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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

The cold shoulder

Experts comment on Ukraine’s economy when boycotted and isolated by international community
17 May, 2012 - 00:00

In all the twenty years of national independence Ukraine’s foreign political situation hasn’t been as strained and unpredictable as it is now. German Chancellor Angela Merkel, voicing her concern over the ex-Prime Minister Yulia Tymoshenko case, said Ukrainians, like Belarusians, live under the yoke of dictatorship and repression. Ukrainian Prime Minister Mykola Azarov responded by describing such accusations as absurd, bluntly adding that those who insist on them, within and without Ukraine, are rascals.

These political verbal duels appear to have overshadowed expert opinions. Meanwhile, Ihor Zhdanov, president, Open Politics Analysis Center, believes that the international community’s next step will be a complete isolation of Ukraine; that Ukraine has been given the cold shoulder by the European Union and the United States, and that Yanukovych has lost Russia’s support: “The worst scenario will be when Yanukovych’s international isolation is replaced by sanctions that will affect the whole country, or when they refuse to sign the Association Agreement.”

Yevhen Kopatko, sociologist, founder of the R&B group of companies, urges the Ukrainian and European politicians to show a balanced approach because “boycott by the stronger party always narrows the range of opportunities.” He is grateful to the Polish president for his support of Ukraine but is sure that the current situation can be resolved only by reaching a political compromise within Ukraine. When asked by The Day, he stressed that this “boycott will jeopardize the whole country… Rocking the fragile boat of our economy will be very bad for everyone.”

Below are other expert opinions regarding the possible consequences of Ukraine’s isolation and boycott.

Oleksandr KENDIUKHOV, president, All-Ukrainian Association of Economists:

“If the current domestic situation remains the same, and if the EU’s stand doesn’t show any changes for the better, one may well expect harsh measures in regard to Ukraine’s full-scale partner-like operation on the EU markets. Here the point is not only their official stand, but also the attitude of the man in the street in these countries. People may listen to what their government has to say and proceed to boycott various projects in our country, as well as refuse to buy Ukrainian goods. The fact that Ukraine has slowed down work on EU partnership and Association Agreement (the latter appears to be suspended) means at best a period of stagnation in its economic relationships with the EU. There are no reasons to expect the range of these relationships to broaden, just as there will be no increase in Ukraine’s exports, let alone preferential treatment in the sphere of trade with the EU countries.”

Tetiana YEFIMENKO, president, Academy of Financial Management, Ministry of Finance of Ukraine:

“I believe that there are political circumstances that are to be assessed and dealt with by professional diplomats. In the economic sphere, I so far see no reasons for making decisions that will have an impact on the Ukrainian economy. There are political statements, but once again, these aren’t accompanied by any decisions in the economic sphere – and I hope there won’t be any. Diplomats will eventually make the right kind of decisions. Ukraine’s economy is currently in a sufficiently calm state. The absence of the IMF loan will make us tighten our belts, yet this isn’t too critical a circumstance to have any negative consequences on the micro level. Moreover, economy doesn’t always positively respond to large financial injections; sometimes they cause negative consequences.”

Anton FILIPENKO, president, Ukrainian Association of International Economists:

“What’s happening is an acid test in terms of politics, economy, and business, considering that exports make up 60 percent of the Ukrainian GDP, with more than half aimed at the European region with its sales and investment markets, along with well-established economic contacts. Therefore, isolation and boycott are sure to have a negative effect on our economy and its growth rate. Ukraine needs not only investments, but also competitive hi-tech markets. Their narrowing may have negative consequences. Add here the Association and FTA. If and when Europe becomes inaccessible to Ukraine, the only option will be getting back to the old coordinate system on a par with Alexander Lukashenka. I’m not saying that Ukraine will once again change this vector, but that those who have until now lobbied for this change will get an extra chance, saying that’s the only option left. As it is, the European vector allows Ukraine to acquire a new quality, as agreed by the expert and business communities.”

Oleh USTENKO, CEO, Bleyzer Foundation in Ukraine:

“Ukraine is running huge image-building risks, although I don’t see any serious ones in conjunction with Euro-2012. Boycott by political leader is bad news, but not critical enough from the economic standpoint. However, long-term image-building effects are extremely important, especially in terms of foreign inland investment, the setting up of hi-tech production facilities – something Ukraine badly needs (for instance, one is reminded of Angela Merkel’s openly negative statement). Nevertheless, I hope this won’t play a key negative part. Whereas last year’s direct foreign inland investments amounted to six billion dollars, this year’s forecasts point to four billion. I expect these forecasts to come true. In the long run this boycott will have a negative effect on Ukraine, including the Association Agreement and the IMF loan.”

By Vitalii KNIAZHANSKY, The Day
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