Ukraine will be a European country in a few decades time, but poor for many years to come – economist

During the Euromaidan protests in December 2013

During the Euromaidan protests in December 2013 

Op-ed

What are Ukraine’s chances to become a successful country?

Oleksandr Paskhaver

Oleksandr Paskhaver

In his column for the magazine Novoye VremiaPresident of the Ukrainian Center for Economic Development Oleksandr Paskhaver identifies three factors helping Ukraine move forward on its chosen path of development. They are the dissolution of the Russian empire, being conducted by its own leadership, giving Ukraine a chance to move away from the “Russian world.” Then, there is the postindustrial revolution, which brings about technological and social changes making the existing Ukrainian property ownership model – oligarchic capitalism – obsolete. Finally, there is the Euromaidan revolution as the start of an anticolonial social revolution, as an ongoing movement that is helping Ukraine to advance and to transform itself:

“Sociologists have noted that people on Euromaidan behaved in accordance with values that are different from the values of the passive majority. But they comprise a minority – which is typical for revolutions.

 

This is a major difference between what happened currently and what happened at the beginning of the 1990s when we set out to build capitalism after the collapse of the USSR and after the failure of the Soviet economic system. There was no revolution when we created our homegrown version of capitalism – there were no ‘revolutionary bourgeois.’ And building an effective society was not the goal of those who were involved in building capitalism in Ukraine.”

Also, Paskhaver identified three elements that are blocking the progress of Ukrainian integration into Europe:

1. The survival strategy

The majority of the people champion the values that are embodied in the simplest of strategies: the strategy of survival. The survival strategy has been a necessary and integral part of Ukrainian life for hundreds of years; it was practiced by Ukrainians in foreign states and in states that were hostile to Ukraine. This is what saved Ukrainians in what, for Ukraine, was a bloody twentieth century. Briefly, the survival strategy can be condensed to the following:

  1. Do not trust anyone except “one of your on.” The state, especially, cannot be trusted.
  2. If possible, act stealthily. If that is impossible, employ deception in dealing with those around you. If deception does not work, use bribery.
This strategy worked, and people survived. Survival strategy is fundamentally different from the European development strategy in which freedom, active involvement, and trust are of primary importance.

2. Capitalism Ukrainian style

Capitalism Ukrainian style is the survival strategy which helped build Ukraine’s existing oligarchic capitalism. Under the chaotic conditions of the early 90’s – the consequence of the survival strategy – a grandiose, impressive shadow economy was built that saved both the country and society.

But the shadow economy, with all its remarkable “redeeming” qualities, failed at building a law-abiding society. Every law was broken because everyone knew: it is impossible to apply laws when chaos and collapse are the norm. In the end a society was established which sociologists called “the immoral majority.”

The only people who ended up building homegrown capitalism in those conditions were the Soviet bureaucrats and the opportunist speculators who flocked to partake in the gobbling up of the abundant pickings.

Paskhaver stresses that oligarchic capitalism is not comprised of the ten richest people, it is comprised of hundreds of thousands of the richest. Many of them did not gain anything, but those who profited handsomely have built their private little monopolies everywhere, enterprises that included factories, hospitals, and cemeteries. The goal was to establish a monopoly that would provide corrupt rent payments.

The professional bureaucrats of the last 26 years have been replaced with crony acquaintances of the oligarchic system. The quality of the bureaucracy has deteriorated sharply even in comparison with the Soviet bureaucracy. And the national economy has become a hierarchical conglomerate of the monopoly. Where there is a monopoly there is no growth. The monopoly is an obstacle to growth and development and a source of poverty. Therefore, Ukraine does not advance and does not grow rich.

And finally, perhaps the worst thing is that all the rules, be they formal or informal, have been slanted to favor the corrupt system. Ukraine is encompassed in a newfound social fabric; and all its inhabitants are interwoven in it, willingly or unwillingly, because there is no other way their rights can be protected. This social fabric is highly adaptive and therefore long-lasting. A hero who would want to break the system would most likely fail. Only slow, steady displacement can succeed in breaking the system.

3. The immaturity of the revolutionary class that appeared during the Euromaidan revolution

The revolutionary group of people that emerged in the course of the Euromaidan has not yet fully matured. They have not succeeded in creating an attractive ideology for the public; in forming political structures; in installing a group of leaders. As events progressed, power was handed over to people who even though they are the most liberal, the most forward-looking, they are, nevertheless, representatives of the old electorate. And in spite of their best intentions, their actions become entrapped within the old customs of doing things and the same old connections and management techniques.

Thus Ukraine ended up with a “sandwich” model of reform management: the meat of the sandwich is the power structure, including the representatives of the old electorate; the top slice is comprised of the donors and their pressure; the bottom slice is the millions of new people with new attitudes and new expectations who are likewise applying pressure on the government.

