Visiting BINTEL — Michael Bleyzer

Майкл БлейзерMichael Bleyzer

Co-founding Partner, President & CEO of SigmaBleyzer, Investment Group, LLC, Houston, Texas based Private Equity firm, which over the last 20 years has raised approximately $1 billion most of which have been invested in Ukraine. Chairman of the Board of AgroGeneration, French publically traded company operating one of the most successful agricultural businesses in Ukraine.

A native of Kharkiv, Mr. Bleyzer graduated from the Kharkiv Institute of Radio Electronics with Master’s Degree in Engineering in the field of digital electronics and quantum physics. In 1978 he emigrated to the United States and in 1981 became an American citizen.

In the USA, Michael Bleyzer began his career in finance and management. Over 15 years of experience in the Exxon and Ernst & Young he has held operational, administrative and executive positions in Texas, Louisiana and in Europe.

 

 

 

 

 

 

 

 

 

According to the Author’s Edition

This Is Not a “Russia-Ukraine” Confrontation, This Is a Confrontation of Different Civilizational Approaches to Life, a Confrontation of Forms of Society.”

— Mr. Bleyzer, formation of the Ukrainian state, as we see, is a very, very complicated process. Experts mention different reasons. Naturally, we, Ukrainians, do care what those foreign citizens think of us who have directly to do with our country and are interested in our success, in fact, trying to help us and having already succeeded in the difficult task. Threats to our state now come from outside, and do you think they are more dangerous than our internal threats? By the way, in your previous interviews to Ukrainian press you once said that the probability of a third world war (because of Ukraine) is very little. Now, after some time, is your opinion the same?

— The name of your Center is “Borysfen.” What does this word mean?

That is our River Dnipro’s ancient name.

— I am sorry, I did not know. Now I will remember… I think that the probability of a third world war in the classic sense of the phrase is small. Not too small, but small. After all, what is a third world war? Europe, USA, Russia, etc. send all their military arsenal, including nuclear, against each other. As a consequence, hundreds of millions of people around the world are killed. This is a classic nightmare scenario on the planet Earth, which people remember from the time of 1945, when atomic bombs were dropped on the Japanese cities of Hiroshima and Nagasaki. I repeat: the likelihood of this scenario, in my opinion, is very small. Since there are impediments. During the “Cold War” there was a theory of mutual assured destruction (MAD). It held back both sides from a military attack. Now, this theory would not work that well, because today’s situation is different. But its influence will be felt. I think the main reason for a traditional war (World War III included) being unlikely is the presence in the arsenal of countries of completely different weapons. A so-called “hybrid war” is much cheaper and more effective. Often, it is war by proxy, and methods of conducting it are not too expensive, and work better. So the instigators see no reason to unleash a major war.

That is, its global consequences do not suit them?

-Exactly. After all a war is not an end in itself, there must be some reason for unleashing it. People fight for spheres of influence, for territory, for minerals. Other reasons do not exist. But, as we have seen in Crimea, and the example of Eastern Ukraine, the attacker can achieve the desired result through other means and methods too.

Then what do you think is the reason for the Russian-Ukrainian confrontation? And why did Russia decide to take this step?

— Ten years ago, the now ruling circles of Russia publicly stated that the collapse of the Soviet Union was a disaster. If so, then this statement can be interpreted in two ways. Most of the world perceived it as a rhetorical remark. However, it can also be understood that those circles are going to correct this so-called catastrophe. That is how I take that statement. If so, then we see concrete steps taken to change the balance of power established after the collapse of the Soviet Union.

But why on the territory of Ukraine of all others?

— Figuratively speaking, it is the most delicious “candy” for them. The largest country, with a large population, very rich in natural resources, located next to European countries. There are a huge number of strategic factors, due to which Ukraine is considered a tasty morsel.

Some are inclined to state that the most attractive thing in Ukraine is its land, its black soil. Russia categorically considers that wealth its own and is ready to prove it by force of arms. The West does not seek to do the same, because this land belongs to Ukrainians, who are not yet ready to sell it.

