Update: Ukraine part 1
It’s been an entire year since I’ve visited my favorite European country. Usually, when you revisit an area, you can see subtle changes, but it’s still pretty much the same. Not true for Ukraine.
My first trip to Ukraine was 2008, just before the crash. Viktor Yuschenko was President, and Yulia Tymoschenko was Prime Minister. Ukraine’s economy was growing, an average of 7.4 % from 2004 to 2008. The easing of old Soviet government controls, coupled with increasing exports of food, metals, engineering, and chemicals helping to eliminate absolute poverty between 2004 and 2009. Yuschenko and Tymoschenko were the main architects of this transition for Ukraine.
To put this economic surge in perspective, Germany, Europe’s “economic powerhouse” was averaging 2.5% GDP growth. Across all economic indicators, Ukraine was the economic “Gold Standard” of Europe.
2009 was a bad year for everyone, everywhere. Especially Ukraine. With bought and paid for protestors in the street of Odessa and Kiev, a strongly pro-Putin President Yanukovich was elected. He quickly set about wiping out the Orange Revolution’s economic advances, freedoms, and Constitution. Yanukovich returned Ukraine to a Soviet Style cronyism economy. The economy contracted 5 quarters in a row under “the New Capitalism” proposed and enacted by Yanukovich. I watched as Ukraine devolved from hopeful optimism, rare for a former Soviet satellite, to the usual nihilism rife across the former Eastern Bloc.
Eventually, Yanukovich was forced from power, the Russians invaded Crimea and crossed into the Donbas region of Ukraine, igniting a war. For two more years, Ukraine has had falling GDP growth, until this year. Talking with those involved in the fighting at the Maidan, and those fighting in Odessa, the last two years were hard, and the fighters are very disillusioned with the government. Last year, in Odessa and Kiev, the scars of raging battle still remained. This year, not so much.
Despite what the media wants to tell you, Ukraine has accomplished more in the last two years, than in the span from 2004-2008. For the first time, there was a successful prosecution for corruption at cabinet level. Of course, the Ukrainians imported a prosecutor from New York, but at least they are getting experts with experience.
There has also been concerted efforts and graft and corruption reform. Former Georgian President Shakashvili is heading up the Odessa Oblast, which is famous for its Red Mafia and organized crime syndicates. He has fought, with moderate success, the graft on the ports and organized crime’s grip on the import/export businesses.
Yesterday, I was talking to a several people on the central mall. They complain about how difficult times are. They talk about how the refugees from Donbas are driving up rent in Odessa and Kiev. And they talk about the war and the thousands of men and women lost. In the midst of these conversations, I watched as the revamped Doribovskaya street (Our equilavent of Rodeo Drive) had so many people shopping you couldn’t pass on the sidewalk, and were forced to go into the street. There were many new shops and restaurants that weren’t there last year. I asked a street performer about the changes.
“We can make our own money now. The laws are better for us.” Then he continued playing a bad version of SRV’s “Voodoo Child”.
The common theme of my conversations yesterday was that Ukraine has turned the corner, and even though there are many obstacles, things are moving forward. Ukraine is slated to have 1% growth in GDP this year. Germany’s GDP is estimated to grow at 1.3 %.
My analysis says that things are going much better than expected, and definitely better than reported by the media. And Germany had better watch out. Ukraine may take the “European Economic Powerhouse” title from you.
(Stay tuned for more updates!)