State Enterprise Resold for Big Money

On October 25, Kryvorizhstal, the Steel Plant privatized to Viktor Pinchuk (former President Kuchma's son-in-law and Ukrainian media mogul) and oligarch Rinat Akhmetov for $800 million in an obviously fixed privatization tender, was finally reprivatized.

for $4.8 billion.

That's more than Ukraine has earned from all previous privatization tenders since independence. It's also the equivalent of 6% of GDP or 20% of the 2004 budget. The buyer is the (Indian-owned Dutch company) Mittal Steel, the company that submitted the highest bid in the tender stolen by Pinchuk and Akhmetov. So it's nice to see them getting the asset they should have won the first time.

It's nice to see them bid $4.8 bn, when last time they bid less than half that much. It's nice to see the price wildly exceed expectations, (which Forbes capped at $3.5 bn before the sale). And it's also nice to see the privatization tender... live; it was televized nationally.

The Financial Times, Wall Street Journal, Economist, and lots of others gave the privatization a hurrah. (though all sources gave reasons to believe Krivoryzhstal was a one-off)

In the words of the FT:

Mittal Steel's successful bid is the best possible start [to improving the country's economy through privatization] - tribute both to the global clout of Asia's diaspora entrepreneurs, and the real opportunities for credible international investors in post-Soviet states.

The government is currently trying to figure out what to do with the money, but it looks like Yushchenko favors investment in economic growth. Whatever that means.

As an odd little side note, the BBC has taken this chance to run an article on... t-shirt sales in Kyiv? What oddly lazy journalism. They've got BBC Monitoring, why the fluff?

Red and Black Baggage

As if I needed another reason to like the bid, Valentyna Semenyuk tried to resign over it. (but Yushchenko rejected her resignation) Let her go!

Semenyuk was not alone is making useless gestures of opposition against the privatization. A Parliamentary bill against the privatization united 257 deputies (out of of 450) behind the principles of oligarch-dominated anti-competition and lack of transparency as well as reactionary leftism. The same folks tried to stop two recent WTO bills from passing and failed. May their streak continue.

Yanukovych vs. the Imperial Netherlands

But the news of the privatization isn't all good, as we learn from Yanukovych's words of caution:

[Yanukovych, in Russian] If Ukraine chooses the path of selling its plants then we will lose independence completely very soon, because after the economic dependence of our country we will have political dependence too.

We should understand clearly who will come to Ukraine to buy our companies and with what money. They will be buyers from the world's top league, those who have enormous capital. They will come and buy Ukraine up.
[Ukrayina TV, Donetsk, via BBC Monitoring and AUR]

Ukrainians have been warned: soon the wily Dutch with own the whole country!