— I do not believe in this. I have read articles on this subject, written, in my opinion, on the order of Russian security services. Supposedly there is a serious dispute over Ukrainian black soil. This is a silly statement. Yes, I agree that Ukrainian black soil is very good. But if you look at the map of the world’s black soils, then Russia has much more black soil than Ukraine. If we were attacked by Germany, it would be possible to agree with this point of view as Germany’s soils are not good for farming.

Yes, during the Second World War, the Germans were taking away Ukrainian soil to Germany. It’s a well known fact.

— True. They did it out of their own considerations. But would Russia fight for this reason? As for the capture of Ukrainian territory — it is a different thing, as Ukraine’s territory is attractive. But I do not believe in the conflict over black soil.

Do you think that the reasons for what is happening in Ukraine are actually more global? What is it — confrontation between Russia and the United States as political power centers?

— I think there is more to it than what you have just said. This is not a confrontation between Russia and the United States. And, of course, it is not a confrontation between Russia and Ukraine. It is confrontation between the cultural values ​​of the West and those of a certain group of people in Russia. It is a confrontation of views on life, morality and confrontation of human values. It has no territorial boundaries, it is not a “Russia-Ukraine” confrontation, it is a confrontation of different civilizational approaches to life, a confrontation of forms of society. The conflict is precisely this — what should be the form of society, and the form of governance of that society.

Do they understand this in the West, in the United States?

— Of course they do not. I know many politicians in the West, I am friends with some. They do not realize it. But your question is, I think, more extensive — do the masses understand this? I would ask this question differently: Do they (those masses) or do they not care what is going on here? I must disappoint you, the masses in the West today do not realize it. They have a lot of other problems. For example, citizens of the United States are concerned about health problems, jobs, prices for basic necessities. If you take on a global scale, the main concern is international terrorism, security, extremism, Islamic radicalism. Although, I must tell you that Americans do not see the latter problems as very serious.

Have the US citizens forgotten about the events of September 2001?

— The human memory is obviously trying to get rid of worries. It seems to be not as strong as we would like it to be. It is characteristic of it…

Having invested in the Ukrainian economy for a long time, have you noticed any positive changes in this matter?

— Today, I see that a new generation of Ukrainians has grown up fundamentally different from previous generations. Those previous generations are usually characterized with the help of different adjectives — “sovdep”, “sovok”, “vatnik”. For 38 years now living in the USA, I have forgotten how to understand the exact meaning of these words. When I hear them, I just guess what they could mean… So I do not see the above-mentioned features in the new generation. New, so to speak, fresh people have appeared. With a twinkle in their eyes, interested in modern technology, modern life, etc. They look at the way a human society should be arranged completely differently, how it should be governed. They are the future of Ukraine. This gives me great hope.

I have often been accused of being too optimistic when predicting the future of your country. Even ten years ago, I said the following sentence: “Ukraine is pryrechena (doomed) to succeed”. One of the reasons I said that is the Ukrainian people. Especially the younger generation. It is absolutely amazing, full of promise. All other changes…there are very few! And this fact disappoints.

Ukraine is in the process of transition from the Soviet system, with its socialist system and centrally planned economy to democracy, market economy and a free form of society. And this transition was delayed for more than twenty years. This is an incredibly long transition! And it’s so bad. Look at other countries that also had to do it. They coped with their difficulties very quickly. Here you keep hearing the phrase — “shock therapy”. Now, when the country has new people in power — more progressive, more democratic, and more radical than the previous authorities — the question of shock therapy in Ukraine has risen again. Poland and its way out of the crisis with the help of this therapy are being talked about. You know, I have great doubts about Ukraine…

On the one hand, shock therapy is good. Especially when it started without delay. Because there are some natural reserves left over from the previous economy. Even if it was old, bad, it somehow helps the people to adjust, to endure hard times.

But having wasted, having thrown twenty years out the window, it is stupid to use the remaining resources just eating them up, — what will you have in the end? Nothing! So I would say that you can apply shock therapy in Ukraine, but in a completely different way. This requires smart people, honestly caring about the future of Ukraine. Who, having studied the overall picture of the problems, would correctly determine the direction of the use of shock therapy in each case. They would decide which reforms should be carried out immediately and which can wait. If to reform rashly, recklessly, you could end up with new revolutionary protests. Of course, you cannot delay the reforms. Since it would not be reforming but a completely opposite thing. There are things that must be done very quickly right now. Because Ukraine is in a more difficult situation than the situation in which Poland was twenty years ago.

