FACES AND PLACES: What does Tkachenko know? (02/21/99)

FACES AND PLACES

by Myron B. Kuropas

What does Tkachenko know?

The news that Verkhovna Rada Chairman Oleksander Tkachenko is promoting the idea of "Slavic unity" with Russia and Belarus sent chills up the spines of Ukrainian Americans, but it probably didn't surprise certain pundits in the West who predict unification of the three republics within a year.

Unification will be voluntary, they believe, and will be in the economic interests of all parties.

In some ways, Ukraine's slide back to "Mother Russia" is no surprise. Democratic capitalism can buttress national independence, but only if the nation can compete in today's global economy. Being competitive requires the development of goods and services that other nations need but cannot or will not produce in an efficient manner. The nation that meets that need has what is called a comparative advantage. For some Arab nations, the comparative advantage is oil. For certain Asian nations, it's technology. Ukraine had somewhat of a comparative advantage when it was "the breadbasket of Europe," but with the introduction of collectivization that advantage disappeared. The most enterprising farmers were eliminated and replaced with apparatchiks who all but destroyed Ukrainian agriculture. Today, few people in Ukraine know how to manage a productive farm.

All of this mattered little in the Soviet Union because it was a closed society totally separated from the global economy. Within COMECON, the Communist trade zone, inferior goods and services were purchased because consumers had no choice. There was no competition and the market was predictable. As inferior and antiquated as everything was, there was a certain stability. People pretended to work and the state pretended to pay them, albeit regularly. Inferior workers received inferior wages to buy inferior products in order to live under inferior conditions.

All of this changed with the collapse of the Soviet Union. Hungary, Poland, the Czech Republic and now the Baltic nations, which garnered the "fruits" of Marxism-Leninism for only 40 years, were able to slowly restore their economic systems and to begin their long journey back from the economic middle ages. Ukraine and Russia were not so fortunate. They had no economy to resuscitate because it was Soviet. Foreign investors soon learned that doing business in independent Ukraine and Russia was a "they win, we lose" proposition. Foreign aid proved to be money down a rat-hole.

One option being suggested for Ukraine is the restoration of the closed market system of Soviet times. Since no amount of foreign financial aid or investment can possibly make Ukraine competitive in the global market in the near future, a closed command economy that includes Russia, Belarus and Ukraine appears to be the only answer. A few paltry goods and services are preferable to no goods and services. Russians love the idea. While they may disagree on a variety of political and economic issues, Russia's Communists and Russia's nationalists are united on one point: Ukraine belongs with Russia.

Will Ukraine join Russia voluntarily? I believe there are three reasons it won't. The first is that Russia itself is barely breathing. The February 8 issue of U.S. News and World Report provides some scary statistics: per capita income in Russia fell by 80 percent; gross national product is down by 55 percent; grain production has declined by half; milk production decreased by 60 percent. Three quarters of the water supply is contaminated. Some 40 million Russians live under the poverty line of $40 a month. Forty percent of Russia's children are chronically ill. Oil output is down 50 percent. The infrastructure - electric power nuclear plants, sewage systems - is deteriorating. Almost three-quarters of the economy operates on barter, and many goods produced in decrepit factories are worth less than the raw materials that went into their manufacture. The government spends two rubles for every ruble collected. Can such a bankrupt regime seriously consider absorbing still another economic basket case?

A second reason Ukraine won't be easily embraced by the Russian bear is Ukraine's oligarchs, people like Mr. Lazarenko, whose affluence can only be described as obscene. They have much to lose if Ukraine unites with Russia. They may just take their money and run, of course, but I don't believe their greed will allow it. As long as Ukraine remains standing, there is still too much left to steal.

A final factor in Ukraine's favor is Central Europe and Germany. As in the past, Germany will support Ukraine's continued independence. For reasons that are obvious, Poland, the Czech Republic and Hungary, soon to be part of NATO, also will. The history of Central Europe provides valuable lessons.

If Ukraine survives to the millennium, will it still be democratic? That depends, as Bill Clinton might say, on what you mean by "democratic." Today, Ukraine's "democracy" means lower or no wages, an elected but parasitic Parliament, the same old nomenklatura running the country with fewer restraints and thuggery from the no-neck "byky" in black leather jackets. Under these circumstances, is it any wonder that some Ukrainians yearn for a return to the relative security of communism? As one wag explained it: "it took Ukraine's 'democrats' just five years to do something the party couldn't accomplish in 80, namely, to teach the people to love communism."

Ukraine is at the crossroads. Ukrainians can continue to slide back to the future or they can reverse direction and begin to build a society based on the rule of law, security for private property, the enforceability of contracts and civic responsibility. It's a tall order, but it's the only meaningful long-term solution. Without significant movement in that direction, Mr. Tkachenko and company will eventually drag Ukraine into the abyss.

Unfortunately, there is precious little the Ukrainian diaspora can really do to significantly turn Ukraine around. Observing Ukraine today is a lot like standing on a hill watching two trains speeding towards each other around a curve on the same track.

Predictions are that Ukraine will be very much in the news in 1999, and not just in Svoboda and The Ukrainian Weekly. Believe it!

Myron Kuropas' e-mail address is: mbkuropas@compuserve.com

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