Paskhaver sees this as being moderately effective. Along with the reforms, there are outstanding achievements in the field of macroeconomics. Financial stability has been achieved and even though the country is at war, the staggering economic crisis has been reined in and supplanted with fragile economic growth. An army has been restored and the war has been localized. Nearly 2 million internally displaced persons, refugees from the war in Donbas, have been absorbed by the general population without a crisis.

There is yet another important factor: the intensification of tensions. The more the pressure to reform is applied, the more complex the conflict becomes. Ukraine is witnessing a sharp escalation in the conflict, which according to Paskhaver means reforms are starting to have an impact:

“Naturally, if we compare ourselves with the best achievements the developed countries have attained our meager successes are laughable, but if we compare ourselves with the lowermost bottom from which we are now rising, then, I believe, our limited successes are outstanding. It all depends on what point of reference you consider.”

Oleksandr Paskhaver’s comments on what Ukraine can expect in the future:

  1. Even if the impact of the new institutions grows sporadically, they will eventually start working as a system and their influence will become effective. The positive trend will be evident in the near future.
  2. Work within the revolutionary class is continuing, and there is a chance that a viable political project will be created. The current leaders of Ukraine should support this process and be prepared to hand power over not to their current political surrogates, but to a well-seasoned revolutionary class.
  3. The conflict will continue to escalate. That is an indication that we are moving forward.
  4. We can expect a slow but steady increase in the influence of European values as opposed to the value of the survival strategy. We will become a European country (after a generation) but we will be a poor European country for a long time. May God help us become a poor European country.

Translated by: Olha Rudakevych
Source: texty.org.ua

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  • Screwdriver

    Divis Mykola…Moldova was all about Europe, then few years later elected pro-Russian president.

    • laker48

      And his days in office are numbered. No chance for re-election.

      • Screwdriver

        Sorry to disappoint but.. “A recent poll shows that both the liberals and Plahotniuc’s Democrats may not even earn a place in parliament during elections scheduled for next year. On the other hand, Dodon’s Socialist Party is predicted to make big gains. Dodon himself is polling as the most popular politician in the country.” http://www.euronews.com/2017/10/06/moldovas-leaders-step-up-east-west-tug-of-war

        • laker48

          Wouldn’t bet a horse, or even a skinny bronco on this news. :)

          • Screwdriver

            Do you know what poll is ?
            “Meanwhile, a new poll conducted on IDIS’s “Viitorul” reveals that if elections were held next Sunday, only the Socialist Party and the Solidarity and Action Party would join Parliament.

            According to a study conducted by CBS-AXA, at the parliamentary elections under the current electoral system, nearly 26 percent of citizens would vote for the Party of Socialists in Moldova, more than 12 percent of the votes would get the Party of Action and Solidarity. Democrats and liberals would not enter Parliament, gaining 3 per cent, and almost a percentage of citizens’ votes. In the future Legislative, the Party of Communists, which would have little over 2 percent, and the Political Party Dignity and Truth Platform, would not be found, about 3 percent.

            The poll also shows that nearly 70 percent of citizens would go to vote.

            In terms of top populist politicians, pro-Russian President Igor Dodon is on the top position, with over 32 percent, followed by PAS leader Maia Sandu, who enjoys the confidence of nearly 18 percent of citizens”

          • laker48

            A year or so is a long time. Back, in 2015, all Polish pollsters predicted a landslide victory in the first round of former president Komorowski and an election victory of the coalition Civic Platform (PO) and the Polish Peasant Party (PSL). The actual results were a decisive win of Mr. Andrzej Duda in the presidential election and absolute majorities in both chambers of the Polish parliament of the opposition party that created the first since 1924 majority government in Poland (I discard the 1944-1991 period of the Soviet occupation of Poland). Don’t get too excited! Oil and gas prices have started dropping again after the stopped US rigs came back to business after the series of tropical storms. RuSSia keeps bleeding red ink profusely. Also US oil and gas shale drillers keep adding new rigs what translates into $88 per 1000 cm at the HH and $3.50-$5.50 for MMBtu of LNG ($125 to $200) FOB Charged by Cheniere Energy after regassification in China and Europe.

          • Screwdriver

            Of course there is no Chrystal ball, but you have to base on some numbers/data before you make your wishful thinking predictions.

          • laker48

            I wouldn’t have trusted any polls from Belarus, Ukraine, Moldova or RuSSia if I were you. Belarus is a dictatorship, while the other three are highly corrupt mafia states.

          • Screwdriver

            You did not get it. YOUR claim must be based on SOMETHING .

          • laker48

            “There are lies, damned lies and statistics.”
            – Mark Twain
            I happened to use statistics for a living through most of my professional life. I don’t believe in any value of polls carried out in totalitarian and mafia states.

