“Marshall Plan” for eastern Ukraine

“One can emerge from the crisis as a leader,” says economist Andrii NOVAK who recently visited the World Trade Organization headquarters and brought over a lot of interesting information. He thinks that, to do so, the state should revise its policy in several fields. It is, first of all, about energy, finances, and investments. In Novak’s words, the world is prepared to make heavy investments in Ukraine. “Today, the three largest German, British, and American foundations have formed a pool of banks to reserve $300-billion-worth investment programs for a period of 15-30 years. In other words, the world is prepared to infuse money into Ukraine. The reason is very simple – surplus of capital. So the investor is looking for a potentially dynamic market. Ukraine is practically ‘untouched’ from this angle,” Novak says. According to the economist, the conditions are a trustworthy government and, of course, settlement of the conflict in eastern Ukraine.

Petro Poroshenko, a presidential candidate, also discussed the investment issue the other day in Warsaw with Poland’s President Bronislaw Komorowski. “We have outlined several fields of cooperation with Poland after the elections, including Warsaw’s assistance in decentralizing the government in Ukraine. Another field is target-oriented investments to create jobs in eastern Ukraine because we believe that one of the main causes [of instability] is the current situation there,” Poroshenko pointed out.

It is still unknown whether Komorowski and Poroshenko reached any concrete agreements. Nor is it known if any real deals were made with investors. In all probability, we will only know this after the presidential race is over.

The Day has decided not to wait so long and asked some experts what they think can be a “Marshall Plan” of sorts for eastern Ukraine – how can the economy be revitalized, what markets should we seek to enter, what sectors should the state support, in what fields should conditions be simplified for investors, etc. For the region’s economic statistics is really unfavorable and is likely to considerably worsen by the end of the year and, hence, further aggravate the social plight of the region. For example, Donetsk oblast is now experiencing the greatest ever industrial slump. The output dropped by 20.1 percent in March against the overall 6.8 percent in Ukraine. In the first quarter of this year the slump was 13 percent against the all-Ukrainian 5 percent. In the past few months alone, the number of vacancies in Donetsk and Luhansk oblasts has been reduced by a third.

The former economics minister Vasyl Rohovy is convinced that it is practically impossible to create new jobs, which in fact means to revitalize the east, unless we have an all-Ukrainian vision of things. “This will be an illusion,” Rohovy emphasizes. The investor must receive clear signals. “And it is a fact that this country has neither a strategy nor a tactic of its development in neither the long nor the short term. Everybody is asking: where are the reforms, what are our offers to business and the investor? Who can answer these questions? And there’s nothing to discuss unless we answer these seemingly obvious questions. We can of course make some offers to eastern Ukraine, but they won’t work. We need an overall vision,” Rohovy says.

In his words, Ukraine’s minister for economic development and trade is supposed to address these problems rather than corruption control and deregulation. “The latter are, of course, important, but not the main, components. They are instruments for attaining the goals.” He emphasizes.

All these matters need to be seriously discussed at national roundtables, experts say. If the state does not hold any, it would be good if the media did. The experts we polled said they were ready to take part in a Den roundtable that would result in a new national program for eastern, western, southern, and central Ukraine. Only after this can we speak about job creation, attraction of investors, economic growth, and social guarantees, particularly in the east. It is only clear so far that the east needs changes and business does not needs federalization. Hennadii Chyzhov, president of the Chamber of Commerce and Industry, explained this very well in a Den interview. If you remember, he said: “Entrepreneurs need no borders inside the country.”