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Prytulak   InfoUkes Posting   24-Sep-1997   Aid to Ukraine (Less than meets the eye?)
Date:  Wed, 24 Sep 1997 12:08:10 -0700
To:  [email protected]
From:  Lubomyr Prytulak
Subject:  Aid to Ukraine (Less than meets the eye?)
TO WHAT DEGREE DOES THE WEALTHY WEST HELP IMPOVERISHED UKRAINE?

I have noted in my two postings of September 23/97 "Japanese aid to Ukraine" and "Aid to Ukraine (from the United States)", and in my one posting of September 24/97 "Aid to Ukraine (from the World Health Organization) that the aid flowing to Ukraine seems meager in comparison to that flowing to other Newly Independent States.  In the present posting, I wish to suggest that the amount of assistance actually received by Ukraine is smaller than the figures commonly cited in the press may suggest.

IDENTIFYING THE DONOR COUNTRY IS NOT ENOUGH

In the first place, it may be helpful to distinguish the source of the aid within each donor country.  If the donor country is the United States, for example, then one may still distinguish funds that are allocated by the government from funds that are voluntarily contributed, as from the Ukrainian diaspora.  On this subject, we see that government figures are sometimes inflated by having included within them the value of voluntary contributions:

[Members of the Clinton Administration] are misrepresenting the real level of support they provide.  Just as one example, $23 million of the $330 million which the administration claims [as being allocated to Ukraine] is, in fact, in their own words, the "value of private, charitable donations which they only transport."  This means that donations made by your readers are claimed by President Bill Clinton as U.S. government aid in order to inflate the bottom line.  (Senator Mitch McConnell, Letter to the editor, The Ukrainian Weekly, October 27, 1996, p. 7)

A small example from my own experience reinforces the notion that such taking credit by the government for personal contributions is not an altogether isolated or rare phenomenon.  Specifically, when I went to Ukraine in 1995 on a Canadian Bureau for International Education (CBIE) grant, I bought in Ukraine one computer and one printer using grant money, but also bought two computers and two printers using the private money of myself and my brother, Myroslaw.  In its summary of projects, however, the CBIE took credit for all three computers purchased, and for two printers (it would have taken credit for the third printer as well, but lost count and overlooked it).

BREAKING DOWN THE FIGURES

Large sums of money are often mentioned in the press as flowing to Ukraine, but almost always the quality of reporting is low, and no attempt is made to break down the figures into outright gifts as opposed to loans that will have to be repaid, perhaps with interest; and no attempt is made to break down the figures into where the money is allocated and who actually receives any benefit.

One item that has been mentioned in the press recently is that John Deere agricultural equipment � harvesters or something like that � that were recently sent to Ukraine all ended up on collective farms.  Thus, although this equipment did have the small beneficial effect of slightly increasing the efficiency of Ukrainian agriculture, it at the same time had the large harmful effect of strengthening collective farms against pressures to privatize.  It might be argued, therefore, that the net effect of the John Deere transaction was harmful�-had the John Deere equipment not been given to the collective farms, they might have been broken up and privatized all the sooner, and that the benefit to the efficiency of Ukrainian agriculture of such a privatization would have been enormous.  Furthermore, if the equipment was purchased with money loaned by the United States to Ukraine, then the Ukrainian taxpayer will be burdened with payments of principal together with interest into the indefinite future�-and these would be payments on a loan whose effect was chiefly to preserve the antiquated and destructive institution of collective farming bequeathed from the Communist years.

Without going into specific detail, it may be supposed that many projects funded with Western assistance are wasteful or counterproductive in a manner more egregious than the borderline case of the John Deere project cited above, and that some of the money may even be misappropriated or stolen, so that the amount that might accurately be credited with helping Ukraine would be lower than the sum cited.  If money is loaned at interest, and if the purpose of the loan is to fund a project that will bring little benefit to Ukraine, or if the money will be stolen, then the prime beneficiary of the loan will be the lender who reaps the interest, in which case the loan might be characterized as aid from the Ukrainian taxpayer to the lender.

