Trudy Rubin | To reform, Ukraine will need Western support

June 7, 2014 

On meeting Ukraine’s president-elect, Petro Poroshenko, in Warsaw, Poland, on Wednesday, President Barack Obama said the United States was “absolutely committed to standing behind the Ukrainian people … not just in the coming days … but in the coming years.”

That commitment is important because Ukraine has become the symbol of whether Russia can get away with destabilizing its European neighbors. Poroshenko must not only reform a sinking economy but also combat armed pro-Russian militias that have grabbed chunks of eastern Ukraine.

So Obama wasn’t kidding when he said, “The challenge now for the international community is to make sure that we are supporting Petro’s efforts.” The question is whether Washington and the European Union will rise to the challenge, which will become more acute in the coming weeks.

Having just returned from Ukraine, I believe Poroshenko and the Ukrainian government are finally ready to start the economic reforms so vital for the country. They understand that Ukraine will no longer tolerate the massive Russian-style corruption practiced by the previous president, Viktor Yanukovych, who stole billions before decamping to Russia in February. That was the message of the middle-class Euro-maidan revolution that filled Kiev’s Independence Square for months, and ultimately led to Yanukovych’s exit.

“Ukraine has one-quarter of the Polish economy, even though we started at the same level 30 years ago,” said Ukraine’s impressive minister of economic development, Pavlo Sheremeta (who has an MBA from Emory University in Atlanta). “So it is absolutely understandable why people went out on the streets. If the president and parliament don’t deliver by 2015, the people will be back. I would expect another maidan. People don’t want to live like this.”

Russian meddling, however, makes it even harder for Ukraine to undertake the painful reforms necessary to get its economy on a solid footing. Moscow is playing political games with the price of its gas, on which Ukraine depends; it practically doubled the price to Kiev after Yanukovych fell.

And although it has recognized the results of the presidential elections, Moscow appears to be sending even more arms and men into eastern Ukraine to further destabilize the region. The message to Poroshenko: Return to our economic and political orbit or we will make it impossible for you to govern.

In addition, the Kremlin is waging a propaganda war of epic proportions — beamed in via Russian TV to Russian-speaking Ukrainians — that falsely brands the Ukrainian government as “fascists.” A conversation with Sheremeta in his office makes clear how ludicrous such charges are.

The former president of the Kyiv School of Economics, the 42-year-old minister cites two urgent economic priorities: fighting corruption with “much more energy” and deregulating Ukraine’s economy from Russian-style controls.

Like Russia, post-communist Ukraine witnessed a sell-off of key state-owned resources for a song to well-connected individuals, often former party members, the richest of whom became known as “oligarchs.” Several oligarchs are now serving as governors, and Poroshenko — the chocolate billionaire — is sometimes considered in their number.

I asked Sheremeta how his country could reform if the oligarchs were still omnipresent. His reply: “Poroshenko has promised to sell his assets and not use his wealth for economic gains while he serves as president.” If wealthy individuals act as “good servants of Ukraine” and other players “have equal access to markets and state resources,” Sheremeta said, the reforms can move forward. This will be a stretch, but at least, unlike in Russia, Ukrainian officials recognize the problem and are trying to address it.

As for Mafia-style corruption and corrupt courts, Sheremeta said his government understands “the country can’t develop further if it doesn’t take care of these wrongs.”

Moreover, said the minister, the government also knows, given its geography, it has “to deal with both the European Union and Russia. Both sides must understand that solutions of ‘either-or’ can’t be good for us.”

But an openness to Russia does not mean that Ukraine will abandon its efforts to implement rule of law or cease its efforts to join the European Union. It doesn’t mean it will cling to a Russian-style economy with subsidies it cannot sustain.

And it doesn’t mean that Ukraine will, like Russia, clamp down on the civil society that went to the streets.

On the contrary, said Sheremeta, “It is absolutely vital that civil-society activists keep an eye on the economy.” Indeed, groups of professionals who took part in the demonstrations are now lobbying for specific legislation to reform courts and the health system, and to devolve more powers to the regions. Sheremeta told me he is in regular touch with their leaders, who are notching some successes.

Talking to the minister, it is possible to imagine that Ukraine could emulate Poland and become an economic success story over the next decade, in agriculture, IT, and industry — were Moscow not so determined to prevent it. Helping them get there will require Western resolve.

Trudy Rubin is a columnist and editorial board member for The Philadelphia Inquirer. Readers may write to her at trubin@phillynews.com.

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