Committee-2005, founded in November 2001 to discuss the ways of offsetting the consequences of the infrastructure crisis imminent in Ukraine, held its first session on November 22. Under discussion was the report, The 2005 Crisis as a Challenge of the Time: The Problem of Responding by the committee chairman Viktor Medvedchuk, First Vice Chairman of Verkhovna Rada. Expounding the basic theses of this comprehensive study prepared by Ukrainian academics, Mr. Medvedchuk pointed out that the question is not about the economic crisis but of a systemic crisis, a far broader phenomenon. Ukraine has in fact received a challenge of the time to which it must give an appropriate response.
We have inherited from the USSR the sources that determined the development of our Ukrainian symptoms of crisis. First of all, it is the high energy and resource intensive character of Ukrainian industry. In particular, energy consumption per unit of Ukrainian GDP is 5 6 times as high as in WesternEurope. This level of energy consumption, even taking into account our relatively cheap labor force, keeps Ukrainian products from being competitive. In the absolute terms of natural gas consumption, Ukraine ranks sixth in the world (after the US, Russia, Britain, Germany, and Canada), spending almost an annual $5 billion for gas purchases.
According to Mr. Medvedchuk, two obvious conclusions can be drawn from this. First, the funds earmarked for restructuring the Ukrainian economy have to be spent on energy resource purchases (about 50% of Ukrainian imports); secondly, the most important infrastructures need to be radically updated, and it is achieving this objective that the bodies of public administration should redouble their efforts for. Unfortunately, the current problems do not yet allow us to come to grips with these issues (of which the passage of the 2002 budget is proof), but this is going to be an urgent and strategic task in the next few years.
Speaking in the post-report discussion, a Committee-2005 member, new leader of the Democratic Union party, Volodymyr Horbulin, pointed out that Ukraine is one of the world’s most technology-intensive countries, while the wear and tear of fixed assets in nuclear power generation, metallurgy, thermal power generation, and the chemical industry is reaching 80-90%. Assessing this country’s demographic situation as a crisis, director of the Institute of Strategic Studies, Serhiy Pyrozhkov, noted this is the worst situation in Ukraine throughout the twentieth century: although Ukraine has suffered considerable demographic losses in these years (wars, repression, and famines), these were of a short duration and the nation had enough time to restore its population. But in the past ten years this country has been gradually slipping to depopulation, Academician Pyrozhkov concluded.
The main goal of Committee- 2005, Mr. Medvedchuk said, is to help Ukraine’s authorities, political forces, and non-governmental organizations to take timely measures to offset the consequences of a systemic crisis, which will peak in 2005, according to domestic researchers. They suggest that the committee’s next session deal with infrastructure modernization, fuel and energy problems, environmental protection, and the financial and economic problems of restructuring, housing and public utilities, and the Armed Forces of Ukraine.
