Ukraine’s Potential

Source: Getty
Q&A
Summary
Despite a highly educated and skilled workforce and natural resources, Ukraine continues to struggle with sustained economic growth.
Related Media and Tools
 

Ukraine is a large and important European country but one that still struggles with its Soviet legacy and other barriers to development. In a Q&A, Matthew Rojansky examines Ukraine’s domestic reform initiatives and foreign policy priorities. Rojansky says that despite a highly educated and skilled workforce and considerable natural resources, the country continues to struggle to sustain economic growth. And while Ukraine has opportunities to play a leading role in Euro-Atlantic security, it has not yet defined a compelling vision for its own role in the region and the world.

Does Ukraine matter?

Yes, Ukraine matters. It is the largest country, by area, that is physically within Europe entirely, and it is the largest economy that is neither part of the EU nor part of NATO nor part of Russia’s Eurasian Economic Community. This is in a sense a country that is trapped in the gray area’s in-between, and yet it’s an enormous economy. And there is potential—it is a country with 45-46 million people who have a great educational background, are hard workers, and are entrepreneurial. It’s got 70 percent of the so-called black earth, the most fertile soil in Europe. So, Ukraine is a powerhouse no matter how you cut the cake and yet it is not really integrated yet.
 

Why is reform so difficult in Ukraine?

The paradox of reform in Ukraine is that no reform that is driven by the government is ever going to be enough. There is a kind of chicken and egg problem, which is that the people of the country determine whether reform can succeed and whether corruption can be eliminated because it takes two to tango.

It’s not only the official who asks for the bribe but it’s the business person or the citizen or the person who is stopped in traffic who pays the bribe. And I think to start changing that culture, it should start with things like exchanges and getting more young Ukrainians into Western Europe and into the United States so that they have different expectations. Or even sending them to places like Georgia, where corruption has been tackled relatively effectively, or at least the process has started.

But the much deeper change, of course, is going to happen by building institutions and promoting the rules of institutions and the rule of law over the rule of individuals. And that’s a process. It takes time. I think this government has done a little bit of it and previous governments have done a little bit of it. But there hasn’t really been a sea change moment in Ukraine yet. We are still waiting.
 

What is most likely to bring Ukraine sustained economic growth?

Ukraine’s relative economic success over the past several years, and then if you look back at the decade before that, has been kind of an artifact of unique circumstances. Either there’s been a good harvest and so Ukraine has done well, or global steel prices have gone up and with Ukraine being a big steel producer, it has done well. Or if you go back ten years, it was that European banks were finally starting to pay attention to Ukraine and so all of a sudden there was all this credit and people who had never borrowed were now borrowing and then spending, and so Ukraine was doing well.

And the thing is, after a while, you run out of these artifacts. Ukraine starts to look like a regular country, and then it has problems that regular countries have. And so I think it’s going to have to look for much more normalized and integrated solutions. And those are going to depend on institutional restructuring, institutional reform, balancing the budget, fiscal consolidation—all of the hard stuff. Austerity, that terrible buzzword that Europe is afraid of these days, is particularly hard when you’re going into a parliamentary election like Ukraine at the end of 2012.

It’s hard to see how that success story really accelerates between now and 2012 and 2013. And Yanukovych, the president of Ukraine, is in a sort of political pressure cooker, feeling pressure from all sides.
 

What role can Ukraine play as OSCE chair in 2013?

Ukraine, being the incoming Organization for Security and Co-operation in Europe (OSCE) chair, is actually already involved in the so-called troika of the previous chair, the current chair, and the incoming chair. So it should already be playing a role in terms of managing the security space of the OSCE. But the whole purpose of the OSCE is to acknowledge the fact that security comes in multiple forms. You have human security, economic security, and then traditional political-military security. And so I think Ukraine has to demonstrate that it understands that sort of multi-dimensionality of security, but also that it has a unique comparative advantage.

And what is that? As I mentioned earlier, Ukraine is in the in the gray space. It is not a NATO member. But it also not part of Russia, or Russian-led security alliances. So it has a unique perspective to understand what it means to be a non-bloc country in the Euro-Atlantic space, and that should give it a special incentive to make the Euro-Atlantic system as a whole—the system that includes Russia on the one hand, but also North America and traditional NATO allies on the other—a more meaningful system to strengthening Euro-Atlantic security.

