The resolution of the 7th extraordinary congress of the Ukrainian Union
of Industrialists and Entrepreneurs (UUIE), the first stage of which ended
February 16, points to the ever-deepening crisis of the Ukrainian economy
making it less efficient and competitive. Congress delegates spoke about
the lack of political will and professionalism in both the legislative
and executive branches in carrying out structural reforms and falling trust
in the political leadership. Consider the following commentary on the speech
by President Leonid Kuchma.
The President's speech at the UUIE congress on February 16 again enriched
the theory of our long-suffering fatherland's uninterrupted economic woes.
It was de facto a proposal to establish a closed domestic market
and fold up export-oriented industries.
Everyone wonders who writes the texts for the President to read. Economists
not wearing blinders have never doubted that the financial crises in the
outside world and in Ukraine were caused by entirely different factors.
And blind copying of "the lessons of Latin America" can be advocated only
by a theorist with the world view of a failed village tractor driver. Thus,
claims that the Latin American model "has shown its inadequacy" are rather
questionable under Ukrainian conditions.
Any macroeconomics textbook (even the simplest) has a chapter on international
economic relations. One can read here about the advantages of international
cooperation and the international division of labor. Any enterprise that
takes part in this cooperation and division of labor by virtue of doing
so achieves reduced unit production cost, increases output, gets a chance
to fully utilizes technological innovations, etc. The formation of an open
economy is treated all over the world as a natural step toward the expansion
of both economic and political ties, and logical integration into the world
community. Moreover, the world now retains only one state, North Korea,
which tries to create a closed domestic market and has already achieved
a certain effect (rationing of food and other goods).
Yes, the national commodity producer should be encouraged and developed,
but why should it be done by distorted methods?
True, ferrous metallurgy items, chemical products, and raw materials
account for over 60% of Ukrainian exports. Owing to this, Ukraine is seen
in the outside world as a developing country located in Europe. However,
this is a question of restructuring exports along with the national economy
as a whole; it does not mean at all that we should not develop export-oriented
sectors.
Incidentally, how should Ukraine's foreign partners, both actual and
potential, treat us after such a bold "adjustment"?
In addition to this, I wonder in purely human terms how the government
is going to bolster the nation's currency and repay its foreign debt. As
of the beginning of the year, Ukraine's foreign debt reached a staggering
$11.47 billion, while her hard-currency reserves were only $685 million
(a year ago these indicators were $9.555 billion and $2.341 billion, respectively).
A sad picture, indeed.
All this makes us come to a rather simple conclusion: the President
was yet again set up with this "adjustment of economic policy," running
counter to everything he has said earlier and is openly questionable in
its essence. Yet, this quite organically fits in with his theory and practical
implementation of "the course of radical economic reforms."







