Saturday, August 23, 2014


Ukraine's Economic Rankings Mired In Decline Despite Attempts At Reform

Ukrainian President Viktor Yanukovych attends a session at the World Economic Forum in Davos  last year. A new report highlights his administration's lack of progress in implementing economic reform.
Ukrainian President Viktor Yanukovych attends a session at the World Economic Forum in Davos last year. A new report highlights his administration's lack of progress in implementing economic reform.
By Dmytro Barkar
KYIV -- Ukraine continues to languish in a leading global index of economic freedom, despite promises of reform from President Viktor Yanukovych.

The 2012 Index of Economic Freedom, a joint project by the U.S.-based think tank the Heritage Foundation and "The Wall Street Journal," ranked Ukraine 163rd of 179 countries, just behind the Solomon Islands and just ahead of Uzbekistan.

Ukraine ranked dead last among the 43 countries of the European region, pulling up the rear behind Belarus (153) and Russia (144).

The low rating continued a pattern of decline and stagnation for Ukraine that began about five years ago.

In 2008, Ukraine ranked 133rd, but the next year -- amid a political standoff between then-President Viktor Yushchenko and then-Prime Minister Yulia Tymoshenko -- the rating collapsed to 152nd.

Ukraine's rating continued to languish in subsequent years -- it fell to 162nd in 2010, the first year of Yanukovych's presidency, 164th in 2011, and 163rd in the latest survey.

The Index's report on Ukraine cited "fragile" economic foundations as the main problem in the country.

"Poor protection of property rights and widespread corruption discourage entrepreneurial activity, severely undermining prospects for long-term economic expansion," the report says. "The rule of law is weak, and the judicial system remains susceptible to substantial political interference."

The poor results come despite repeated statements by the Yanukovych administration that economic reforms are a top priority.

'Idiotic Legislation'

At various times since Yanukovych became president early in 2010 officials have promised regulatory reform, tax relief, anticorruption measures, and judicial reform.

However, on January 11, Yanukovych told government officials at a meeting of the Economic Reform Committee that he is disappointed with the lack of progress.

"I remember our first meeting last year [2011]. We had a lot of plans," he said. "There were big expectations about how we will work in the coming year. Our dreams and expectations were sincere. But what results did we get for the year? I think no one in this room is satisfied with the results."

The owner of a clothing store in Kyiv, who asked not to be identified, told RFE/RL's Ukraine Service that the problem is simple.

"Our problem is our idiotic legislation, which only creates difficulties," he said. "For example, I pay under the unified income tax [a simplified tax regime for small entrepreneurs]. Previously, I made one payment in one place. Now I have to make several payments. There is a new law on the protection of personal data that is written in such a way as to be incomprehensible."

Yaroslav Zhalilo, an analyst with the National Institute of Strategic Research, maintains that the early stages of such massive reform are inevitably difficult and frustrating.

"Regulatory reform is just in the initial stages," she said.  "Regulatory reform is just in the initial stages. Perversely, some procedures seem more cumbersome than before because the mechanisms are not yet in place. Second, as we all know, there is a high level of corruption. Third, Ukraine is currently at a stage where it is necessary to bring order to significant areas of activity that earlier were uncontrolled.

"This is being done, as well as the introduction of tougher requirements for the safety of goods and services, for the organization of certain types of businesses, for the necessity to pay taxes from various categories of revenues. Business perceives this sort of organization as a limitation on economic freedom."

'We've Lost Confidence In Tomorrow'

Nonetheless, businesspeople around the country continue to press their case. Anatoliy Hyrshfeld is board chairman of the Organization of Employers of Kharkiv Oblast:

"There are problems with customs, with the timely refunding of VAT," he said. "So potential investors, when they are asked, mention this and so a negative rating emerges. The recent governments have not added to Ukraine's competitive advantages.

"They only settled immediate questions: how to pay salaries to state-sector employees, how to pay pensions, and other social matters. They think that business will survive, will get used to this. But they forget that it is business which creates the country's material well-being through taxes."

