This article is part of our special report EU-Ukraine Relations.
Ukraine since independence has been marked by economic difficulties and political corruption, but the development of market elements will in time encourage positive changes in the political system, argues Ivan Matiyeshyn of People First.
Ivan Matiyeshyn is a businessman and co-founder of 'People First', a Ukrainian civil society organisation whose mission is to help build democracy in Ukraine.
"Ukraine is not the only country with a claim to the geographical centre of Europe. Like every other hypothetical point on the map, this geographical centre always has several versions. The location of our continent depends on the definition of the borders of Europe, for instance, whether remote islands are included to define the extreme points of Europe or not.
Thus, according to different versions, four places claim to host the geographical centre of Europe:
- A mark near the village of Dilove near Rakhiv, Ukraine;
- The village of Purnušk?s, 25 km north of Vilnius, Lithuania;
- A mark in the village of Krahule, near Kremnica, central Slovakia;
- Suchowola, north of Bia?ystok, northeast Poland.
In any case, none of those countries which have ambitions to be considered the centre of Europe had to go through such a stormy and cardinal breaking point 20 years ago in their history like we have as Ukrainians.
This breaking point in fact drew our country closer to Europe because neither the Tsars of Russia with their five capitals in Saint Petersburg, Moscow, Kiev, Warsaw and Odessa, nor the Ukrainian Soviet Socialist Republic, had any mental connections with Europe or wanted to have any.
That explosion of nationalism and patriotism which Ukraine went through on 24 August, 1991 wasn't expected by anyone and no-one could foresee it. The whole world has pretended for 20 years that it expected such an appearance of the state of Ukraine on the map: in fact it was an impromptu action of the Ukrainian people who were for centuries oppressed and who always wanted to gain freedom from imperial and Soviet chains, but they assembled slowly.
The transition of Ukraine to democracy and a market economy 20 years ago meant, first of all, a complete breaking away of our state from that particular form of societal organisation which was characteristic of the totalitarian Stalin system.
The Chinese are indeed right: for all of us it was difficult to go through times of cardinal changes. Although it is true that there were also unexpected pluses: for instance, there were sharply reduced state expenses on the maintenance of 300,000 KGB informers, who in Soviet times received pecuniary rewards at other people's expense for denunciations about those same people.
20 years ago we created a democratic republic in the fields of Ukraine. We wrote a new Constitution. At elections we learned to determine leaders of the state and governmental bodies, as well as relations between citizens and this government.
It was a real revolution, which as with all revolutions went through the hearts of Ukrainians with a crack.
Getting accustomed to a market economy was even harder since in order to build capitalist manufacturing in one of the biggest states of Europe, we had to ruin the socialist economy to a certain extent, which caused a heavy economic crisis in Ukraine long before the global financial crisis of the last [few] years. It is indeed possible that the resources provided […] by the breakup of the USSR provided the rest of the world with two extra pre-crisis decades.
In fact, we have to acknowledge today that the first 20 years of independence of Ukraine were accompanied, firstly, by a continual shrinkage of amounts of industrial production (hundreds of plants and factories are completely closed); secondly, by new phenomena for our young country – inflation and currency devaluation (during some years inflation reached 2000% per annum, and in terms of grivna devaluation in 2009, we were first place in the world); thirdly, by the rupture of traditional external economic relations (trade with the Russian Federation, for instance, was reduced [three-fold]).
GDP growth in Ukraine in 2011 is the highest in Europe and reaches 6%, but in addition to this, we have to state that within 20 years, gross national product got reduced by approximately 20%, industry manufacturing by 40% and agricultural manufacturing by 15%.
Structural factors provided the conditions for this recession and it was the price we paid for the transition from the socialist economy to the market economy: at first Ukrainians tried all attractions of the so-called 'wild capitalism'; then they found themselves to be prisoners of an oligarchic economy and finally now they are trapped in a bureaucratic capitalism where political power becomes the main way of gaining property, and mechanisms for preventing corruption haven't yet been worked out by society.
Within 20 years, Ukraine went through a stage of a sharp imports decrease at first (1991-2004), and then through a stage of a sharp increase (2004-2011). In the same way exports decreased sharply, then increased, and then decreased again. In fact within 20 years there has been a substantial decrease of foreign trade turnover (by 27%).
The fact is that our state not only doesn't have its own freely convertible currency, but also till this time has no strategy in the issue of development of the national currency unit [which] extremely weakens Ukraine's position on […] foreign markets.
On the whole, within 20 years a breakthrough in a general amount of foreign investments took place (in sum no less than 200 billion dollars were invested from abroad during this period), which points not only to an increase of investment activity in a new country, but also to great investment possibilities and perspectives for Ukraine in the future after the creation of a real market of agricultural land (after this we can forecast an annual amount of foreign investments on the level of 60 billion dollars).
People's income for all these 20 years grows more slowly than new sectors of the national economy: as a result, today three out of four Ukrainians are below the poverty line (according to world analysts).
And this when our capital is among the ten most expensive cities of the world, and that there is no efficient system of determining indices of prices and rates of inflation: as a result, official data absolutely doesn't reflect the dynamics of the rise in prices and practically all consumer markets are controlled by speculators.
Despite a permanent increase of wages and pensions, the real income of people during [recent] years practically hasn’t changed, and the share of food products and communal services payments reaches 80% of […] total income for an average Ukrainian family.
Rapid and successful development of market elements in our economy will no doubt sooner or later lead to qualitative changes in our political system and system of power. It's just important that those ordinary Ukrainians, including [the] five million of our people who work now in Europe, don't say as the great Voltaire: 'Better never than late'…"