need to continue to build in Ukraine. And Ukraine still has got bad laws for the profit sector, and bad laws for the not-for-profit sector. You can’t make donations the way you should be able to. You can’t do the kind of things that you need to do. But is spite of that, the private sector is growing: the not-for-profit sector and the profit sector. And that’s driving Ukraine, driving Ukraine into the future, and it is really driving Ukraine into Europe, it’s driving Ukraine into Euro-Atlantic integration.

You have real middle class in Ukraine, now for the first time. And this is wonderful. This middle class demands goods, they demand better apartments, they demand better cars, better services, and so they now have money. And this middle class is driving economic demand in Ukraine, in spite of the fact that there have been no reforms, and in spite of the fact that there is almost total political instability. You say: how could Ukraine still grow 6-7-8-9-10 percent in that kind of an atmosphere? This is because the people of Ukraine, the middle class of Ukraine, they want better life, they want to come back home, they want jobs, so they are moving ahead. And when you take the middle class demand and you put in the country that sits between two of the largest markets of the world, with 47 million people – Chrystia, that’s the largest emerging market in that part of the world.

So it is Ukrainian businesses that are growing and move on and out of Ukraine in Poland and other places, and it’s also European businesses or international businesses – it’s a better word – moving into Ukraine, because they are all saying: Wait a minute? Why do we want to be left out of 47-million-person market if we are not there? So all the banks in Europe are buying banks in Ukraine. 6-7-8 billion dollars are spent buying banks in Ukraine. That’s great! They are going to bring in all kinds of money; they are going to bring in lower interest rates, they are going to want transparent accounting standards. The incumbent are just going to play around, they can’t really do business. And so if you are in Poland, if you are in France, if you’re in UK, your bank is here in Ukraine, and it’s a lot easier for you to do business there. So now almost every consumer business located in Europe regardless of where it is headquartered is now moving into Ukraine. You’ve got grocery stores, you’ve got supermarkets, you’ve got home good stores, you have got real estate companies, and shopping centers are going up all over Ukraine. That’s wonderful, because the entire international business community of Europe is now moving to Ukraine. Ukraine businesses want to move outside, because they want money from London, money from Warsaw, they want talent. So this is the integration of the business community of Ukraine being large enough and strong enough to move out of Ukraine, and all of the business community of Europe.

And again, if you want to be involved in Ukraine – don’t go apply for a job here with one of the US or international companies. If you do – fine, but they all operate in Ukraine out of their European offices. Don’t go to Procter and Gamble, don’t go to any of these companies and say – I want a job in the United States but I want to focus on Ukraine. The jobs are not in United States, they are all going to be out of Brussels, Geneva, London, Paris - that’s where they operate their European divisions. That’s where they operate things in that part of the world, and there are lots of opportunities there.

So you have your European banks, you have your European consumer goods (basically – international) companies, your real estate companies, your legal firms. Now you’ve got big UK law firms moving to Ukraine, and there is going to be a lot of mergers and acquisitions. Two Lithuanian guys came to Ukraine and with a bunch of Ukrainians created “Sandora” juice company. Pepsi bought it the other day for 600 million dollars. Why didn’t we start a juice company, you know? There are all kinds of companies now that were started after independence that are worth now a hundred, two hundred, three hundred million dollars. And established companies around the world who don’t want to start new business in Ukraine – they are coming and buying a going business.

It is just amazing – the kind of economic activities that are going on: a lot of it non-visible, a lot of it most people don’t know about, and it gets overshadowed of course in our country and in other countries by the political games that are being played and by other things like that that are going on. So it’s really an exciting time and it’s really an exciting place.

There are a lot of problems, and you have to go to Ukraine with your eyes open. You have to be very careful, if you have to be there for the long run. Ukraine doesn’t pay its VAT tax back. We have members of the US-Ukraine business association that are owed over two hundred and fifty million dollars in back VAT taxes. They say that Ukraine is the worst in the world in paying them back. All big rapid transport companies – UPS, DHL – will tell you that Ukraine is the worst country in the world in handling rapid transport packages. They can guarantee they can get your package to Borispol airport in 24 hours. After that, it’s up to customs. Maybe it’s a week, maybe it is two weeks, maybe it’s three weeks. Ukraine has totally Soviet-based corrupt customs service. They still have the concept of 100 percent control over every package – and it’s a disaster. Some of these companies took some Ukrainian customs guys to Europe to show them what happens in Germany. One day later these Ukrainians were trying to tell Germans they were doing it wrong.

We don’t really have a stock market in Ukraine. They haven’t passed good laws that you would really have a stock market. There is no commodity market in Ukraine. The Overseas Private Investment Corporation of the United States is still closed for Ukraine, because Ukraine needs to step up, be an international nation and resolve an 18 million dollars claim with United States government. There is no really economic or business code in Ukraine. There are two Soviet ones that contradict each other. A judge can pick one or the other – whichever you pay him most to pick. Legal system is totally corrupt.