          • Screwdriver

            I am trying to find any logic with you stating.
            “And his days in office are numbered. No chance for re-election” – that YOUR statement based on what , Mark Twain, Huckleberry Finn, or because you “use statistics for a living” ?

    • Oknemfrod

      Under the Moldavian political system, he is but a figurehead.

      • Screwdriver

        They lucky Transnistria is not part of the election system, then parliament would be pro-Russian as well.

        • zorbatheturk

          RuSSians are slime.

          • Eddy Verhaeghe

            zorbatheturk, not for the first time I beg you to leave the insults to the fans of Russkiy Mir.

          • Rafael Hernandez

            Isis lovers like Zorba and Ukrainians are best friends so what is suprising to you?

          • zorbatheturk

            Well, it is very difficult not to insult them.

        • Eddy Verhaeghe

          Screwdriver, the ethnic composition of the Transnistrian population being what it is :
          – 32,1% Moldovians;
          – 30,4% Russians;
          – 28,8% Ukrainians;
          – 8,7% others,
          I highly doubt your assertion.

          • Screwdriver

            Funny. :-)
            I was a Master in chess,… with you I feel like I play with a very green rookie. Boring :-(
            Is it really that difficult for you to understand, that some Moldovans are pro-Romanian, pro-West, some neutral, and some are pro-Russian ? Specially those who were raised in predominantly Russian speaking environment, eastern parts of Moldova. Do you know how many Ukrainians live in Kuban ? Do you really think they support Kiev regime ? :-)

            “On 31 August 1989, the Supreme Council of the Moldavian SSR adopted Moldovan as the only official language with Russian retained only for secondary purposes, returned Moldovan to the Latin alphabet, and declared a shared Moldovan-Romanian linguistic identity. As plans for major cultural changes in Moldova were made public, tensions rose further. Ethnic minorities felt threatened by the prospects of removing Russian as the official language, which served as the medium of interethnic communication, and by the possible future reunification of Moldova and Romania, as well as the ethnocentric rhetoric of the Popular Front. The Yedinstvo (Unity) Movement, established by the Slavic population of Moldova, pressed for equal status to be given to both Russian and Moldovan.[50] Transnistria’s ethnic and linguistic composition differed significantly from most of the rest of Moldova. The share of ethnic Russians and Ukrainians was especially high and an overall majority of the population, some of them ethnic Moldovans, spoke Russian as a mother tongue” WIKI

          • laker48

            After a generation or two the RuSSian language will die off in Moldova, if not much sooner, contingent on how long it will take RuSSia to collapse and ultimately disintegrate.

          • Screwdriver

            By the way it is only positive for Russia if some parts “disintegrate”, I do not see a problem here.
            For example Dagestan and Chechnya is a burden for Russian economy, with high crime rate. Only good things happen if those regions depart Russia.
            God bless they independence, if somebody else sponsor’s them.

        • Tony

          Transnistria like Donbass is a wasteland dependant on russian money to stay afloat. That’s the best the russian model can offer.

          • Eddy Verhaeghe

            And knowing that Transnistrians only get the scraps from the Russian table, their only chance for economic and social progress is turning away from Russia.
            Russia can’t even take proper care of the needs of its own population, so what little scraps Transnistrians receive from Russia will be of little help.

  • zorbatheturk

    Get rid of Putin.

    • laker48

      Why? He’s the best available undertaker for the fascist RuSSian Federation. Let him finish Dwarfstan off!

      • Oknemfrod

        A good point, though.

        • Rafael Hernandez

          That is what Napoleon and Hitler tought too, now you’re advocating the same beliefs

          • Oknemfrod

            What did Napoleon and Hitler think? That Laker48 made a good point about the Kremlin dwarf?

      • zorbatheturk

        I just don’t like the little prik.

        • Eddy Verhaeghe

          One doesn’t have to like the prick to see the merit of the argument of laker48.
          I personally don’t know if the world in general and Ukraine and also Russia in particular are better off with the immediate removal from power of Putin or with the destruction in the long run of Russia.
          A destruction caused by the power vertical in the Kremlin that is bleeding the country to death with the aid of an oligarchic maffia that runs the country and its economy… At best the Russians can expect a quasi stagnant economy in the next few decades. A stagnant economy that cannot reverse the destruction of the social system, the destruction of health care, the destruction of the schooling system, the wholesale flight of brains and capital, etc…, etc… that we’ve seen those last years in the country. A country that should have been exporting civilian airplanes, cars, technology, etc… A country that has the capacity – just like Ukraine – to be one of the richest countries in the world.
          My heart hurts for the Russians I know – and I know quite a few – and not only for those I know, because they deserve much, much better. Just like Ukrainians deserve much, much better.

