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Leonid Chernovetskiy interviewed by Correspondent magazine

During your tenure, the majority of attractive land plots and real estate were sold or leased for long periods. This effectively left Kiev without any free land or premises.

– Kiev has enough real estate, which – if privatised properly – will continue to generate dozens of billions of dollars for the city’s budget for many years to come.

For example, community markets have nothing to do with the city management. Their daily shadow turnover reaches millions of hryvnias collected by mafia, on the one hand, and by officials, on the other. We simply need to privatise these markets, which should bring in hundreds of millions of hryvnias in immediate revenues to the city budget.

At the same, these markets have to continue to fulfil their function as a place, where the people of Kiev can do their shopping. We can put this in the terms of privatisation, which has to be conducted on the auction principles.

– And what about the land? Your opponents say Kiev has no vacant land at all.

Today, only 7% of Kiev’s land is privatised. So there is enough land to sell, and it has to be sold through auctions.

The problem is nobody wants to buy it. There are many reasons, and the main reason is that the auction terms say nothing about the infrastructure. As a result, infrastructure may cost the owner several times more than the land itself. Because you will have to bribe officials to get necessary permits.

Today, about 7% of Kiev’s land is privatised. At the same time, leasing is a hidden form of privatisation, where a tenant does not pay the entire price at once – instead, they pay the government in small instalments during a long time period; obviously, the rent is cheaper than the true cost of the land. In the meantime, the questions with permits and infrastructure are being sorted out. Once everything is ready, a tenant can buy the land for its appraised value, but not at an auction, as required by law. The actual price paid may be several times smaller than the land’s auction price.

– Is this the essence of your economic policy in Kiev?

My economic policy does not differ from the economic policy in cities with developed market economy. First, officials must not manage utility businesses, which, unfortunately, are plenty in today’s Kiev. Businesses should be managed by entrepreneurs.

For example, as long as the Kiev water utility is managed by the officials, the quality of water in Kiev will never be up to the European standards. And this is only one example concerning the utility companies. As I said, there are thousands of such entities.

– Was that the reason of the conflict between you and the officials of various ranks?

Yes, because state-owned companies controlled by officials are the easiest to fish in troubled waters: you post losses, receive aid from the government, spend it ineffectively, pay off officials for protection, and it goes on and on.

I have managed to completely liberalise the economy in Kiev by getting rid of utilities, mostly unprofitable. This is exactly what the media calls “illegal privatisation”.

– You promised to fill Kiev’s budget in Kiev, instead your opponents claim that the city has huge debts.

During my first year in office as a mayor and head of the Kiev City State Administration, I increased budget revenues from 5 billion to 25 billion hryvnias.

This was made possible by holding a number of land auctions, but mainly due to the fact that for the first time in the city’s history we showed all the revenues the city was receiving from different sources.

The administration of Kiev lived by the same rules which applied to the rest of Ukraine. However, the Cabinet of Ministers and the Parliament were very opportunistic in planning the state budget for the next year and took an enormous sum from the city, which undermined the performance of my administration.

– Alexander Popov said that all those responsible for the illegal alienation of Kiev’s assets will be held accountable. Do you think you or members of your family have reasons to be worried?

I do not think that the main goal of the current head of the Kiev City State Administration is investigating all that he thinks wasn’t done properly. This statement has more to do with politics.

Nevertheless, I can’t say that my administration never made mistakes. The administration of Kiev lived by the same rules which applied to the rest of Ukraine. Unfortunately, violations did occur. But nothing has changed so far. I will neither blame Alexander Popov nor his team, because corruption in Ukraine has to be eliminated on the legislative level. There were mistakes. Lots of them. But the man who makes no mistakes does not usually make anything. There you go.

Correspondent magazine, issue #13 of 8 April 2011

 

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