The COVID-19 pandemic and decline of the world’s gross domestic product figures for 2020 are creating fierce competition for financial resources and forcing many businesses to re-evaluate from where they should be operating and manufacturing.
In this increasingly competitive environment, Ukraine continues to be handicapped by Russia’s ongoing hybrid aggression, the negative influence of toxic oligarchic clans, and widespread corruption.
To persevere economically Ukraine needs significant backing from private and institutional investors, including international financial institutions; historically, the driving forces of sustainable development for free‑market economies.
When deciding whether to invest in Ukraine, a potential investor will make a SWOT — strengths, weaknesses, opportunities and threats — analysis characterizing the availability of skilled, highly-educated and hard-working people, the relatively low cost of production and a favorable geographical location as strengths and opportunities, while the unreliable judicial system, high level of corruption, widespread oligarchal abusive control and an overabundance of business regulations will be viewed as weaknesses and threats.
Unfortunately, this simple exercise does not play out in Ukraine’s favor.
To attract a critical mass of investment and financial backing, Ukraine’s governing authorities must address the following basic issues in a tangible way:
- Legal guarantees protecting investments;
- Overall compliance with and enforcement of the law;
- Fair judicial system for all;
- Fair competition without corruption;
- Mechanisms preventing undue interference in businesses by law enforcement agencies; and
- Mechanisms preventing corporate raids.
- A webinar held on Sept. 3 by NGO “Ukraine-2050” on “Investment and doing business in Ukraine. New realities in the context of COVID-19” echoed the same concerns. A link to this webinar can be found here: https://www.youtube.com/watch?v=Gih-GCEJMJY.
For more than 29 years, Ukrainian authorities have committed themselves to resolve these issues, but have always fallen far short of their promises.
Thе most recent such commitment was undertaken by President Volodymyr Zelensky on Oct. 6 in the joint statement following the 22nd EU-Ukraine Summit with the presidents of the European Council and the European Commission:
“We agreed on the importance of accelerating and reinforcing reform efforts, in particular on the judiciary (including reforming the High Council of Justice and the independent recruitment of judges with integrity) and in the fight against corruption, ensuring strong and independent anti‑corruption institutions. We welcomed the renewed commitment of Ukraine to fight the influence of vested interests (“de-oligarchization”). In this regard, we underlined the need to further strengthen media pluralism in Ukraine.”
Ukraine’s current governing authorities certainly have the opportunity to completely overhaul this problematic situation. Now, all that is required is an unwavering political will based on a genuine desire to bring increased prosperity to Ukraine.
These exceptionally challenging times are forcing, in an unprecedented way, Ukraine’s governing authorities to address the following critical needs to attract investments to Ukraine:
1) Significant judicial reform;
2) Promoting the work of anti-corruption bodies and their independence;
3) Adoption of relevant laws reducing access to state funds for oligarchic clans;
4) Restructuring of law enforcement agencies to eliminate undue interference in businesses; and
5) Reduced regulations and bureaucracy for businesses.
Time will soon tell whether Ukraine’s governing authorities will rise to the unique challenges and opportunities of our time by fully – not only superficially – addressing these urgent issues for the benefit of all the Ukrainian people.
For Ukraine’s sake, they really should!
Eugene Czolij is president of Ukraine-2050, a non-profit organization established to help implement within one generation – by 2050 – strategies for the sustainable development of Ukraine as a fully independent, territorially integral, democratic, reformed and economically competitive European state.
