The View From Here: Unrealized Potential

Volodymyr Kish.

As Ukrainians everywhere celebrated the 28th anniversary of the latest iteration of Ukrainian Independence last week, there was no small measure of concern to go along with the festivities. Yes, Ukraine is still a free and independent democracy, and yes, it does have a young, new President with a parliamentary majority that has vowed to end Ukraine’s seemingly endless cycle of corruption and ineffective government. And yet, there is cause for worry.

The new regime has yet to demonstrate that there is real substance behind the reformist rhetoric. Eastern Ukraine is still a war zone besieged by the latest version of the Muscovite hordes intent on dismembering Ukraine once again. The oligarchs are still an economic and political power stifling the evolution of Ukraine into a modern European state. To compound the misery, Ukraine’s economy is in a sorry state, to the point where many of Ukraine’s youngest and brightest are migrating in huge numbers to the EU to seek opportunities to make a decent living.

Prior to the Russian invasion in 2014, Ukraine’s GDP stood at $183.3 Billion according to UN statistics. By 2018, it had sunk to $130.8 Billion, putting it in 57th place amongst world economies. When one looks objectively at Ukraine’s population, literacy rate, natural resources, geographic location, and other relevant factors, Ukraine should ideally be in the same league as the current list of G20 countries, with a not unrealistic possibility of even aspiring to join the elite G8. Ukraine undoubtedly has the potential to grow its economy to the same level as Germany, France, Italy or the United Kingdom. This potential is real, yet, because of a belligerent Russian neighbor, endemic corruption, outdated and ineffective government infrastructure, laughable justice system and a kleptocratic economic elite, Ukraine remains effectively a third world country.

As a member of the Board of Directors of the Canada Ukraine Chamber of Commerce, I have become quite familiar in recent years with the challenges and problems Ukraine is facing as it tries to emerge from the stifling legacy of the former Soviet empire and become a modern ”first world” European country. Unsurprisingly, Russia continues to be Ukraine’s main stumbling block, and this is not only because of the war in the east, but also the residual economic strings that Russia is still pulling. I think most people are aware of how difficult it has been for Ukraine to break free from its former almost total dependence on Russia for petroleum and natural gas supplies. Unfortunately, these are not the only dependencies.

In 2017, Ukraine had total exports of $46.1 Billion, and total imports of $51.7 Billion. You may be surprised to learn that its top export destination was Russia with $4.3 Billion in exports, while its top source of imports was also Russia with $7.7 Billion of goods coming in. Hard to believe, but it’s true – Ukraine’s biggest trade partner in both directions is the country that it had been at war with for over three years. This is a bad hangover that doesn’t seem to want to go away.

You will be pleased to know that the Canadian government has in recent years made special efforts to help Ukraine overcome its economic woes, particularly as it relates to improving the Canada – Ukraine trade relationship. In 2016 the government invested $13.4 Million dollars in creating the Canada Ukraine Trade Investment Support (CUTIS) project. The project is being managed by the Canada Ukraine Chamber of Commerce. Its primary focus is to increase Canadian investment in Ukraine, as well as help Ukrainian companies find new markets in Canada. Further, in 2017, Canada and Ukraine concluded a free trade agreement that will eliminate virtually all tariff barriers and duties on trade between the two countries.

One would have thought that because of Canada’s special relationship with Ukraine, that trade between the two countries would be far greater than it currently is. In 2018 Canada exported some $220 Million in goods to Ukraine and imported $126 Million. In the service sector, in 2017, Canada supplied $126 Million in services, while Ukraine provided $91 Million in services to Canada, primarily in IT. It is hoped that with the free trade agreement, as well as the facilitation and assistance being provided by the CUTIS project, these figures will grow substantially in the coming years.

The biggest unrealized potential market though is obviously the European Union. Ukraine should make joining the EU its top priority for the coming decade. By the same token, the EU should realize that Russia is the biggest threat to peace and stability in Europe, and that its best defense against that threat is to ensure that Ukraine becomes a vibrant and successful member of the European family. A strong Ukraine, both politically and economically, would inevitably lead to the collapse of the reactionary Russian predatory state that exists today. Putin realize this very well, which is why he has made destabilizing Ukraine a top priority.

Ukraine has phenomenal potential. The big question is whether its neighbours will allow it to be realized.