Transcript Ukraine
UKRAINE the most important element in the historic and historical jigsaw puzzle between Europe and Russia LAJOS BOKROS, PROFESSOR OF ECONOMICS AND PUBLIC POLICY CENTRAL EUROPEAN UNIVERSITY, BUDAPEST, HUNGARY BABES-BOLYAI UNIVERSITY, CLUJ-NAPOCA, ROMANIA Zbigniew Brzezinski Without Ukraine, Russia is a modest middle ranking power With Ukraine, it is still a formidable continental empire DEMOCRACY versus DICTATORSHIP Global Strategic Context Historic and historical struggle between EU and Russia in the whole XXI. century Putinesque „managed democracy” entrenched for at least a quarter century Substantial popular appeal of aggressive nationalist authoritarianism within Russia Populist & nationalist forces on the rise in Europe – promoted by an assertive Russia Far-right & far-left populist parties receive significant financial assistance from Russia China supported by Russia in its struggle for global & regional hegemony with the US Chinese & Russian autocracies projecting efficiency to a seemingly paralyzed EU European soft power inadequate to tackle authoritarian tendencies within the EU Brexit & Grexit – the two most important internal challenges of the EU – no solution Anti-establishment aggressive (left & right) populism clearly on the rise in the US, too Regional Significance of Ukraine The EU – as a framework of a multinational, multiethnic, multicultural and democratic civilization – incomplete without Ukraine (Georgia, Armenia) Russia – in demographic, economic, industrial, financial & cultural decline – never to regain its preeminent global standing without Ukraine (Belarus) To be acknowledged: EU & Russia have strongly conflicting and hardly reconcilable strategic interests in the former bloodlands of Eastern Europe New bloodlands or frozen conflicts: Donetsk, Luhansk, Crimea, Transnistria – festering wounds of insoluble regional crises for the next one hundred years No popular desire, political will and institutional capacity in the EU to further enlargement either towards Ukraine, Moldova or Turkey & Caucasus No political power and institutional capacity in the EU to define and support democratic development in either Ukraine, Moldova or Turkey & Caucasus UKRAINE versus POLAND Every country in CEE has a grudgingly admitted but widely accepted historical development comparator in its immediate neighborhood For Poland >> Germany For Slovakia >> the Czech Republic For Hungary >> Austria For Romania >> Hungary For Serbia >> Croatia For UKRAINE >> POLAND When the comparator charges ahead in terms of economic and societal development, the comparing country feels frustrated for falling behind UKRAINE versus POLAND (2015) People million 1991 People million 2015 GDP USD bn 2015 GDP/PP capita USD 2015 EU trade External share % Debt % 2015 of GDP 2015 FDI stock USD bn 2013 Inflation yoy 2015 GDP growth 2015 Poland 38.3 38.5 474.8 26455 75 39.9 248.2 -0.87 3.9 Ukraine 52.1 44.4 90.5 7519 26 137 54.4 48.5 -9.9 Reasons of Ukraine’s relative decline Horrible Soviet legacy with especially dreadful XX. century historical baggage Enormous tasks of state capacity building after gaining independence in 1991 Difficulties of state building in a multiethnic/multinational/multicultural society Disunity of national elites >>> no consensus in national political strategy even today Sporadic, half-hearted, inconsistent introduction of structural economic reforms Growth and welfare results fragile <<< reforms in transition easily reversible Oligarchic power structure >>> rampant crime, cronysm and corruption (3C) Powerful Russian influence and blackmail versus low intensity European incentives Various vicious circles; e.g. declining population >>> erratic growth & job creation Popular revolts (2004 Orange, 2014 Maidan) degenerating rapidly into farce What needs to be done? Building the largest possible coalition of democratic political forces in Ukraine Appealing directly to the people in time of dire necessity for the state to survive Quick implementation of a critical mass of structural economic & societal reforms Reduction of economic dependency from Russia with long-term EU emergency help Enhancement of free trade agreement with the EU by elimination of all quotas IMF umbrella with one-off substantive debt reduction (no pretend and extend) NATO umbrella to guarantee the territorial integrity of the whole Ukrainian state Graduated tightening of sanctions against Russia for illegal occupation of Crimea Administrative reorganization of the Ukrainian state into a much looser federation Full cultural and – if possible - significant local autonomy to all national minorities Matrix of structural reforms in transition Business sector liberalization Mon & fiscal stabilization Competitive Privatization Privatization of public utilities Restructuring of Re-regulation public utilities of public utilities Public finance administration reforms Subsovereign government reforms Legal and judiciary reforms Critical mass of structural reforms Elimination of all producer and most consumer subsidies (especially in energy) Liberalization of private sector entry and exit in all areas of the economy Strong anti-monopoly and competition enhancing regulation enforced Protection of SMEs from oligarchic intervention and market distortions Protection of private property and ownership rights – judiciary reforms Improving the business environment, promoting FDI in agro & manufacturing Free float e/r – preannounced no intervention, accumulation of forex reserves Very simple, stable and uniform corporate income taxation across the board Massive public investment in physical infrastructure with international oversight Transparency and accountability on every level of government – eGov measures Changes in international strategic context – to promote internal refoms Elevating Ukraine (and Moldova) to candidate country status by the EU Proclaiming Caucasus countries as potential further candidates for EU Officially acknowledging the two-speed Europe concept (EUR vs non-EUR) Enhanced military cooperation and prospective NATO membership Increasing university scholarships offered to Ukrainian students tenfold German-Polish-Hungarian-Slovak drive for massive vocational training Visa free travel for all Ukrainian citizens with strong security safeguards Project for intensive investment into East European interconnectedness Trade and tourism hotspots: Odessa, Lviv, Chernivtsi, Kharkiv, Uzhhorod, etc. Ukraine a strategic asset for European democracy, peace & prosperity!