Ukraine may finally be opened up for business

The new president offers hope for a more open economic climate, writes Chris Stephen in Kiev.

Ukraine's future is orange, following the success of the street revolution of the same name, but is it bright? Dr Frank McGovern, the Donegal-based director of the country's biggest software company, certainly thinks so.

Dr McGovern is scouting for an Irish IT company to go into partnership with his firm, Kvazar-Mirco, confident that the Orange Revolution means Ukraine is finally open for business.

"Everything's changed in Ukraine," he says. "Under the old regime there was absolutely no incentive to do business. The last government didn't care about business as long as they were doing okay."

He is not the only one to feel the new buzz. Mr Stuart McKenzie, managing director of Pulse, Kiev's biggest advertising agency, says: "Before, it was all about the government and their own people controlling things. The Orange Revolution should clean it up."

Under the former regime of president Mr Leonid Kuchma, Ukraine was very definitely closed for business. The economy was dominated by a handful of tycoons so powerful they were nicknamed oligarchs because they bestrode the worlds of business and politics.

Their power was made plain last summer when the state's biggest steel combine, Kryvorizhstal, was sold for about half the price US bidders were willing to pay to two tycoons one of whom, Mr Victor Pinchuk, just happens to be Mr Kuchma's son-in-law.

Now, with a new president, Mr Victor Yushchenko, about to be installed, business leaders in Kiev hope the arm-lock of the oligarchs will be broken.

"Now that the politics is sorted out, there's a very favourable business climate," says Dr McGovern, who got a doctorate in philosophy before turning to IT. "It's an exciting time; we're at the very beginning."

His faith is based on Mr Yushchenko's record. A former head of the Central Bank, Mr Yushchenko was a prime minister under Mr Kuchma and was credited with starting market reforms. He was sacked, say supporters, when he ran up against the oligarchs.

Mr Yushchenko's success, and the prospects for western companies, will depend on whether, in the long-term, he can wrestpower from these oligarchs.

Kvazar-Micro chairman Mr Evgeni Utkin shares his colleague's optimism.

"The revolution changed the country, it gave us confidence," he says.

"Ukraine before the revolution had no vision, no mission, no national idea. Now Ukraine has a mission."

That mission, he says, is enterprise. "People voted not for Yushchenko but because we want to live in an individualist Ukraine."

In Soviet times, Ukraine was a centre for science and technology and it has a strong science base that companies such as Kvazar-Micro plan to exploit.

It has begun setting up an outsourcing department to take advantage of the country's 25,000 certified programmers.

Mr Utkin is an ethnic Cossack, a proud people from southern Ukraine with an intriguing heritage. He has produced a jazz CD containing the music played to the crowds through the long cold weeks of protests and insists jazz is a metaphor for the Ukrainian people, who prefer running their own show to being organised, Russian-style, into big enterprises with harsh, inflexible bosses.

Problems litter the road ahead. Beneath the surface, the machinery of government and business are likely to remain the same for some time to come: bureaucrats relying on bribes to supplement their incomes, inefficiency and red tape.

But business leaders say that the revolution showed, above all, the hunger of ordinary people to enjoy the lifestyles of their Polish, Hungarian and Slovak neighbours, all now members of the European Union.

Foreign investors will also find a country that already has the basic services needed for business: there are US and European chambers of commerce and some specialised service companies to give advice. Enterprise Ireland will offer Irish businessmen help, albeit without an office in the country - the nearest one is Moscow.

Mr McKenzie says the market began to grow three years ago, with Nescafé, Procter & Gamble and Jacobs all moving production plants to Ukraine, a country with a lot of hungry, increasingly affluent customers.

"There's a good educated workforce, there's people doing business in the city, and this was even before the change of government," he says. "And how many markets of 50 million people are there left in the world?"