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Looking West: Lviv Models Itself As Ukraine's Future

Ukraine's GDP is set to contract by 9 percent this year, but you wouldn't guess it by walking around Lviv.

Coffee houses buzz with the din of outsiders. The streets are filled with the hustle bustle of locals going about their daily business. Living statues dotting the main square add a human element to the city's medieval past.

Lviv exudes an air of a place that is going in the right direction.

The sight of soldiers drinking in bars is one of the few signs of the war simmering on the opposite end of the country, some 1,200 kilometers away. Thriving tourism belies the economic hardship faced by Ukraine as a whole. And the city's place both in history and on the map -- it lies just an hour's drive from the EU border -- give it a decidedly Western feel.

"I feel comfortable here, I love living and working here," says Viktoria Bryndza, a young professional from Lviv. "Even the proliferation of tourists sort of strokes my ego."

The country's GDP is set to contract by 9 percent this year, but you wouldn't guess it by walking around Lviv. New restaurants open every month, and posters advertise new residential developments.

And while anger and disappointment rise nationwide, the mood in Lviv is one of cheerful confidence and joie de vivre.

WATCH: In Lviv, the first stations have been set up for a new bicycle-sharing scheme -- the first of its kind in Ukraine. New bike lanes are also under construction, making Lviv the most bike-friendly city in the country.

Lviv Gets Ukraine's First Bike-Sharing Scheme
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Often, albeit sometimes grudgingly, the city's can-do disposition is attributed to its mayor.

Andriy Sadovyy became mayor in 2006 after several unsuccessful attempts. He inherited a city of 730,000 with decaying industry and infrastructure, where water supply was limited in many areas to just a couple hours a day.

He teamed up with businessmen and intellectuals to create a strategy for his city through 2025. The aim was to turn Lviv into a city "open to the world and friendly to the people," and there was no question that it would be a long road.

A City Transformed

On recent Wednesday afternoon, while the rest of the country celebrated a national holiday, a handful of programmers busily tapped away behind their desks at Sigma Software.

It has only been 10 months since it opened its Lviv office, but the firm has already grown to the point that it must move one floor up, which offers double the space.

Aside perhaps from the wooden moose in the middle of the room -- a nod to the information-technology (IT) firm's Swedish roots -- the office is indistinguishable from that of any other fast-paced, modern company around the globe.

"Anyone who has never made a mistake has never tried anything new," reads one poster that hangs in the open workspace, quoting Albert Einstein.

By all appearances Sigma Software tried something new, but made no mistake, when it set up shop in Lviv. "It was an easy, comfortable, and straight-forward entry," says Volodymyr Chyrva, a company co-founder who runs the Lviv office. "I expected more trouble."

The company also has offices in Kyiv, Kharkiv, and Odesa, but Chyrva says this highlights a key difference to doing business in Lviv. "Compared to other regions, there is an understanding that there is no need to help the IT sector," Chyrva says. "You just don't need to hinder it."

Open For Business

A decade ago, IT and tourism were identified as the sectors of the local economy with the greatest potential for growth.

From virtually nothing, the number of people employed in the IT sector has grown to around 15,000 -- accounting for about 2 percent of the city's population, according to Stepan Veselovskyy, a leading figure in the local IT community.

The sector generates an estimated $280 million-$300 million in annual turnover, says Veselovskyy, head of Lviv IT Cluster. Most are outsourcing companies, but some are product developers. The local arm of Gameloft, a French gaming giant, shares the same floor as Sigma, for example.

Jobs in tourism and related service sectors have increased by 30,000 in the past few years, according to the city government's estimates. By contrast, unemployment has grown nationwide since 2013, and hovers at around 10 percent this year, according to the central statistics agency.

Ilia Kenigshtein moved this year from Kyiv to Lviv to kick-start his latest project, the Creative Quarter. The idea is to develop an energy-efficient innovation center, stretched over 1 1/2 hectares, that can serve as a hub for research and development, culture, and leisure in Lviv.

Kenigshtein, an Israeli IT entrepreneur who was born in Ukraine, knows his way around. He returned to Ukraine from Israel in 2007 and set up a venture capital fund in Kyiv before making the move west.

"Lviv today is in effect not only the most comfortable place for living, but the least problematic in terms of the mind-set of people," he says, stressing that it's not "just because of the closeness of a [European] border."

He explains that the city differs from others in Ukraine because it has no oligarchs, and boasts a healthy middle class unified by a singular goal.

Election Time

Mayor Sadovyy is trying to capitalize on his and his city's success. He will be running for reelection on October 25, when local elections are to be held nationwide, and is expected to win by a landslide. His party, Self-Help, is going along for the ride and is polling well in many of the races it has entered, particularly in the west.

Sadovyy created Self-Help three years ago, when he realized that true success could only be achieved through national politics. "My task and my ambition is to create a powerful ideological party in Ukraine, because you can only build a powerful ideological country with the help of such a force," he tells RFE/RL.

The party did spectacularly well in its first parliamentary elections last fall, winning 33 seats in Ukraine's 450-seat legislature and becoming a part of the pro-presidential coalition. It hopes to repeat its success in local polls, including the capital, Kyiv, where it could become the second- or third-biggest faction in the local council.

Andriy Sadovyy became mayor in 2006 after several unsuccessful attempts. He inherited a city of 730,000 with decaying industry and infrastructure, where water supply was limited in many areas to just a couple hours a day.
Andriy Sadovyy became mayor in 2006 after several unsuccessful attempts. He inherited a city of 730,000 with decaying industry and infrastructure, where water supply was limited in many areas to just a couple hours a day.

The party, however, is experiencing many growing pains. It recently expelled some key members from its ranks for failing to vote against changes to the Ukrainian Constitution suggested by the president. Self-Help has been called a one-man show. But the most frequent criticism is that it lacks a clear identity.

"They have no ideology. Some of their laws are conservative, some are populist, and some are liberal," says Timofey Milovanov, an associate professor of economics at University of Pittsburgh who recently attempted a comprehensive study of Ukraine's main parties based on their legislative track records.

Sadovyy disagrees, arguing that Self-Help shares the ideology of "[former U.K. Prime Minister Margaret] Thatcher's liberal conservatism."

Self-Help has also been reproached for cozying up with oligarchs, powerful businessmen who have monopolized key industries in Ukraine. Sadovyy dismisses that suggestion as well. "Not a dollar, not a cent, not a hryvnya have I taken from any [of the oligarchs] and I won't," he says. "I know what it's like to deal with [them]. Not only is it dangerous, it's deadly."

While Lviv in many way stands out as exceptional, it has not escaped many of the problems that plague Ukraine. For example, a recent survey showed that 67 percent of city residents consider corruption to be a major problem in Lviv -- lower than in the capital, where the figure stands at 78 percent, but a strikingly high percentage nonetheless.

Some of the blame, as well as the success, has been pinned on Sadovyy.

But as Lviv prepares to vote in new leaders, it is clear that the injection of new people and ideas during Sadovyy's 10 years in office has left the city with no shortage of ambitious young minds to help shape its future.

Veselovskyy, the 27-year-old head of IT Cluster, is running for city council this year. He says there are plenty of people who, like him, want to achieve more.

"We realized that we set our goals too low," he says, before adding with a laugh: "It was a terrible disappointment. We have to dream bigger."