Why the EU needs to save Ukraine

EU flags on Maidan Nezalezhnosti in Kyiv during the Euromaidan revolution

EU flags on Maidan Nezalezhnosti in Kyiv during the Euromaidan revolution 

2015/05/17 • Op-ed

Article by: Robin Molnar

Nothing is forever,  relative wealth is not eternal and poverty is not final. What is forever is people’s strive for a better life, for a better society and social justice.

Of course, this strive can be hijacked by politics and by external factors, such as religion, military intervention, corruption and propaganda. But neither of these are forever, unlike people’s determination to live a better, more fulfilling life.

So, among the many uncertainties we have today, there is a certainty that while social progress is not irreversible, it tends to stay positive. As a result of this social progress, we no longer enslave people, we treat each other rather equally and so on and so forth.

It is with this thought in mind that I come here before you, today, to propose a very bold expansion of European Union in Ukraine, Moldova, Turkey and Georgia, for the reasons I will next detail.

First and foremost, Ukraine has the greatest growth potential in Eastern Europe, due to the fact that, currently, its economy is very low and you can’t really go lower than that. Not in Europe, where we have a rather well regulated trade system.

Of course, growth speed is important. However, let’s factor in something else: there are a few EU economies that are not doing so great and, helping Ukraine help itself become an EU member, this will increase the leverage EU gets, if something rather foreseeable happens.

With the latest financial crisis behind us, now, it’s time we square our shoulders to the task ahead, and prepare for the next one, only perhaps one, maybe two decades away, just in time for the newer EU member states to help the heavier, more developed older states get by faster and smoother.

My calculus is simple: with some determination, Ukraine can grow its economy to EUR 400 bn, slightly lower that Poland today, with slightly more people. This is doable, as exemplified by each and every newer EU member state that has tripled its GDP in less than two decades, if not faster.

Of course, this is attainable only by reforming the society as a whole, and Ukraine seems to be on the right track, the same track the Baltic states were in the early 1990s.

If we chose to help Ukraine help us in the long run, we need to consider the possibility of harvesting additional growth from smaller countries, like Moldova and Georgia, and (why not?) Western Balkan countries.

Surrounded by the EU, these countries will enjoy at least some relative growth that the EU is actually generating, so why not collect our part of it? After all, both parties should benefit and this is the ethical way to do it, specifically by sharing the good trade for joining the EU.

My numbers for Eastern EU are like these (EUR bn.): 412.189 bn for Poland, 154.939 for the Czech Republic,  150.665 for Romania, 103.303 for Hungary, 75.215 for Slovakia, 43.085 for Croatia, 42 011 for Bulgaria, 37 246 for Slovenia,  36 288 for Lithuania, 24.058 for Latvia, and 19.526 for Estonia.

In total, as of 2014, Eastern EU member states produced EUR 1 098.525 bn worth of goods and services. But this means something more. If we were to borrow money, so as to overcome some financial crisis within the EU, these countries have a rather low level of debt, as percentage of GDP, roughly around 40%.

In short, if they were to help resolve some EU-affecting financial crisis, these countries could attain more-common levels of debt, say 70% of GDP, gathering around EUR 300 bn while still being financially in a very safe position.

Getting back to Ukraine, being able to reach EUR 400 bn of GDP, with the Eastern European common level of debt of around 40% of GDP, our partner could leverage, in some EU-hurting financial crisis, another EUR 120 bn.

And this is the slightly-pessimistic scenario, where Eastern EU countries don’t grow, which we know is not the case, so – all in all – in case something bad happens to the EU economy, the newer members could potentially raise in and around 420 to 500 bn worth of debt leverage, for the common good.

But I want to go even further, by adding Turkey to the picture. Currently, Turkey has a GDP of EUR 1,000 bn and, by EU accession through reforms, could reach at least EUR 2 000 bn in two decades. However, this is the pessimistic behavior, with only moderate reforms. Remember, for the other countries we’ve tripled the GDP, but not for Turkey.

Also, Turkey has some external debt of around 50% and, if we’re following the same crisis scenario, could provide debt leverage of another roughly EUR 400 bn.

In total, by EU accession for Ukraine and Turkey, along with the already member EU eastern states, the leverage that could be consumed in order to resolve some badly-hurting financial crisis would be of EUR 1000 bn.

And this is just for debt leverage, while keeping these countries safe and not overly-indebted, but there’s even more: imagine all that trade going on between EU and the Middle East, through Turkey, and with Central Asia, through Ukraine!

Both, the Middle East, and Central Asia, need technology, money and everything in between, while the EU could provide, especially since a lot of reconstruction is needed in the Middle East, and also especially because a lot of modernisation is needed in Central Asia as well, something that we could provide.

It’s almost like I can see all the exotic fruits from as far as Yemen on display at my local supermarket, while still fresh and tasty and I can almost see the monumental task of modernizing Ukraine’s infrastructure, creating so many jobs and, thus, so many trade opportunities, from glasses to software and all while helping Ukrainians living the European dream, with great opportunities on all sides!

There’s so much work around the EU, that not pursuing it translates to lost opportunities and, thus, to lost profits and degrading lifestyle, all while our people are aging and the population is shrinking.

So yes, we have very good reasons to save Ukraine, help Turkey and all the smaller countries around, that want to join the European Union. After all, their initial cost of accession preparation and joining is nothing but a loan we make to our future generations, living in a united and free Europe that it’s up to our current making how prosperous it will be.

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  • Dagwood Bumstead

    The sad thing is that the EU won’t do anything. Only the Poles and the Baltics care, but the others don’t. Merkel in particular would happily sacrifice Ukrainian political independence, indeed the country’s very existence, for “normal” relations with Dwarfstan. She has shown her partiality at Minsk- Minsk II gives Putin pretty much what he wants, and Minsk III will be more of the same. She also showed it by visiting Moscow on May 10th to lay a wreath but, although she could easily have done so, did not travel to Kyiv on May 8th. The question is: why? And why does Merkel supply modern weapons to the Kurds, but refuse to supply modern weapons to Kyiv?

    Does Dwarf 2 have some sort of hold over Merkel? Is there something in her GDR past that Dwarf 2 knows and that she does not want to become public knowledge because it would destroy her politically? Her Stasi file, and her father’s, are under embargo. Why, if she has nothing to hide?

  • Dalton

    I say Ukraine votes to join the US.. Putin and his propaganda pushing idiots are already essentially accusing the US of being the culprit behind Ukraine, so why not really rachet up the rhetoric. We could use an Eastern state the size of Texas. :)