As an American it is always pleasant for me to welcome a new US ambassador, and Ambassador Carlos Pascual’s interview, couched, of course, in the proper diplomatic language, says precisely the right thing. What foreign governments think about Ukraine is far less important that what foreign (and domestic) businessmen and potential investors think. The hard fact of this sinful world is that business, not states, create wealth, and if you want your country (or town, or whatever) to do well in material terms, you have to create a favorable business climate so that those who want to make money will be convinced that they stand a better chance here than somewhere else. As Japan shows, you can do this even without major natural resources if you have a political system that fosters private enterprise. The competition for investment is intense not only among countries with among localities within the United States. For example, I recall how my hometown of Muskogee, Oklahoma, with a population under 40,000 once had a special election where the locals democratically voted to impose on themselves a supplementary sales tax of an additional one cent on the dollar to pay a firm, which was looking at three different sites at the time, to build a plant there by giving it $5000 for every permanent job it created. They knew that more jobs mean more wealth, more customers for the local businesses, a bigger tax base, and more money for just about everybody.
The main problem in Ukraine that Ambassador Pascual will have to deal with is that this simple truth has not quite made it home to those who are in a position to do something about it. Ukraine, as I have emphasized on many occasions, has inherited an economy and sociopolitical structure that are simply not capable of making it without such an overhaul that it would threaten precisely those who are in a position to do it. This means those who can will not, and those who could will probably not get the chance. This means all Ukraine’s pipe dreams about integration with the European Union will remain precisely that. Try tackling that one, Mr. Ambassador.