Do you think our current leadership is ready for such steps?

— I hope so.

So do we.

— For two reasons I cannot promise you that it will cope with the challenges ahead. I am not a citizen of Ukraine, so I think that I have no right to evaluate the actions of the Ukrainian authorities. Ukrainians themselves should do it. I often criticize the US government. I can afford such criticism because I pay my taxes. Assessing your leadership, let me say this: it is the best of all those you’ve had had since 1991. Luck gave your government the best chance.

You know, even if I wanted to criticize your present leadership, I won’t do it for the reason that today I see no common sense in criticism. Because it would work for the collapse of the country, for which the authorities claimed responsibility.

It’s hard not to agree with you. By the way, from time to time, some high-ranking officials come out with a proposal to close a network of some commercial establishments, voicing the violations found. As a successful Western-style businessman, do you think that it would be more correctly not to close them but to make the network of trading companies work under the law and bring income to the state budget? We just have some “international” disease — “…we’ll destroy the base, and then we will build our own, new world…”

— “…Who was nothing will become everything.” Yes, I remember these lines. You know, again, Ukraine is facing a difficult choice, as if saying, “Let’s delve further into the past. Let’s do it all anew, because it was done unfairly and wrongly. And then we’ll deal with the future”. To some extant I can understand that many people maybe even the majority would want this. But I believe that in today’s current situation in Ukraine, where a country can literally fall apart due to the aggressor’s capturing its territory, that should not be done! Or if you do that, then at least do it with great caution. I would try and look forward, into the future. I would seek to ensure that the rule of law is unconditionally applied. This is one of the most important issues for Ukraine in the whole depth of its performance — adoption of laws, their implementation, bodies monitoring compliance with the law, courts, etc., that is everything that in Ukraine for more than twenty years, in fact, has not worked. If you manage to achieve this, the rest — made in violation, captured by force, by fraud — will work for the state, its citizens, for the common good.

After all, to take away someone’s shop, supermarket — it means to close it, destroying businesses. And where should ordinary citizens buy the necessities of life? Such drastic actions are pointless. I can understand young people — hot, highly offended by present life, trying to do something. But, agree that to destroy something is much easier than to create, to build something.

Now a specific question: didn’t you personally receive an offer to work in our state bodies? Due to the fact that today in our government, there are a lot of professionals with experience in foreign governments.

— No, there were no such proposals. Somehow, it never occurred to me. Most of my life I have lived in the United States, first of all I am an American. And a Texan, perhaps above all a Texan, since I have been living in Texas for 38 years. But as I was born in Kharkiv and left it at the age of 28, I do care about Ukraine, I care about everything that is going on here. My heart is broken because of the events happening here. I am frustrated with what the aggressor allows himself to do in this country. It’s a shame when the West, including my US government, does not give sufficient assistance to Ukraine. I hope that what I’m doing for the benefit of Ukraine does it good.

Could the United States increase its assistance to Ukraine?

— Of course it could. The question of aid — is a matter of setting priorities: what is important at the moment? Why is Ukraine important? To what extent is it important and how seriously is it necessary to care about it? The problem is that too many problems have accumulated in the world. There are not many countries in the world that are able to solve these problems. Some citizens believe that global problems should be solved by one country — the United States. Perhaps also by the EU and Japan. Such countries are few. Most rely on the United States. And if so, there are too many world “fires” for one country, or even for a few. You can look for the reasons for this situation. And then I, as an American citizen, can afford criticizing my government, whose effectiveness of work abroad in the last six years has fallen significantly. Here you can even philosophize. Our intellectuals, representatives of science, perhaps even more than half of the American population consider the US policy of non-intervention into other countries very correct.

Or maybe it’s unwillingness to take the responsibility for what is happening?

— No, I would not say that.

Not long ago there was news that the USA may join the work of the “Norman Four” on the settlement of the issue of the Russian-Ukrainian conflict.

— I have read about it in your press. I believe that this is wishful thinking.

By the way what do you think about the statements of some politicians, who claim that Ukraine will become a raw materials appendage if it joins the EU?

