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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

From one Independence Day to another: 1994-1999

31 July, 1999 - 00:00

The current President's activity, or rather inactivity,
in the economic field is quite worthy of being entered into the economic
history books for at least one very specific reason: how did he manage
to do his best, within the complete term of his presidency, to leave the
economy in an almost forcibly frozen and unreformed condition? Only the
technology of Independence Day celebrations seem to have made a qualitative
leap forward.

The specific year-by-year chronology of economic policies
(from one holiday to another) can be presented as follows:

The 1994 Day of Independence was celebrated under the colors
of the just-held presidential elections. The election of the current President
was accepted favorably in and outside this country. Unlike his predecessor,
the newly-elected President had the image of a practical manager quite
familiar with the economic sphere not by hearsay. Leonid Kuchma was even
forgiven his tenure as Prime Minister, utterly negative for the economy.

The 1995 Day of Independence came off as the first year
after the proclamation of the so-called «Course of Radical Market- Economy
Reforms.» This «course» was still accepted positively in this country and
abroad. No one could imagine then that the affair would boil down to a
pure proclamation and a photocopied text distributed in Verkhovna Rada.

In addition to everything else, the President suddenly
found that inflation could be suppressed. What is more, the results of
this suppression also became, by all accounts, a revelation for the President's
economic entourage, which became virtually stuck in the mud after this.
A perverse national monetarism gained momentum, whereby attention is paid
to only one indicator, while macroeconomic processes arouse nobody's interest.

The 1996 Day of Independence was connected with a whole
series of events. The 1995-fall proposals to soften a severe monetary course
and shift emphasis on the development of national economic sectors, drawn
up by the Yevhen Marchuk government, found no support from the President.
But it is the second half of 1995 and the first half of 1996 that could
have laid the groundwork for Ukraine's rapid jump to the level of normal
European transition-economy countries, provided the economic course had
been modified. The President began a continuous search for pretexts to
evade the economic sphere as well as for clearly mythical causes of a negative
economic situation.

The change of Prime Minister and the appointment of Pavlo
Lazarenko placed new accents in the relationship between the President
and the Cabinet of Ministers, but the real-life economic situation only
began to deteriorate. The Constitution-making process, portrayed as a universal
reason for non-interference in the economy, came to an end. But the President,
who had not been dealing with the economy before, never got down to it
later on.

Day of Independence, 1997: The monetary reform carried
out in the early fall of 1996 was of a belated and non-comprehensive nature.
It did not even set the task of combating the criminal economy, legalizing
shadow incomes, etc. It in fact boiled down to a banal denomination: new
bank notes with a lesser number of zeros were introduced. The year 1997
launched the tradition of official forecasts on economic growth, to be
made in all following years but never to come true.

The President must have understood at last that the economy
was in dire straits. The appointment of Valery Pustovoitenko as new Prime
Minister did not yield any tangible results. According to the established
tradition, the government is regarded as a temporary shaky thing. The external
factor also continued to deteriorate, which was evidenced by the structure
of export and the growing dependence on foreign sources to finance the
state budget deficit. Ukraine always finds itself at the tail of various
rating lists.

The 1998 Day of Independence, celebrated against the backdrop
of a deepening financial crisis in Ukraine, became the acme of the authorities'
inability to adequately handle things. Another reason was found that year
to explain the President's non-involvement in the economy: parliamentary
elections. What is more, the end of the election campaign never made the
President change his attitude toward the economic sphere.

The debt pyramid rose high in this country, on which the
state budget is in fact based. The state became unable to service its debentures,
and the stream of those willing to buy treasury bills petered out. The
causes of all economic troubles were put down to the world financial crisis.

The 1999 Day of Independence should be regarded, by all
accounts, as the current President's last holiday in this post.

Since the beginning of this year, the President has totally
lost any interest in the economic sphere. The election campaign has eclipsed
everything and even robbed the country of the traditional message to Verkhovna
Rada. The President supplied the country with a number of decrees hardly
useful in either economics or in pandering to popular prejudices. A picture
of a «good» President and «bad» civil servants, reluctant to carry out
reforms, is being painted.

As for social policy, it has boiled down to fighting our
own people. Fantastic back wages and other social payments have become
a customary thing which stirs up no emotions in state leaders. Real wages
in May 1999 were only 30.1% of the 1990 level and dropped compared to 1994.
The only positive thing in the social sphere, an absence of mass actions
of civil disobedience, stems in all probability from the highly tolerant
Ukrainian national character, which is not the result of the state's social
policy.

The national economic sectors have been almost totally
exhausted in 1994-1999, which is bound to tell for a long time to come.
It seems sometimes that even if the world's most sophisticated destructive
forces had tried to plunge Ukraine into economic ruin, they would not have
managed to achieve a result commensurate with the consequences of the current
President's policies. A country which has lost 2/3 of its GDP over the
past ten years proved unable to radically change the situation in the years
of the current President's incumbency. According to foreign estimates,
Ukraine's 1999 GDP will be only 35% of its 1989 level, with still worse
indices only being in Georgia and Moldova, of all the former Soviet republics.

The overtly ineffective economic entourage of the President
has long demonstrated its inability to really influence the economic situation
in the state. Yes, one can naively build an outwardly pleasant image of
Ukraine, thus trying to enlist foreign financial support without paying
attention to the actual situation in the country. One can also rattle on
about Ukraine's «undoubted competitive advantages:» the presence of chernozem
soil and very kind-hearted and highly-skilled people. Finally, one can
try to persuade us that all the state needs now is «a new stage in administrative
reform.» Unfortunately, all this is very sad and very far from what could
take this country out of the economic crisis.

The freshest «horror story» occurred just about two weeks
before Independence Day: the promise that the hryvnia and «other things»
will only remain stable «provided the current President is reelected and
the present composition of the government is preserved.» Just as well the
«guarantees of stability» might be linked to the discovery of oil deposits
on Khreshchatyk or the transfer of the Eiffel Tower to Kyiv's Obolon neighborhood.

Our everyday reality, when only the shadow economy helps
millions of Ukrainian citizens to make ends meet, is an affront to the
civilized world community. A situation befitting European countries struggling
out of their postwar ruin has become the everyday reality of Ukraine. That
Ukraine is quite a well-grounded «standing example» for foreign media reports
on corruption, and other economic outrages should be a matter of serious
concern. A country which cultivates tax evasion and has flows of shadow
capital infiltrating all the conceivable and inconceivable spheres of socioeconomic
life should replace not only economic policy but also the political leadership
as soon as possible.

It is obvious that the dubious experiments in the economic
policy of our state should be discontinued. And the democratic procedure
of discontinuing the experiment will itself guarantee successful development
of Ukraine in the future.



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