Debate “A difficult way to Europe”


Changes in Ukraine are difficult, but the process of their implementation has started for good.  The discussion „Ukrainian economy. Why are reforms so difficult?”, which was held in the seat of „Rzeczpospolita”, was devoted to the 20th anniversary of regained independence by Ukraine.

 Rafał Guz, Fotorzepa

The discussion „Ukrainian economy. Why are reforms so difficult?” focused on the 20th anniversary of regaining independence celebrated this year in Ukraine. It preceded also organization of the 5th Economic Forum Europe – Ukraine. The IMF’s decision to grant Ukraine a loan in the amount of 14.9 billion USD was the most important factor expected to provide for fiscal stability of the country in 2010. The budget anticipates cuts in social spending, the parliament adopted a tax code, which assumes reduction of the tax rate and changes will also affect the pension system. The Ukrainian authorities assure that the reforms are a priority. The principal task is also to sign with the EU a contract on establishing a free trade area.

Direction Europe

– Ukraine counts very much on the Polish leadership in the European Union – said during the debateOleksij Plotnikov, chairman of the subcommittee for international economic policy in the Ukrainian Parliament. – We have outlined many directions, which are expected to strengthen our integration with the European structures: to begin with talks about introducing a free trade area with the EU, and to end with talks on lifting visa regime for Ukrainian citizens. Signature of the contract is not a purpose in itself: we hope to draw from the European experience in the area of implementation of reforms and use of European technologies – he remarked. He reminded that the position of Ukraine is unambiguous: it will not join the customs union with Russia, Kazakhstan and Belarus.

Ewa Synowiec, the head of the representative office of the European Commission in Poland, had no doubts: signature of the contract on establishing free trade area with the EU will help Ukrainian reforms. – Negotiations with Ukraine in this matter began in 2008, but they are still in progress. The agreement concluded by both parties is extremely ambitious. On the grounds of it, Ukraine will be very close to the European internal market. I mean the commercial part, the most important one in the context of introducing reforms in Ukraine – she emphasized. Asked when the free trade agreement is likely to come into force, she replied: – In the second half of 2011. Poland will preside the EU. It is worth to take this opportunity to speed up negotiations.

Why are you so pessimistic?

– If the condition of the Ukrainian economy is improving, why does it rank continuously so low in global business rankings? Do you know? – asked Plotnikowa Mikolaj Oniszczuk, a former commercial councillor of the Polish Embassy in Kiev. – What is the level of corruption in Ukraine? I do not know any other such state, besides Russia, where corruption rules. Apparently we rely on transparency, but it does not translate into practice. We need to reform the judicial system, reforms in agriculture are insufficient – he enumerated. – Foreign investment in Ukraine, totalling 42 billion USD, is incommensurate to the needs of the Ukrainian economy – he concluded.

According to Adam Eberhardt, deputy director of the Centre for Eastern Studies, there are three reasons why implementation of reforms in Ukraine is troublesome: lack of a strategic vision of reforms on the part of authorities, oligarchization of Ukrainian economy, lack of social pressure, which would force repair of the state. –No matter, which authorities exercise power in Kiev, the main difficulty is lack of comprehension of the fact that market reforms, which would bring Ukraine closer to the European Union, should be treated in the categories of strategic, civilization choice – he stated. He convinced that the team of Janukovytch led to market oriented thinking in the Ukrainian foreign policy, where immediate profits prevail. – The intention to attract western investment or leverage credit can stimulate reformatory action, but they are not accompanied in Ukraine by a strategic vision of long-term benefits for the state. It is proved by prolonged negotiations of the contract on establishing a free trade area with the EU – emphasized Eberhardt.

Meanwhile Mikolaj Oniszczuk added that although 20 years have passed since Ukraine regained independence there have still not been enough facts. – Ukraine is at the stage of transition from socialism to capitalism – he said.

State control

Why have subsequent governments in Kiev done so little to improve the economic situation in their country? What changes would bring quick effect? Krzysztof Dresler, vice-president of PKO BP, chairman of the supervisory board of KREDOBANK SA with the seat in Lvov and chairman of the Council of Polish-Ukrainian Chamber of Commerce, thinks that small steps towards improvement of business conditions have already been made.

– We can observe certain positive changes now, such as introduction of a new tax code, which assumes reduction of the CIT tax rate from 25 to 16 percent in 2014. Such changes can have a positive impact on attraction of foreign investment. I think that it is worth to introduce international financial reporting standards in the financial sector to make the regulatory framework compatible with the standards binding in developed economies – said Dresler.

In his opinion also changes in the foreign exchange law are needed. – Today Ukrainian standards depart from the Polish or Russian regulations. Considering the fact that the economy will not develop dynamically without a robust and efficient banking sector, it is important to draw appropriate attention to the foreign capital present in banks. In this area regulations should be standardized in line with the European solutions, especially in respect of the rights of majority shareholders, first of all within the scope of the possibility to buy out minority shareholders – underlined president Dresler.

According to Adam Eberhardt, the team of Viktor Janukovych restored the internal steerability of the state, which the previous governing elites were not able to achieve.

– Economic transformation is introduced though if it satisfies the interest of big business, entrepreneurs connected with the authorities and bureaucracy. The possibility for development of small and medium size business is limited – he said.

V Forum Europe – Ukraine
This will be a debate on the political and economic perspectives of Ukraine. Talks about its civil society, which has already met certain European standards. We want to check on the spot, which direction is really followed by Ukraine, where we have observed so far a game of apparent implementation of reforms – said in the office of „Rz” daily Miroslaw Skorka from Foundation Eastern Institute, the organizer of the Forum. Between 23 and 25 February the seat of the Ukrainian House in Kiev will provide a venue for a meeting of the representatives of authorities, experts and politicians from a few dozens of countries. Their agenda will include changes undergoing in Ukraine 20 years from the date when it regained independence, strategic objectives followed by the authorities in Kiev, cooperation of Ukraine with Russia and the European Union, and also integration of the country with the European structures. The agenda of the forum will also include presentation of a report on transformation in Ukraine in 2010, which ends with a conclusion that the Ukrainian economy has been recovering since the crisis in 2009.

Tatiana Serwetnyk, Rzeczpospolita