Monday, March 21, 2022

Economics in a war zone: Tymofiy Mylovanov interviewed by Scott Kominers

 What's the first thing an economist has to think about when his country is invaded?  Supply chains.

Scott Kominers interviews Tymofiy Mylovanov, via Twitter, at Bloomberg.

How a Ukrainian Economist Is Fighting the Russians. Since the bombs started to drop, Kyiv School of Economics President Tymofiy Mylovanov has been working on the nightmare logistics of humanitarian aid in a war zone. By Scott Duke Kominers

"For the past three weeks Tymofiy Mylovanov, president of the Kyiv School of Economics in Ukraine, has been witnessing the effects of Russia’s invasion of Ukraine firsthand -- working from within a war zone to bring desperately needed medical supplies to the country. Mylovanov, an economics professor and former minister of Economic Development, Trade and Agriculture for the Ukrainian government, is directing fundraising and other aid efforts from his base in Lviv in western Ukraine. 


"Mylovanov: If you want to get something done during war, it must be project-based. A lot of people are just completely lost. People have all kinds of ideas that the government has to do something, or someone else has to do something, and so they don’t do anything. You really have to focus on a specific project and the entire logistical supply project chain. We rely a lot on trust. And this trust was developed over the last eight years. I started working with Ukraine in 2014. I was at [the University of Pittsburgh] when the invasion of Crimea happened and I felt I had to get engaged with Ukraine. And I developed some expertise on how things work in extreme circumstances. So that helps me a little bit now. For example, we knew what to do with finances. In 2014, I raised $50,000, and a lot of academics were giving me checks of $1,000, $2,000 just to help Ukrainians in 2014. And none of it was wasted.

"We don’t need food or paper towels. What the army needs is munitions and people need medical supplies, specific medical supplies. Most people die from blood loss after a cluster bomb or after some kind of ballistic missile falls.  There may be 20 or 200 people wounded. It’s a little bit like when an airplane cabin loses pressure, the masks fall down — and what you need to do is to put the mask on yourself and then help others. So in this case, the mask analogy is a medical kit, which allows you to stop bleeding. So you really have to ensure that you are not bleeding, and then that people next to you are not bleeding.

"So you have to have a lot of these medical kits, and they usually cost 10 or 20 bucks. But now of course they cost 100 bucks because it’s surge pricing and no one can deliver. So we are trying to focus on this specifically. Civilian authorities need them and even railroads are asking for these medical kits because evacuation trains get shelled and people die without this specific kit. We will deliver them. We have connections, there’ll be no [extra overhead charges]. It doesn’t get stolen on the way. And [your donation] is also tax deductible in the U.S. So for $100, you’ll save a life and get your taxes back.

"So that’s what we are doing. But the first thing is to make sure we can pay [for supplies]. Because it’s wartime, there are capital controls and no one can make payments [in the usual way]. So you have to figure out how we’re going to pay. Then you need to figure out how you’re going to collect [fundraising] money. You need to figure out how to do crypto. So I am [talking to] European currency exchanges and charitable foundations and [universities] in the U.S. and Ukraine and the central bank of Ukraine and other banks and CEOs to ensure that the financial monitoring [for sanctions] doesn’t stop me because it’s all automatically blocking everything.

"And you need to get suppliers. In war, there are so many intermediaries and fees. So you have to establish a procurement department to figure out who is serious. Once you have suppliers, you have to figure out all the [wartime] export licenses,  all these government regulations. And of course things get stolen on the way. For example, one large, well-known American charity sends 95 pallets of medical supplies to Ukraine. When it arrives, it’s only two pallets because 93 of them got stolen somewhere. Not in Ukraine — either in Poland or even in New Jersey. So you have to watch for this. You actually have to put your own people in Warsaw or in New Jersey, in Israel, in Sweden, to check what has been loaded at every point so that it doesn’t get stolen. It’s a logistical nightmare. And when you finally get it to Ukraine, people are shooting at you at checkpoints.


"All the fundraising goes directly to logistics. I have a website at the university of the charitable foundation [Kyiv School of Economics Humanitarian Relief Fund], and there is a Twitter post at my account. If I get a hundred dollars on that charitable foundation, it goes towards medical kits and it’s likely going to save a life."

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