While President Viktor Yanukovych was reporting on his first year in office, the former president Leonid Kuchma was meeting with leading international relations and economy experts, analyzing the 20 years of Ukrainian independence within the framework of the Europe-Ukraine International Forum. For the fifth time the forum became an arena for an international discussion about Ukraine, global developments, burning economic issues and plans for the future.
Kuchma was the first person to deliver a report — “On The achievements, failures and potential of Ukraine over 20 years of independence” — at the plenary session of the forum. In his speech he emphasized that he would like to hear how the international community sees Ukraine, now and in the future. He also stressed that he did not want Ukraine to wait for an invitation to join the EU. The country, according to Kuchma, has to work hard on its own complete makeover. “Honestly, I want to see those times when the fact that Ukraine is not part of the EU will be perceived in the same way as is now in regards to the Sweden and Norway Hopefully, it will take less time than the 20 years that we have spoken of,” Kuchma said. Over the last 20 years the distance between us and Europe has shortened only geographically. “No longer are there thousands of kilometers [separating us], as we already have four European neighbors,” he noted. But neither mentality, nor civilization brought us closer to the desired European standards, the ex-president emphasized.
Yet the Europeans were of a different opinion. According to Guenter Verheugen, European Commission deputy head and ex-Commissioner, Ukraine is one of the most worthy candidates for EU membership. He said that earlier Europe made a mistake regarding Ukraine. “In 2003, in the Crimea, as EU representative I should have offered Leonid Kuchma more than just good-neighborly relations. When I came here I could not offer anything but an incremental approach to neighborhood policy. It was what the EU could offer then. Now I have to confess that it was a mistake. We should have done way more, and I will explain why. There is no question as to the independence or sovereignty of Ukraine, which has to be treated as an equal member of Europe. It is a large country with a powerful economic potential.” Verheugen emphasized that it is only his own opinion, which the EU may dislike, but they have no clear vision of the Ukraine’s place and role so far. However, according to the ex-Commissioner, Ukraine is worth of EU membership.
“It is true that the EU considered Ukraine as a part of its relations with Russia. Ukraine was viewed as something valuable,” Verheugen admitted. He assured that there is nothing bad in it, on the contrary, it is one of our best trumps in Eurointegration negotiations. “Europe needs Ukraine to better understand Russia,” the ex-Commissioner stressed, and brought up the example of Poland. “It was viewed as the weakest candidate. It was like a sore part in Europe. Many believed that Poland was not ready for EU membership. But the most important thing was that it would help understand the issues of the countries that remained behind the eastern border of the EU: first of all, Ukraine, Belarus and Russia,” the diplomat admitted. “Now Poland is a success story. It is the most optimistic and pro-European country in the EU. I am convinced that the same results are possible for Ukraine in the future, if it receives what it deserves.”
Yet the Europeans were not only concerned about the vector of external economic development; the international community also pays attention to the economic transformations taking place in Ukraine. Martin Raiser, head of the World Bank in Ukraine, Belarus and Russia, noted that the reaction of the Ukrainian government to the international community’s claim, regarding a chance for Ukraine to play a key role in the prospect of meeting a food crisis, was quite strange. He explained that Ukraine started setting additional quotas, and a commodity exchange, in which agricultural producers had to register their export “ambitions.” “It is clear that you worry about the condition of domestic food security but such reforms are not aimed at supporting domestic consumers. You simply oppress the interests of investors,” Raiser said.
Natalia Korolevska, head of the Parliamentary Committee on the Industrial and Regulatory Policy and Entrepreneurship, believes that the agrarian reforms are not the only transformation that surprised investors. According to her, tax reform is another example. Korolevska said that according to the information given by the State Employment Agency, illicit activity doubled in less than two months since the new Tax Code came into effect. “Such a rate means that the regulations of the new tax legislation are considered as hostile by businesses when it comes to creating new working places,” Korolevska opined. She believes that the Tax Code created a chasm between employers and employees, as the legal job market is no longer efficient. Chances to be legally paid with all the deductions to social funds have dropped dramatically. It also means less payments to the pension fund. “If the situation develops, the pension fund will collapse,” she warned.
Korolevska reminded that Ukraine has one of the world’s highest levels of social contributions. “A Ukrainian pays 37 percent [of his income] on average to social funds, while an American gives 27 percent and an EU citizen pays 19 percent. As a result, nearly 120 billion hryvnias a year are paid in the envelopes. Making salaries legal will bring in 42 billion hryvnias to the pension fund, twice its current deficit,” Korolevska affirmed.
The experts gathered at the forum believe that the reason for the slow and inefficient reforms in Ukraine is the total corruption of the system. “Because of corruption some 45 percent of the economy is in the shadows,” Korolevska summed up.
The recipe for healing this “illness” should be looked for at this and similar forums believes Yaroslav Romanchyk, who came from Belarus where he is head of the Scientific Research Center. “Ukraine needs new ideas, but, unfortunately, the EU, World Bank and IMF are unable to suggest any. They just give advice for the matrix that has been applied for 20 years and brought the country to the situation, where Ukraine is partially free and is 164th in terms of economic freedom,” he said.
Those who could implement such ideas were not present at the forum. Iryna Akimova, first deputy head of the Presidential Administration, was supposed to be the “leading” speaker of the first panel “Economic Reforms and Restructuring Processes: Plans of Ukraine and Experience of European Countries.” Viacheslav Kaskiv, who was the discussion’s moderator, reported that she “was not able to be present” at the meeting. It appears that the international community and the opposition talked tete-a-tete once again.
