How long can one stand at the crossroads? Well, quite a long time, at least this is the case of Ukraine, a vast country of over 600,000 square kilometers and approximately 45 million people, strategically positioned between the West and the East. While history supposedly had ended twenty years ago, in Ukraine it continues, with confusing results.
Three weeks ago I returned from a brief visit to Lviv, in Western Ukraine, close to the border with Poland, which since certain times is seen there as “West”. Yesterday, I came back from Dnepropetrovs’k, in Eastern Ukraine, closer to the order with Russia (some 360 years ago it was near the border with the Republic of Poland, or Rzeczpospolita as it’s been known), where the feelings of the people are mixed – pro-Western and pro-Eastern at the same time. A kind of identity crisis still prevails, although much less within the younger generation than among their parents and grandparents. Thus, there is a huge question mark: whither Ukraine? Towards the European Union or to further reintegration with Russia, and possibly some other post-Soviet republics? As of today both scenarios are plausible and a lack of a clear destiny is a major factor for policy reforms muddling-through.
One entirely unrealistic dream is to soon join the EU with the existing institutions. This is absolutely impossible. The Ukrainian style of market economy and political organization is dominated by oligarchical structures and corrupted bureaucracy. Although there is a lot of local democracy and certain fundamentals for civil society, these are far away from the values and institutions which are at the core of the European Union. Much change is still needed and change takes time.
Ukraine – a beautiful country, with rich culture and nature – has great potential for economic growth. Presuming proper structural reforms and institutional building occur, one may envisage the feasibility of doubling national income in a decade. Thus far, it is still very low, firmly below the 1989 level because of mismanagement of transition. GDP per capita, at the purchasing power parity, stands currently at just 7,200 USD while in Poland almost three times that at 20,000, and in Russia 16,700. It stands now even lower than in 2008 due to sharp contraction in 2009 when GDP fell by as much as 14.5 percent – one of the largest dips in the world at that time. In 2010-11 it increased, on average, by 4.7 percent. A pity, since with better market institutions and reasonable policies – as well as an alternative, more market-oriented values – it could be much more. Production can grow in the medium term by 6-7 percent per year, but it will not happen if the current structural and political stalemate continues.
It’s already the end of May 2012 and a gorgeous spring is in bloom, though it’s still difficult to feel in the economic and political air. Hopefully, Ukraine will prosper in the long-run and be on the minds of many as it will soon be as it co-hosts with Poland the Euro-2012 football championship. Change does not come with the passing of time alone. Change calls for vision and leadership, long-term strategy and political commitment. Unfortunately, all of these are in a deficit.