Crucial Efforts Needed

Contrary to forecasts, no decline has been registered in Ukrainian-EU trade and economic contacts after the Union’s expansion. At least, this was the optimistic statement made by Deputy Economy and European Integration Minister Valery Piatnytsky during Government Day at the Verkhovna Rada, when the MPs were deliberating new trends in Ukrainian-EU cooperation, in conjunction with the EU’s expansion. “It would be premature to draw conclusions about whether we have avoided losses and to what extent. However, the first results give grounds to hope that despite the denunciation of free trade agreements with the Baltic States, the prognosticated decline in the trade and economic relationships between Ukraine and the expanded EU has not occurred,” said the deputy minister. According to Valery Piatnytsky, the trade turnover with 25 EU countries in the first half of 2004 has not decreased; it has even increased by 46%, compared to last year’s, registering .8 billion. Direct foreign inland investment from EU countries has also increased by 35%, reports The Day’s Volodymyr SONIUK. Valery Piatnytsky believes that fewer losses could have been sustained had Ukraine joined the World Trade Organization, whose basic mechanisms envisage compensations payable to countries sustaining losses owing to the creation of custom unions. Ukraine’s WTO membership is an issue closely connected to obtaining the status of a market-economy country. In order to obtain it, Mr. Piatnytsky explained, Ukraine must solve two problems brought up by the European Commission: (a) the state’s interference in the price-setting process and (b) application of the bankruptcy law. These issues were last negotiated in July 2004, and the EC raised the matter of official intrusions in the price-setting process in the metallurgical and chemical industries, as well as exceptions from the bankruptcy law, said the deputy minister. The Ukrainian side has provided meticulous answers and is now awaiting a positive solution in the nearest future, he stressed. He also noted that the government and parliament should combine efforts in upgrading banking and price-setting laws. The furthering of Ukrainian-EU relationships calls for developing their legal frameworks, declared First Deputy Foreign Minister Oleksandr Motsyk. Addressing MPs on Verkhovna Rada’s Government Day, he said that a stronger agreement on Ukrainian-EU partnership and cooperation should be the next basic document. Its parameters would be determined by proceeding from the progress made in implementing the Action Plan, whose coordination is nearing completion. Mr. Motsyk reminded those present that the partnership and cooperation agreement remains the main mechanism regulating Ukrainian-EU relationships. Remarkably, two-thirds of the MPs failed to attend the VR’s “European” Government Day.

The 14th economic forum in Krynica Gurska (Poland) was held this year under the slogan of solidarity, security, and efficiency. Polish President Alexander Kwasniewski traditionally called it to order; analysts, politicians, businesspeople, and journalists in attendance were reminded: “Ukraine should obtains tickets in both directions.” Lithuanian president Valdas Adamkus was named Man of the Year 2003 in Central- Eastern Europe (the only head of state present at this year’s forum).

The forum was planned as a Central-European Davos, a place where government officials, people representing various political forces, businessmen, and journalists from various countries in the region could communicate in an informal atmosphere. In fact, previous forums were much better represented, attended by presidents, premiers, and ministers from a number of countries, including the president of Ukraine. This time, Economy and European Integration Minister Yevhen Derkach and First Deputy Foreign Minister Oleksandr Motsyk represented Ukraine. People from the opposition were also conspicuously in attendance, including Borys Tarasiuk, Yuri Yekhanurov, and Anatoly Matviyenko, who took part in the forum’s sessions. Among those present were Oleksandr Todiychuk, formerly in charge of the Eurasian Transport Corridor, ex-CEO of Ukrtransnafta, who attended sessions dealing with power supply problems, and former First Deputy Foreign Minister Oleksandr Chaly. Anatoly Kinakh, head of the USPP, the Ukrainian Association of Industrialists and Businessmen, and a Ukrainian presidential candidate, met with President Kwasniewski and Premier Belka. Mr. Kinakh, however, left the forum quickly. Apparently, issues connected with the Ukrainian presidential campaign took precedence. Be that as it may, the Odesa-Brody pipeline’s forward or reverse modes, arrangements for new routes and patterns of energy supplies to European countries, designed to achieve greater energy security, remained priorities but were dealt with as though Ukraine were no longer a promising player.

Ukraine, its domestic situation, and Ukrainian-EU relations, with an eye to the Union’s expansion, were among the most important points on the agenda. At the outset, President Kwasniewski- who came off sounding like a better champion of Ukraine than some of the Ukrainians-said that they were responsible for helping Ukraine get all kinds of two-way tickets to Europe. That signal from Krynica, in Mr. Kwasniewski’s own words, should be heard in Brussels. Lithuanian President Adamkus, the Man of the Year, declared that they had to cooperate not only with the West, but also the East; that their development depended on reforms in Ukraine, Belarus, and Russia. German expert Karl-Olaf Lang noted that this was only one aspect, the other being Ukraine and the EU’s mutual disillusionment. Actually, there was nothing new about the statements made by the Polish and Lithuanian presidents, or those concerning Ukrainian-EU misunderstandings, just as the Krynica forum added nothing new there. Once again, it transpired that few of the participants had any idea about what the Ukraine-EU Action Plan should actually look like, proceeding from the objectives set forth therein; the EU could not offer a clear-cut strategy with regard to Ukraine, and Ukraine was not showing any comprehensible strategy with regard to the EU. Lars Handrich, another German economics expert, said that Ukraine was regarded as a buffer state, and that it was little known in the West, but not because its products were of poor quality or uncompetitive.

So what should be done? Experts recommended that Ukraine should join the WTO as soon as possible; the EU should finally grant Ukraine market economy status; and Ukraine should boost production at a high added-value level (e.g., machine-building). Ihor Burakovsky, co-director of the Institute for Economic Studies and Political Consultations, believes that Ukraine is noticeably hampered by nontransparent private ownership relationships and economic policy at both the national and corporate levels; the absence of effective bankruptcy proceedings; that Ukraine is trading in what is easiest to sell; that the state has not ultimately determined its priorities in bringing its legislation closer to EU requirements; that the problem of output certification is part of competition, so it requires spending as well. These are specific topics and problems, solving which would make it possible to discuss normal relationships and a greater interest in Ukraine on the part of EU countries — not only as a large market and an unfathomable neighbor.

First Deputy Foreign Minister Oleksandr Motsyk said that removing Ukraine from the list of EU candidate members was “a big geopolitical mistake.” Mr. Motsyk tried to convince the forum participants that Ukraine was an unstable but progressing democracy; that the European idea had become a consolidating one in Ukraine, and that, most importantly (as a new tone in Ukrainian diplomacy), “we want to join the EU as an equal partner.” Mr. Motsyk further declared that Kyiv, hearing insistent recommendations concerning a fair and lawful election campaign in Ukraine, would want to receive fair and unbiased election results, regardless of the winner of the race.

Perhaps it was a specific feature of the forum, focusing as it did on returning countries in this region to Europe, and combating terrorism, to the point that Ukrainian and Russian problems did not look as though they could add anything new to a debate that had grown rather tiresome. New topics on the forum agenda included prospects of Arab investments in the Polish economy and German dominance in Europe. The Poles promoted their country’s investment potential and demonstrated a “history of success” (e.g., the Orlen Oil Company). International security issues were also deliberated, and a discussion of freedom of speech in Russia, as the “main vector of Russian development,” was very successful.

At times, it seemed as though the forum were being held simply to uphold a good tradition. This year it looked more like a reunion of sorts than a venue capable of eventually producing great business contracts and unexpected political breakthroughs. Perhaps the situation will be different next year.