          • Rafael Hernandez

            OMG ha ha ha XD XD XD “Russian economy stagnating” The Russian economy is set to grow st least 2,2% this year and an additional 10% the next five years. Your 4th paragraph just demonstrates how much damage western and Ukrainian media can do to one. None of it is true, especially since over 1 million Ukrainians have moved to Russia this year.

            With the deals Russia are doing with Saudi Arabia, Syria, Iran, India, China, Germany and Phillipene and Turkey in which Russia is earning billions of dollars, the future looks even brighter for Russia. Ukraine will probably seize to exist within 2030.

          • https://en.wikipedia.org/wiki/G%C3%B6del%27s_ontological_proof Styx

            Eddy is a well known and highly depraved idiot, Rafael.

            It is pointless to even try to reason with it.

            All of his “posts” on beahlf of the kyiv nazzis can only be described as idiotic balderdash.

            Please don’t waste your time on it.

          • Rafael Hernandez

            It is unbelievable that this goon keeps spreading these obvious lies. It is liks he is in his dream. But it is funny to point out how stupid he is :)

          • laker48

            And they long lived ever after …

          • Rafael Hernandez

            Thank you for facing the reality! Russia has not any debts, meaning that it indeed will live long ever after :)

          • laker48

            Sure! A Cuba does! :)

          • zorbatheturk

            RuSSians cannot build a car for export. Too much competition.

      • Rafael Hernandez

        Lol, the Russian economy is going to grow 2,2% this year. The PPP in Russia has reached over 4 trillion dollars for the first time. Your frustration proves what a good job Putin has done

        • laker48

          Sure! Only last Sunday at least 300 protesters were arrested by the Dwarf’s goons between Petersburg and Vladivostok. The most recent increases in defense and cuts in education and healthcare expenses are really warmly welcome by grateful RuSSians. RuSSian military retirement pensions were also reduced bu roughly a third some nine months ago.

          • Rafael Hernandez

            Yes, but the salaries increased by 16% last year. The gdp of european Russia surpasses most western countries. Many Russians are now tourists in Turkey, Germany, Norway and France. Not saying that everything in Russia is great in every part of its gigantic territory, just like cities in Usa like Detroit, El Paso, parts of New york and Cleveland. Concidering that the oil prices are reaching 60$, and the projected growth of the Russian economy is based on 50$ it indeed looks bright for Russia. So your wet dreams aren’t becoming a reailty, just so you know

          • laker48
    • AmounRah

      And Ukraine will MAGICALLY recover, and MAGICALLY get money, and EVERYONE will get higher salaries and pensions overnight.

  • laker48

    A very realistic scenario. It’ll take at least a generation to visibly transform Ukraine, but the process has been already initiated and the snowball effect is gaining momentum. This alone will accelerate the degenerative processes with the fascist RuSSian Federation leading to its ultimate collapse and disintegration in the 2020s.

  • Ihor Dawydiak

    And as Ukraine prospers while integrating into the European Family of Nations, Pompous Putin the Pederast will play his fiddle (just as Nero did when Rome was burned to the ground) and watch as Russia disintegrates under his Pinocchio sized nose. However, there could be another possibility. Somebody might just “smoke” him.

  • Hurd Harley

    Ahh, this man understands Ukraine and Ukrainians. I hope his optimism is correct.

    • Rafael Hernandez

      Ukrainian “optimism” tend to look at things wishfully

  • AmounRah

    “Ukraine will be a European country in a few decades time”,
    Oh my! What happened to “GUARANTEED by october 2015” then november, than all of 2016 then by oct of 2017?
    Decades? Try generations

    “poor for many years to come”
    Uh…no duh? This is exactly what I said when this whole fiasco started. Ukraine is being robbed bu IMF, like COUNTLESS other countries, everything that was socially owned became private and then was sold. Like countless other countries that IMF and Washington touches. This is not new and it is upsetting that Ukrainians are being had, while the st0oges that are running and ruining Ukraine are making Russia their scapegoat. And the fact that you trolls are constantly parroting what you are told, does not hurt Russia, it only delays recovery of Ukraine. So good freakin job.

    • laker48

      The problem with Ukraine is the lack of elites able to govern the country. The centuries of RuSSian and decades of Soviet occupation reduced the Ukrainian nation to an amorphic crowd prone to all kinds of manipulation and calls made by populists and/or ultranationalists. Ukraine will eventually win its fight for independence from the fast deteriorating fascist RuSSian Federation, but most Ukrainians don’t understand democracy and don’t know how to implement its rule. Democratisation and, in the long run, democracy is a never ending process. The sooner Ukrainian society realises that it’s still ruled, but not governed, by corrupt to the core and mostly Soviet-trained and demoralised oligarchs now led by Poroshenko, the sooner the rule of law takes over and the country will start its long and painful march towards a better future. Ukraine still is, unfortunately, a failed mafia state at par with the fascist RuSSian Federation in this department.