Yurii Vaskov: I am Not Striving to Return to Government Agencies at this Stage (Part 1)

In an interview with the CFTS portal, Yurii Vaskov discusses his attitude to work in state agencies, the new structure of the Ukrainian Ministry of Infrastructure, the long-standing problems in his industry, and why reforms are moving so slowly.
Olga Bystritska 20 July 2016 13:38

We met with Vaskov near the Odesa seaport, the company to which he has devoted 10 years of his life and where he built his career from deputy dispatcher to director. In jeans and a T-shirt, the former deputy minister of infrastructure looks somewhat at home in his own way.

This is Vaskov’s first interview since leaving the Ministry of Infrastructure. He says he is happy to be in his native Odesa finally. In recent years, he lived in Kyiv and saw his family once per week. Vaskov checks his smartphone several times during our conversation, but responds only to calls from his daughter. Asked what he will do next, he replies that he is not planning to return to active employment at least until the beginning of autumn.

Regarding his participation in competitions for leadership positions in the public sector, Vaskov says he will make a decision when the competitions are announced officially and the terms become clear. "It is necessary to be on the outside for some time in order to be able to see things differently and, if I return, to return with fresher and, most importantly, new ideas," says the former deputy minister of infrastructure

Was dismissal from the Ministry of Infrastructure a surprise for you or were you ready for it?

Every deputy of Andrii Pyvovarskyi was probably ready for it after he announced his departure in December. Different people reacted to it in different ways: some were happy with it while some regretted it. As for me, my family was definitely happy. I thought it was an opportunity to change my way of life radically. Even if only temporarily. I will say that I had been ready for it from the moment that I resigned from the company and moved to the political position of deputy infrastructure minister. Given our present political situation, one cannot expect to work in the executive branch of government for many years.

Do you miss your post?

I never tied myself to the post. I was tied more to my work, which I found interesting. I did not have enough time to miss the industry because my time there was too short. At this stage, I have decided for myself not to seek to return to state agencies, whether a company or the executive branch. Everything has its time.

I was ready for dismissal from the moment I moved to the political position of deputy minister

You occupied the highest position in the water transport sector. Perhaps, you are not very willing to move down one level to become the head of a seaport after that…

History knows many cases of people holding high positions in the executive branch of government and then heading a company in the same industry. Moreover, many even strive to do so. Why is that? This is because some people find production closer to them than the executive branch. Although, it also happens the other way around. For me, economic activity is closer, although my experience in the Ministry of Infrastructure has been very useful. I stress again that I have no plans to work in state-owned companies in the industry. At this stage.

People in the ministry have recently been saying that continuity and institutional memory are important. Did you manage to hand over your post?

There was nobody from whom I could take over and nobody to who I could hand over. There was no such position as deputy minister responsible for water transport when I arrived at the Ministry of Infrastructure and there is no position following my departure. However, the ministry has Andrii Zatulko (the former head of the Ministry of Infrastructure’s department of maritime and river transport, who is now an advisor to the Minister of Infrastructure), who possesses absolutely all the information and is the most professional specialist in the field of water transport within the walls of the Ministry of Infrastructure. The department has a team that also consists of highly qualified specialists.

In our industry, I estimate the level of implementation of the outlined plans and reforms at no more than 40%

Are you disappointed with the civil service?

Disappointed is not the right word. Rather, I became convinced that, unfortunately, the system still focuses on the process rather than the outcome. Changes in the approach are taking place, but they are prohibitively slow. Why did so many people who are successful in business join the government half a year ago? People heard of willingness to reform and readiness to make the long-awaited decisions that are necessary for country and they believed what they heard. In fact, they were able to do a lot, but far from what was expected. In our industry, I evaluate the implementation of the outlined plans and reforms at no more than 40%, although we managed to solve a number of issues that accumulated over decades and held back the development of the industry. Primarily, I am referring the issue of deregulation.

In order to resolve the other outstanding issues quickly, it is necessary to rebuild the system. We hear that the leadership of the state, the government, and ministries really want reforms, but the executive apparatus, numerous regulations, and instructions are written in such a way that the system cannot work toward results in principle. Therefore, it is necessary to rewrite and greatly simplify everything.

In your opinion, to what extent is the new structure of the ministry viable? I mean the transition from sectoral to functional management.

In theory, this structure is viable. That is only in theory. However, at this stage, such a structure will be quite difficult. Management processes will be optimized when the commercialization of state-owned companies is completed and the ministry has a minimum number of enterprises directly under its control. Then this model will be able to operate successfully. Currently, when the ministry is virtually forced to control each enterprise manually because most enterprises are in varying degrees of crisis, people who take a comprehensive approach to solving the problems of specific enterprises are needed.

I recommended that the minister preserve the post of deputy minister responsible for the industry within the Ministry of Infrastructure and appoint a professional to the post.

When it became clear that I was leaving the ministry, I recommended that the minister preserve the post of deputy minister responsible for the industry within the Ministry of Infrastructure and appoint a professional to the post. As we have seen, this has not yet happened. In any case, the minister himself has the right to decide how it is convenient for him to lead the ministry and the structure to use. I repeat that such a structure could function successfully in theory. Time will tell whether it can take hold under the current conditions, which are highly regulated and unstable. I sincerely wish the management and staff of the ministry of success in implementing the long-awaited reforms.

It seems to me that the first deputy minister will find things hardest. He is now responsible for reform of all sectors...

Yevhen Kravtsov should be given credit for his courage in taking on the primary chunk of issues. In this case, it is important to rely on professionals more than ever. If he immediately surrounds himself with people capable of not simply voicing slogans but people who will competently prepare solutions and see them through, then I think he can cope with that amount of work.