A CASE HISTORY

Consider my own limited experience.  In 1995 I received a Canadian Bureau of International Education (CBIE) grant to teach computer programming at the Institute of Mathematics in Kyiv.  Let me tell you a few of the details.

Creative Accounting.

In the first place, the amount of the grant was subjected to some creative massaging with the goal of allowing Ottawa bureaucrats to inflate the accomplishments of the program.  For example, my grant was supposed to be $10,000.  However, it turned out that $3,500 of this was allocated to travel.  When I called my travel agent, he informed me that I could get a Vancouver-Kyiv return ticket for $1,628.  Accordingly, I requested the CBIE to allow me to buy my own ticket, and to allocate the unspent travel money to computer purchases.  The CBIE refused�-it insisted on buying the plane ticket, and subtracting $3,500 from my grant.  The loss to a grant recipient traveling not from Vancouver but from Ottawa would have been even greater, as his return ticket � had he been allowed to buy it himself � would have fallen even farther below the $3,500 travel allowance than the $1,628 that I was quoted in Vancouver.  Thus, while claiming to be handing out grants of $10,000, the CBIE was in reality handing out grants of $7,500 plus return airfare, which cost them less than $10,000.

Most of CBIE Money was Spent Outside the Countries Targeted for Aid

But my main point is that most of the money spent by the Canadian government in support of my project was spent outside Ukraine and provided no benefit to Ukraine.

In the first place, when the Canadian government allocates funds to Ukraine, then some of it is spent in Ottawa to administer the aid�-to be paid are salaries, office rent, phone bills, computers and filing cabinets, paper and postage and so on.

In my own case, there was my plane fare from Vancouver to Ottawa for three days of an obligatory orientation.  Had I not flown on to Kyiv immediately after, then there would have been the additional plane fare back to Vancouver, then to Ottawa once more, and only then on to Kyiv � an option I was allowed to elect.  Air Ukraine was not used for any leg of the journey�-it was always Canadian Airlines or Lufthansa.  On the return leg of the journey, I was obligated to spend the night in Frankfurt�-so we have a Frankfurt hotel and restaurant being paid by the Canadian taxpayer who was under the impression that all of the CBIE money was being spent on aid to Ukraine.  There were the hotel and food expenses for an obligatory three day orientation session in Ottawa.  There were the anthropologists and sociologists and historians and political scientists who spoke to us and who had to be transported to Ottawa and housed and fed and paid for their services.

Were we to add up the total cost of sending me to Ukraine � not only my grant itself, but also the amounts spent on air fare, hotels, the three-day orientation meeting in Ottawa, and the costs of the Ottawa bureaucracy managing the CBIE project, then it would likely be discovered that the vast majority of it was spent outside Ukraine and produced no direct benefit to Ukraine.  And yet, it is probably the case that the full budget of the CBIE project is credited as aid to Ukraine, or more accurately as aid to Eastern Europe and the NIS since Ukraine was only one of the targets of the CBIE.

Some of the CBIE Money is Wasted

My three-day orientation in Ottawa was sometimes fun, and a few of the other grant recipients were very interesting people � but did these three days benefit Ukraine?  No, they did not!  Did they make me any more effective in delivering aid to Ukraine?  Decidedly not!  They were not in the least bit helpful.  I think that some of the other grant recipients would disagree with me and claim that the three-day orientation helped them, but it did not help me.  A few of the speakers were knowledgeable and interesting � but this in no way enhanced my effectiveness or helped Ukraine; and at the same time, other of the speakers and discussion leaders were neither knowledgeable nor interesting.  I recollect that one of my fellow grant recipients arrived more than an hour late for one of our sessions, and I leaned over and whispered to him, "I've been taking notes of the important points for you," and then showed him a sheet of blank paper.  The two of us shook our heads in disbelief that the silly diagrams sometimes made up by lecturers with only rudimentary training in the social sciences to bolster their trite theories were being dutifully copied by some of the grant recipients, as if in the event of being confronted with a thorny situation in Ukraine, they would consult the pair of triangles in their notes to determine the optimal course of action.  I told one of the other grant recipients that I thought that the real purpose of the three-day orientation session was to recruit agents for Canada's spy agency, and that any grant recipient observed to be copying down those silly triangles was rejected for consideration as a possible agent on the grounds of stupidity�-however, I think my joke misfired and I hurt her feelings because she had been one of the people who had copied down all that had been put on the board.

