According to Forbes magazine, Ukraine has the worst business climate in Europe and ranks 98th out of 128 in the world alongside Russia and Senegal."


Business climate – worst in Europe

According to Forbes magazine, Ukraine has the worst business climate in Europe and ranks 98th out of 128 in the world alongside Russia and Senegal.

People First comment: For business to succeed, you need three things: a viable and well-presented product, enough finance to deliver the product to market and, finally, a climate in which business can flourish. In Ukraine we have a climate that stifles business, banks that have little or no money to lend and, as a result, we dont create viable products. It all comes down to the fact that successive Ukrainian governments have never really had really any idea how modern business works or what it needs to be successful. Most seem stuck in a neo-Soviet time warp.

Coal mines – second worst in the world

Ukrainian mines are the second most dangerous in the world after China, killing more than 3,500 miners since 1990. About 75 percent of them are officially considered dangerous as a result of coal bed methane gas. Since independence, Ukrainian mining accidents have killed more miners than in the whole of the European mining industry over the same period.

People First comment: Josef Stalin is reported to have said that the death of one man is a tragedy while the death of a million is a statistic. How true this is for the people who have no choice but to work the mines. Ukrainian mines are deadly, but what causes these terrible accidents is that miners are paid only for the coal they cut. In order to feed their families, they cut corners on safety and cut coal when the risks are unacceptably high subsequently paying for it with their lives. The whole industry needs fundamental reform.

Government policy coupled with the tax police has totally undermined Ukraines competitive edge."


Competitiveness – second worst in Europe

Ukraine is the second least competitive country in Europe after Albania and ranks 89th out of 139 countries, alongside Gambia, Albania and Honduras, according to the World Economic Forum.

People First comment: How can a nation that once manufactured 40 percent of everything made in the Soviet Union be so totally uncompetitive today? The answer is that government policy coupled with the tax police has totally undermined Ukraines competitive edge. Small enterprises that could grow into the industries of tomorrow are taxed into oblivion, legislation coupled with bureaucracy and corruption make it virtually impossible to harness entrepreneurialism and as a result the nation is dependent on monolithic industries that should have been shut down decades ago. The government need to completely rethink economic policy.

Gross domestic product per capita – third worst in Europe

Ukrainian gross domestic per capita is now 30 percent lower than it was at the time of independence in 1990 and is the third worst in Europe after Moldova and Georgia.

People First comment: The policies of successive governments and the opposition have been driving the country backwards and unlike almost all our near neighbors the Ukrainian people are getting progressively poorer. There is only one solution and that is to become a real democracy where government works in the interests of the nation and not in the interests of a select few.

More than five million Ukrainians are prepared to risk deportation from their host country rather than seek employment in Ukraine such is the standard of living and salaries at home."


Illegal migration – worst in Europe

Ukraine has the highest level of illegal migration in Europe with 5 to 6 million Ukrainians now working abroad. Only around 5 percent of Ukrainians living and working abroad have the legal right to do so.

People First comment: More than five million Ukrainians are prepared to risk deportation from their host country rather than seek employment in Ukraine such is the standard of living and salaries at home. The government is seeking to establish visa-free travel into the European Union. If the government is successful, one has to ask who will be left in Ukraine to run the country and look after the sick and elderly.

Investment climate – second worst in Europe

Ukraine has the second worst investment climate in Europe after Albania, according to the World Bank European Region survey of 2010.

People First comment: Foreign direct investment has fallen 75 percent this year alone making it the worst year on record. FDI into Ukraine has always been well below that of our neighbors. The international community has just lost patience with the games, lies and false promises of the Ukrainian political elite and there are now easier places to invest. Ukraine is losing out on millions of much needed new jobs and ironically the value of the investments and assets of Ukraines financial elite is now starting to tumble.

An aging population coupled with real poverty, a failing health service coupled with alcoholism and environmental pollution … Is it any wonder that the life expectancy is falling and the mortality rate rising so markedly?"

Life expectancy and mortality rate – worst in Europe

Ukraine has the lowest average life expectancy in Europe, at 67.9 years, and is ranked 123rd out of 194 countries alongside North Korea, Azerbaijan and Uzbekistan. Ukraine also has the highest mortality rate in Europe and is equal 17th in the world ranking with Somalia, Burundi and Russia.