But in spite of all these kinds of things, raidership is a big problem in Ukraine. You’d better be careful about your business and how you organize it. Most people want majority control, no such things as joint ventures any more. Because it’s still easy under Ukrainian law for somebody, if you have 30 percent, it will be 3 percent – they didn’t even invite you to the meeting, or they moved all the assets from the 30 percent to another company, and you would have 30 percent of nothing. So corporate raidership is not just through corrupt legal system, it’s not just through the fact their laws say all kinds of things and they contradict. It is also by physical force. A lot of businesses in Ukraine have been taken over by physical force, which is still a major problem in a society that doesn’t have a reasonable legal system.

And again, we try to tell them in Ukraine and the business community firms say: look, we aren’t looking for something unusual; we are not looking for something rare that nobody else has; we’re just looking for them to bring these things into standards, international standards that fifty other countries have. You don’t have to invent a wheel, you don’t have to go out and discover all the stuff. Just whatever is normal in the international business community that other countries have worked on and adopted.

So the US-Ukraine Business Council that I run – we’ve been very fortunate. We decided two years ago to expand, because Ukraine was expanding. We decided to become a full-time strong voice for Ukrainian business. Because again – the future of Ukraine is to drive the private sector. And the private sector is going to help drive the public sector. Because the public sector is going to lag behind like most politicians do in most countries of the world; they lag behind the citizenship, they lag behind the private business community. And finally as the business community is getting strong enough in Ukraine – they are going to start demanding some reasonable things. They are going to start getting rid of these 80 percent old Soviet apparatus, or the old Soviet laws or the Soviet… We met with Yuliya on the day of this meeting. The number one complaint was: “Yuliya, when are you going to get rid of these stupid stamps we have to sign? You go over there and you got a menu. Every media has got to have a stamp on it. You can’t travel without these stamps.” Yuliya promised to get rid of the stamps. Just the stamps – which is a major impediment. And you don’t have to have much of a cost to put millions of stamps on all these documents, but every time you have another document there is another chance for corruption.

Sure, there are lots of tough things going on, there are lots of bad things – and one kind of question is what economic development can be if they just passed the real reforms, if they just start bringing the things into normal. Every apartment needs to be rebuilt, every road needs to be rebuilt, every city needs to be built, tourism, all the kind of things – the economic miracle of Ukraine could just be astounding! It could be astounding if they could ever just push few reforms, just come into international standards. There is no Ukrainian way or other way. There is no conservative way or liberal way, or Democratic way or Republican way, or whatever. It is just the international business way that meets international standards.

I’ve got a friend who runs a candy company in Poltava. His dad was an engineer. The Soviet system broke up. He didn’t know anything about marketing, he didn’t know anything about finance; he was an engineer just trying to keep the candy company going, the machines going. He bulked up the truck and took all the candy to Russia. This place fell apart. He tried to keep all 300 women working for him. He tried to keep the thing going. But 10`000 percent inflation, no working capital, no branding, no markets – that’s the way the Soviet system worked. Finally, he brought in one of his sons, finally, he got a private investor to come in, and now they are producing ten times as much as they did. They are the largest taxpayer in the area; they brought in an international investor. It is amazing success story.

I know a young guy that I visited in 1993. He has just opened up a farms supplies store out in Rivne. We evaluated his business the other day – it is worth a hundred and eighty million dollars, and he owns 83 percent of it. I know four guys that started a software company in 1995. I found them an investor in 2000 that bought 51 percent. And now they all have 700+ employees. These are guys who are making money the old-fashioned way – they’re earning it. And that’s the future of Ukraine. Don’t steal it from the government, don’t steal it from your friends or your father-in-law happens to be a president. And the wonderful thing is that I am not really concerned about all the oligarchs. They’ve got their deals, it’s too late, Yuschenko said he was going to send them in jail, but he didn’t send any of them to jail. They said we’re going to reprivatize some of these companies that they stole; they ended up reprivatizing one of them. They had to get together and say – here are the worst ten or worst fifteen, everybody else is free. What that one company, Kuchma’s son-in-law and the other guy behind – what’s his name? I forgot. You all know. They bought it for 800 million. They (government) took it back and sold it to steel company for 4 billion!

So you don’t need to steal wealth in Ukraine, you don’t need to get it from your political friends; you don’t need to get it through corruption. There is just plenty of money to be made in Ukraine through old-fashioned way – by earning it. That’s the future of Ukraine. And so I think that’s exciting, Ukraine is growing, you can create wealth, you can create jobs. The civil society needs to be built and also the not-for-profit sector. I just think for young people – it is so exciting, the opportunities that you have in whatever area you want to contribute. Get your education, go to Ukraine and have a wonderful life!

Thank you.

MK: Thank you, Mr. Morgan, for your exciting presentation. I think if there were ten such presentations not only here, but in Ukraine in Ukrainian, then maybe Ukrainians would believe by themselves that that’s what they deserve. Because very often people look around and just see – oh, that’s the way it is, nothing is going to change. But once it’s outsiders that are telling them about that, then they start thinking really seriously. That was just a side remark.