Ukraine would like to see two basic things in the new enhanced agreement between Ukraine and the EU: political association and economic integration, President Viktor Yushchenko told the Europe-Ukraine International Forum last Thursday. According to the president, the EU member states are studying this idea at both the political and expert levels. “I hope that before the September Ukraine-EU summit we will find a meaningful formula in line with Ukrainian aspirations,” Yushchenko said.
But is the economy of our country prepared for this step? The European experts who discussed the topic “Ukraine-EU Relations: the Economic Dimension” during the forum mostly emphasized what Ukraine still has left to do rather than what it has already achieved.
Adrian Severin, chairman of the European Parliament’s EU- Ukraine Parliamentary Cooperation Committee, favors a maximum degree of rapprochement between Ukraine and the EU without, however, any institutional formalization of this movement. “Let us do everything together except for EU institutions. Let us do it as if we were really integrated, as if we were establishing a new political association and economic integration. And let’s not raise the question that we are so much in love with each other that we can embark on a marriage in five or six years’ time. Let us live together and get married later,” Severin told journalists, perhaps unaware of the impression this suggestion would make on them.
“The Ukrainian economy has not shown very impressive success in the last while. This was caused by a number of macroeconomic challenges. First of all, inflation has reached 19.4 percent in the past few months, and it was higher than 20 percent last year. This is a very high rate of inflation, which is going to have a negative effect. The government should respond to this challenge. Ukraine also has no clear-cut monetary policy. In other countries this is a key factor for controlling domestic demand,” said Balas Horvath, Hungary’s resident representative at the International Monetary Fund. He is convinced that only by properly responding to these challenges will Ukraine be able to bring its economy up to the level that suits the EU.
Meanwhile, the EBRD director in Poland, Kazimierz Marcinkiewicz, has even calculated when this growth will be possible. “I think Ukraine will reach a new level of economic development in 10 years. Ukraine’s economic potential is extremely large, above all, thanks to industry and agriculture, and sufficiently ambitious and educated people. Even its geographical position is an essential advantage.” But this expert warned that the quality of economic activity depends on political freedoms and democracy. And, in the view of many, Ukraine does not have a very good situation in this respect: there is no transparency or clarity in the regulatory policy, there is no adequate legislation, and corruption is rampant. All this creates “a very bad atmosphere for successful economic activity.”
The report authored by the noted American political scientist Zbigniew Brzezinski, Ukraine: A Net Assessment of 16 Years of Independence, states: “Domestic political problems include...pervasive corruption...The country’s economic development has been hindered by government intervention in the markets...Ukraine faces particular challenges in the energy sector...” However, in Brzezinski’s opinion, “Ukraine has recorded significant achievements since 1999...Ukrainians have laid the foundation for a robust market economy and reversed the economic decline of the 1990s. Ukraine has established itself as a sovereign and internationally recognized state, with a deepening engagement with the European Union, a distinctive partnership with NATO, and a robust relationship with the United States...This is a significant achievement, while some forecasts were very pessimistic 16 years ago.”
Ukrainian experts agree with both these compliments and criticisms, but emphasize that in order to resolve our problems Ukraine must seriously intensify its cooperation with the European Union.
“Accession to the WTO is a step, a platform that enables us to say that we can open a new page in our economic relations with the European Union, even though we are facing some serious challenges along the way. Still, relations with the EU are an opportunity that will allow us to join — in a rather short period of time — the developed states and make full use of our country’s potential. Seven-percent economic growth is something to be proud of, but this will not bring about serious changes because there are even more challenges. So it is very important not to substitute fruitless negotiations for hard domestic work,” said Valerii Piatnytsky, Ukraine’s Deputy Minister of Economy.
His opinion is shared by Oleksandr Vlasiuk, director of the National Institute of International Security. “We are suffering the greatest losses from the failure to seize opportunities. We have to revise the existing forms and methods of cooperation because, while we are wasting time, the countries of Asia will be capturing our traditional trade niches. We need certain interstate agreements because we will be able to reach a new level only by intensifying cooperation. In my view, we are not using this potential, and there are glaring disproportions in our economic cooperation.”