People First comment: An aging population coupled with real poverty, a failing health service coupled with alcoholism and environmental pollution … Is it any wonder that the life expectancy is falling and the mortality rate rising so markedly? Somalia and Burundi are failed states ravaged by war, while Ukraine is supposed to be a modern Western-leaning democracy. They have an excuse, Ukraine does not.

Poverty – second highest in Europe

Nearly 13 million Ukrainians are now official recognized as living below the poverty line. Ukraine’s level of poverty is defined at $105 per person per month or $3.38 per day. Poverty in Ukraine today is 11 percent higher than the European average, while the World Bank reports that 26.4 percent of Ukrainians now live in real poverty, a similar level to Moldova, slightly lower than in Armenia at 28.7 percent, but appreciably higher than Georgia at 18 percent and Russia at 13.6 percent.

People First comment: Poverty as a result of natural disaster the world can understand, poverty as a result of selfishness and incompetence the world will not accept. Ukraine has more natural wealth than many countries of Europe put together and one of the most highly educated work forces. How can it be that with all this wealth, 26.4 percent of the nation lives on less than $4 per day? The answer is that our political system is geared to making a select few extremely wealthy while the rest are left to fend for themselves.

According to the international media freedom watchdog Reporters Without Borders, Ukraine has fallen 42 places on their index in 2010 alone, one of the highest annual falls since their index began."

Press freedom – highest fall ever in one year

According to the international media freedom watchdog Reporters Without Borders, Ukraine has fallen 42 places on their index in 2010 alone, one of the highest annual falls since their index began. In 2009, Ukraine was 89th out of 175 nations, in 2010 Ukraine has slipped 42 places to 131st. Russia, on the other hand, rose 13 places from 153rd to 140.

People First comment: There is no state-sponsored censorship in Ukraine. What we have is far more insidious. The president quickly established vertical power and, as a result, media owners, even in his own party, are frightened by the memory of the vertical power of the former era. As a result, they do not want to incur the wrath, imagined or otherwise, of the president or his administration. Thus they have imposed restrictions on what their editors can publish. This is a very unhealthy position as the public now receives more and more information from the Internet which often runs directly opposite to the propaganda at home.

The main reason why Ukraine suffered most in the recent world economic crisis was the absence of an economic cushion of small- and medium- sized enterprises that were relatively unaffected by the crisis."

Small- and medium-sized enterprise development – lowest in Europe

The average small-and-medium-sized contribution to the gross domestic product of countries of the European Union is 57 percent, while in Ukraine the contribution is barely 16 percent, the lowest in Europe and ranking Ukraine 34th out of a 44-nation survey carried out by the European Commission.

People First comment: The main reason why Ukraine suffered most in the recent world economic crisis was the absence of an economic cushion of small- and medium- sized enterprises that were relatively unaffected by the crisis. Yet running a small- or medium-sized company in Ukraine is a bureaucratic nightmare, as 85 percent of the tax police are focused on this area alone. When compared to other European nations, the majority of the paperwork is completely unnecessary, the accounting systems encourage fraud and tax rates encourage evasion. The whole sector needs to be completely modernized.

Software piracy — worst in Europe

About 85 percent of all the software used in Ukraine is pirated according to the 7th Annual IDC Software Piracy Study. Ukraine has the worst record in Europe and the 9th worst record in the world and it is costing the government $260 million a year in lost tax revenue alone.

People First comment: Software piracy is theft which the government through their inaction seems to condone. The music industry agreed a reduce royalty fee to legitimize music compact disc production in Ukraine, the government should do the same for the software developers. The loss to the government is not simply revenue, it is also national reputation, which is far harder to rebuild.

The current system of governance does not produce politicians that look to the national interest. It needs to change and power must be returned to the people through effective democracy so that the national interest can supplant personal interest."

Summary

Ukraine cannot be proud of this litany. It is a national disgrace that the nation has been allowed to slide in this way. Clearly successive governments have had other priorities, but this cannot be allowed to continue as people are suffering and dying as a result of government inaction. The current system of governance does not produce politicians that look to the national interest. It needs to change and power must be returned to the people through effective democracy so that the national interest can supplant personal interest. Ukraine can greatly benefit from international experience as almost all of the above issues have been solved somewhere in the world at some time. Ukrainian politicians can no longer afford to play politics whilst the nation suffers. It is time for action.

Viktor Tkachuk is chief executive officer of the People First Foundation, which seeks to strengthen Ukrainian democracy. The organization’s website is: www.peoplefirst.org.ua and the e-mail address is: [email protected]