Ukraine and Poland had roughly the same gross domestic product per capita in 1990, but today Poland’s GDP is three times that of Ukraine.
What happened? Poland undertook economic reforms in the late 1980s and early 1990s. Ukraine delayed reforms that would have boosted its GDP and living standards. Today, as Ukraine becomes more democratic and seeks economic gains, it has got to make tough decisions. It needs serious reforms to its business regulations, Steven Pifer, a Brookings Institution expert, said.
During a speaking tour of European cities, Pifer, who is a former U.S. ambassador to Ukraine, praised some recent reforms in Ukraine — from its free and fair elections to its creation of an anti-corruption bureau. But he reminded Europeans that their countries will need to help spur further changes in Ukraine before it can become more like Poland, “with a stable, market economy, embracing European values.”
The U.S. and Europe should incentivize the Ukrainian government to set up credits for an additional $5 billion to $7 billion that could only be accessed by Ukraine if it holds corrupt officials accountable, Pifer said. And the international community should push Ukraine to break up monopolies in the energy sector and guarantee fair competition for gas producers and distributors.
Pifer wants the international community to pressure the Ukrainian government to limit the influence of oligarchs — businessmen who got rich quickly during the privatization of state-owned assets in the 1990s. As long as oligarchs have unlimited political influence, he said, the best interests of the Ukrainian people will not be taken into account.
Calling for an end to Russian aggression
But progress is hindered by Russia’s presence in eastern Ukraine and by uncertainty over Russia’s resolve for a long-term solution to the conflict.
Russia has not fully implemented its commitments under the Minsk agreements, which were drawn up by the European allies of the U.S. in September 2014 and February 2015. Despite a recent cease-fire in eastern Ukraine and the delay of local elections in the occupied territories of Donetsk and Luhansk, Russia has yet to pull back all of its heavy arms in eastern Ukraine and provide full access to European monitors.
“If the Kremlin is hearing the same message from European capitals and the U.S., influencing Russia to make a different policy choice … Ukraine will have a greater chance to succeed,” Pifer said.
Pifer spoke in Prague, Berlin and The Hague, Netherlands, in October. .
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