Cold Shower after Nirvana
On February 15 Ukraine saw two related jubilees celebrated at the same time. In the morning, the presidium of the International Congress of Industrialists and Entrepreneurs (ICIE) held a meeting on the occasion of its tenth anniversary, then, after lunch (on the same occasion), a similar meeting was held by the Ukrainian Union of Industrialists and Entrepreneurs (UUIE). The two ceremonious functions (at least called so by ICIE President Viktor Glukhikh) still provide an occasion to consider the state of the CIS economy and the place Ukraine holds in it.
Tellingly, the week before last this topic was actively discussed in a totally practical, not ceremonious, aspect. Ukrainian President Leonid Kuchma turned to Ukraine’s advantage the Siberian oil fields working for Russia thanks to Ukrainian engineers and workers. Chief of the Presidential Administration Volodymyr Lytvyn tried to make a last-ditch attempt to persuade Poland to revise its decision to allow a gas pipeline being laid across its territory bypassing Ukraine.
Simultaneously, the Interfax News Agency central Moscow office hosted a press conference of the leaders of the Business Russia non-governmental organization under the motto of Russia and Ukraine: Five Steps to Establish a Common Economic Space. Addressing the audience, Business Russia Director Igor Lisinenko claimed that Ukraine every year loses about $1 billion in Russian investment. Moreover, according to him, Russia practically puts up no artificial obstacles to the development of cooperation with Ukraine. At the same time, Mr. Lisinenko noted, there are several factors, apparently of Ukrainian origin, that could jeopardize Russian-Ukrainian cooperation. Among them he named the instability of Ukraine’s energy balance, problems of defense industry cooperation, fuel prices, and the unjustifiable losses incurred as a result of transit across the Ukrainian territory.
Correcting these are the five steps Ukraine must take. In addition, as the Business Russia boss said, Ukraine should make purposeful efforts to attract Russian capital to its economy. Yet, in his opinion, this would require not only bringing the two countries’ economic legislation into conformity and establishing a mechanism to protect private property and investment but also a moratorium on changes in economic laws.
Naturally, these jubilee meetings mentioned nothing of the sort. In response to Mr. Glukhikh’s speech, Prime Minister of Ukraine, UUIE president and ICIE Vice President, Anatoly Kinakh, had a chance to present in the best light the successes of Ukraine’s reviving economy. He even quoted some economists as saying that the current state of our economy, which is showing industrial growth and minimal inflation, might be called economic nirvana. On the other hand, the premier noted that you cannot eat macroeconomic indices. He called on the International Congress of Industrialists and Entrepreneurs to draw up an “optimal set” of proposals to defend, under conditions of a tough market competition, the national economic interests of the member states of this association.
After the ICIE jubilee meeting, its participants were received by Leonid Kuchma. This in all probability brought not only nirvana but also a cold shower. Shortly before, the president had pointed out insufficient state budget revenues from customs payments as well as the threat presented to the nation’s consumer market by the ever-growing trade earnings (up to 5 billion hryvnias) that do not return from abroad. Addressing the jubilee meeting participants who represented entrepreneurial leagues of the post-Soviet states, Mr. Kuchma said that the former socialist countries should strengthen economic cooperation to counter the negative consequences of the European Union’s eastward expansion. “Thus I think we must pay attention to internal cooperation,” the president emphasized, noting that it is necessary to reinforce domestic markets and develop high technologies, for “if we still remain in such an amorphous condition, no one knows where we will wind up.” Should this amorphous condition continue, we will obviously not get to where the term, former socialist camp, is forgotten.