It also has a real incentive to deal with protracted conflicts. The conflict in Transnistria is more Ukraine’s problem, quite frankly, than anyone else’s. Certainly it’s Moldova’s problem, it’s a breakaway territory of Moldova. But Ukraine is the other party on the other border, and Ukraine is going to be saddled with the problem if Moldova enters Europe. Moldova’s on the path to enter Europe without Transnistria. Because the Transnistrians will look to their immediate neighbor, their former Soviet neighbor, and say you have to help us out. And so the Ukrainians have a real incentive to move forward on Transnistria.

And then lastly, there are these sort of twenty-first century challenges, where actually Ukraine has much greater capacity but greater challenges than many other countries.

Trafficking. The northern coast of the Black Sea, that’s Ukrainian territory, and the Black Sea is the major highway between the Middle East and the instability of the Arab world today and the greater AfPak region. That whole region, that’s how it flows up into Europe. And Ukraine is right there at the entry point.

Global health pandemics. Ukraine has massive health capabilities but they’re crumbling and from the Soviet-era. And it has a population that’s very vulnerable to drug-resistant tuberculosis and other epidemics.

And then cyber. Ukraine has actually been the source of both a number of major global cyber-attacks, but also the solutions. The government can draw upon very technically-skilled Ukrainians to try and deal with the problems of cyber-insecurity, and I think it needs to do a more effective job of bringing Ukraine into a globally integrated system in that respect.

End of document

About the Russia and Eurasia Program

The Carnegie Russia and Eurasia Program has, since the end of the Cold War, led the field of Eurasian security, including strategic nuclear weapons and nonproliferation, development, economic and social issues, governance, and the rule of law.

 

Comments

 
Source http://carnegieendowment.org/2012/04/17/ukraine-s-potential/a92e

More from The Global Think Tank

In Fact

 

45%

of the Chinese general public

believe their country should share a global leadership role.

30%

of Indian parliamentarians

have criminal cases pending against them.

140

charter schools in the United States

are linked to Turkey’s Gülen movement.

2.5–5

thousand tons of chemical weapons

are in North Korea’s possession.

92%

of import tariffs

among Chile, Colombia, Mexico, and Peru have been eliminated.

$2.34

trillion a year

is unaccounted for in official Chinese income statistics.

37%

of GDP in oil-exporting Arab countries

comes from the mining sector.

72%

of Europeans and Turks

are opposed to intervention in Syria.

90%

of Russian exports to China

are hydrocarbons; machinery accounts for less than 1%.

13%

of undiscovered oil

is in the Arctic.

17

U.S. government shutdowns

occurred between 1976 and 1996.

40%

of Ukrainians

want an “international economic union” with the EU.

120

million electric bicycles

are used in Chinese cities.

60–70%

of the world’s energy supply

is consumed by cities.

58%

of today’s oils

require unconventional extraction techniques.

67%

of the world's population

will reside in cities by 2050.

50%

of Syria’s population

is expected to be displaced by the end of 2013.

18%

of the U.S. economy

is consumed by healthcare.

81%

of Brazilian protesters

learned about a massive rally via Facebook or Twitter.

32

million cases pending

in India’s judicial system.

1 in 3

Syrians

now needs urgent assistance.

370

political parties

contested India’s last national elections.

70%

of Egypt's labor force

works in the private sector.

70%

of oil consumed in the United States

is for the transportation sector.

20%

of Chechnya’s pre-1994 population

has fled to different parts of the world.

58%

of oil consumed in China

was from foreign sources in 2012.

$536

billion in goods and services

traded between the United States and China in 2012.

$100

billion in foreign investment and oil revenue

have been lost by Iran because of its nuclear program.

4700%

increase in China’s GDP per capita

between 1972 and today.

$11

billion have been spent

to complete the Bushehr nuclear reactor in Iran.

2%

of Iran’s electricity needs

is all the Bushehr nuclear reactor provides.

78

journalists

were imprisoned in Turkey as of August 2012 according to the OSCE.

Stay in the Know

Enter your email address in the field below to receive the latest Carnegie analysis in your inbox!

Personal Information
 
 
Carnegie Endowment for International Peace
 
1779 Massachusetts Avenue NW Washington, DC 20036-2103 Phone: 202 483 7600 Fax: 202 483 1840
Please note...

You are leaving the website for the Carnegie-Tsinghua Center for Global Policy and entering a website for another of Carnegie's global centers.

请注意...

你将离开清华—卡内基中心网站,进入卡内基其他全球中心的网站。