Can Kravtsov rely on Roman Kohut, the current head of the department of maritime and river transport?

I think Roman is a professional. He has worked at absolutely all levels of in the state department of sea and river transport and he the most qualified person in terms of working with management organs and enterprises. He will be even more effective if the Ministry of Infrastructure – I am no longer talking about the department – gains more powers. In the past 10 years, the ministry has transformed from an important organ of state administration into a sort of department of the Cabinet of Ministers.

How is this manifested?

What decisions can a ministry make independently now? I remember very well how the system worked until the year 2002 – most decisions were made locally, in enterprises. Then came the so-called centralization, with more powers shifting from enterprises to the ministry – financial plans, personnel, write-off of assets, rent, rates, investments, etc. From 2006 to 2007, the Cabinet of Ministers began to take powers away from ministries gradually. Since 2006, the financial plans of enterprises with profits exceeding UAH 50 million need to be approved by the Cabinet of Ministers. However, UAH 50 million in 2005 and UAH 50 million in 2016 are “two big differences,” as they say in Odesa. The Cabinet of Ministers has practically taken over tariff, property, personnel, and many more issues and stripped the ministry of its independence. Now, even the appointment of the acting head of a small enterprise is now the competence of the Cabinet of Ministers and not the ministry. Not so long ago, a sectoral state department could do that. 

In the past 10 years, the ministry has transformed from an important organ of state administration into a sort of department of the Cabinet of Ministers

That is, today, a ministry sounds like a very serious agency and the minister is a very serious figure who bears responsibility for everything and who is criticized for all the problems in the industry. However, at the same time, the minister practically has no powers to do anything independently.

In essence, the Cabinet of Ministers makes the decisions and the minister has to defend those decisions later...

It turns out that way. This centralization occurred over the past 10-15 years. Therefore, if we really want to implement reform and want to achieve quick results, then the first thing to do is to grant ministries more powers. It is necessary to change the entire system and then revival and development will begin not only in the Ministry of Infrastructure, but also in other areas of the economy.

In my opinion, the Ministry of Infrastructure is one of the most difficult ministries, and I say this not just because I worked there. There is no other ministry that manages so many industries and so many modes of transport, has so many international commitments, and oversees so many state-owned enterprises that are actual operational. While being responsible for all of this, the ministry has limited amount of powers to make timely and appropriate decisions with respect to these enterprises.

Has the direction of development of the port industry that was chosen under former Minister of infrastructure Andrii Pyvovarskyi been preserved?

I hope so. Pyvovarskyi thoroughly studied issues before making any decisions on them. Therefore, I do not advise anyone to doubt the correctness of the direction he chose. I must say that among the things that the new team at the Ministry of Infrastructure plans to do, I have not yet heard anything with which I disagree. However, it is important for words to match deeds and, most importantly, for the Ministry of Infrastructure’s team to be allowed to develop in this specific direction. After all, we have been hearing “Yes” to investments, PPP, etc. "from above" for more than 10 years. However, implementation has always bumped against something – the unwillingness of individuals or procedures – unfortunately. Therefore, we are returning to where we started - it will not be possible to achieve results if we do not change the procedures. 

Among the things that the new team at the Ministry of Infrastructure plans to do, I have not yet heard anything with which I disagree

Infrastructure Minister Volodymyr Omelian recently said that competitions would be held in all the ports where contracts are ending…

That is his position as a minister as of today. Moreover, we are hearing a similar position from the leadership of the Cabinet of Ministers. However, speaking of competitions, I have never hidden my opinion that I am against competitions in the form in which they are held today. The ministry can organize a competition quite successfully when the minister deems it necessary to do so. If the minister is entrusted with the management of a particular sector, I think he should also be entrusted with personnel decisions.

In that case, people will accuse him of appointing "his own" man...

We have many people who are used to saying, writing, criticizing, etc. The only problem is that none of them is willing to work hard, take responsibility, and make decisions. However, let us return to competitions for posts in accordance with the Cabinet of Ministers resolution No. 777. Let us see how this system works in our industry. Since the end of 2014, virtually no competition has been organized successfully to the end. More and more heads of enterprises have the status of “acting head”. For a long period, it has not been possible to appoint the heads of the state-owned Berdiansk Commercial Seaport, Oktiabrsk seaport, Reni seaport, Kherson seaport, and Ukrvodput and conclude long-term contracts with them because of the shortcomings of the legislation. The acting head of an enterprise is someone without an employment contract. Legally, this means that he is responsible for very little, he does not have clearly defined obligations, and there is no supplements to his contract regarding the amounts of profits he is required to generate, the amount of taxes to be paid, attraction of investments, or upgrade of fixed assets...

We currently do not have a surplus of efficient and decent managers. There is an acute shortage of such managers.

That is, nothing can be got out of him...

Absolutely. What kind of strategic planning can there be? What kind of five-year or three-year plan can such a person have? Everything comes down to the current operations, no more.

Regarding personnel: in your opinion, how can one determine which ports currently have ineffective management?

I believe that if an enterprise meets the basic indicators of its financial plan and the minister trusts the head of this enterprise, then there is no need to hold a competition for the post of head of the enterprise. This is because we currently do not have a surplus of efficient and decent managers. There is an acute shortage of such managers. The competitions that have already been held have confirmed this.

Is it possible that the head of a port to be a person who is not from the industry but simply an efficient manager?

I believe that the port industry is a real sector of the economy, and there should be more specialized knowledge and practice.

In the second part of the interview, Vaskov will discuss the establishment of a maritime administration, reform of the Ukrainian Port Authority, a new strategy for development of the maritime industry, port charges, and the dredging of River Dnipro.

To be continued...