The Heritage Foundation/"Wall Street Journal" report echoes Hyrshfeld's opinion. "Recent large deficits have strained public finances," the report says, "forcing Ukraine to confront the challenge of restoring sustainable levels of public spending."

The owner of a retail outlet in Zaporizhzhya, who like his counterpart in Kyiv asked not to be identified, claimed pessimism is growing.

"Over the last year or two we have really lost confidence in tomorrow," he said. "There is no confidence because small business is being robbed by the state.

"A huge number of laws are passed that contradict one another but under which it is possible to assess fines, to close businesses, and to prevent us from working. I might just close my business and go work for a pittance at some large enterprise."

RFE/RL correspondent Robert Coalson contributed to this story from Prague
This forum has been closed.
Comment Sorting
by: Konstantin from: Los Angeles
January 16, 2012 17:20
Ukraine was even before Russian Revolution center of industry
And food supply of occupying and plundering it "Russian Empire".
Russians influxed in Eastern Ukraine many, through the Sea.
Lenin crushed Ukraine's Labour Unions, like Russian Zcar.

Stalin offered free elections, independence and democracy.
Ukraine rebuilt again, but Russian influx used the bad times
To starve local East Ukrainians and rised the nazi Germany
To destroy it. Ukraine relocated industries East and did fight.

After war Russia hold back Ukrainian people and industries.
Since 1947 Stalin under house arrest, restore-CIS reversed.
Russia influxed again CIS and Eastern Ukraine - plundering.
Since 1990th CIS independence Russia continue its course.

All Ukraine must obtain hope of better future as a free nation.
The East Ukraine Russians pressured by Russia - to stole it.
As in all World, Russia is "devide to repopulate" annexations.
Using usurped USSR might - Russia blackmail and bethroat.

Is World ready accept manipulations by imperial resurectors
Against Ukraine and the rest of Euro-Asia, including rankings?
It should take a child - see on the maps of Europe pipesuction
That Russia, UK, Germany and Austria garroted under Seas.

Europe's nations should refresh EU and CIS by positive steps.
Don't be depressed by blocade of imperial resurectors "raps",
Or be depressed by propaganda of their self-appointed press.
It is they, lead by Russia, making you be corrupted by a mess.

by: UKR FAN from: Canada
January 16, 2012 22:44
Surprise; surprise: surprise.
Did anyone really believe that this incompetent individual would/could revive a Country? Yuschenko was on the right track and they rejected him. Start by getting Yanukovych out and some free market ideas into the Country.
First of all , get Tymoshenko out of jail, and then pick someone to run for President who knows how to run a government.
In Response

by: Eugenio from: Vienna
January 17, 2012 08:41
You are saing: "Start by getting... some free market ideas into the Country" :-). Yeah, when one looks at advanced market economies - such as Greece or Italy or Spain or Portugal or Ireland or the US with their vanishing industrial base, their exploding real estate bubbles, their unpayable sovereign debt, their banksters who run entire economies into bankruptcy and then get bonuses for this good job - one can only be convinced that free market capitalism is a functional system of economic governance :-)).
In Response

by: Konstantin from: Los Angeles
January 17, 2012 15:35
"UKR FAN" in part is right, as for "market ideas" - what?
The modern World is run by plagiaristic and plundering empires - "market" only part of it, but they use it too - to steal and resurect
colonial empires - Ukraine was richest country but its "market"
is squized by Russia - using stolen oil and gas and Russian influx.
Any "idea" would be stolen by World imperial theafs and used against the very creator of "ideas" and his country.
The few ideas that prevented Big Depression were mine, since
Obama stole my advise to McCain during election...

"Eugenio" is right, in part, as for "industrial base" and "sovereign debt" - he simce leaning to "soveregn" nations be annex by Russia.
In case of Ukraine through forcing energy blocade and through
destroying Ukraine's "industrial base" by blocading Ukraine's
products, replacing it by anybody's else, starting with German products.

Both are right, but leaning to oposite orientation, about World
finance and market capitalizm and both are dissingenuine
about it - Russian race tirrany and Brito-Germano-Austrio
race tirrany are both destroying other, often better nations,
using trade and finances crimes of manipulations or,
like Russia - aggression, plander and genocide...

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