Although I will not comment on whether my own project did any good, I will comment on some of the other projects.  In a small number of cases, the other projects were truly excellent; however, several of them were a total waste.  One woman was going to the Czech republic to build a Canadian-style wood frame R-2000 house; however, the two other people who had initially planned to go with her who might have been able to pull the project off had reneged leaving her alone.  This woman had no training in architecture, or in engineering; she had no background in construction.  She had no blueprints, no tools either with her or promised at the other end, no land, no lumber, no nails, no concrete, no trucks, no bulldozers, no promise of cooperation from the Czech government.  She had never built such a house herself, never participated in building one.  In short, she had nothing and would accomplish nothing, and yet the Canadian government was paying for her trip and counting it as money spent aiding Eastern Europe.  She did have a Czech lover from a previous visit during which she had taught ESL, and her main concern was whether he would show up to meet her upon her arrival, as the relationship was of uncertain solidity.  She was a delightful person, vivacious and intelligent, a good companion on the tedious journey eastward, and it pains me to speak so negatively of her, and it is only in evaluating the good that she brought Eastern Europe that I am forced to do so.

This brush of mine against the Canadian foreign-aid establishment encouraged me to believe that to some degree government grants are allocated not to the most deserving who will accomplish the most good, but to those who have learned the skills of getting the grants whether they are going to accomplish any good or not.  A good sociologist examining the CBIE project with critical eyes might conclude that one of its unrecognized latent functions�-perhaps even the main one � was the providing of employment for Canadians who might otherwise be unemployable.

CONCLUSION

And so I say in conclusion that the numbers that one sees in news reports concerning the amounts allocated to helping Eastern Europe or Ukraine or whatever, are exaggerations of the benefits that are actually conferred or the wealth that is actually transferred � much of the money may be loans that have to be repaid with interest; much of the money may be spent on projects of dubious merit; much of the money may be spent in the West itself; some of the money may vanish into secret Swiss bank accounts. Thus, perhaps it is the case that the seeming flow of wealth from the West to Ukraine is in reality a mere trickle.

A CONSTRUCTIVE PROPOSAL FROM ANOTHER PLANET

If the above sounds negative, then I am able to end this discussion with a positive and constructive proposal.  I do have a way of cutting waste and guaranteeing that all of the money allocated for foreign aid does benefit the targeted country.  The down side of my proposal is that it involves a paring down to close to nothing of the Ottawa bureaucracy presently managing aid funds � although this might be viewed as an advantage by the taxpayer, it will obviously be opposed by the bureaucracy whose down-sizing is contemplated.

My proposal is simply to take whatever funds are presently allocated to helping Ukraine, and to reduce the tax burdens of Canadians importing from Ukraine by that amount.  That's all!

Thus, no bureaucracy whatever would be needed in administering aid to Ukraine, other than the existing staffing at Revenue Canada.  Every cent lost to the Canadian government in the form of reduced tax revenue would directly benefit Ukraine.  There would be no purposeless or aborted projects � as the only beneficiaries of the tax deduction would be Canadians who actually found something in Ukraine worth buying, and those Ukrainians actually able to produce something saleable � and I am thinking now beyond the big things like MRIA airplanes or minerals, to the smaller things that may be produced by small groups or even by individuals, like wood carvings, embroidery, books-magazines-newspapers, computer software, songs, paintings, pottery, musical instruments.

But I realize that this is a proposal from another planet, and has no chance of winning support or of being implemented � too many Ottawa bureaucrats will step forward to prove that their expertise is essential to managing foreign aid funds, and things will go on as they always have.

One thing that should not go on as it always has, however, is our description of what is happening�-and that description should begin to reflect that much of the wealth purportedly being transferred from the West to Ukraine never actually gets there or never actually accomplishes any good.

Lubomyr Prytulak
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