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Ukraine Entrepreneur Supply Lines Keep Blockades Fueled

Photographer: Martin Bureau/AFP via Getty Images

As opposition leaders use oratory skills to bring protesters out, businesspeople are paying to keep them there, even as they increasingly fear prosecution for their anti-government stance. Close

As opposition leaders use oratory skills to bring protesters out, businesspeople are... Read More

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Photographer: Martin Bureau/AFP via Getty Images

As opposition leaders use oratory skills to bring protesters out, businesspeople are paying to keep them there, even as they increasingly fear prosecution for their anti-government stance.

Oleksandr swept out of his hulking canvas tent near Independence Square dressed from head to toe in camouflage, and greeted another day on Kiev’s front lines.

The army uniform, complete with matching bullet-proof vest, was part of a larger donation of defensive clothing his fledgling wholesale company provided to keep fellow anti-government protesters safe. Oleksandr, 25, who asked that his last name be withheld to avoid prosecution, is a member of a cadre of small business owners watching barricades instead of profits and donning fatigues instead of suits.

As leaders to the east and west of Ukraine bicker about the former Soviet republic’s future, the sprawling pro-democratic tent camp in the center of the capital is manned by hundreds of entrepreneurs. They’re investing time and money to halt what they see as economic mismanagement, to support trade relations with Russia and the European Union and to fight corruption to bring the country in line with European norms.

“Their European choice as citizens is in sync with their practical and pragmatic thinking,” said Yuriy Yakymenko, head of political research at the Kiev-based Razumkov Center. “The conditions under which business operates essentially don’t leave much room for them to exist. A significant segment of the people at the square are entrepreneurs.”

Protective Clothing

While masked rock-throwing activists have hogged media attention, business owners are playing a key role in the protest movement, which after 12 weeks relies on gifts of money, goods and food to survive. Some are giving time, others equipment -- such as Oleksandr’s company’s procurement of protective clothing.

They say they’re motivated by years of intimidation and forced bribes -- the price of staying in business -- and are counting on changes to the government and the Constitution to make Ukraine safer for their enterprises to thrive.

“Businesspeople want more transparency and predictability,” said Anna Derevyanko, head of Kiev’s European Business Association. With the economy stagnant and graft worsening under President Viktor Yanukovych, according to Transparency International, “there’s less and less interest from the market and investors,” Derevyanko said.

Government policy toward smaller businesses is worse than average in a group that includes Azerbaijan, Belarus, Georgia and Moldova, according to 2012 data compiled by the Organization for Economic Cooperation and Development, the European Bank for Reconstruction and Development and the European Commission.

Squeezing Business

Sasha, the owner of a chain of handbag and luggages shops, sat in a Kiev restaurant two blocks from the barricade and railed about the system.

“All the problems boil down to corruption,” he said, asking that his name be withheld. “The authorities are squeezing everything they can from business without thinking about where to get funds from tomorrow.”

The self-employed and small and medium-sized businesses account for 40 percent of jobs in Ukraine, state statistics office data show. The country ranks 144th of 177 countries in Transparency International’s corruption perceptions index. Poland, an ex-communist nation that joined the EU in 2004, is ranked 38th, according to the Berlin-based group.

Nadiya Gura, an accountant for carmaker AT Avtomobilna Kompania Bogdan Motors, stood on Independence Square on Feb. 9 amid the smoke of wood-burning stoves and an array of weather-worn tents while opposition leaders rallied listeners.

She didn’t need to be persuaded about the need for change.

Hair Splitting

Tax inspectors “split hairs over tiny details -- about how forms are filled out, where the commas are placed -- and don’t even bother about how the calculations are made,” she said. “Accountants like me are very upset.”

As opposition leaders use oratory skills to bring protesters out, businesspeople are paying to keep them there, even as they increasingly fear prosecution for their anti-government stance.

Serhiy, a Kiev restaurant owner, brings food. He catered to crowds during the 2004 Orange Revolution that also vented anger at Yanukovych and promised a better business environment.

“The business situation hasn’t changed significantly for years,” said Serhiy, who asked not to have his last name or the name of his restaurant published.

Running Fast

The pressure has forced some to flee.

In Dnipropetrovsk, an industrial city of 1 million southeast of Kiev, Gennadiy Korban and his partner Borys Filatov aired news footage of a police crackdown in the capital on his business center’s giant television screens. The next day, the lights went out.

While the local utility denied involvement, all three of Korban’s shopping centers were left in the dark before he received a summons and was told an arrest order was being issued. Korban and his partners took the next flight to Israel.

The authorities “accused us of organizing and financing” protests “and said we were preparing to seize regional administration offices,” he said via Skype. “It was a lie.”

As political leaders fail to resolve the crisis, business owners provide money, food and firewood, as well as medicine, sanitation supplies and clothes. About 50 companies contribute every day, according to Stepan Kubiv, who manages the finances and supplies at the camp.

“The middle class is the guarantor of democracy -- you can’t force them to vote in your favor,” said opposition lawmaker Oleksandra Kuzhel. “They don’t serve any politician. They go and stand up for their demands.”

Role Playing

On a recent night in central Kiev, Oleksandr, the wholesaler, and a dozen university friends crowded into his ash-smudged khaki tent, crammed with make-shift bunk beds and a field kitchen, and role-played an end to the deadly protests.

The “good guys” won, he said with a smile, as tent mates brewed coffee and cut wood for the smoky stove inside. Yards away, luxury shops bearing the Louis Vuitton (MC), Gucci and Prada trademarks were preparing to open for business.

Tucked into the pocket of his bulletproof vest was an iPad, the weapon of choice for the urban warrior, so he could use Facebook Inc. (FB) to alert friends and comrades of danger.

“My first and only goal is to change the system,” he said, narrowing his eyes. “I don’t want to live in a system of bribe-giving, a system of kick-backs and cronyism.”

To contact the reporters on this story: James M. Gomez in Prague at jagomez@bloomberg.net; Kateryna Choursina in Kiev at kchoursina@bloomberg.net; Volodymyr Verbyany in Kiev at vverbyany1@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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