The presidential elections are just around the corner in Ukraine, with Viktor Yushchenko and Viktor Yanukovych clearly positioned as the two frontrunners. What is your assessment of the future president’s economic policy, judging from the economic planks in the election platforms of both presidential hopefuls?
Yaroslav ZHALILO, president of the Anti-Crisis Research Center:
“This question applies not just to the frontrunners, since the economic programs of all the presidential contenders are centered on the same economic issues. This is absolutely normal and logical, because candidates simply evaluate the problems that are plaguing Ukraine’s economy and troubling their constituents. On the other hand, there are differences in how these problems are presented and in the proposed ways to solve them. Speaking of Yushchenko’s program, it is more structured and logically formulated. But because the program’s accessibility to the public was a major consideration, many of its clauses seem unfounded. There is nothing to indicate that Viktor Yushchenko has a vision of specific instruments to achieve certain goals, beginning with the creation of more jobs and ending with transformations in the sphere of ownership. By contrast, Yanukovych’s program is very detailed, but somehow does not show an integrated strategy of economic development, which is even more surprising since Yanukovych heads a taskforce that authored the announced strategy of economic and social development until 2015.
“It is very obvious that neither of the two programs, much less the programs of the other candidates, contain any serious proposals on ways to stimulate market transformations in the nation’s economy, such as changes in agriculture, land ownership reform, and application of market economy principles to agricultural producers. Little attention has been given to questions of developing the market infrastructure and entrepreneurship. I think this is due to the populist pitch in the candidate’s platforms, because they do not expect that talk of further intensified market reforms will be well received by the constituents.
“Finally, both programs outline economic and foreign political goals in a very superficial and vague way. Neither program says specifically if or when the country will join the WTO, how the officially declared strategy of European integration will develop, and whether the candidate in question will pursue it. The general opinion is that, unfortunately, neither program offers any idea of how the candidates view the set of problems faced by Ukraine or how they plan to act specifically, if elected to the top executive post.”
Tatiana SHCHERBAKOVA, International Center for Advanced Research:
“In principle, both programs are very similar and therefore hard to analyze. By this I mean that it is difficult to find any differences because they address the same problems. It is characteristic of all the political programs in general and these two in particular that they couch economic issues in the style of slogans. Yet in general terms Yushchenko’s program offers a little more in the way of practical ways to achieve the established goals. Let us analyze how each program addresses economic issues.
“Developing the business environment. Both candidates promise to bring down loan rates, which will enable businessmen to secure more financial resources. In addition, Yushchenko has declared his commitment to developing the domestic market, while Yanukovych also mentions the development of the financial infrastructure and the banking sector. There are no fundamental differences in the candidates’ approaches toward business.
“Legalizing citizens’ personal incomes. Yushchenko plans to fight the shadow economy with tax cuts. In particular, he plans to relieve the tax pressure on the wage fund to 20% within five years. Yanukovych’s program does not mention this problem.
“Combating poverty. In brief, Yanukovych’s intentions come down to raising minimum wages and pensions, and reimbursing the people for their savings that were frozen in the Savings Bank of the USSR. He expects to do this with money from privatization and with government support. Yushchenko also plans to use privatization receipts. Moreover, he intends to monitor privatization to ensure that assets sell at their real market price.
“Employment. While Yanukovych’s program mentions job creation, Yushchenko goes a step further by promising to create five million new jobs within five years by attracting investments. Although both candidates have pledged to raise wages in the country, Yanukovych promises to do so by two to two-and-a-half times within five years.
“I think the following scenario is possible: if Yanukovych wins, the opposition will not put up with this and will attempt to have the election results nullified. For a certain period of time this will distract those in power from pursuing reforms.”
Oleksandr RIABCHENKO, Ph.D. in economics, director of the International Institute of Privatization, Asset Management, and Investments:
“I have not read the programs of the frontrunners for the presidential post because there is no need to do so. Both are well known individuals, and their approaches to the economy were best seen when they headed the government. I don’t think we should expect any surprises in economic activity if either of them is elected president. The candidates’ attitude toward the economy is in line with market principles, and this is their common feature. The differences are also well known — they showed these during their ministerial stints. I’d like to point out two classic approaches used by the state to influence the economy. The watershed between the two candidates runs along these approaches. The first approach is when the state assumes more functions of influencing the economy, in which case taxes are higher, coupled with larger allocations for social programs. The second approach is when the state leaves more functions to the market system and relieves the tax pressure for this purpose. Consequently, less money passes through the budget. After all, everything comes down to the volume of the GDP that is redistributed through the budget. Everything else is of secondary importance.
“In my view, Yushchenko is more inclined toward lowering taxes and limiting the government’s influence on the economy. Yanukovych leans more toward the principle of increasing the government’s influence on the economy and expanding social programs. Yet the difference between the two frontrunners in the economic sphere is not that great. The economic policy of the new president will be largely determined by the current state of Ukraine’s economy and the fact that it is not a WTO member. Our country does not enjoy free economic relations with Europe either. On the other hand, the Single Economic Space has yet to be finalized. All of this will exert significant pressure on the new president from three sides and will significantly restrict his possibilities to influence the economy, no matter who comes out the winner. Therefore, the new president will not so much bring his own ideas to life as attempt to find a way out of the current situation. First and foremost, he must attempt to resolve the accumulated problems, and only after that will he have an opportunity to implement his ideas and vision of accelerated economic development.”
