EDITORIAL: It's the economy, stupid (08/25/96)

EDITORIAL

It's the economy, stupid

Last week's editorial about the anniversary of Ukraine's independence underlined that this newly reborn state had traveled far during its first five years of life. It noted progress in many spheres, including foreign affairs, domestic politics, and state- and nation-building.

This week, we pick up with the issue of Ukraine's economy.

"The greatest challenge for Ukraine, now that the initial challenges of creating statehood ... have been tackled, is to get the economy regularized," said Fiona Hill of Harvard's Kennedy School of Government, speaking during roundtable discussions held recently by the Harvard Ukrainian Research Institute. (Excerpts of the roundtables appear in a special eight-page section in this issue.)

To be sure, there has been progress on the economic front, but not as much as one would like. After all, during the first two to three years of independent statehood, there was not much movement toward true reform. Yes, there were pledges and words indicating Ukraine's intention to pursue establishment of a market economy, but in the end there was soaring inflation, a decline in production, etc.

It wasn't until 1994, when Ukraine's second president, Leonid Kuchma, took office, that Ukraine was perceived as seriously dealing with economic reform, as having true leadership on the issue. It became apparent that Ukraine was willing to take the tough steps required, no matter how painful, to get reform moving. And the West began to listen, and, slowly, to act.

Today, once again, Zenovia Sochor of Clark University underscored in her remarks at Harvard, "Kuchma and his advisers need to show the seriousness of their intent in pursuing economic reform..." Added Daniel Kaufmann of the World Bank: "Once the readiness is there, the international organizations should be ready to march every step up the ladder [with appropriate support]."

A similar topic was examined in an August 8 op-ed article in The New York Times headlined "Give Ukraine a Break." Written by Anders Aslund, senior associate of the Carnegie Endowment, who serves as an advisor to the government of Ukraine, the opinion piece argued that, despite much lip service, the United States, the G-7 and the West in general have not lived up to their fine words.

Ukraine "still is not getting what it needs most: bilateral assistance with no ties," Mr. Aslund wrote, adding that Ukraine is flooded with consultants, more than it can use. "Rather than rely on high-paid consultants, Ukraine needs to educate its own citizens," he argued. The U.S. should offer scholarships at American universities as "education is vital to strengthen both new state institutions and a weak civil society."

As well, Mr. Aslund noted, the U.S. and Europe can open their markets to Ukrainian products and end discriminatory measures that stymie Ukraine's economic growth. Jeffrey Sachs, director of the Harvard Institute for International Development, echoed this theme at the Harvard roundtables. The West should "keep its markets open for Ukrainian exports," he said. "This is a serious miscalculation by the West. It makes reform harder..."

"Ukraine needs friendly support during its search for its place in the world," Mr. Aslund concluded. The United States "has a great role to play here [acting unilaterally and multilaterally], and it should welcome the opportunity."

Truly, words to consider on the fifth anniversary of Ukraine's independence.