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THE STATE OF SMALL BUSINESS

Why the Civil Unrest in Ukraine Matters to Small Business
 

Yuriy Boykiv, the founder of an advertising agency and a Ukrainian immigrant living in New York City, explains the stake entrepreneurs have in the outcome of the turmoil plaguing the European nation.

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Ukraine is my homeland; it's the country where I spent my childhood and most of my young adulthood. It provided me with a unique background, and it played a large role in shaping me into the person I am today.

When I came to the U.S. at the age of 19, I still had hopes of going back to Ukraine one day. Unfortunately, recent events have proven to me that Ukraine is on the brink of collapse. Rather than operating as an independent nation, Russia wants Ukraine to be its satellite state; the larger country is using its natural gas supply as a bargaining chip to get Ukraine to join the Russian version of the free trade zone.

However, the European Union wants Ukraine as a new member. This move would enable the EU to sell European goods to 45 million Ukrainians. The Ukrainian government supports Russia, but an oppositional force that supports the EU is thriving. Neither side hesitates to use violence to get its point across, leaving civilians sandwiched in the middle. Many people fear martial law--and a civil war--is on the horizon.

A Strong, But Threatened Market for Labor and Exports

This may sound like a lot of politics, but American businesses have a real stake in what's happening in Ukraine. According to Bloomberg, Ukraine is one of the top 30 outsourcing countries to the U.S. Many American startups make use of its highly skilled technical labor force to build websites, apps, and health care software.

Not only is Ukraine developing into an outsourcing powerhouse, but it also has physical advantages on its side. It is the second-largest country in Europe, with an area of more than 233,000 square miles, which provides significant agricultural capabilities. Ukraine used to be called a European breadbasket. It has a population of more than 45 million people, which represents a significant market for American products. Unlike some other countries with similar backgrounds, Ukrainians love all things American, from iPhones to jeans to food.

Many Ukrainian outsourcing companies work with American and Western European clients. Since protests and bloodshed are mostly happening in Kiev, where the majority of the outsourcing companies are located, it is increasingly difficult to operate in such an environment. A Kiev-based company, Ciklum, which serves American clients such as RR Donnelley, CBS Interactive, and ComScore, is feeling the pain of employees not being able to get to work. The subway system has been blocked for the last few days and cars are piled up in the middle of the city, creating an apocalyptic scene right out of a Hollywood movie.

What's Tripping the Country Up

Despite its potential, Ukraine has a lot of internal problems. It ranked 144th of 177 nations in Transparency International's 2013 Corruption Perceptions Index, tying it with Iran and Nigeria. That signals that the country is still rife with secret negotiations and abuses of power.

The corruption is not Ukrainian entrepreneurs' only problem. Many small-businesspeople in Ukraine cannot understand the country's tax code and wish it were simplified. Lately, under President Viktor Yanukovych's leadership, a large portion of business revenue has gone directly into the president's family's hands. There is a new term among Ukrainian entrepreneurs: "working for the family"--meaning the family of Yanukovych.

What Makes the Protests Devastating

More than 3 million Ukrainian immigrants have moved to the U.S., claiming either Russian or Ukrainian origin. Many of those who claim to be ethnically Russian actually come from Ukraine. Among those with Ukrainian heritage are Max Levchin, co-founder of PayPal, as well as film titans Dustin Hoffman and Steven Spielberg, whose parents and great-grandparents, respectively, came from Ukraine.

When I was leaving Ukraine, I hoped that one day I could go back and build a company there. I was born in Berezhany, a town in the western part of the country, which historically had pro-Western views. My dream was to help people like myself attend Western universities, then come back to Ukraine and build a new elite that would help the country create transparent systems in which entrepreneurs could flourish.

I still hope that will happen one day, but current events show that Ukraine is as divided as ever. I don't blame the government or the opposition for the escalation of conflict; I blame the corrupt elite who stole cents on every dollar the country was producing and used it to buy expensive cars, apartments, and houses in the West--and completely abandon its own country. For these individuals, Ukraine is merely a place to make money.

I believe that, at the moment, the best the U.S. can do is negotiate a deal with Russia. New presidential elections in Ukraine are scheduled; after their conclusion, the protesters will have to go back home. And in this way, democracy will start to take effect, one small step at a time.

IMAGE: Getty Images
Last updated: Feb 20, 2014

YURIY BOYKIV is the co-founder and CEO of Gravity Media, a full-service advertising agency that helps brands connect with multicultural and international consumers. Connect with Yuriy on Twitter.
@bojkiw




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