— I would call such a statement stupid. That could be stated only by an enemy, not respecting Ukraine, not having a head on his shoulders.

You once said that for failures in one’s work one should blame, first of all, oneself. And not to look for any excuse, not to blame one’s predecessors.

— Yes, as they say, it is impossible to cure a disease, such as alcoholism, having not recognized being ill with it.

We know your statement that Ukraine’s very important task is energy independence from the Russian Federation. On what are your estimates based?

— Ukraine in the nearest future (as they say, not overnight, but in less than ten years) will be able to become completely energy independent from Russia, from the East. It will be able then even to export energy resources, if it has successfully developed necessary projects, such as shale gas. The development of shale gas is a very complex and time-consuming process. It requires considerable investment. It is very dependent on world oil and gas prices. Important in this matter is the type of shale gas.

So, for independence it is necessary to fulfill three strategic tasks: diversification of imports (your country is actively working on this, but this had to be done long ago, because it is a dogma of any business), to develop your own sources (in Ukraine there are a lot of proven oil, gas and coal fields), as well as energy efficiency.

For example, what is needed to develop your own geological resources? Huge investments are. The risk for a company engaged in exploration is enormous. You need to spend a lot of money, often for many years, to find a deposit. After that, you need money for the development of what you found. Only a madman separates exploration from the production of the resources. In Ukraine, these two processes go separately.

Who will come to you with investments if he is not sure that he will be able to produce what he has explored? A madman!

Secondly, the freedom to provide information. You see, the problem with Ukraine is also the fact that due to old “sovdep” traditions, everything is closed, secret. There are many geologists in Ukraine who have full information about Ukrainian geological resources. This information is secret or semi-secret. Okay, nostrovia, sit on it! Without any benefit, first of all, for yourselves. But this is another stupidity!

How do you find large sums of money for development, which the country obviously does not have? You need to attract foreign investments. How do you do it? Just demonstrate your proven reserves to investors. I would do it immediately, without delay. Otherwise, you will not see investments. Next, if you work with one and only one company in this field, you will have no profit. If an offer of cooperation will be widely known, there will be competition, which provides benefits in prices.

And the third direction — energy savings. I have been investing in Ukraine for twenty years, and I know one of those “jokes” — Ukraine ranks first in the world in energy use per capita. That is we spend more energy on everything! Yours is incredibly inefficient energy production. Expensive energy is thrown out the window by inefficient use.

If you really do these three things, Ukraine is doomed for success in this issue. If everything is done openly, with participation of foreign investors, and if you do care about energy efficiency, Ukraine will become fully independent in five years. Or even sooner.

In that case, could you tell me in which country former republic, except Ukraine you would be interested in running your business?

Kazakhstan is very attractive. An incredibly interesting country for business.

Once you expressed your personal fears regarding the Russian Federation. Was that due to the fact that it was the successor of the USSR, or are there new grounds for such conclusions?

— You know, it’s a combination of two factors. The first factor is the traditional form of the Russian Empire. If you look at a map of the world, you will see one, the largest country among the rest of the countries of the world. There must be some reason for its being what it is! It is a reflection of historical trends. Like, for example, in business: there are two ways of growth. The organic when it naturally expands. In the USSR, they were proud that it was home to over one hundred and fifty ethnic minorities. That had been so for a long time. And the other way is expansion through acquisition. The latter is peculiar to the Russian Federation as the successor to the Soviet Union. It inherited these characteristics from the Russian Empire. It also kept growing as a result of capturing territories, where it sought to establish its sphere of influence. These two factors had led to the fact that the Russian leaders a decade ago, said the collapse of the Soviet Union was a disaster. Because the usual size of the state, which had been growing for several centuries, has suddenly decreased significantly. In fact, 14 republics disintegrated from the USSR. That is what caused Russians’ active actions.

And one more thing. I believe that in the subconscious of the people, there still remains a lot of Soviet ideology. Using this, in Russia they again begin worshipping Stalinism. Communism is no longer considered something terrible and unnatural. These trends look very dangerous to me. Communism in the twentieth century has shown that by the number of its victims, it repeatedly exceeded all systems known to mankind.

— Thank you for your answers to the questions.

Recorded by Oleg Makhno

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